contents · 2019-10-31 · (resolution2) to re-elect the following directors who retire under the...

Tanco Holdings Berhad2004 Annual Report

1

Contents

2 - 3 Notice of Annual General Meeting

4 Corporate Information

5 - 7 Directors’ Profile

8 - 11 Corporate Governance Statement

12 Additional Compliance Information

13 Statement on Internal Control

14 - 16 Audit Committee

17 - 18 Chairman’s Statement

19 - 21 Group Managing Director’s Review

22 - 25 Directors’ Report

26 Balance Sheets

27 Income Statements

28 Statements of Changes in Equity

29 - 31 Cash Flow Statements

32 - 63 Notes to the Financial Statements

64 Statement by Directors

65 Statutory Declaration

66 - 67 Report of the Auditors

68 - 70 List of Properties

71 - 72 Shareholdings Structure

73 - 74 Warrant Holdings Structure

75 Statement of Directors’ Interests

Contents


2

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Forty-Sixth Annual General Meeting of the Company will be held in Agong & MaduraHall at Duta Palms Resort & Anglers' Club, Jalan Desa Permai, Bandar Country Homes, 48000 Rawang, Selangor Darul Ehsan onThursday, 30 June 2005 at 10.30 a.m. for the following purposes: -

AGENDA

By Order of the Board

Chan Keng YewChoi Siew FunCompany Secretaries

Selangor Darul EhsanDate : 8 June 2005

Notes:

1.

2.

3.

4.

5.

6.

7.

To receive and adopt the audited financial statements for the year ended 31 December 2004 together with the Reports of theDirectors and the Auditors thereon. (Resolution 1)

To approve payment of Directors' Fees of RM96,000.00 in respect of the financial year ended 31 December 2004.(Resolution2)

To re-elect the following Directors who retire under the respective provisions of the Company's Articles of Association :-(a) Dato' Tan Lee Sing (Article 101) (Resolution 3)(b) James Wong Kwong Yew (Article 101) (Resolution 4)(c) Dato' Abdul Rahim bin Saibu (Article 106) (Resolution 5)

To consider, and if thought fit, to pass the following resolution: -

"THAT Dato' Dr. Mohd Noordin bin Haji Keling, who retires in compliance with Section 129(6) of the Companies Act, 1965 beand is hereby re-appointed as a Director of the Company and to hold office until the conclusion of the next Annual GeneralMeeting of the Company." (Resolution 6)

To re-appoint Messrs. Monteiro & Heng as auditors of the Company and to authorise the Board of Directors to fix their remuneration. (Resolution 7)

APPROVAL FOR ISSUANCE OF NEW ORDINARY SHARES PURSUANT TO SECTION 132D OF THE COMPANIESACT,1965

"THAT, subject always to the Companies Act, 1965, the Articles of Association of the Company and approvals of the relevantgovernmental/regulatory authorities, the Directors be and are hereby empowered pursuant to Section 132D of the CompaniesAct, 1965 to issue new ordinary shares of RM1.00 each in the Company, from time to time and upon such terms and conditionsand for such purposes and to such persons whomsoever as the Directors may, in their absolute discretion deem fit and expedient in the interest of the Company, provided that the aggregate number of shares issued pursuant to this resolution doesnot exceed 10% of the issued and paid-up share capital of the Company for the time being AND THAT the Directors be and arehereby also empowered to obtain approval from the Bursa Malaysia Securities Berhad for the listing of and quotation for theadditional shares issued AND THAT such authority shall continue in force until the conclusion of the next Annual GeneralMeeting of the Company." (Resolution 8)

To transact any other business for which due notice has been given in accordance with the Company's Articles of Associationand the Companies Act, 1965.

(i)

(ii) (iii)

(iv)

(v)

A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but neednot be a member of the Company.A member shall be entitled to appoint more than one proxy to attend and vote at the same meeting.Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his holdings tobe represented by each proxy.The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, ifthe appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised.The instrument appointing a proxy must be deposited at the Company's Registered Office at Jalan Desa, Bandar Country Homes,48000 Rawang, Selangor Darul Ehsan not less than 48 hours before the time for holding the meeting or any adjournment thereof.

AS SPECIAL BUSINESS: -To consider and if thought fit, to pass the following resolution as Ordinary Resolution: -


3

Notice of Annual General Meeting (cont’d)

EXPLANATION NOTE ON SPECIAL BUSINESS

RESOLUTION PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

The proposed Ordinary Resolution No. 8, if passed, will empower the Directors of the Company to issue and allot shares in theCompany up to an aggregate amount not exceeding 10% of the issued share capital of the Company for the time being for such purposes as they consider would be in the interest of the Company. This authority unless revoked or varied at a general meeting willexpire at the next Annual General Meeting.

2004 ANNUAL REPORT:

The 2004 Annual Report is in the CD-ROM format. Printed copy of the Annual Report shall be provided to the shareholders uponrequest. Shareholders who wish to receive the printed copy of the Annual Report and who require assistance with viewing the CD-ROM, kindly contact Cik Rohana bt Mohd Yusoff at Tel: 03-60928333 ext. 154 or Miss Yeap Pek Yoong at Tel: 03-60928333 ext. 129 or e-mail to [email protected].

STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING1)

2)

3)

4)

NAMES OF DIRECTORS WHO ARE STANDING FOR RE-ELECTION

DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETINGS

There were five (5) Board meetings held during the financial year ended 31 December 2004. The details of attendance of theDirectors are set out in the Directors' Profile appearing on pages 5 to 7 of the Annual Report.

PLACE, DATE & TIME OF FORTY-SIXTH ANNUAL GENERAL MEETING

The Forty-Sixth Annual General Meeting of the Company will be held in Agong & Madura Hall at Duta Palms Resort & Anglers'Club, Jalan Desa Permai, Bandar Country Homes, 48000 Rawang, Selangor Darul Ehsan on Thursday, 30 June 2005 at 10.30a.m.

DETAILS OF DIRECTORS SEEKING FOR RE-ELECTION OR RE-APPOINTMENT AT THE ANNUAL GENERAL MEETING

Details of Directors who are seeking for re-election or re-appointment are set out in the Directors' Profile appearing on pages5 to 7 of the Annual Report. Information relating to the Directors' securities holdings in the Company and its subsidiaries is presented on page 75 of the Annual Report.

(a)

(b)

(c)

DIRECTORS RETIRING BY ROTATION PURSUANT TO ARTICLE 101 OF THE ARTICLES OF ASSOCIATION

Dato' Tan Lee SingJames Wong Kwong Yew

DIRECTORS RETIRING PURSUANT TO ARTICLE 106 OF THE ARTICLES OF ASSOCIATION

Dato' Abdul Rahim bin Saibu

Loh Chen Peng, although eligible, does not wish to offer himself for re-election and pursuant to Article 106 of the Articles ofAssociation, he will retire at the conclusion of the Forty-Sixth Annual General Meeting of the Company.

DIRECTOR RETIRING PURSUANT TO SECTION 129(6) OF THE COMPANIES ACT, 1965

Dato' Dr. Mohd Noordin bin Haji Keling


4

Corporate Information

BOARD OF DIRECTORS

Dato' Abdul Rahim bin SaibuIndependent Non-Executive Chairman

Aznan bin Abdul AzizDeputy Chairman/Executive Director

Dato' Tan Jing NamGroup Managing Director

James Wong Kwong YewGroup Executive Director

Dato' Tan Lee SingExecutive Director

Dato' Dr. Mohd. Aminuddin bin Mohd. RouseIndependent Non-Executive Director

Dato' Dr. Mohd. Noordin bin Haji KelingIndependent Non-Executive Director

Loh Chen PengIndependent Non-Executive Director

AUDIT COMMITTEEDato' Dr. Mohd. Noordin bin Haji Keling (Chairman)James Wong Kwong YewDato' Dr. Mohd. Aminuddin bin Mohd. Rouse

NOMINATION COMMITTEEDato' Dr. Mohd. Aminuddin bin Mohd. RouseDato' Dr. Mohd. Noordin bin Haji Keling

REMUNERATION COMMITTEEDato' Dr. Mohd. Aminuddin bin Mohd. Rouse (Chairman)Dato' Dr. Mohd. Noordin bin Haji KelingDato' Tan Jing Nam

COMPANY SECRETARIESChan Keng YewChoi Siew Fun

REGISTERED OFFICEJalan Desa,Bandar Country Homes,48000 Rawang, Selangor Darul EhsanTel: (603) 6092 8333Fax: (603) 6091 3188Website: http://www.tancoholdings.comE-mail: [email protected]

SHARE REGISTRARSectrars Services Sdn. Bhd. (92781-X)No. 28-1, Jalan Tun Sambanthan 3Brickfields, 50470 Kuala Lumpur.Tel: (603) 22746133Fax: (603) 22741016

AUDITORSMonteiro & HengChartered Accountants

PRINCIPAL BANKERSAmMerchant Bank Berhad (23742-V) Hong Leong Bank Berhad (97141-X)Malayan Banking Berhad (3813-K)

STOCK EXCHANGE LISTINGMain Board of Bursa Malaysia Securities Berhad,Malaysia

Corporate Information


5

Directors’ Profile

DATO' ABDUL RAHIM BIN SAIBUChairman/ Independent Non-Executive Director

Dato' Abdul Rahim bin Saibu, a Malaysian aged 50, was appointed as Chairman of THB on 1 September 2004.

His prominence in the infrastructure and property development sectors stems from construction of toll roads under the governmentprivatization program. His years of experience in real estate development included large-scale housing projects both in Malaysia andabroad. He currently holds the position of Managing Director of Peninsular Metro-Works Sdn Bhd. He is also actively involved incommunity and social welfare projects.

He does not have any family relationship with any other directors and/or major shareholders of THB. He does not have any conflictof interest with THB. He has not been convicted for offences within the past ten years.

He attended one Board Meeting held during the financial year ended 31 December 2004.

ENCIK AZNAN BIN ABDUL AZIZDeputy Chairman / Executive Director

Encik Aznan bin Abdul Aziz, a Malaysian aged 47, was appointed as Deputy Chairman of THB on 8 January 1997.

He holds a Diploma in Mechanical Engineering. He has extensive hand-on experience in property development and constructionsectors. Over the last 25 years, he had been involved in various major development projects such as Bandar Country Homes, a 730acres of self-contained township in Rawang, 682 units of mixed housing development for Koperasi Polis Diraja, Kelab Darul Ehsan,Taman Keramat, Taman Bukit Chedang and Taman Abdul Razak.

He does not have any family relationship with any other directors and/or major shareholders of THB. He is deemed in conflict of interest with THB by virtue of his interest in certain privately-owned companies which are also involved in property development business. However, these privately-owned companies are not in direct competition with the business of THB. He has not been convicted for offences within the past ten years.

He attended three out of the five Board Meetings held during the financial year ended 31 December 2004.

DATO' TAN JING NAMGroup Managing Director

Dato' Tan Jing Nam, a Malaysian aged 49, was appointed to the Board on 28 July 1995 and is the Group Managing Director sinceon 23 October 1995. He is also a member of the Remuneration Committee of THB.

He has over 28 years of experience in the property and construction sectors. Under his leadership, the Tanco Group diversified fromplantation business to property development, construction and leisure businesses. He is the driving force behind the successfuldevelopment of Bandar Country Homes, a self-contained township in Rawang.

He is the brother of Dato' Tan Lee Sing, a Director of THB. Save as aforesaid, he does not have any family relationship with anyother directors and/or major shareholders of THB. He is deemed in conflict of interest with THB by virtue of his interest in certain privately-owned companies which are also involved in property development business. However, these privately-owned companiesare not in direct competition with the business of THB. He has not been convicted for offences within the past ten years.

He attended all the five Board Meetings held during the financial year ended 31 December 2004.


6

Directors’ Profile (cont’d)

MR. JAMES WONG KWONG YEWGroup Executive Director

Mr. James Wong Kwong Yew, a Malaysian aged 58, was appointed to the board on 28 July 1995 and subsequently appointed asGroup Executive Director on 23 October 1995. He is also a member of the Audit Committee of THB.

He is a Chartered Accountant (England and Wales since 1971). With over 33 years of experience in professional firms and commercial sector, he is well versed in the field of accounting, corporate finance, banking and property development. Prior to joining THB, he was the Executive Vice President/Director of a listed financial services group.



DATO' DR. MOHD. AMINUDDIN BIN MOHD. ROUSEIndependent Non-Executive Director

Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse, a Malaysian aged 59, was appointed to the Board as an Independent Non-ExecutiveDirector on 20 October 1997. He is the Chairman of the Remuneration Committee, a member of the Nomination Committee and amember of the Audit Committee of THB.

He graduated with a B. Sc (Hons) in Biochemistry from University Malaya and holds a Ph.D in Agriculture Chemistry from Universityof Adelaide. Prior to venturing into commercial sector, he was an academician for 14 years having started as a lecturer in UniversityPutra Malaysia and serve as Professor in University Sains Malaysia. While in academia, he held numerous positions including Headof Biochemistry and Microbiology, Deputy Dean, Dean and Professor of Biochemistry.

He ventured into corporate world in 1983. He also sits on the board of several public listed company including Konsortium LogistikBhd, Star Publications (Malaysia) Bhd and Ajiya Bhd. He is also a director of Deutsche Bank Malaysia Bhd.



DATO' DR. MOHD. NOORDIN BIN HAJI KELINGIndependent Non-Executive Director

Dato' Dr. Mohd. Noordin bin Haji Keling, a Malaysian aged 78, was appointed to the Board as an Independent Non-ExecutiveDirector on 1 July 1994. He is the Chairman of the Audit Committee, a member of the Nomination Committee and a member of theRemuneration Committee of THB.

A veterinary surgeon by profession, he graduated from the Bengal Veterinary College, Calcutta in 1950 and in 1956 from the RoyalVeterinary College, University of London as a Member of the Royal College of Veterinary Surgeons, England. While in governmentservice, he obtained post-graduate qualifications in tropical veterinary medicine at the University of Edinburgh in 1960 and in veterinary public health at the University of Toronto in 1966. He later obtained the Bachelor of Laws degree, LLB (Hons) from theUniversity of London and the Certificate in Legal Practice (C.L.P) awarded by the Legal Profession Qualifying Board, Malaysia. Hewas admitted as an Advocate and Solicitor of the High Court, Malaya in December 1996. He had a distinguished career in theVeterinary Department, Malaysia, retiring in 1982 as the Director-General of the National Livestock Development Authority. On retirement he served for two years as Executive Vice-Chairman of MAX Agriculture Sdn Bhd, a company with principal activities inthe manufacture and trading of fertilizers. Currently he also sits on the board of several private limited companies.




7

Directors’ Profile (cont’d)

DATO' TAN LEE SINGExecutive Director

Dato' Tan Lee Sing, a Malaysian aged 45 was appointed to the Board as Executive Director on 28 July 1995.

She graduated from the University of Melbourne, Australia with a degree in Commerce in 1980. She has over 13 years of experience in the property and construction sectors.

She is the sister of Dato' Tan Jing Nam, the Group Managing Director of THB. Save as aforesaid, she does not have any family relationship with any other directors and/or major shareholders of THB. She is deemed in conflict of interest with THB by virtue ofher interest in certain privately-owned companies which is also involved in property development business. However, these privately-owned companies are not in direct competition with the business of THB. She has not been convicted for offences withinthe past ten years.

She attended all the five Board Meetings held during the financial year ended 31 December 2004.

MR. LOH CHEN PENGIndependent Non-Executive Director

Mr. Loh Chen Peng, a Malaysian aged 51, was appointed to the Board as an Independent Non-Executive Director on 26 August2004.

He is a member of Malaysian Institute of Certified Public Accountant. He had worked for an international accounting firm for five yearsand spent the next thirteen years with a merchant bank. In 1994, he helped established and thereafter served on the executive committee of directors of a commercial banking group until 2001.

He is now involved in some private ventures and is an independent non-executive director of Major Team Holdings Berhad, NexnewsBerhad, Dijaya Corporation Berhad and Sunrise Berhad.


He attended one Board Meeting held during the financial year ended 31 December 2004.


8

Corporate Governance Statement

The Board of Directors ("the Board") of Tanco Holdings Berhad recognises the importance of good corporate governance and fullysupports the recommendations of the Malaysian Code of Corporate Governance (the Code). Accordingly, the Board is committed toensuring that the highest standards of corporate governance are practised throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholder value.

Set out below is a statement of how the Group has applied the principles and complied with the best practice provisions set out inthe Code during the year.

DIRECTORSThe Board

The Group is led and controlled by an effective Board. The Board meets on a scheduled basis, at least four (4) times a year, withadditional meetings convened as necessary. All Board members bring an independent judgement to bear on issues of strategy, performance, resources and standards of conduct.

The Board has delegated specific responsibilities to three (3) sub-committees (Audit, Nomination and Remuneration Committees),the details of which are set out below. These Committees have the authority to examine particular issues and report back to theBoard with their recommendation. The ultimate responsibility for the final decision on all matters, however, lies with the entire Board.

Board Balance

The Board has a balanced composition of executive and non-executive directors so that no individual or small group of individualscan dominate the Board's decision making. The Board currently has eight (8) members, comprising four (4) Executive Directors andfour (4) Non-Executive Directors (including the Chairman). The four (4) Non-Executive Directors are Independent Non-ExecutiveDirectors within the meaning of Chapter 1.01 of the Listing Requirements. The Board therefore fulfilled the Listing Requirementsunder Paragraph 15.02, which states that one third of the board members must be Independent Directors.

During the year ended 31 December 2004, five (5) Board meetings were held. The composition of the Board together with the attendance of the respective Directors at Board meetings are as follows: -

Together, the Directors bring a wide range of business and financial experience relevant to the Group. A brief description of the background of each Director is presented on pages 5 to 7 of the Annual Report.

The role of the Chairman and the Group Managing Director are distinct and separate; the Chairman being Non-Executive, is notinvolved in the management and day-to-day operations of the Group.

Dato' Dr. Mohd. Noordin bin Haji Keling is the Senior Independent Non-Executive Director, to whom all concerns may be conveyed.

The presence of independent non-executive Directors in the Board provides objectivity and they are of the calibre necessary to carrysufficient weight in Board decisions. Although all the Directors have an equal responsibility for the Group's operations, the role of theindependent non-executive Directors is particularly important in ensuring that the strategies proposed by the executive managementare fully discussed and examined, and take account of the long term interests, not only of the shareholders, but also of employees,customers, suppliers, and the many communities in which the Group conducts business.

Supply of Information

All directors are provided with an agenda and a set of Board papers, prior to every board meeting. The Board papers circulatedinclude quarterly and annual financial statements, minutes of meetings, major operational and financial matters, and performancereport of the Group. All matters requiring Board approvals are also circulated prior to the Board Meetings and during Board Meetingsthese matters are duly discussed and deliberated with senior management before decisions are made.

All Directors have access to the advice and services of the Company Secretaries and where necessary, in the furtherance of theirduties, take independent professional advice at the Group's expense.

Name of Director Date of Appointment AttendanceDato' Abdul Rahim bin Saibu 01.09.2004 1/1

Aznan bin Abdul Aziz 08.01.1997 3/5Dato' Tan Jing Nam 28.07.1995 5/5James Wong Kwong Yew 28.07.1995 5/5Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse 20.10.1997 5/5Dato' Dr. Mohd. Noordin bin Haji Keling 01.07.1994 5/5Dato' Tan Lee Sing 28.07.1995 5/5Loh Chen Peng 26.08.2004 1/1


9

Corporate Governance Statement (cont’d)

Appointments to the Board

New appointments to the Board are recommended by the Nomination Committee to the Board for their approval. The otherresponsibilities of the Nomination Committee include making recommendations to the Board on the appointment of members ofBoard Committees, the review on an annual basis of the Board structure, size and composition, and assessment of the effectiveness of the Board, its Committees and the contribution of each Board.

The Nomination Committee consists of wholly Independent Non-Executive Directors and its composition is as follows:-

For the year, the Nomination Committee had three (3) meetings held on 30 April 2004, 26 August 2004 and 1 September 2004.

Directors' Training

All the Directors of the Company have attended and completed the Mandatory Accreditation Programme, as required under theListings Requirements of Bursa Malaysia Securities Berhad ("Bursa Malaysia"). The Directors have also attended various accredited programme under the Continuous Education Programme ("CEP") approved by Bursa Malaysia. The Directors who haveyet to meet the CEP requirements have until 31 December 2005 to do so.

Re-election

In accordance with the Company's Articles of Association, at least one third of the Directors are required to retire by rotation at eachAnnual General Meeting and can offer themselves for re-election at the Annual General Meeting. Directors who are appointed by theBoard to fill a casual vacancy or as an addition to the existing Board are subject to election by shareholders at the next AnnualGeneral Meeting following their appointment. The Directors also shall retire from office at least once in three years, but shall be eligible for re-election.

Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section129 (6) of the Companies Act, 1965.

DIRECTORS' REMUNERATION

Remuneration Policy

The Remuneration Committee reviews annually and recommends to the Board, the Group's remuneration policy for ExecutiveDirectors to ensure that the Executive Directors are rewarded appropriately for their contributions to the Group's growth and profitability, and that the remuneration policy supports the Group's objectives and shareholders' interest.

In framing the Group's remuneration policy, the Remuneration Committee obtains the advice and information from external source,if necessary. It is, nevertheless, the ultimate responsibility of the entire Board to approve the remuneration of these Directors.

The determination of the remuneration of the non-executive Directors including Non-Executive Chairman is a matter for the Boardas a whole.

Procedure

The Remuneration Committee consists of three (3) members of which one (1) is executive director and two (2) independent non-executive directors and its composition is as follows:-

For the year, the Remuneration Committee had one (1) meeting held on 30 June 2004.

DesignationDato' Dr. Mohd. Aminuddin bin Mohd. Rouse - Independent Non-Executive DirectorDato' Dr. Mohd. Noordin bin Haji Keling - Independent Non-Executive Director

DesignationDato' Dr. Mohd. Aminuddin bin Mohd. Rouse - Chairman of the Remuneration Committee,

Independent Non-Executive DirectorDato' Dr. Mohd. Noordin bin Haji Keling - Independent Non-Executive DirectorDato' Tan Jing Nam - Group Managing Director


10


Disclosure

A summary of the remuneration of the Directors for the financial year ended 31 December 2004, distinguishing between executiveand non-executive Directors in aggregate, with categorization into appropriate components and the number of Directors whose remuneration falls into each successive band of RM50,000 are as follows:

Note : Inclusive of two Directors who had resigned during the year.

Detail remuneration of each Director is presented under Note 33 of the Financial Statements.

SHAREHOLDERS

Dialogue between the Company and Investors

The Board recognizes the importance of communication and proper dissemination of information to its shareholders, stakeholdersand the public generally. However, any information that may be regarded as undisclosed material information about the Group willnot be given. The following are the channels of communication of the Company to its shareholders, stakeholders, analysts and thepublic: -

Annual General Meeting

At each Annual General Meeting, the Board presents the progress and performance report of the Group and encourages shareholders to participate and pose questions to the Board in the Question and Answer session.

Each item of special business included in the notice of the meeting will be accompanied by a full explanation of the effects of a proposed resolution. Separate resolutions are proposed for substantially separate issues at the meeting.

Executive Directors

Non-ExecutiveDirectors Total

Directors' Fees (RM) - 96,000 96,000

Salaries (RM) 2,587,200 - 2,587,200

Meeting Allowances - 5,000 5,000

Benefits-in-kind (RM) 79,750 13,325 93,075

Directors' Remuneration

0 -RM50,000 - 6 6

RM50,001-RM200,000 - - -

RM200,001-RM250,000 1 - 1

RM250,001-RM500,000 - - -

RM500,001-RM550,000 1 - 1

RM550,001-RM850,000 - - -

RM850,001-RM900,000 1 - 1

RM900,001-RM1,000,000 - - -

RM1,000,001-RM1,050,000 1 - 1

1)2)

3)

the distribution of annual reports and circulars to shareholders;timely quarterly results announcements and various disclosures and announcements made to the Bursa Malaysia SecuritiesBerhad;company's website at http://www.tancoholdings.com.


11


ACCOUNTABILITY AND AUDIT

Financial Reporting

In presenting the annual financial statements and quarterly announcement to shareholders, the Directors aim to present a balancedand understandable assessment of the Group's position and prospects. This also applies to other price-sensitive public reports andreports to regulators.

Audit Committee

The Audit Committee of the Board comprises two Independent Non-Executive Directors and one Executive Director. The composition of the Audit Committee together with the terms of reference and activities of the Audit Committee during the financialyear ended 31 December 2004 are provided separately in this Annual Report.

Internal Control

The Board acknowledges its responsibility for establishing an efficient and effective system of internal controls covering not onlyfinancial controls but also controls relating to operational, compliance and risk management to safeguard shareholders' investmentand the Group's assets. Such system can, however, only provide reasonable and not absolute assurance against material misstatement, loss or fraud.

The Group's Statement on Internal Control is set out on page 13 of the Annual Report.

Relationship with the Auditors

The Company has established transparent and appropriate relationships with the Company's auditors through the Audit Committee.The auditors has continued to report to shareholders of the Company on their findings which are included as part of the Company'sfinancial reports with respect to each year's audit on the statutory financial statements. From time to time, the auditors wouldhighlight to the Audit Committee matters that require their attention.

Directors' Responsibility Statement for Preparing the Financial Statements

The Directors are required by the Companies Act 1965 to prepare financial statements for each financial year which have been madeout in accordance with the applicable Approved Accounting Standards and give a true and fair view of the state of affairs, the resultsand cashflows of the Group and Company for the financial year.

In preparing the financial statements, the Directors have:

* selected suitable accounting policies and applied them consistently. On the application of the going concern basis as had been adopted by the Company in preparation of the financial statements of the Group and the Company, the assumption as taken is that the Group and the Company will be able to realise their assets and liquidate their liabilities in the normal course of business. The ability of the Group and of the Company to continue as going concerns, however is dependent on:-

Should the debt restructuring schemes not be successfully concluded, the entire borrowings may become repayable immediately and the application of the going concern concept may be inappropriate and adjustments may be required to, inter alia, write down assets to their realisable values, reclassify all long term assets and liabilities as current and to provide for any further costs which may arise;

* made judgements and estimates that are reasonable and prudent;

* ensured that all applicable accounting standards have been followed.

The Directors have responsibility for ensuring that the Company keeps accounting records which disclose the financial position ofthe Group and Company and which enable them to ensure that the financial statements comply with the Companies Act 1965.

The Directors have overall responsibilities for taking such steps as are reasonably open to them to safeguard the assets of the Groupto prevent and detect fraud and other irregularities.

This Statement is made in accordance with the Board of Directors' resolution dated 26 April 2005.

i)

ii)iii)

the successful completion of the debt restructuring schemes as mentioned in Note 22 (c) and (d) to the financial statementsin a timely basis;the Group and the Company achieving sustainable and viable operations; andthe Group and the Company generating adequate cashflows for its operating activities.


12

Additional Compliance Information

To comply with the Listing Requirements of Bursa Malaysia Securities Berhad ("BMSB"), the following additional information is provided:-

i)

ii)

iii)

iv)

v)

vi)

vii)

viii)

ix)

x)

xi)

Material Contracts

Save as disclosed in Note 33 of the Financial Statements for the financial year ended 31 December 2005, there were no othermaterial contracts entered into by the Company and its subsidiary companies, involving Directors and major shareholders.

Utilisation of Proceeds

No proceeds were raised by the Company from any corporate proposal during the financial year.

Share buybacks

During the financial year, there were no share buybacks by the Company.

Options, warrants or convertible securities

During the financial year, there were no warrants exercised.

American Depository Receipt (ADR) or Global Depository Receipt (GDR) programme

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

Imposition of sanctions/penalties

There were certain late payment penalties imposed on the Company and its subsidiaries by certain statutory bodies amountingto RM68,102.00 during the financial year.

Non-audit fees

The amount of non-audit fees paid or payable to the external auditors by the Company and its subsidiaries for the financial yearended 31 December 2004 amounted to RM84,000.00

Profit estimate, forecast or projection

There is no material variance between the results for the financial year and the unaudited results previously announced by theCompany. The Company did not issue any profit estimate, forecast or projections for the financial year.

Profit guarantee

During the financial year, the Company had not provided any profit guarantees nor is there any profit guarantee given to theCompany.

Recurrent related party transactions statement

There was no recurrent related party transaction of a revenue nature, which requires shareholders' mandate during the financial year.

Revaluation policy on landed properties

Please refer to Note 3 of the Financial Statements.


13

Statement on Internal Control

The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard shareholders' investments and the Group's assets. Paragraph 15.27(b) of the Bursa Malaysia Securities Berhad ("BMSB")Listing Requirements requires directors of listed companies to include a Statement on Internal Control in their annual reports. Setout below is the statement: -

The Board of Directors of Tanco Holdings Berhad affirms its overall responsibility for the Group's system of internal controls, riskmanagement, and for reviewing the adequacy and integrity of the system. Due to the limitations that are inherent in any system ofinternal control, such systems are designed to manage, rather than eliminate the risk of failure to achieve business objectives.Accordingly such systems can only provide reasonable but not absolute assurances against material misstatement or loss.

The existence of the internal audit function aims to assist the Audit Committee to review the effectiveness of the Group's internalcontrol system. The Board confirms that there is an on-going process for identifying, evaluating and managing significant risks facedby the Group. This includes examining principal business risks in critical areas and identifying measures to mitigate, avoid and eliminate these risks. The Audit Committee and the Board regularly review this process with the Statement on Internal Control:Guidance For the Directors of Public Listed Companies. The process has been in place during the year under review and up to thedate of approval of this annual report.

The key elements of the Group's system of internal control include the following:

In order to achieve the above objectives, the Group has the following procedures/processes in place:-

The statement is made in accordance with a resolution of the Board of Directors dated 26 April 2005.

- An organization structure which formally defines lines of responsibility and delegation of authority.

- Key functions such as corporate affairs, finance, tax, treasury and human resources are controlled centrally.

- Incompatible responsibilities are properly segregated to ensure that no staff is in total control of whole transactions.- The Group has a policy on financial limits and approving authority for its operating and capital expenditure.

- There is effective reporting system in place to ensure timely generation of financial information for management review.

- The internal audit function adopts a risk-based approach in identifying areas of priority and carries out its works in accordance with an annual audit plan approved by the Audit Committee and the Board. The Audit Committee holds regularmeetings and reviews internal audit reports covering such matters. Significant issues are brought to the attention of theBoard.

- Financial results are reviewed quarterly by the Audit Committee and the Board.- Operating units' meetings are conducted regularly to review financial performance, business development and deliberate

on management issues.- There are regular meetings between the senior management (Managing Director and Executive Directors) and Heads of

Department to discuss business, operational and key management issues; and to review the financial performance of all the companies in the Group.

- The Audit Committee has access to external auditors and their reports and meets them to discuss their findings and reports.


14

Audit Committee

Composition of Audit Committee

Terms of Memberships

The term of office of Audit Committee members should be reviewed by the Board once every three (3) years.

Authority

The Audit Committee is authorised by the Board to investigate any activity of the Company and its subsidiaries within its terms ofreference, the resources which it needs to do and full access to information.

The Audit Committee is also authorised by the Board to obtain outside legal or other independent professional advice and to securethe attendance of outsiders with relevant experience and expertise if it considers this necessary.

The Audit Committee shall have direct communication channels with the external auditors and person(s) carrying out the internalaudit function and activity and be able to convene meetings with the external auditors, excluding the attendance of the executivemembers of the Audit Committee, whenever deemed necessary.

Members DesignationDato' Dr. Mohd. Noordin bin Haji Keling - Chairman of the Audit Committee

Independent Non-Executive DirectorDato' Dr. Mohd. Aminuddin bin Mohd. Rouse - Independent Non-Executive DirectorJames Wong Kwong Yew - Group Executive Director

1. The Audit Committee shall be appointed by the Board of Directors from among its members and shall be consist of not lessthan three (3) members of whom a majority must be independent directors.

2. The Audit Committee shall include at least one director who is a member of the Malaysian Institute of Accountants or alternatively, a person who must have at least three (3) years working experience and have passed the examination specifiedin Part 1 of the First Schedule of the Accountants Act, 1967 or is a member of one of associations specified in Part II of thesaid Schedule.

3. No alternate director shall be appointed as a member of the Audit Committee.4. The members of the Audit Committee shall elect a chairman from among their number who shall be an independent

non-executive director.5. If a member of the Audit Committee resigns, dies or for any other reason ceases to be a member with the result that the

number of members is reduced below three (3), the board of directors shall, within three (3) months of that event, appoint suchnumber of new members as may be required to make up the minimum number of three (3) members.


15

Audit Committee (cont’d)

Duties

The duties of the Audit Committee should include the following:-

Attendance at Meetings

The Group Financial Controller, Internal Auditor, and a representative of the external auditors shall normally attend meetings. OtherBoard members and employees may attend meetings upon the invitation of the Audit Committee. However, at least once a year theAudit Committee shall meet with the external auditors without executive board members present.

The Company Secretary shall be the secretary of the Audit Committee. The secretary shall be responsible for keeping the minutesof the meeting of the Audit Committee, circulating them to Audit Committee members and to the other members of the Board ofDirectors.

Quorum

The quorum of the Audit Committee Meetings shall consist of a majority of members of whom are Independent.

Frequency of Meetings

The Audit Committee shall meet not less than four (4) times a year. In addition, the Chairman may call a meeting of the AuditCommittee if requested to do so by any Audit Committee member or by the external auditors if they consider it necessary.

Number of Meetings & Details of Attendance

During the financial year ended 31 December 2004, the Audit Committee held a total of five (5) meetings. The details of attendanceof the Audit Committee members are as follows:

(i)(ii)(iii)(iv)

(v)

(vi)(vii)

(viii)(ix)(x)

(xi)

To consider the appointment of the external auditor, the audit fee and any questions of resignation or dismissal;To review with the external auditor before the audit commences, the nature and scope of the audit and their audit plan;To review the assistance given by the company's officers to the internal and external auditors;To review the quarterly and year-end financial statements of the Company, prior to the approval of the board of directors, focusing particularly on:-- any changes in accounting policies and practices;- significant and unusual events;- significant adjustments arising from the audit;- the going concern assumption;- compliance with accounting standards and other legal requirements; To discuss problems and reservations arising from the interim and final audits, and any matter the auditor may wish to discuss(in the absence of management where necessary);To review the external auditor's management letter and management's response;The internal audit function:-- review the adequacy of the scope, functions and resources of the internal audit function, and that it has the necessary

authority to carry out its work;- review the internal audit programme and results of the internal audit process and where necessary ensure that appropriate

action is taken on the recommendations of the internal audit function;- review any appraisal or assessment of the performance of members of the internal audit function;- approve any appointment or termination of Internal Auditor;- inform itself of resignations of Internal Auditor and Internal Auditor an opportunity to submit his reasons for resigning.To consider any related party transactions or conflict of interests situation that may arise within the Company or Group;To consider the major finding of internal investigations and management's response;To report promptly to the Bursa Malaysia Securities Berhad (“BMSB”) matters reported by the Audit Committee to the Boardwhich have not been satisfactorily resolved resulting in a breach of Listing Requirements of BMSB, and To consider other topics as defined by the board.

Name of Director AttendanceDato' Dr. Mohd. Noordin bin Haji Keling 5/5James Wong Kwong Yew 5/5Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse 5/5


16

Audit Committee (cont’d)

Summary of Activities of the Audit Committee

The following activities were performed by the Audit Committee during the financial year ended 31 December 2004: -

Internal Audit Function

The Group has outsourced its internal audit function to a professional consulting firm, Nexia Consulting. The internal audit functionis therefore independent of the activities of the Group and performs its duties with impartiality, objectivity and due professional care.

The internal audit review of the Group's operations encompasses an independent assessment of the Company's compliance with itsinternal controls and makes recommendation for improvements.

During the financial year ended 31 December 2004, the internal auditors reviewed the adequacy and effectiveness of the accounting and operational internal control system of a core subsidiary of the Group. The audit activities carried out during the yearincluded the following: -

(a) Reviewed the audit plans for the year for the Company and the Group prepared by the external auditors;(b) Reviewed the audit reports for the Company and the Group prepared by the external auditors and consideration of major

findings by the auditors and management's responses thereto;(c) Reviewed the quarterly and annual results of the Company and the Group prior to submission to the Board of Directors for

consideration and approval;(d) Reviewed related party transactions entered into by the Company and the Group;(e) Reviewed the adequacy and relevance of the scope of internal audit works as stipulated in the internal audit plan;

(f) Reviewed and considered the findings in the internal audit reports and management's response thereto; and

(g) Followed up on remedial actions taken by the management on the internal audit raised.

(a) Prepared the audit plan for the approval of the Audit Committee.(b) Performed internal audit works to review the adequacy and efficacy of the internal control systems relating to the

operation of the core subsidiary.(c) Rendered internal audit reports on a quarterly basis to the Audit Committee, Board of Directors and management,

identifying weaknesses and providing recommendations for improvements.(d) Acted on suggestions made by the Audit Committee and senior management on concerns over operations or control.(e) Attended Audit Committee meetings to table and discuss the audit reports, and to follow up on matters raised.


17

Chairman’s Statement

Dear Stakeholders,

My decision to accept the position of Chairman of Tanco Holdings Bhd (Tanco) at such a challenging time in the development of theGroup is a clear indication of the confidence I feel about its future.

Since joining Tanco in September 2004, I have devoted much time and effort to seeking an equitable resolution of the financial difficulties that have plagued the Group for several years. I am happy to say that I believe that there is now light at the end of thetunnel.

In the early part of the year, the significant decline in Tanco's businesses seriously affected its cashflow. As a result, on 28 May 2004,the Group announced that it was not in a position to meet its interest obligations to its lenders due on 31 May. This resulted in adefault in the restructured loans that had been worked out with our lenders with assistance from the Corporate Debt RestructuringCommittee (CDRC). The Group's inability to meet its repayment obligations was due mainly to

The Company therefore immediately took vigorous steps to address the issue of the default. Negotiations were begun with lenders;an independent financial adviser, Z J Advisory Sdn Bhd, was appointed to assist in working out a Debt Restructuring Scheme underSection 176 of the Companies Act (the Scheme,) and to advise lenders on the Group's proposed restructuring of its entire loans anddebts; and Messrs Cheang & Ariff were engaged as the Group's legal advisor to make application to the Court pursuant to theScheme.

As a result of these measures, on 16 August 2004, the Group proposed a Scheme which principally comprises

The Scheme is subject to the creditors' consent and to any modifications necessary to meet regulatory and legal requirements.

To facilitate an arrangement to be reached between the Group and its creditors on the resolution of its indebtedness, Tanco appliedto the High Court of Malaya for a restraining order (RO), which was granted on 13 August 2004. In conjunction with the grant of theRO, the Court also approved the appointment of Mr Loh Chen Peng to act as a director of the Company to represent the interest ofthe creditors, pursuant to Section 176(10A)(d) of the Companies Act 1965.

-

-

Adverse economic conditions following the completion of the CDRC Scheme that affected the Group's business, in particularthe vacation ownership business. Faults in the CDRC Restructuring Agreement that hampered the efforts of the Group to realize its assets so as to create sufficient liquidity to meet its obligations.

--

-

A proposed capital reduction A proposed settlement involving

A managed and orderly programme for the disposal of certain Group assets to finance debt repayments

-

-

-

-

For secured lenders, the terming-out of part of the loans, repayments being met from development proceeds, conversionof part of the loan to Redeemable Secured Loan Stock (RSLS) and Redeemable Convertible Secured Loan Stock (RCSLS),and the balance not covered by any of these instruments being waivedFor cross-secured lenders, the conversion of part of the loan to RSLS and RCSLS, and the balance not covered by theseinstruments being waivedFor unsecured lenders, a waiver of a significant portion of their debt and with the balance being settled by way of sharesissued by the CompanyFor other creditors, any surplus arising from the proposed settlement to the lenders being used to repay the remaining debts


Chairman’s Statement (cont’d)

Since the commencement of the RO, the Group has been proactively investigating the possibility of acquiring new income-generating assets or concluding new refinancing arrangements to support its restructuring proposals. As a result of this initiative, on 13 December 2004, Tanco was able to present Scheme creditors with an alternative proposal of an outright cash payment of RM177.5 million in lieu of the various financial instruments contemplated under the Scheme, as full and final settlementof its debt obligation. The alternative proposal would involve

Both proposals are currently being considered by the Scheme creditors and two of its creditors have agreed in principle to its proposed cash settlement. With the goodwill and cooperation of all parties, these proposals offer a viable way to resolve the debtissue. I am therefore hopeful of a positive response from our creditors.

Looking forward, I believe that 2005 offers us a golden opportunity to move forward. As soon as we have achieved a final resolutionof our financial position, we will once again be able to focus our energies on the prosperous development of our core businesses ofproperty development and vacation ownership.

Dato' Abdul Rahim bin SaibuChairman

18

(i)(ii)(iii)

the secured lenders with its entire debt of RM279.0 million as at 31 December 2003 being settled for RM165.7 million;the cross-secured lenders with its entire debt of RM51.8 million as at 31 December 2003 being settled for RM10.6 million;the unsecured lenders with its entire debt of RM12.5 million as at 31 December 2003 being settled for RM1.2 million.


19

Group Managing Director’s Review

Dear Stakeholders,

It is my pleasant duty to begin by welcoming Dato' Abdul Rahim bin Saibu as Chairman of Tanco Holdings Bhd (Tanco). He bringswith him a wealth of corporate expertise and knowledge and his appointment will contribute significantly to the growth and development of the Group.

Since joining the Board of Directors, Dato' Abdul Rahim has already demonstrated an exceptional level of skill and dedication by hissingle-minded pursuit of a solution to the Group's financial difficulties. As outlined in Dato's letter to stakeholders, two viable optionsare currently being reviewed by the Group's creditors.

Given that Dato' Abdul Rahim only joined Tanco on 1 September 2004, it once again falls to me, on behalf of the Board of Directors,to present the Annual Report and Financial Statements of the Company and the Group for the year ended 31 December 2004.

BACKGROUND

The Malaysian economy strengthened in 2004, with growth in real Gross Domestic Product accelerating to 7.1%. The constructionsector, however, shrank by 1.9% as against a 1.9% expansion in 2003. Nevertheless, the housing price index achieved a nationwidegrowth rate of 5.6% with by far the highest rates occurring in Kuala Lumpur.

In Kuala Lumpur and the Klang Valley, the demand for affordable residential properties remained firm. The residential sector wasdominated by high-profile, high-end, location-specific projects. Meanwhile, in other parts of the country the property market was generally stable, if unexciting.

Overall, though economic conditions generally showed signs of improvement, the underlying sentiment was of guarded optimismrather than confidence. In the property sector it remained for the most part a buyers' market: a situation considerably exacerbatedby intensified competition among developers.

FINANCIAL PERFORMANCE

Throughout the year, the challenges posed by aggressive competition and the general sense of uncertainty were compounded bythe Group's troubled financial situation, which unfortunately dented public confidence in the Group. As a result, for the financial yearended 31 December 2004, the Group incurred a loss before tax and minority interest of RM51 million, as compared to a loss of RM66million in 2003.

PROPERTY DEVELOPMENT

Bandar Country Homes

In the face of stiff and growing competition, sales at Bandar Country Homes held up reasonably well. Most of the sales during theyear were of low and medium cost apartments, for which demand remained buoyant. At Bayu Apartments, 128 units of four-storey,walk-up, low-cost apartments and 32 ground floor shop lots were sold with a total sales value of RM7.8 million.

Meanwhile, work is ongoing on three blocks of Raya Apartments, comprising 224 units of four-storey walk-up apartments and 12units of ground floor shop lots. At a sales launch held on 9 January 2005, just after the year end, 85% of the units were sold with atotal sales value of approximately RM20.7 million. The target completion date for the project is the first quarter of 2006. This type ofhousing will continue to be our main focus in the year ahead.

Moving forward, we also plan to launch higher end housing units. Phases 45, 46 and 47 of Bandar Country Homes which, comprises of 211 units of double-storey terraced houses is projected to be launched this year.


Group Managing Director’s Review (cont’d)

Palm Springs

The lacklustre performance of the property market in Negeri Sembilan during the year prevented us from making significant salesduring the year. We believe, however, that the outlook for 2005 will be brighter.

Accordingly, we plan to launch 2 phases this year comprising of 72 double-storey strata bungalows of unique Japanese and Balinesedesign and a phase of five blocks of seventeen-storey Resort Suites comprising a total of 800 studio, one-bedroom and two-bedroom units this year.

VACATION OWNERSHIPS

Tanco Resorts Berhad

The vacation ownership segment continued to be adversely affected by fierce competition with the entrance of more players into analready crowded environment. As a result, the cost of doing the business has risen such that it is scarcely viable to continue.Consequently, in March 2004 our wholly-owned subsidiary, Tanco Resorts Bhd (TRB) suspended its selling efforts and focusedinstead on consolidating its position and enhancing the services it provides to existing customers. At the same time, the companyundertook a streamlining exercise designed to deliver greater cost-efficiencies. TRB plans to review the position that it has taken assoon as the situation improves.

DISPOSALS

During the year, the Group continued to pursue its policy of disposing of non-essential assets in a move to pare down borrowingsand improve cashflow. Accordingly in October 2004, TRB entered into a Sale & Purchase Agreement to dispose of its entire equityinterest in Tanco Resorts (NZ) Limited (TRNZ) together with TRNZ's entire debts, for a total consideration of RM2.1 million. The saleresulted in a net gain of RM561,063 for the Group.

In November 2004, the Group also disposed of a factory unit in Taman Perindustrian Plentong, Johor, for a total consideration ofRM2.3 million. The Group will continue to look into further disposals of non-essential assets to improve liquidity and pare down itsborrowings.

OUTLOOK

For Malaysia's property market, prospects appear to be good, with demand expected to hold up at least through the first half of 2005.Supported by low interest rates, home ownership is becoming increasingly widespread, and most types of housing are witnessingprice increases. In the year ahead, the property market in Kuala Lumpur and the Klang Valley should remain vibrant, though weexpect a significantly less exciting performance in other parts of the country.

However, there are a number of areas of concern, in particular the persistent issue of over-supply, the threat of higher inflation, andthe possibility of a rise in interest rates. In addition, there may be serious repercussions for the global economy if China's economic growth slows down as its government acts to prevent its economy from overheating. Growth could also be hit by calamities such as the recent tsunami, the earlier SARS crisis, and the terrorist attacks in the USA and Indonesia. Together withimbalances in economies around the world, such calamities could easily undermine property sector growth.

Thus, the economic situation, while showing signs of improvement, remains fluid and abounding in uncertainties. The Group willtherefore continue to take appropriate steps to deal with the challenges faced by its businesses. The top priority will be to addressTanco's debt position with its creditors and to rebuild public confidence in the Group.

20


Group Managing Director’s Review (cont’d)

ACKNOWLEDGEMENTS

During the year, our former Chairman, Dato' Ali bin Hassan and one of our directors, Dato' Loh Siew Cheang, resigned from ourBoard, and I would like to take this opportunity to thank them both for the sterling contributions they made to the Group throughouttheir term of office.

At the end of an exceptionally trying year, I wish to express my deepest gratitude to our Board of Directors, management team andstaff who have remained both positive and totally committed to securing a rewarding future for the Group and all its stakeholders.

I would also like to offer heartfelt thanks to our customers, business associates and bankers for their continued support and understanding. We are equally grateful to all government agencies and regulatory authorities for their guidance and assistance.

Finally, on behalf of the Board of Directors, I wish to convey our profound appreciation of the loyalty manifested by our shareholders as we endeavour to safeguard and promote their interests by creating new and firm foundations on which to build thefuture prosperity of the Group.

Dato' Tan Jing NamGroup Managing Director

21


Directors’ Reportfor the year ended 31st December 2004

The directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 31st December 2004.

PRINCIPAL ACTIVITIES

The principal activities of the Company consist of investment holding and the provision of management services. The principal activities of its subsidiary and associated companies are disclosed in Notes 6 and 7 to the financial statements.

There have been no significant changes in the nature of these principal activities during the financial year.

DIVIDEND

No dividend was paid or declared by the Company since the end of the previous financial year.

The directors do not recommend the payment of any dividend in respect of the financial year ended 31st December 2004.

RESERVES AND PROVISIONS

All material transfers to and from reserves and provisions during the financial year have been disclosed in the financial statements.

BAD AND DOUBTFUL DEBTS

Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonablesteps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts,and satisfied themselves that all known bad debts had been written off and adequate allowance had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances that would render the amount written off for bad debts,or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to anysubstantial extent.

CURRENT ASSETS

Other than any adjustments that may be required in conjunction with the debt restructuring scheme as disclosed in Note 22 (c) and (d) to the financial statement:

VALUATION METHODS

At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, other than anyadjustments that may be necessary depending on the outcome of the debt restructuring scheme referred to in Note 22 (c) and (d)to the financial statements.

22

RESULTS

Group Company

RM’000 RM’000

Loss for the year after taxation (44,828) (104,459)Minority interest (1) - Net loss for the year (44,829) (104,459)

(i) the directorts took reasonable steps to ensure that any current assets, other than debts, which were unlikely to realise in theordinary course of business, their values as shown in the accounting records of the Group and of the Company had been written down to an amount that they might be expected to realise before the income statements and balance sheets of theGroup and of the Company were made out; and

(ii) the directors are not aware of any circumstances that would render the values attributed to the current assets in the financialstatements of the Group and of the Company misleading at the date of the report.


Directors’ Report for the year ended 31st December 2004 (cont’d)

CONTINGENT AND OTHER LIABILITIES

At the date of this report, there does not exist:-

Subject to the successful implementation of the debt restructuring scheme and satisfactory resolution of the contingent liabilities asdisclosed in Notes 22 (c) and (d) and Note 31 (b), (c) and (d) respectively, no contingent liability or other liability of the Group and ofthe Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of thefinancial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company tomeet their obligations as and when they fall due.

CHANGE OF CIRCUMSTANCES

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

ITEMS OF AN UNUSUAL NATURE

The results of the operations of the Group and of the Company for the financial year were not, in the opinion of the directors,substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or eventof a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Groupand of the Company for the financial year in which this report is made.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the Company has not issued any shares or debentures.

DIRECTORS

The directors in office since the date of the last report are:-

Dato' Abdul Rahim Bin Saibu - appointed on 01.09.2004Loh Chen Peng - appointed on 26.08.2004Aznan Bin Abdul AzizDato' Tan Jing NamJames Wong Kwong YewDato' Dr. Mohd. Aminuddin Bin Mohd. RouseDato' Dr. Mohd. Noordin Bin Haji KelingDato' Tan Lee Sing

In accordance with Article 101 of the Company's Articles of Association, Dato' Tan Lee Sing and James Wong Kwong Yew retire andbeing eligible, offer themselves for re-election.

In accordance with Article 106 of the Company's Articles of Association, Dato' Abdul Rahim Bin Saibu retires and being eligible, offershimself for re-election.

In accordance with Article 106 of the Company’s Article of Association, Loh Chen Peng retires and does not seek to be re-elected.

In accordance with Section 129 of the Companies Act, 1965, Dato' Dr. Mohd. Noordin Bin Haji Keling retires and being eligible, offershimself for re-election.

23

(i) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which securesthe liability of any other person, or

(ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year.


Directors’ Reportfor the year ended 31st December 2004 (cont’d)

DIRECTORS' INTERESTS

According to the Register of Directors' Shareholdings, the interests of those directors who held office at the end of the financial yearin shares and 2002/2008 Warrants in the Company and its related corporations during the financial year are as follows:-

Other than as stated above, none of the other directors in office at the end of the financial year had any interest in shares in theCompany and its related corporations during the financial year.

By virtue of their interests in the Company, all the directors are also deemed interested in the shares of all the subsidiary companiesto the extent the Company has an interest.

24

Number of ordinary shares of RM1/- eachAt At

The Company:- 1.1.2004 Bought Sold 31.12.2004Tanco Holdings BerhadAznan Bin Abdul Aziz- direct 42,960,058 - - 42,960,058 Dato’ Tan Jing Nam- direct 53,120,200 - - 53,120,200James Wong Kwong Yew- direct 5,000 - - 5,000- indirect 5,751,312 - - 5,751,312Dato’ Dr. Mohd. Aminuddin Bin Mohd. Rouse- direct 70,000 - - 70,000 Dato’ Dr. Mohd. Noordin Bin Haji Keling- direct 62,510 - - 62,510Dato’ Tan Lee Sing- direct 5,000 - - 5,000

Number of 2002/2008 Warrants Exercisableat RM1/- per ordinary share

At Exercised/ At1.1.2004 Bought Sold 31.12.2004

Aznan Bin Abdul Aziz- direct 23,157,029 - - 23,157,029 Dato’ Tan Jing Nam- direct 26,560,100 - - 26,560,100James Wong Kwong Yew- indirect 2,875,656 - - 2,875,656Dato’ Dr. Mohd. Noordin Bin Haji Keling- direct 31,255 - - 31,255Dato’ Tan Lee Sing- direct 2,500 - - 2,500

Number of ordinary shares of RM1/- each

At At

1.1.2004 Bought Sold 31.12.2004Tanco Enterprise Sdn. Bhd.Aznan Bin Abdul Aziz- direct 15,002 - - 15,002 Dato’ Tan Jing Nam- direct 15,002 - - 15,002 Medan Melati Sdn. Bhd.Dato’ Dr. Mohd. Aminuddin Bin Mohd. Rouse- direct 200 - - 200


Directors’ Report for the year ended 31st December 2004 (cont’d)

DIRECTORS' BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefits(other than as disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with thedirector or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest.

Neither during nor at the end of the financial year was the Company or any of its related corporations a party to any arrangementwhose object was to enable the directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Companyor any other body corporate.

AUDITORS

The auditors, Messrs Monteiro & Heng, have expressed their willingness to continue in office.

On behalf of the Board,

…………………………………………........DATO' ABDUL RAHIM BIN SAIBUDirector

…………………………………………........DATO' TAN JING NAMDirector

Kuala Lumpur

Date: 13 May 2005

25


Balance Sheetsas at 31st December 2004

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

26

Group Company

2004 2003 2004 2003

Note RM'000 RM'000 RM'000 RM'000

PROPERTY, PLANT ANDEQUIPMENT 4 151,225 157,360 37 88

LAND AND DEVELOPMENTEXPENDITURE

- NON CURRENT PORTION 5 250,344 250,206 - - INVESTMENT IN SUBSIDIARY

COMPANIES 6 - - 111,052 111,052INVESTMENT IN ASSOCIATED

COMPANIES 7 - - - - OTHER INVESTMENTS 8 108,139 109,567 2 2AMOUNT OWING BY SUBSIDIARY

COMPANIES 9 - - 204,961 299,662TRADE RECEIVABLES 10 927 637 - -

CURRENT ASSETSLand and development expenditure

- current portion 5 16,093 15,109 - - Inventories 11 37,790 44,828 - - Trade receivables 10 28,601 47,171 - - Other receivables 12 18,864 17,142 553 477

Amount owing by associated companies 13 1 1 - - Bank balances and deposits 14 3,904 2,582 14 21

105,253 126,833 567 498Less:CURRENT LIABILITIESProvisions 15 18,672 17,509 - - Trade payables 16 9,910 12,978 - - Other payables 17 60,897 44,911 10,148 1,550 Amount owing to directors 18 288 190 273 176Short term borrowings 19 83,631 13,003 26,685 - Provision for taxation 25,848 25,196 368 396

199,246 113,787 37,474 2,122 NET CURRENT (LIABILITIES)/ASSETS (93,993) 13,046 (36,907) (1,624)

416,642 530,816 279,145 409,180

Financed by:SHARE CAPITAL 21 334,887 334,887 334,887 334,887RESERVES (195,577) (150,748) (167,507) (63,048)SHAREHOLDERS' FUNDS 139,310 184,139 167,380 271,839

MINORITY INTEREST 49 48 - -LONG TERM LIABILITIES 22 272,984 335,927 111,765 137,341 DEFERRED TAXATION 25 4,299 10,702 - -

416,642 530,816 279,145 409,180


Income Statementsfor the year ended at 31st December 2004


27

Group Company2004 2003 2004 2003

Note RM'000 RM'000 RM'000 RM'000

REVENUE 26 21,648 47,567 6,778 6,644

Cost of sales (8,123) (15,844) - -GROSS PROFIT 13,525 31,723 6,778 6,644

Other operating income 6,408 5,805 7 -Administrative expenses (45,077) (80,360) (2,862) (1,899)Other operating expenses-Allowance for amount owing by

subsidiary companies - - (98,989) -

-Allowance for impairment losses of:- property, plant and equipment (291) - - -- investment in subsidiary companies - - - (4,013)Loss on disposal of other investment (520) - - -Allowance for diminution in value

of other investments - (116) - -Gain/(loss) on disposal of subsidiary

companies 561 - - (51,842)

OPERATING LOSS 27 (25,394) (42,948) (95,066) (51,110)

Finance costs (net) 28 (25,814) (23,149) (9,393) (8,528)LOSS BEFORE TAXATION (51,208) (66,097) (104,459) (59,638)

Taxation 29 6,380 3,655 - (19)LOSS FOR THE YEAR AFTER TAXATION (44,828) (62,442) (104,459) (59,657)

Minority interest (1) (1) - -NET LOSS FOR THE YEAR (44,829) (62,443) (104,459) (59,657)

Loss per share (sen) 30Basic (13.39) (18.64)Diluted (13.39) (18.64)


Statements of Changes in Equityfor the year ended 31st December 2004

28

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Acc

umul

ated

Loss

R

M'0

00

Tota

lR

M'0

00

Sha

reC

apit

alR

M'0

00

Acc

umul

ated

Loss

R

M'0

00

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lR

M'0

00

Bal

ance

at 1

st J

anua

ry 2

003

334,

887

(85,

075)

249,

812

334,

887

3,39

133

1,49

6

Prio

r yea

r adj

ustm

ent (

Not

e 36

)-

(2,9

61)

(2,9

61)

--

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alan

ce a

t 1st

Jan

uary

200

3as

rest

ated

334,

887

(88,

036)

246,

851

334,

887

(3,3

91)

331,

496

Net

loss

for t

he y

ear

As

prev

ious

ly re

porte

d-

(62,

442)

(62,

442)

-(5

9,65

7)(5

9,65

7)P

rior y

ear a

djus

tmen

t ( N

ote

36 )

-(2

70)

(270

)-

--

As

rest

ated

-(6

2,71

2)(6

2,71

2)-

(59,

657)

(59,

657)

Bal

ance

at 1

st J

anua

ry 2

004

as re

stat

ed33

4,88

7(1

50,7

48)

184,

139

334,

887

(63,

048)

271,

839

Net

loss

for t

he y

ear

-(4

4,82

9)(4

4,82

9)-

(104

,459

)(1

04,4

59)

Bal

ance

at 3

1st D

ecem

ber 2

004

334,

887

(195

,577

)13

9,31

033

4,88

7(1

67,5

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167,

380

The

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form

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.


Cash Flow Statementsfor the year ended 31st December 2004

29

Group Company2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

CASH FLOW FROM OPERATING ACTIVITIES:

Loss before taxation (51,208) (66,097) (104,459) (59,638)

Adjustments for:Allowance for doubtful debts 4,318 23,672 - 643Allowance for amount owing by subsidiary companies - - 98,989 -

Allowance for impairment losses of:- property, plant and equipment 291 - - -

- investment in subsidiary companies - - - 4,013 Allowance for diminution in value of:

- inventories 5,529 42 - -

- other investments - 116 - -

Allowance for forseeable losses - 13,774 - -

Amortisation 71 71 - -

Attributable profit to development work performed todate (1,619) (1,157) - -

Bad debts written off 3,926 10,376 - -

Depreciation 3,471 3,971 51 59

Dividend income - - (2,488) (2,370)

Gain on disposal of property, plant and equipment (41) (1) - -

Gain on disposal of inventories - (3) - -

(Gain)/Loss on disposal of subsidiary companies (561) - - 51,842

Interest income (613) (2,233) (4,231) (4,302)

Interest expenses 26,428 25,382 9,469 8,760

Loss on disposal of other investment 520 - - -

Show apartment written off - 490 - -

Operating (Loss)/Profit Before

Working Capital Changes (9,488) 8,403 (2,669) (993)

Increase in land and development expenditure (4,062) (23,714) - -

Decrease/(increase) in receivables 8,309 (14,248) (76) (201)

Decrease in inventories 1,509 885 - -Increase in provisions 1,163 - - -

(Decrease)/increase in payables (8,521) (25,547) 1,093 70 Increase in progress billings 4,559 39,515 - -

Net Cash Used In Operations (6,531) (14,706) (1,652) (1,124)


Cash Flow Statementsfor the year ended 31st December 2004 (cont’d)

30

Group Company2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Interest received 613 2,233 4,231 4,302Tax paid - (389) (28) - Tax refund 629 1,501 - 1,502

Net Cash (Used In)/From Operating Activities (5,289) (11,361) 2,551 4,680

CASH FLOW FROM INVESTING ACTIVITIES:Increase in amount owing by associated company - (1) - -Disposal of other investments 837 - - -

Dividend received - - 2,488 2,370Net cash inflow from acquisition of subsidiary

company (Note A) - - - -Increase in amount owing by subsidiary companies - - (4,288) (3,892)Increase in amount owing to subsidiary companies - - 195 133 Purchase of property, plant and equipment (Note B) (1,534) (3,554) - - Purchase of other investments - (95) - -

Proceeds from disposal of -property, plant and equipment 2,412 6,623 - - -inventories - 130 - -

Net Cash From/(Used In) Investing Activities 1,715 3,103 (1,605) (1,389)

CASH FLOW FROM FINANCING ACTIVITIES:Increase in short term borrowings 1,170 - - - Fixed deposits release as security value 134 626 - - Increase/(decrease) in directors' accounts 98 (183) 97 45 Interest paid (2,887) (1,429) (1,964) - Drawdown/(repayment) of term loans 5,314 (4,532) 914 (3,327)Payments to hire purchase and lease payables (599) (713) - -

Net Cash From / (Used In) Financing Activities 3,230 (6,231) (953) (3,282)

NET (DECREASE)/INCREASE IN CASHAND CASH EQUIVALENTS (344) (14,489) (7) 9

CASH AND CASH EQUIVALENTS ATBEGINNING OF THE YEAR 2,408 16,897 21 12

CASH AND CASH EQUIVALENTS ATEND OF THE YEAR (NOTE C) 2,064 2,408 14 21


Cash Flow Statementsfor the year ended 31st December 2004 (cont’d)

SUMMARY OF EFFECTS ON ACQUISITION OF SUBSIDIARY COMPANIES

Tanco Resorts Berhad disposed of its 100% equity interest in Tanco Resorts (NZ) Ltd. on 2nd October 2004 for a total consideration of NZ $1/-.

The disposal has the following effects on the Group's financial result for the year:

The disposal has the following effects on the financial position of the Group as at the end of the year:

PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

During the financial year, the Group acquired property, plant and equipment amounting to RM1,533,950/- (2003 : RM4,331,100/-) of which RM Nil (2003 : RM95,830/-) were acquired by means of hire purchases and of which RM Nil (2003 :RM681,322/-) pertained to interest expenses capitalised.


31

A.

B.

C.

2004

RM'000Revenue -Cost of sales -

- Administrative expenses (85)Other operating expenses (83)Loss from operations (168)Finance costs, net (260)Loss before taxation (428)Taxation - Net loss for the year (428)

2004RM'000

Property, plant and equipment 1,536 Trade and other receivables 5Cash and bank balances -Trade and other payables (1,785)Amount due to intercompany (317)Bank borrowings -Net assets disposed (561)Total disposal proceeds settled by cash - Gain on disposal to the Group (561)

Cash inflow arising on disposal:

Cash consideration, representing cash inflow of Tanco Resorts Berhad -

Cash and cash equivalents of subsidiaries disposed -Net cash inflow of the Group -

Group Company

2004 2003 2004 2003

CASH AND CASH EQUIVALENTS: RM'000 RM'000 RM'000 RM'000

The cash and cash equivalents comprise the followng:-

Bank balances and deposits 3,904 2,582 14 21 Bank overdraft (1,800) - - -

2,104 2,582 14 21

Less: Monies placed with trustee (1) (1) - -Deposits placed with licensed banks (39) (173) - -

2,064 2,408 14 21


Notes To The Financial Statements

32

GENERAL INFORMATION

The principal activities of the Company consist of investment holding and the provision of management services. The principal activities of its subsidiary and associated companies are disclosed in Notes 6 and 7 to the financial statements. Therehave been no significant changes in the nature of these principal activities during the financial year.

The Company is a limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Board of the BursaMalaysia Securities Berhad.

The registered office and principal place of business of the Company are both located at Jalan Desa, Bandar Country Homes,48000 Rawang, Selangor Darul Ehsan.

The number of employees of the Group and of the Company at the end of the financial year are 350 (2003 : 454) and 2 (2003 : 2) respectively.

The financial statements are expressed in Ringgit Malaysia.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 13th May 2005.

FUNDAMENTAL ACCOUNTING CONCEPT

The financial statements of the Group and of the Company are prepared on the assumption that the Group and the Companywill continue as going concerns. The application of the going concern basis is based on the assumption that the Group and theCompany will be able to realise their assets and liquidate their liabilities in the normal course of business.

During the year, the Group and the Company incurred further net losses of RM44,829,285/- and RM104,458,958/- respectively and the Group reflected a deficit in cashflow used in operating activities of RM5,289,668/-. At that date, the currentliabilities of the Group and the Company exceeded its current assets by RM93,993,243/- and RM36,907,467/- respectively. Theability of the Group and of the Company to continue as going concerns is dependent on:

In view of the debt restruturing schemes as mentioned in Note 22 (c) and (d) to the financial statements, the financial statementsof the Group and of the Company are prepared on the assumption that the Group and the Company will continue as going concerns. Should the debt restructuring schemes not be successfully concluded, the entire borrowings may become repayableimmediately and the application of the going concern concept may be inappropriate and adjustments may be required to, interalia, write down assets to their realisable values, reclassify all long term assets and liabilities as current and to provide for anyfuther costs which may arise.

SIGNIFICANT ACCOUNTING POLICIES

1.

2.

3.

(i)

(ii)(iii)

the successful completion of the debt restructuring scheme as mentioned in Note 22 (c) and (d) to the financial statementson a timely basis;the Group and the Company achieving sustainable and viable operations; andthe Group and the Company generating adequate cashflows for its operating activities.

(a) Basis of Accounting

The financial statements of the Group and of the Company have been prepared under the historical cost convention.Certain assets of the subsidiary companies are stated in the Group's financial statements at values reflecting approximately the effective acquisition costs by the Group of these assets (group cost).

The financial statements comply with the applicable approved accounting standards in Malaysia and the provisions of theCompanies Act 1965. The new accounting standards adopted in the financial statements are as follows:-

- MASB 31 (Now known as FRS 120) "Accounting for Government Grants and Disclosure of Government Assistance".- MASB 32 (Now known as FRS 201) "Property Development Activities".

With the exception of MASB 32 (Now known as FRS 201) (Note 36), there are no changes in accounting policy that affectthe Group. Comparatives have been adjusted to take into account the above change in accounting policy.


Notes To The Financial Statements (cont’d)

33

SIGNIFICANT ACCOUNTING POLICIES (cont’d)3.(b)

(c)

Basis of Consolidation

Investments

(i)

(ii)

Subsidiary Companies

The consolidated financial statements include the financial statements of the Company and its subsidiary companies,made up to the end of the financial year. Subsidiary companies are companies in which the Group has a long term equity interest and where it has power to exercise control over the financial and operating policies so as to obtainbenefits therefrom.

The financial statements of the subsidiary companies are consolidated using the acquisition method of accounting.Under the acquisition method of accounting, the results of subsidiary companies acquired or disposed of during thefinancial year are included in the consolidated income statement from the effective date of their acquisition or up to thedate of their disposal. The proportion of the profit or loss applicable to minority shareholders is deducted in arriving atthe profit attributable to the shareholders of the Company.

The assets and liabilities of subsidiary companies are included in the Group's balance sheet whilst the interest of minority shareholders in the net assets employed are stated separately. All significant inter-company transactions andbalances are eliminated on consolidation.

The excess of the purchase consideration over the net tangible assets of property development subsidiary companies acquired has been ascribed to development properties and included in group cost as fair valueand is amortised over the period of development by reference to the development profit earned during the year compared to the total estimated post-acquisition development profit.

The excess of the purchase consideration over the net tangible assets of resorts operation subsidiary companiesacquired has been ascribed to resort properties and included in group cost as fair value.

The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Group'sshare of its net assets together with any unamortised balance of goodwill or reserve on consolidation which was notpreviously recognised in the consolidated income statement.

Minority interest is measured as the minorities' share of post acquisition fair values of the identifiable assets and liabilities of the acquiree.

Associated Companies

Associated companies are companies, other than subsidiary companies, in which the Company has a long term investment of between 20% to 50% equity interest and is in a position to exercise a significant influence over its financial and operating policies.

The consolidated income statement includes the Group's share of results of associated companies based on the latestmanagement financial statements of the companies concerned except for Sunshine Genius Sdn. Bhd. which is undercreditors winding-up. In the consolidated balance sheet, the Group's interest in associated companies is stated at costplus the Group's share of post-acquisition retained profits or accumulated losses and other reserves as well as goodwill on acquisition.

Unrealised gains on transactions between the Group and the associated companies are eliminated to the extent of theGroup's interest in the associated companies. Unrealised losses are estimated unless cost cannot be recovered.

(i) Investments in subsidiaries, associated companies, quoted and unquoted shares are stated at cost less impairmentlosses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 3 (o).Where an indication of impairment exists, the carrying amount of the investment is reviewed, and if found to be in excessof recoverable amount, is written down immediately to its recoverable amount.

On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged or credited to the income statement.



34

SIGNIFICANT ACCOUNTING POLICIES (cont’d)3.(c)

(d)

(e)

(f)

Investments (cont’d)

Property, Plant and Equipment and Depreciation

Property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment losses, if any.The policy for the recognition and measurement of impairment losses is in accordance with Note 3(o).

Depreciation is not provided on the freehold land. Leasehold land with an unexpired lease in excess of fifty years is alsonot depreciated as it is the Group's practice to continually upgrade the golf course which is situated on the leasehold landwith regular maintenance and repairs, and the Group has also adopted an impairment review at each year end to ascertainthe carrying value of the said land. No depreciation is provided for assets under construction until the relevant assets areready for their intended use. All other property, plant and equipment are depreciated over their estimated useful lives on astraight line basis at the following annual rates:-

Land and Development Expenditure

Land and development expenditure account consists of land under development and other related costs including financialand administrative expenses during the period of development and portion of profit or loss attributable to development workperformed todate, less progress billings. Provision for foreseeable losses is made when the estimated future revenue realisable is lower than the carrying amount of the project. Provision for liquidated damages is made if there is a delay inthe handing over of vacant possession of the developed properties based on the estimated liability to be incurred.

That portion of land and development expenditure in respect of which significant development work has been undertakenand which is expected to be completed within the normal operating cycle of two to three years is considered as a currentasset. The portion classified as current asset which is stated at the lower of carrying amount and net realisable value,includes the related profit attributable to development work performed todate, less the applicable progress billings butexcludes that portion of development property and expenditure which the Group does not currently intend to sell.

Inventories

Inventories have been valued at the lower of cost and net realisable value.

Inventories of unsold completed units and vacant lands include direct costs of construction and proportionate land cost andother development costs. Inventories of food, beverages and golf accessories are determined on a first-in first-out basis.

(ii) Investment in resort properties and rights in resort properties are stated at cost less impairment losses, if any. Thepolicy for the recognition and measurement of impairment losses is in accordance with Note 3(o). Depreciation is notprovided on resort properties as it is the Group's practice to maintain all its resort properties in the high standard andcondition in order to maintain their image and market share. Because of this, the resort properties maintain residualvalues at least equal to their respective book values such that depreciation would be insignificant. The related maintenance expenditure is dealt with in the income statement.

In order to establish whether resort properties have maintained residual value at least equal to their respective bookvalues, all resort properties are appraised by independent professional values at least once in every five years on anopen market value basis.

Investment in vacation ownership intervals and golf club membership are stated at cost less accumulated amortisationover the remaining period of investments on a straight line basis of 25 years and 95 years respectively and, impairmentlosses, if any. The carrying values of all other investments are also reviewed for impairment losses, if any. The policyfor the recognition and measurement of impairment losses is in accordance with Note 3 (o).

On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged or credited to the income statement.

Golf course and club village over 97 yearsFurniture and fittings 5% - 20%Boats and motor vehicles 10% - 20%Office Equipment 10% - 20%Maintenance Equipment 10% - 20%Buildings 2% - 4%



35

SIGNIFICANT ACCOUNTING POLICIES (cont’d)3.(g)

(h)

(i)

(j)

(k)

(l)

Receivables

Receivables are carried at anticipated realisable value. An allowance is made for doubtful debts based on specific reviewof outstanding balances at balance sheet date. General allowances are made to cover possible losses which are not specifically identified. Bad debts are written off during the financial year in which they are identified.

Leases/Hire Purchase

Assets financed by finance lease and hire purchase arrangements which transfer substantially all the risks and rewards ofownership to the Group are capitalised as property, plant and equipment and inventories of vehicles and the correspondingobligations are treated as liabilities. The assets so capitalised are depreciated in accordance with the accounting policy onproperty, plant and equipment. Finance charges are charged to the income statement in equal annual instalments over theperiod of the respective agreements.

Lease payments for assets under operating lease where substantially all the risk and benefits remain with the lessor, arerecognised as an expense in the income statement on a straight-line basis over the term of the relevant lease.

Payables

Payables are stated at cost which is the fair value of the consideration to be paid in the future, whether or not billed to theGroup.

Borrowing Costs

Borrowing costs incurred on property development projects are capitalised and included as part of developmentexpenditure. The capitalisation of borrowing costs commences when expenditure for the property development projectsand borrowings costs are being incurred and the activities that are necessary to prepare the property development projectsfor its intended sale are in progress. However, capitalisation of borrowings costs is suspended during the extended periods in which active development is interrupted.

Capitalisation of borrowings costs should cease when substantially all the activities necessary to prepare the property development projects for its intended sale are completed.

Borrowing costs incurred in financing the construction-in-progress are capitalised as part of the cost of the assets.Capitalisation will cease when the relevant assets are ready for their intended use.

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

Provisions for Liabilities

Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliableestimate of the 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 presentvalue of the expenditure expected to be required to settle the obligation.

Foreign Currencies(i) Foreign Currency Transactions

Transactions in foreign currencies are converted into Ringgit Malaysia at the exchange rates prevailing at thetransaction dates. Where settlement has not taken place at the end of the financial year, conversion into RinggitMalaysia is at the approximate exchange rates prevailing at that date. Foreign exchange gains or losses are taken upin the income statement.

For consolidation purposes, monetary and non-monetary items of foreign subsidiary companies are translated atexchange rates ruling at the balance sheet date and at historical rates respectively whereas income statement itemsare translated at average rates for the financial year. All exchange differences are dealt with through the income statement.

All exchange rate differences are taken to the income statement with the exception of differences on foreign currencyborrowings, that provide a hedge against a net investment in a foreign entity. These exchange differences are takendirectly to equity until the disposal of the net investment, at which time they are recognised in the income statement.



36

SIGNIFICANT ACCOUNTING POLICIES (cont’d)3.(l)

(m)

(n)

(o)

(p)

Foreign Currencies (cont’d)

Financial Instruments

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

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

The particular recognition methods adopted for financial instruments recognised at balance sheet date are disclosed in theindividual policy statement of each item, where applicable.

Impairment of Assets

At each balance sheet date, the carrying values of assets, other than inventories, deferred tax assets and financial assets,are reviewed for impairment when there is an indication that the assets might be impaired. Impairment is measured bycomparing the carrying values of the assets with their recoverable amounts. The recoverable amount is the higher of anasset's net selling price and its value in use, which is measured by reference to discounted future cash flows. Recoverableamounts are estimated for individual assets, or if it is not possible, for the cash-generating unit.

An impairment loss is charged to the income statement immediately, unless the assets is carried at revalued amount. Anyimpairment loss of a revalued asset is treated as a revaluation decrease to the extent of previously recognised revaluationsurplus for the same asset.

Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairment loss and isrecognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation anddepreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately,unless the asset is carried at revalued amount. A reversal of an impairment loss on a revalued asset is credited directly torevaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognisedas an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement.

Segmental Information

Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of cash, debtors, inventories, intangibles and property, plant and equipment, net of allowances and accumulated depreciation and amortisation. Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets and liabilities do not include income tax assets and liabilities respectively.

Intersegment Transfers

Segment revenues, expenses and result include transfers between segments. The prices charged on intersegment transactions are the same as those charged for similar goods to parties outside of the economic entity at an arm's lengthtransactions. These transfers are eliminated on consolidation.

(ii) Foreign Operations

Where the operations of a foreign company are integral to the operations of the Group, the translation principlesdescribed above are applied as if the transactions of the foreign operation had been those of the Group.

The principal closing rates used in translation of foreign currency amounts are as follows:-2004 2003

RM RM1 US Dollar 3.800 3.7881 Australian Dollar 2.938 2.8301 New Zealand Dollar 2.709 2.218



37

SIGNIFICANT ACCOUNTING POLICIES (cont’d)3.(q)

(r)

(s)

(t)

Income Tax

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

Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the taxbases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities arerecognised 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 availableagainst which the deductible temporary differences, unused tax losses and unused tax credit can be utilised. Deferred taxis not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of anasset or liability in a transaction which is not a business combination and at the time of the transaction, affects neitheraccounting 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 liabilityis settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax isrecognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in whichcase the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is anacquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.

Revenue Recognition

Employee Benefits

Cash and Cash Equivalents

For the purposes of the cash flow statements, cash and cash equivalents consist of cash on hand, deposits, bank balancesand other short term, highly liquid investments that are readily convertible to cash and are subject to insignificant risk ofchange in value.

(i)(ii)

(iii)

(iv)(v)

Revenue from property development is recognised on the percentage of completion method.Revenue from sales of vacation ownership intervals and points based schemes is recognised based on agreementssigned with purchasers upon expiration of the "cooling-off" period. Revenue from sales of club memberships is recognised upon admission of the applicants as members. Revenue from club subscription fees is recognised on areceipt basis.Revenue from club operations and sales of tour packages and rental income is recognised upon delivery of productsand customer acceptance, if any, or when the rights to receive has been established.Dividend income and interest income are recognised in the income statement on receipt basis.Revenue from services rendered is recognised net of service taxes and discounts upon performance of services.

(i)

(ii)

Short term employee benefits

Wages, 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 suchas paid annual leave are recognised when services are rendered by employees that increase their entitlement to futurecompensated absences, and short term non-accumulating compensated absences such as sick leave are recognisedwhen the absences occur.

Post-employment benefits

The Group contributes to the Employees' Provident Fund ("EPF"), the national defined contribution plan. The contributions are charged to the income statements in the period to which they are related. Once the contributions havebeen paid, the Group has no further payment obligations.



38

4.P

RO

PE

RT

Y,P

LAN

T A

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UIP

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roup

Free

hold

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and

Boa

ts a

ndm

otor

Free

hold

land

and

Off

ice

Mai

nten

ance

Con

stru

ctio

nin

-pro

gres

s

2004

land

RM

'000

land

RM

'000

villa

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RM

'000

fitt

ings

RM

'000

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RM

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build

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RM

'000

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RM

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Mar

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RM

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Oth

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RM

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Tota

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Cos

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Jan

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34,8

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22,9

2716

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8,32

516

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11,0

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37,6

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195,

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Add

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890

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6,39

23,

411

- 8,

959

38,9

22

Net

Boo

k V

alue

at 3

1st

Dec

embe

r34

,840

18,3

4621

,084

8,35

418

28,

185

4,72

489

437

,624

16,9

9215

1,22

5



39

4.P

RO

PE

RT

Y,P

LAN

T A

ND

EQ

UIP

ME

NT

(C

onti

nued

)G

roup

Long

Gol

fco

urse

Furn

itur

eB

oats

and

Free

hold

Con

stru

ctio

nFr

eeho

ldle

aseh

old

and

club

and

mot

orla

nd a

ndO

ffic

eM

aint

enan

cein

-pro

gres

s

2003

land

RM

'000

land

RM

'000

villa

ge

RM

'000

fitt

ings

RM

'000

vehi

cles

R

M'0

00bu

ildin

gs

RM

'000

equi

pmen

tR

M'0

00eq

uipm

ent

RM

'000

Mar

ina

club

RM

'000

Oth

ers

RM

'000

Tota

lR

M'0

00

Cos

tA

t 1st

Jan

uary

34,8

3118

,118

22,9

2714

,465

8,23

823

,543

10,3

226,

588

37,6

0121

,925

198,

558

Add

ition

s9

--

471

96-

149

8011

3,51

54,

331

Dis

posa

ls/tr

ansf

ers

--

--

(3)

(6,8

91)

--

- -

(6,8

94)

Rec

lass

ifica

tion/

Adj

ustm

ents

-32

8-

1,50

3(6

)(3

66)

614

(2,3

50)

- -

(277

)A

t 31s

t Dec

embe

r34

,840

18,4

4622

,927

16,4

398,

325

16,2

8611

,084

4,31

837

,612

25,4

4019

5,71

8

Acc

umul

ated

Dep

reci

atio

nan

d im

pair

men

t lo

sses

At 1

st J

anua

ry-

-1,

381

5,74

37,

212

4,18

73,

974

3,20

1-

8,95

934

,657

Cha

rge

for t

he y

ear

-36

231

1,60

058

816

61,

035

315

- -

3,97

1D

ispo

sals

/tran

sfer

s-

--

- (3

)(2

67)

--

- -

(270

)R

ecla

ssifi

catio

n/-

54

-10

213

(201

)37

6(3

44)

- -

-

At 3

1st D

ecem

ber

-90

1,61

27,

445

7,81

03,

885

5,38

53,

172

- 8,

959

38,3

58

Net

Boo

k V

alue

at 3

1st

Dec

embe

r34

,840

18,3

5621

,315

8,99

451

512

,401

5,70

01,

146

37,6

1216

,481

157,

360



40

PROPERTY, PLANT AND EQUIPMENT (cont’d)4.

Company

2004

Furnitureand

fittingsRM'000

Office Equipment

RM'000Total

RM'000

CostAt 1st January 487 92 579Additions - - -Disposals - - -At 31st December 487 92 579

Accumulated Depreciation

At 1st January 409 82 491Charge for the year 47 4 51Disposals - - -At 31st December 456 86 542

Net Book Value at 31st December 31 6 37

2003

Cost At 1st January 487 92 579Additions - - -Disposals - - -At 31st December 487 92 579

Accumulated DepreciationAt 1st January 360 72 432Charge for the year 49 10 59Disposals - - -At 31st December 409 82 491

Net Book Value at 31st December 78 10 88



41

PROPERTY, PLANT AND EQUIPMENT (cont’d)

As at the balance sheet date, certificate of titles to the freehold land of RM28,168,007/- (2003 : RM28,168,007/-) and freeholdland and buildings of RM6,840,000/- (2003: RM6,840,000/-) have not been issued in the name of the subsidiary companies.

Included in construction-in-progress of the Group are interest expenses incurred during the financial year totalling RM681,322/-(2003 : RM681,322/-).

The following assets of the Group, stated at net book values, have been charged to licensed banks to secure the bank borrowings stated in Notes 19 and 22 to the financial statements:-

The net book value of property, plant and equipment of the Group includes the following property, plant and equipment acquiredunder hire purchase and finance lease agreements:-

4.

At NetBook Value

2004RM'000

2003RM'000

Freehold land 7,118 7,117Long leasehold land 18,118 18,118Golf course and club village 21,084 21,315Freehold land and buildings 9,551 12,402Construction-in-progress

- Marina club 37,624 37,612 - others 7,917 13,948

101,412 110,512

At NetBook Value

2004RM'000

2003RM'000

Furniture and fittings 1,905 1,546Boats and motor vehicles 211 524

2,116 2,070



42

LAND AND DEVELOPMENT EXPENDITURE

The freehold land of the Group have been charged to licensed banks to secure the bank borrowings as stated in Notes 19 and22 to the financial statements.

The related land and development expenses, progress billings, attributable profit and provision for foreseeable losses closedout from phases completed during the year amounted to:-

5.Group

2004RM'000

2003RM'000

Freehold land, at cost 106,893 106,903Long leasehold land, at cost 8,693 8,693

115,586 115,596

Development expenditure, at cost 182,251 178,179 Total land and development expenditure 297,837 293,775

Portion of profit attributable to developmentwork performed todate 9,191 7,572

307,028 301,347

Progress billings (40,591) (36,032)

266,437 265,315

Less:

Current portion (16,093) (15,109)Non-current portion 250,344 250,206

Group

2004RM'000

2003RM'000

Inventories of completed units of properties - (27,848)Freehold land - 3,643 Development expenditure - 97,679 Provision for foreseeable losses - (13,775)Attributable profit - 1,741 Progress billings - (61,440)



43

INVESTMENT IN SUBSIDIARY COMPANIES

The following information relates to the subsidiary companies:-

Subsidiaries of Tanco Development Sdn. Bhd.:-

Subsidiaries of Medan Melati Sdn. Bhd.:-

6.Company

2004RM'000

2003RM'000

Unquoted shares - at cost 115,065 115,065Less:Provision for impairment losses (4,013) (4,013)

111,052 111,052

Country ofEffective Equity

InterestName of Company Incorporation Principal Activities 2004

%2003

%Held directly:-

Palm Springs Leisure Sdn. Bhd. Malaysia Property management 100 100

Palm Springs Resort Management Berhad Malaysia Hotel operator 100 100

Pentapeak Properties Sdn. Bhd. Malaysia Investment holding 100 100

Point Resort Club Sdn. Bhd. Malaysia Investment holding 100 100

Popular Elegance (M) Sdn. Bhd. Malaysia Investment holding 100 100*SuperExchange Limited Labuan Provision of exchange 100 100

services in relationto vacation ownershipschemes

Tanco Catering Sdn. Bhd. Malaysia Caterer 100 100Tanco Development Sdn. Bhd. Malaysia Property development 100 100

+ Wheels, Sails & Wings SuperClub Bhd. Malaysia Operator of points 100 100based scheme

+ World Vacation Ownership Sdn. Bhd. Malaysia Provision of consultancy 100 100services and investment holding

+ Medan Melati Sdn. Bhd. Malaysia Investment holding 70 70 + Cool-Wheels SuperClub Bhd. Malaysia Dormant 100 100 + TimeClub.com Ltd. British Virgin Dormant 100 100

Islands+* Tanco Resorts Berhad Malaysia Investment holding, and

the management and operation of resorts and of vacation ownership interval and point based schemes

100 100

+ Tanco Builders Sdn. Bhd. Malaysia Contracting and 100 100building works

+Tanco Dot Com Sdn. Bhd. Malaysia Multimedia related 100 100business

+SuperTime.com Ltd. British Virgin Dormant 100 100 Islands

+Gerak Gaya Land Sdn. Bhd. Malaysia Property development 42 42



44

INVESTMENT IN SUBSIDIARY COMPANIES (cont’d)

Subsidiaries of Tanco Resorts Berhad:-

* Subsidiary companies not audited by Monteiro & Heng# During the financial year, the Group has disposed its entire equity interest of 300,000 ordinary shares of NZ $1/- in Tanco Resorts

(NZ) Ltd for a consideration of NZ $1/-. Additionally, its total debts of NZ $1,856,295/-, being the amount due by Tanco Resorts New Zealand as at 31st December 2003, has been sold for a consideration of RM2,100,000.

+ In view of the going concern consideration as mentioned in Note 2 to the financial statements, the auditors’ reports onthe financial statements of these subsidiary companies have expressed disclaimer opinions to the financial statementsof these subsidiary companies.

6.


Interest

Name of Company Incorporation Principal Activities 2004%

2003%

Subsidiaries of World Vacation Ownership Sdn. Bhd.:-

+BizCredit Sdn. Bhd. Malaysia Money lending business 100 100

+JKMB Development Sdn. Bhd. Malaysia Property development 100 100

+Palm Springs Club Sdn. Bhd. Malaysia Investment holding 100 100

+Palm Springs Development Sdn. Bhd. Malaysia Property development 100 100 +Palm Springs Resort Bhd. Malaysia Operator of golf and 100 100

marina clubs+Regal Resort Sdn. Bhd. Malaysia Property development 100 100 +Tanco Land Sdn. Bhd. Malaysia Investment property 100 100

+Tanco Leisure Holdings Sdn. Bhd. Malaysia Dormant 100 100

+Tanco Properties Sdn. Bhd. Malaysia Property development 100 100

*Tanco Enterprise Sdn. Bhd. Malaysia Property investment 90.32 90.32

+Tanco Club Berhad Malaysia Club operator 100 100

*Tanco Holidays Sdn. Bhd. Malaysia Travel and tour agent 100 100

+*Tanco Lake Resorts Sdn. Bhd. Malaysia Resort operator 100 100

+*Tanco Recreational Holdings Sdn. Bhd. Malaysia Property management 100 100

*Tanco Resorts (Australia) Pty. Ltd. Australia Resort management 100 100

+*Burnham Global Inc. British Virgin Investment holding 100 100 Islands

+*Noreast Co. Ltd. British Virgin Property holding 100 100 Islands

+*Tanco Resorts (NZ) Ltd.# New Zealand Property investment andresort management

100 100

+*TRB Leisure (Mauritius) Pte. Ltd. Mauritius Property investment 100 100 +*TRB Vacation (Mauritius) Pte. Ltd. Mauritius Property investment 100 100



45

INVESTMENT IN ASSOCIATED COMPANIES

The following information relates to the associated companies:-

+ Held directly via World Vacation Ownership Sdn. Bhd.++ Held indirectly via Tanco Leisure Holdings Sdn. Bhd.* Associated company under creditors winding-up.

OTHER INVESTMENTS

7.

8.

Group Company2004

RM'0002003

RM'0002004

RM'0002003

RM'000

Unquoted shares, at cost 500 500 - -

Group's share of post-acquisition results (500) (500) - -

- - - -


InterestName of Company Incorporation Principal Activities 2003

%2002

%

Sunshine Genius Sdn. Bhd.+* Malaysia Provision of timeshare 50 50 exchange activities

Sunshine Genius Co. Ltd.+ United State Provision of timeshare 50 50of America exchange activities

Benua Produktif Sdn. Bhd. Malaysia Dormant 40 40 Palm Springs Centre of Malaysia Educational institutions 40 40

Excellence Sdn. Bhd. ++

Group Company

2004RM'000

2003RM'000

2004RM'000

2003RM'000

Quoted shares in Malaysia, at cost 23 23 23 23Allowance for diminution in value (21) (21) (21) (21)

2 2 2 2

Unquoted shares in Malaysia, at cost 1,585 2,580 - -Less: Allowance for diminution in value - (116) - -

1,585 2,464 - -

Rights in resort properties, at cost 22,563 22,563 - -Impairment losses

- allowance (9,562) (9,562) - -13,001 13,001 - -

Resort properties, at cost 134,131 140,176 - -Impairment losses

- allowance (47,448) (53,015) - -

86,683 87,161 - -

Other investments, at cost 7,384 7,384 - -Accumulated amortisation (516) (445) - -

6,868 6,939 - -108,139 109,567 2 2

Market value of quoted shares 3 3 3 3



46

OTHER INVESTMENTS (cont’d)

Group

Rights In Resort Properties, at cost represent cost of rights to use the resort properties. The rights to use the resorts properties are conferred on a subsidiary company by virtue of a sale and purchase agreement dated 23rd November 1998between the subsidiary company and the owner of the resort properties. The subsidiary company will have beneficial ownership to the resort properties upon full settlement of the rights to use. The principal amount outstanding as at 31stDecember 2004 is RM1,352,705/- (2003 : RM1,476,548/-) included in other payables as mentioned in Note 17 to the financialstatements.

Resort properties at cost comprise long leasehold and freehold land and buildings of RM18,490,895/- (2003 :RM18,480,145/-) and RM115,640,075/- (2003 : RM121,696,848/-) respectively. The freehold land and building at cost ofRM6,552,819/- (2003 : RM6,552,769/-) is pledged to a merchant bank as security for a loan made available to a company inwhich certain directors, Dato' Tan Jing Nam, Aznan Bin Abdul Aziz and Dato' Tan Lee Sing have interests, namely RenownProjects Sdn. Bhd. for the sole purpose to finance the construction costs of the said resort property. This arrangement has beenentered into prior to the acquisition by the Group of the affected subsidiary company.

The following assets of the Group have been charged to licensed banks to secure the bank borrowings stated in Notes 19 and22 to the financial statements:-

In 2002, the directors of the Group assessed the economic conditions and concluded that there were adverse external factorswhich led to the recognition of impairment losses on certain properties of the Group of RM62,576,573/-. The recoverable amountof the said properties is determined based on net selling price.

The directors are of the opinion that the current market values of the above resort properties are at least equal to their net bookvalue.

AMOUNT OWING BY SUBSIDIARY COMPANIES

The amount owing by subsidiary companies are unsecured, interest free and have no fixed terms of repayment except foramounts owing by certain subsidiary companies totalling RM119,026,943/- (2003 : RM255,187,313/-) which bear interest atrates ranging from 0.5% to 3.0% (2003 : 0.5% to 3.0%) per annum.

8.

9.

Group

2004RM'000

2003RM'000

Resort properties at cost- long leasehold land and building 18,491 18,480- freehold land and buildings 115,640 121,697

Company

2004RM'000

2003RM'000

Amounts owing by subsidiary companies 308,615 304,326Less: Allowance for doubtful debts (103,654) (4,664)

204,961 299,662



47

TRADE RECEIVABLES

Included in trade receivables of the Group are the following:-

The Group and the Company's normal trade credit terms range from 30 to 90 days. Other credit terms are assessed andapproved on a case by case basis.

INVENTORIES

The unsold completed units and vacant land have been charged to certain banks to secure the bank borrowings stated in Notes19 and 22 to the financial statements.

The directors of the Group assessed the economic conditions and concluded that there were adverse external factors which ledto the write down on certain unsold completed units of the Group. These unsold completed units are stated at the lower of costand net realisable value estimated by the directors.

10.

11.

Group

2004RM'000

2003RM'000

Trade receivables 32,857 56,246Allowance for doubtful debts (3,329) (8,438)

29,528 47,808

Amounts receivable

Current- within twelve months 28,601 47,171 Long-term- after twelve months 927 637

29,528 47,808

(a)

(b)

(c)

Amounts recoverable by instalment schemes totalling RM6,029,497/- (2003 : RM20,278,899/-). The instalment schemesare for periods ranging between six and sixty months.

In determining the extent of allowance for doubtful debts, the directors have given due consideration to all information available to assess the likelihood of bad debts arising. Although uncertainty generally exists with regard to the recovery ofdebts, the directors are of the opinion that sufficient allowance has been made and the amounts receivable net of the allowance for doubtful debts are expected to be substantially recovered.

Certain trade receivables of the Group recorded at RM5,651,935/- (2003 : RM12,379,256/-) have been pledged to licensedfinancial institutions for credit facilities granted to the subsidiary company as disclosed in Note 19 to the financial statements.

Trade receivables amounting to RM221,258/- (2003 : RM404,519/-) have instituted legal proceedings against a subsidiarycompany for liquidated damages in respect of late delivery of vacant possession of completed units and for refunds due toterminated Sale and Purchase Agreements amounting to approximately RM647,510/- (2003 : RM2,217,390/-).

Group

2004RM'000

2003RM'000

At cost,

Unsold completed units and vacant lands 15,651 44,625Food and beverages 114 149 Golf accessories 54 54

15,819 44,828

At net realisable value,

Unsold completed units and vacant lands 21,971 -

37,790 44,828



48

OTHER RECEIVABLES

Group

Included in the other receivables are the following:-

Company

The amount owing by the other receivables of RM1,224,624/- (2003 : RM1,148,624/-) bears interest at the rate of 8% (2003:8%) per annum. Allowance for doubtful debts of RM673,624/- (2003 : RM673,624/-) has been made in the financial statements.

AMOUNT OWING BY ASSOCIATED COMPANIES

The amount owing by the associated companies are unsecured, interest free and have no fixed terms of repayment.

BANK BALANCES AND DEPOSITS

12.

13.

14.

Group Company

2004RM'000

2003RM'000

2004RM'000

2003RM'000

Other receivables 27,685 24,542 1,225 1,149 Less : Allowance for doubtful debts (12,756) (12,015) (674) (674)

14,929 12,527 551 475 Sundry deposits 2,912 3,245 2 2

Prepayments 1,023 1,370 - -

18,864 17,142 553 477

(a)

(b)

an amount of RM1,000,000/- (2003 : RM1,000,000/-) representing a deposit paid towards securing a development project.The Company is currently taking legal action to recover the said deposit. Allowance for doubtful debts has been made forthe said amount.

an amount of RM19,114,206/- (2003 : RM19,114,206/-) representing a legal claim against a contractor for damages arising from the failure to perform construction work properly and satisfactorily. Other than the allowance for doubtful debtsof RM9,557,103/- made for the recovery of the damages, the directors are of the opinion that the balance of the amount isrecoverable.

Group Company

2004RM'000

2003RM'000

2004RM'000

2003RM'000

Amount owing by associated companies 3 3 2 2Less: Allowance for doubtful debt (2) (2) (2) (2)

1 1 - -

Group Company

2004RM'000

2003RM'000

2004RM'000

2003RM'000

Cash and bank balances 1,499 1,495 14 21Cash held under Housing Development Account 264 581 - -Deposits placed with :-- licensed banks 2,103 333 - -- licensed finance companies 38 173 - -

3,904 2,582 14 21



49

BANK BALANCES AND DEPOSITS (cont’d)

Group

Cash held under Housing Development Account represents receipts from purchasers of residential properties less payments orwithdrawals provided under the Housing Developers (Control and Licensing) Act, 1966.

Cash and bank balances amounting to RM1,289/- (2003 : RM1,289/-) and deposits placed with licenced finance companiestotalling RM38,894/- (2003 : RM172,882/-), represent receipts from members of the clubs/vacation ownership schemes, whichare held in trust by the Trustee in accordance with the Trust Deed established from the respective clubs/vacation ownershipschemes.

PROVISIONS

Provision for liquidated damages is made when a delay in the handing over of vacant possession of developed properties isanticipated. It is based on the planned handover date to the expected handover date of vacant possession to purchasers.

TRADE PAYABLES

Group

Included in this account are the following:-

The normal trade credit terms granted to the Group range from 30 to 90 days.

OTHER PAYABLES

14.

15.

16.

17.

Group

2004RM'000

2003RM'000

Provision for liquidated damagesAt 1st January 17,509 19,306 Provision made during the year 1,309 2,937 Provision used during the year (82) (4,056)Provision reversed during the year (64) (678)At 31st December 18,672 17,509

(a)

(b)

an amount of RM1,854,890/- (2003 : RM1,871,920/-) owing to Renown Projects Sdn. Bhd., a company in which certaindirectors, Dato' Tan Jing Nam, Aznan Bin Abdul Aziz and Dato' Tan Lee Sing have financial interests.

an amount of RM10,935/- (2003 : RM10,935/-) owing to two joint contractors. A legal suit has been instituted by a subsidiary company against the contractors for all general damages arising from the failure to perform construction worksin a proper and satisfactory manner.

Group Company

2004RM'000

2003RM'000

2004RM'000

2003RM'000

Other payables 21,013 21,176 545 438 Sundry deposits 6,178 456 - -Accruals 33,706 23,279 9,603 1,112

60,897 44,911 10,148 1,550



50

OTHER PAYABLES (Cont’d)

Group

Included in this account are the following:-

AMOUNT OWING TO DIRECTORS

Group and Company

The amount owing to directors are unsecured, interest free and have no fixed terms of repayment.

SHORT TERM BORROWINGS

Group and Company

The revolving credits are secured over certain trade debtors as disclosed in Note 10 to the financial statements.

The revolving credits and bridging loan bear interest at rate of 8.75% (2003 : 8.75%) per annum.

17.

18.

19.

(a)

(b)

(c)

(d)

(e)

amounts totalling RM531,984/- (2003 : RM3,569,422/-) representing contributions towards sinking funds operated byTrustees of the respective clubs which consist of non-refundable contributions made by new members and not less than10% of the total subscription/anniversary fees paid by the club members. The funds would only be utilised in respect of anymajor repairs or replacements to the Resorts or of the facilities of the clubs as stated in the Prospectuses.

an amount of RM1,352,705/- (2003 : RM1,476,548/-) representing the amount payable in respect of the Rights In ResortProperties as stated in Note 8 to the financial statements.

amounts totalling RM221,258/- (2003 : RM221,258/-) representing advances received from house purchasers who haveinstituted legal proceedings against a subsidiary company for liquidated damages in respect of late delivery of vacant possession of completed units and for refunds due to termination of Sale and Purchase Agreements amounting to approximately RM647,510/- (2003 : RM647,510/-).

amounts totalling RM8,446,468/- (2003 : RM8,446,468/-) representing advance payments received from certain house purchasers. The said sum includes an amount of RM7,627,537/- (2003 : RM7,627,537/-) representing amount owing to ahouse purchaser who is a contractor as stated in Note 12(b) which the Group is currently claiming damages from.

amounts totalling RM2,179,923/- (2003 : RM1,436,974/-) representing property development expenditure accrued for completed units of the Group.

Group Company 2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Revolving credits, secured 13,530 12,379 - - Bank overdraft 1,800 - - - Bridging loan, unsecured 152 133 - - Hire purchase and lease

payables (Note 20) 123 491 - - Term loan 68,026 - 26,685 -

83,631 13,003 26,685 -



51

HIRE PURCHASE AND LEASE PAYABLES

Interest rate on the hire purchase and lease for the year range from 3.50% to 11.20% (2003: 4.46% to 11.20%)

SHARE CAPITAL

In 2002, a Renounceable Two-Call Rights Issue of 167,443,633 new ordinary shares of RM1/- each attached with 167,443,633free Warrants were issued on the basis of one (1) Rights Share with one (1) free warrant attached for every one (1) existingordinary share held in the Company.

The Warrants which were constituted by a Deed Poll dated 27th December 2001 are quoted on the Bursa Malaysia SecuritiesBerhad. Each Warrant entitles its registered holder, at any time from the date of its issue up to and including 17th February2008, to subscribe for one (1) new ordinary share of RM1/- each in the Company at the exercise price of RM1/- for each newshare, which is subject to adjustments under the terms set out in the Deed Poll.

As at 31st December 2004, none of the Warrants had been exercised.

20.

21.

Group 2004 2003

RM'000 RM'000

Minimum hire purchase and lease payments:- not later than one year 189 626- later than one year and not later than five years 76 386- later than five years 75 43

340 1,055

Future finance charges (97) (213)

Present value of hire purchase and lease liabilities 243 842

Represented by:

Current (Note 19)- not later than one year 123 491

Long term (Note 22)- later than one year and not later than five years 58 317 - later than five years 62 34

120 351

243 842

Group and Company2004 2003

RM'000 RM'000

Authorised:Ordinary shares of RM1/- each 1,000,000 1,000,000

Issued and fully paid:Ordinary shares of RM1/- eachAt 1st January 334,887 334,887

At 31st December 334,887 334,887



52

LONG TERM LIABILITIES

The term loans of the Group and the Company were fully restructured pursuant to the implementation of the debt restructuring scheme on 1st March 2002. According to the repayment schedule set out in the Supplemental Head ofAgreement entered into between the Company and several of its subsidiary companies ("Scheme Creditors") with thevarious financial institutions ("Lenders") the Scheme Creditors are not required to service principal and interest repaymentsof the restructured term loans to the Lenders for a period of 36 months and 24 months respectively from 1st March 2002.Repayments of interest, principal and capitalised interest will commence on 31st May 2004, 31st May 2005 and 28thFebruary 2008 respectively.

22.Group Company

2004 2003 2004 2003Note RM'000 RM'000 RM'000 RM'000

Term loans 272,116 334,828 106,737 132,508 Hire purchase and lease payables

payable after one year 20 120 351 - -Other long term payables (unsecured) 23 748 748 - -Amount owing to subsidiary companies 24 - - 5,028 4,833

272,984 335,927 111,765 137,341

(a)

(b)

The term loans are repayable by fixed instalments, bear interest at rates ranging from 6.20% to 7.90% (2003 : 5.85% to14.0%) per annum and are secured by:-

(i)

(ii)(iii)(iv)(v)

Fixed charges over certain portion of subsidiary companies' landed properties as stated in Note 4, 5, 8 and 11 to thefinancial statements;Debenture charges over all assets of certain subsidiary companies;Assignments of proceeds for new timeshare sales of a subsidiary company;Future income of development projects of certain subsidiary companies;Guarantee of the Company.

The term loans of the Company totalling RM72,920,845/- (2003 : RM72,758,761/-) are additionally secured by the custody over a subsidiary company's shares and are jointly and severally guaranteed by certain directors of theCompany.

The terms of repayment of the term loans are as follows:-Group Company

2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Within the next twelve months (Note 19) 68,026 - 26,685 -

After the next twelve months:-(included under long term liabilities)

- not later than two years 97,876 66,965 40,026 26,502 - later than two years but not later

than five years 174,240 267,863 66,711 106,006 - later than five years - - - -

272,116 334,828 106,737 132,508 340,142 334,828 133,422 132,508



53

LONG TERM LIABILITIES (cont’d)

OTHER LONG TERM PAYABLES (unsecured)

Group

The amount of RM748,000/- (2003 : RM748,000/-) represents redeemable sums due to preference shareholders of a subsidiarycompany upon expiry of the Golf Memberships on 22nd October 2093.

AMOUNT OWING TO SUBSIDIARY

Company

The amount owing to subsidiary companies are unsecured, interest free and have no fixed terms of repayment.

The subsidiary companies have agreed not to demand repayment of the outstanding balances within the next twelve monthsfrom the end of the financial year.

22.

23.

24.

(c)

(d)

On 16th August 2004, the High Court of Malaya in Kuala Lumpur ("the Court') had granted the Group with the restrainingorder ("the RO") in conjunction with the application made by the Company and its subsidiary companies (" the Group") fora RO pursuant to Section 176(10) of the Companies Act, 1965 on 13th August 2004. The RO is valid for eight (8) monthseffective from 13th August 2004 and is to facilitate the Group in formalizing its scheme of arrangement for the approval ofits creditors. The court has since then granted the extension of the RO to the Company and its subsidiary companies from13th April 2005 to 13th July 2005.

Arising from this, a debt restructuring scheme under Section 176 of the Companies Act, 1965 (" the Scheme") has been formulated and is presently subject to the creditors' consent and any modifications which is necessary to meet regulatoryand legal requirements. The Scheme entails:

Since the commencement of the RO, the Group has also initiated and advanced discussions with potential parties on thepossibility of the Group acquiring new income generating assets to support its restructuring proposals. As a consequenceof one such series of discussions, the Group was presented with an opportunity to enable it to offer an outright cash payment of RM177.5 million in lieu of the various financial instruments contemplated under the Scheme, as full and finalsettlement of its debt obligation to these creditors. Accordingly, the Group had on 13th December 2004 presented to thesecreditors the alternative proposal that would involve:-

Both proposals are currently under consideration by the scheme creditors and two of its creditors have agreed in principleto its proposed cash settlement.

(i)(ii)

(iii)

a proposed capital reduction;a proposed settlement scheme;

a managed and orderly programme for disposal of certain of the Group's assets to meet its debt repayments.

-

-

-

-

for secured lenders involving terming out certain portion of the loans where repayments will be met from development proceeds, conversion of part of the loan to Redeemable Secured Loan Stock ("RSLS") andRedeemable Convertible Secured Loan Stock ("RCSLS") and the balance not covered by any of these instrumentsbeing waivedfor cross secured lenders involving conversion of part of the loan to RSLS and RCSLS and the balance not covered by any these instruments being waivedfor unsecured lenders, a waiver of a significant portion of their debt and with the balance being settled by way ofshares issued by the Company; andfor the other creditors, any surplus arising from the above proposed settlement to the lenders will be used to repaytheir indebtedness

(i)

(ii)

(iii)

the secured lenders with its entire debt of RM279.0 million as at 31st December 2003 being settled for RM165.7million;

the cross-secured lenders with its entire debt of RM51.8 million as at 31st December 2003 being settled for RM10.6million; andthe unsecured lender with its debt of RM12.5 million as at 31st December 2003 being settled for RM1.2 million.



54

DEFERRED TAXATION

Deferred tax assets have not been recognised for the following items:-

The unutilised tax losses and deductible temporary differences do not expire under current tax legislation. Deferred tax assetshave not been recognised in respect of these items because it is not probable that future taxable profit will be available againstwhich the Group and the Company can utilise the benefits.

REVENUE

25.

26.

Group

2004RM'000

2003RM'000

At 1st January 10,702 14,944

Transfer to income statement (Note 29) (6,403) (4,242)

At 31st December 4,299 10,702

Group Company 2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Deductible temporary differences 8,450 4,075 232 181Unabsorbed tax losses 80,600 58,625 1,336 1,044

89,050 62,700 1,568 1,225

Group Company2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Sales of development properties 3,712 8,964 - - Sales value of vacation

ownership interval and pointsbased schemes 135 30,462 - -

Income from clubs operations 15,697 5,574 - - Dividend income

from subsidiary companies - - 2,488 2,370 Interest income from- subsidiary companies - - 4,149 4,064 - licensed bank 533 635 6 6 Rental income 473 711 - - Property management services 1,098 1,221 - - Management fee - - 135 204

21,648 47,567 6,778 6,644



55

OPERATING (LOSS)/PROFIT

The estimated monetary value of Directors' benefit-in-kind is RM93,075/- (2003 : RM90,875/-).

27.Group Company

2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000Operating (loss)/profit has been arrived

at after charging/(crediting):-Auditors’ remuneration:- current 209 209 10 10 Allowance for diminution in value of:

- inventories 5,529 42 - -

- other investments - 116 - -

Allowance for doubtful debts 4,318 23,672 - 643

Allowance for amount owing by

subsidiary companies - - 98,989 -

Amortisation 71 71 - -

Bad debts written off 3,926 10,376 - -

Depreciation 3,471 3,971 51 59

Directors’ remuneration- fees- current directors 48 140 24 62

- salaries- current directors 2,587 2,587 1,656 240- a former director - 94 - -

- other emoluments 5 10 5 10

Gain on disposal of:- property, plant and equipment (41) (1) - - - disposal of inventories - (3) - -

- other investments 520 - - -

- subsidiary companies (561) - - 51,842 Gain on foreign exchange- realised- unrealised

(5) (1,117)

(1) -

--

- -

Hire of equipment - 15 - -

Impairment loss onproperty, plant and equipment 291 - - -

Lease rental 229 231 - -

Rental of premises 37 953 - -

Rental of equipment and boats 113 106 - -

Rental income (258) (304) - -

Show apartment written off - 490 - -

Staff costs- current year 10,754 15,943 - -



56

FINANCE COSTS (Net)

TAXATION

A reconciliation of income tax expense applicable to loss before taxation at the statutory income tax rate to income tax expenseat the effective income tax rate of the Group is as follows:

The subsidiary company, Tanco Dot Com Sdn. Bhd., was granted Multimedia Super Corridor status on 17th September 2000thereby making the subsidiary company eligible for Pioneer Status where 100% of its statutory income will be exempted fromtax for a period of 5 years and extendable to a further 10 years. As such, there is no taxation charge for the current year for thesaid subsidiary company.

28.

29.

Group Company 2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Interest income- licensed banks 34 99 - -- others 579 2,134 76 232

613 2,233 76 232

Interest expenses - bank borrowings (26,006) (24,633) (9,441) (8,732)- hire purchase/lease (116) (198) - -- subsidiary company - - (28) (28)- others (305) (551) - -

(25,814) (23,149) (9,393) (8,528)

Group Company 2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Malaysian taxation based on the result for the yearIncome tax

- current year’s provision (7) (219) - - - underprovision in prior years (16) (368) - (19)Deferred taxation (Note 25) 6,403 4,242 - -

6,380 3,655 - (19)

Group Company 2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Loss before taxation (51,207) (66,097) (104,459) (59,638)

Taxation at applicable tax rate of 28% 14,338 18,507 29,248 16,699 Tax effects arising from- non-taxable income 312 597 - - - non-deductible expenses (2,188) (6,016) (29,152) (16,706)- underprovision in prior year (16) (368) - (19)- non-taxable income from Pioneer Status Company 1,312 1,275 - - - deferred tax assets not recognised

in the financial statements (7,378) (10,340) (96) 7

Tax expense for the year 6,380 3,655 - (19)



57

LOSS PER SHARE

Basic loss per share

The basic loss per share is calculated based on the Group's loss for the year after taxation and minority interest ofRM44,829,285/- (2003 : RM62,442,351/-) and on the weighted number of ordinary shares in issue of 334,886,726 (2003 :334,886,726).

The fully diluted earnings per share for the Group is not presented as the assumed exercise of the warrants during the financialyear would be anti-dilutive.

Diluted loss per share

For the diluted loss per share calculation, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potential ordinary shares.

The Group has one category of dilutive potential ordinary shares, warrants 2002/2008. The terms of the unexercised warrantsover ordinary shares are set out in Note 21 to the financial statements.

Since the exercisable price of the warrants is above the fair value of the Company's shares for the current financial year, thewarrants are deemed non-dilutive. As such, the warrants have no dilutive effect on the loss per share of the Group for the current financial year.

CONTINGENT LIABILITIES

30.

31.(a)

(b)

(c)

(d)

As at 31st December 2004, the contingent liabilities were as follows:-

During the year, Tap Construction Sdn. Bhd. had filed a claim against Palm Springs Development Sdn. Bhd., a wholly ownedsubsidiary of the Company, for the sum of approximately RM45,576,325/- allegedly for outstanding billings, finance andinterest charges.

Various purchasers of Palm Springs, Port Dickson had filed claims against Palm Springs Development Sdn. Bhd., a whollyowned subsidiary of the Company, for liquidated damages for late delivery of vacant possession of the completed units andfor refunds due to terminated Sale and Purchase Agreements, amounting to approximately RM2,095,565/-.

A creditor, FAL Resorts and Tours Bhd , had filed a claim against Tanco Resorts Bhd ("TRB"), a wholly owned subsidiary ofthe Company, for the sum of RM4,679,261/- together with interest at the rate of 8.9% per annum form 24th October 2003until realization and damages allegedly for breach of certain terms and conditions of an agreement that the claimant hasentered into with TRB.

Group Company 2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Bank guarantees- secured over fixed deposits of

certain subsidiary companies 37 37 - -A resort property pledged to a

merchant bank for a loan facility granted to Renown Projects Sdn. Bhd., a company in which certain directors,Dato' Tan Jing Nam, Aznan BinAbdul Aziz and Dato’ Tan Lee Singhave interests, as stated in Note 8 tothe financial statements 8,861 8,393 - -

Unsecured corporate guarantees issued for bank facilities granted tosubsidiary companies - - - 160,235

8,898 8,430 - 160,235



58

COMMITMENTS

SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES

32.

33.

Group

2004RM'000

2003RM'000

Expenditure authorised and contracted for but not provided in the financial statements 316 3,017

Capital contracted for but not provided in the financial statements 2,887 316 3,203 3,333

Company

2004RM'000

2003RM'000

Transactions with subsidiary companiesInterest income (4,149) (4,064)Management fee received/receivable (135) (204)Dividend income (2,489) (2,370)Interest expense 28 28

Group Company 2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000Transactions with directors of the

Company, persons related to directors and companies, in which they have interests

Rental expenses to Datin Tan Hooi Theng - 330 - - Supply of furniture, from Samabagia Enterprises

Sdn. Bhd., a company in which Dato' Tan Lee Sing has interest - 1,029 - -

Professional fees received fromMillennium Land Sdn. Bhd., a company in whichDato' Tan Jing Nam and Aznan BinAbdul Aziz, have interests (23) (165) - -

Directors' fees to- Dato' Ali Bin Hassan - 54 - - - Dato' Dr. Mohd. Noordin Bin Haji Keling 24 24 24 24 - Dato' Loh Siew Cheang - 38 - 38 - Dato' Dr. Mohd. Aminuddin Bin Mohd. Rouse 24 24 - -

Directors' salaries to

- Dato' Tan Jing Nam 996 996 708 120 - Aznan Bin Abdul Aziz 864 864 612 120 - James Wong Kwong Yew 487 487 216 - - Dato' Tan Lee Sing 240 240 120 -

Directors' benefit-in-kind- Dato' Tan Jing Nam 27 26 - - - Aznan Bin Abdul Aziz 31 34 - - - James Wong Kwong Yew 14 14 - - - Dato' Tan Lee Sing 8 8 - - - Dato' Dr. Mohd. Aminuddin Bin Mohd. Rouse 13 13 - -

Directors' other emoluments to- Dato' Dr. Mohd. Noordin Bin Haji Keling 5 6 5 6- Dato' Loh Siew Cheang - 4 - 4

Transactions with a former director of the CompanyDirector's salaries to- Yong Poi Leong - 94 - -



59

SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (cont’d)

The Directors of the Company are of the opinion that the above transactions have been entered into in the normal course ofbusiness and the terms are no less favourable than those arranged with third parties.

Balances with companies in which the directors have interests as at 31st December 2004 were as follows:-

Balances with the directors of the Company as at 31st December 2004 were as follows:-

SEGMENTAL ANALYSIS

Segment information is presented in respect of the Group's business segments. The primary format, business segments, isbased upon the industry of the underlying investments.

The activities of the Group are carried out mainly in Malaysia and as such, segmental reporting by geographical locations is notpresented.

Business Segments

For management purposes, the Group is organised into the following operating divisions:-

- Property development/Management- Resorts and Club Operation/Management- Construction- Investment holding

Inter-segment sales have been transacted at arms length basis between the companies in the relevant business segments.

33.

34.

Group Company 2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Company in which, Dato' Tan Jing Nam, Aznan Bin Abdul Aziz and Dato’ Tan Lee Sing have interests Renown Projects Sdn. Bhd.- Trade (1,855) (1,872) - - - Non-trade (2) (2) - -

Companies in which Dato' Tan Jing Nam and Aznan Bin Abdul Aziz have interests-Tanco Maju Sdn. Bhd.

- Non-trade (6) (6) - - - Ivory Avenue Sdn. Bhd.

- Non-trade - (1) - -

Dato' Tan Jing Nam (224) (129) (222) (126)Aznan Bin Abdul Aziz (26) (30) (26) (26)James Wong Kwong Yew (4) (1) - - Dato’ Loh Siew Cheang (24) (24) (24) (24)Dato' Dr Mohd. Aminuddin Bin Mohd. Rouse (10) (6) - -



60

SEGMENTAL ANALYSIS (cont’d)34.

The Group2004

Property development/ Management

RM'000

Resorts and Club

Operation/ Management

RM'000Construction

RM'000

Investment holding RM'000

EliminationRM'000

Consolidated RM'000

RevenueExternal sales 4,810 16,296 - 542 - 21,648Inter-segment sales - 4,720 5,141 4,283 (14,144) - Total revenue 4,810 21,016 5,141 4,825 (14,144) 21,648

Results

Loss fromOperations (5,551) (11,850) (5,086) (3,469) - (25,956)

Finance costs (8,421) (7,076) - (10,317) - (25,814)Gain on disposal of

subsidiary company - 561 - - - 561

Loss Before TaxationTaxation

(13,972)6,196

(18,365)185

(5,086) -

(13,786)(1)

--

(51,209)6,380

Loss For The YearAfter Taxation (7,776) (18,180) (5,086) (13,787) - (44,829)

Other InformationDepreciation and

amortisation 379 3,129 5 92 (63) 3,542Capital expenditure- property, plant and

equipment 240 1,703 - - (481) 1,462 Non-cash expenses

other thandepreciation

Allowance for doubtful debts - 4,318 - - - 4,318

Bad debts written off 2 3,924 - - - 3,926 Loss on disposal of

other investments - 81 - 439 - 520

Consolidated Balance Sheet

AssetsSegment assets 358,629 220,987 364 35,908 - 615,888

LiabilitiesSegment liabilities 191,239 121,432 2,322 161,536 - 476,529



61

SEGMENTAL ANALYSIS (cont’d)34.

The Group2003

Property development/ Management

RM'000

Resorts andClub

Operation/ Management

RM'000Construction

RM'000

Investment holding RM'000

Elimination RM'000

Consolidated RM'000

RevenueExternal sales 10,204 36,635 - 728 - 47,567Inter-segment sales - 7,465 8,015 6,638 (22,118) - Total revenue 10,204 44,100 8,015 7,366 (22,118) 47,567

Results

(Loss)/ profit fromOperations (23,522) (22,412) 1,175 5,300 (3,373) (42,832)

Finance costs (10,516) (6,220) - (9,779) 3,366 (23,149)Allowance for

diminution of investments - - - (116) - (116)

(Loss)/ profit Before Taxation

Taxation(34,038)

(1,306)(28,632)

630 1,175

- (4,595)

(22)(7)

4,353(66,097)

3,655(Loss)/ profit For TheYear After Taxation (35,344) (28,002) 1,175 (4,617) 4,346 (62,442)

Other InformationDepreciation and

amortisation 401 3,546 39 123 (67) 4,042Capital expenditure- property, plant and

equipment 989 2,447 - 121 774 4,331 - resort properties - 95 - - - 95- other investments - - - 4,239 (4,239) - Non-cash expenses

other thandepreciation

Allowance for doubtful debts 11,513 13,053 - 674 (1,568) 23,672

Capital expenditure - 10,376 - - - 10,376 Allowance for

diminution in value- inventories - 42 - - - 42 - other investments - - - 116 - 116

Consolidated Balance Sheet

AssetsSegment assets 377,063 233,483 670 36,618 - 647,834

LiabilitiesSegment liabilities 186,000 119,482 4,608 150,327 - 460,417



62

FINANCIAL INSTRUMENTS

Effective interest rates

35.(a)

(b)

Financial Risk Management and Objectives

The Group seeks to manage effectively the various risks namely interest rate, foreign currency, credit and liquidity risks, towhich the Group is exposed to in its daily operation.

Interest Rate Risk

The Group's primary interest rate risk relates to interest-bearing debt as at 31st December 2004. The Group adopts a policy of constantly monitoring movements in interest rates. Presently, it does not use derivative financial instruments tohedge its interest rate risk.

Effective interest rates

Group

Effective interest rate

%Total RM'000

Within1 yearRM'000

1 -5yearsRM'000

> 5yearsRM'000

2004Financial AssetsDeposits with licensed banks 3.00 - 3.70 2,141 - - 2,141Other receivables 8.00 553 - - 553

Financial LiabilitiesBorrowings

Term loans 6.20 - 8.46 68,026 272,116 - 340,142Hire Purchase and

lease payables 4.46 - 11.20 123 57 63 243Company2004Financial AssetsAmount owing by subsidiary companies 0.50 - 3.00 - 119,027 - 119,027Other receivables 8.00 553 - - 553

Financial LiabilitiesTerm loans 6.20 - 7.90 26,685 106,737 - 133,422

Group

Effective interest rate

%Total RM'000

Within1 yearRM'000

1 -5yearsRM'000

> 5yearsRM'000

2003Financial AssetsDeposits with licensed banks 3.00 to 4.00 506 - - 506Sundry debtor 8.00 477 - - 477

Financial LiabilitiesBorrowings

Revolving credits 8.75 12,379 - - 12,379 Term loans 5.85 - 14.00 - 334,828 - 334,828 Hire Purchase and lease payables 4.46 - 11.20 491 351 - 842Bridging loan, unsecured 8.75 133 - - 133

Company2003Financial AssetsAmount owing by subsidiary companies 0.50 - 3.00 - 255,187 - 255,187 Other receivables 8.00 477 - - 477

Financial LiabilitiesTerm loans 5.85 - 7.90 - 132,508 - 132,508



63

FINANCIAL INSTRUMENTS (cont’d)

CHANGE IN ACCOUNTING POLICY AND PRIOR YEAR ADJUSTMENT

Change in accounting policy

In previous years, certain expenditure were capitalised and as a result of the adoption of MASB 32 (Now known as FRS 201)in the current financial year, these expenditure are written off to the income statement.

This change in accounting policy, applied retrospectively, had the following impact on the results:-

Prior year adjustment

The change in accounting policy is due to the adoption of MASB 32 and has been accounted for by restating comparatives andadjusting the opening balances of retained profits at 1st January 2004 and the statement of changes in equity respectively.

COMPARATIVE FIGURESThe following comparatives have been restated to reflect the change in the accounting policy as explained in Note 36.

35.

36.

37.

(c)

(d)

(e)

(f)

Foreign Currency Risk

The Group operates internationally and is exposed to various currencies, mainly United States Dollar, Australian Dollar andNew Zealand Dollar. Foreign currency denominated assets and liabilities together with expected cash flows from highlyprobable purchases and sales give rise to foreign exchange exposures.

Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are keptto an acceptable level.

Liquidity Risk

The liquidity risk of the Group is managed vis-à-vis effects and implications of the debt restructuring scheme mentioned inNotes 22 to the financial statements.

Credit Risk

Credit risks, or the risk of counterparties defaulting, is controlled by the application of credit approvals, limits and monitoring procedures. Trade debtors are monitored on an ongoing basis via Group reporting procedures.

The Group and the Company have no significant concentration of credit risk, other than as stated in Note 12(b), that mayarise from exposure to a single debtor or to group of debtors.

Fair Values

The fair values of financial assets and financial liabilities of the Group and of the Company approximate to their carryingamounts on the balance sheet on the assumption that the Group and the Company will continue as going concerns. Theapplications of the going concern basis is on the premise as set out in Note 2 to the financial statements.

There are no fair values for financial instruments not recognised in the balance sheet as at 31st December 2004 that arerequired to be disclosed.

The nominal/notional amount and net fair value of contingent liabilities (as disclosed in Note 31 to the financial statements)are not recognised in the balance sheets as at 31st December 2004 as it is not practicable to make a reliable estimate dueto uncertainties of timing, costs and eventual outcome.

Group

2004RM'000

2003RM'000

As reported (44,663) (62,172)Effect of adopting MASB 32 (166) (270)

As adjusted (44,829) (62,442)

Group As Previously Reported As RestatedBalance Sheet RM’000 RM’000

Land and development expenditure:-Current portion 18,340 15,109


Statement by Directors

64

We, DATO' ABDUL RAHIM BIN SAIBU and DATO' TAN JING NAM, being two of the directors of the Company, do herebystate that in the opinion of the directors, the accompanying financial statements are drawn up so as to give a true and fair view ofthe state of affairs of the Company as at 31st December 2004 and of the results and cash flow of the Company for the year endedon that date in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards inMalaysia.

On behalf of the Board,

........................................................................DATO' ABDUL RAHIM BIN SAIBUDirector

........................................................................DATO' TAN JING NAMDirector

Kuala Lumpur

Date: 13 May 2005


Statutory Declaration

I, CHAN KENG YEW, being the officer primarily responsible for the financial management of Tanco Holdings Berhad, do solemn-ly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 26 to 63 are correct,and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the StatutoryDeclarations Act, 1960.

........................................................................CHAN KENG YEW

Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory on 13 May 2005.

Before me,

...............................................................................Commissioner for Oaths

65


Report of the Auditorsto the Members of Tanco Holdings Berhad

We have audited the financial statements set out on pages 26 to 63.

These financial statements are the responsibility of the Company's directors.

It is our responsibility to form an independent opinion, based on our audit, on those financial statements and to report our opinion toyou, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility towards any other person for the content of this report.

We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we plan andperform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by directors, as well as evaluating the overallfinancial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

We report as follows:-

In view of the significant effects of the above matters, we are unable to form an opinion as to whether:-

The financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicableapproved accounting standards in Malaysia so as to give a true and fair view of:

Except for effects of any adjustments that would arise in respect of the Group’s and Company’s continuance as going concern inlight of the matters reffered to above, in our opinion, the accounting and other records required by the Companies Act, 1965 to bekept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provision of said Act.

However, in our opinion, the registers required by the Companies Act, 1965 to be kept by the Company and it s subsidiaries of whichwe have acted as auditors have been properly kept in accordance with the provisions of the said Act.

We have considered the financial statements and the auditors' reports of the subsidiaries of which we have not acted as auditors,which are indicated in Note 6 to the financial statements, being financial statements that have been included in the consolidatedfinancial statements.

66

(a)

(b)

As mentioned in Note 2 to the financial statements, during the year, the Group and the Company incurred further net losses ofRM44,829,285/- and RM104,458,958/- respectively and the Group reflected a deficit in castflow used in operating activities ofRM5,289,668/-. At that date, the current liabilities of the Group and the Company exceeded its current assets byRM93,993,243/- and RM36,907,467/- respectively.

As mentioned in Note 22 (c) and (d) to the financial statements, debt restructuring schemes have been formulated and are currently under consideration by the scheme creditors.

The ability of the Group and the Company to operate as a going concern will then be dependent on the successful completionof the debt restructuring schemes on a timely basic, achieving sustainable and viable operations and generating adequate cashflows for its operating activities.

Should the debt restructuring schemes not be successfully concluded, the entire borrowings may become repayable immediately and the application of the going concern concept may be inappropriate and adjustment may be required to, interalia, write down assets to their realisable values, reclassify all long term assets and liabilities as current and to provide for anyfurther costs which may arise.

We have not been able to obtain sufficient appropriate evidence regarding plans for the generation of adequate positive cashflow from future operations. The timely completion of the debt restructuring schemes, including obtaining the support andapproval from the scheme creditors and new lenders, remain in doubt at this stage.

(i)

(ii)

the state of affairs of the Group and of the Company as at 31st December 2004 and of the results and cash flows of the Groupand of the Company for the year ended on that date; and

the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group andof the Company;


Report of the Auditorsto the Members of Tanco Holdings Berhad (cont’d)

In the view of the disclaimer opinions expressed in the auditors’ reports on the financial statements of the subsidiary companies asdisclosed in Note 6 to the financial statement, we are unable to satisfy ourselves as to whether the financial statements of the subsidiary companies that have been consolidated with the financial statements of the Company are in form and content appropriated and proper for the purposes of the preparation of the consolidated financial statements and we have not received satisfactory information and explanations required by us for those purposes.

Other than for those subsidrary companies with the disclaimer opinions as indicated in Note 6 to the financial statements, the auditors’ reports on the financial statements of the remaining subsidiaries were not subject to any qualification and did not includeany comment made under subsection (3) of Section 174 of the Companies Act, 1965.

........................................................................Monteiro & HengNo. AF 0117Chartered Accountants

........................................................................Heng Ji KengNo. 578/05/06 (J/PH)Partner

Kuala LumpurDate: 13 May 2005

67


List of Propertiesas at 31st December 2004

68

Location Tenure Area(acres)

Description andExisting Use

Year ofAcquisition/Revaluation

Age ofProperties

Net BookValue RM’000

13th mile of Port DicksonPasir Panjang main roadMukim of Pasir PanjangDistrict of Port DicksonNegeri Sembilan Darul KhususLot P.T. Nos.2676-2685, 2688-2690, 2692-2694,2705-2707, 2709, 2710, 2712-2715,2717-2719, 2721-2728, 2735-2742,2746-2749, 2750, 2751, 2753-2755,2757, 2759-2762, 2764, 2765, 2767,2769, 2770-2774, 2776-2782,2784-2786, 2790, 2795-2819, 2821-2829, 2836-2857, 2859, 2871,2873, 2876, 2883, 2885-2913,2936, 2938 & 5400

Freehold with theexception of the golfcourse held underP.T. No. 2760 and

P.T. 5400 which areleasehold for 99years to expire in

the year 2093

358.44 Vacant land,approved for mixed

residential and resort

development knownas Palm Springs

Resort

1993 - 267,282

Mukim of Pasir PanjangDistrict of Port DicksonNegeri Sembilan Darul KhususH.S.(D) No.12126 P.T. No.2604

Leasehold for 99years to expire in

the year 2092

8.86 Vacant land,approved for Resort

Development

1995 - 9,432

Mukim of Pasir PanjangDistrict of Port DicksonNegeri Sembilan Darul KhususH.S.(D) No.13101 P.T. No. 2787 &H.S.(D) No. 22780 P.T. No. 5391

Freehold 21.46 Vacant landapproved for Resort

Development

2000 - 27,610

Mukim of Pasir PanjangDistrict of Port DicksonNegeri Sembilan Darul KhususH.S.(D) No 24397 P.T. No. 5483


the year 2101

7.99 Vacant land,approved for Private

InstitutionDevelopment

2002 - 78

Mukim of RawangDistrict of GombakSelangor Darul EhsanH.S.(D) No. 22620 P.T. No. 7258

Freehold 3.03 Vacant land,approved forCommercial

Development

1995 - 16,363

Mukim of RawangDistrict of GombakSelangor Darul EhsanH.S.(D) No. 40768-40811 P.T. No. 14418-14461, H.S.(D) No. 40860-40923P.T. No. 14510-14573, H.S.(D) No. 40937-40968 P.T. No. 14587-14618,H.S.(D) No. 40982-41040 P.T. No. 14632-14690,H.S.(D) No. 41041-41047 P.T. No. 14691-14697 &H.S.(D) No. 41048-41111P.T. No. 14220-14283

Freehold 10.16 Vacant land,approved forResidential

Development

1995 - 19,406


List of Properties as at 31st December 2004 (cont’d)

69




Age ofProperties


H.S.(D) No. 22644 P.T. No. 7282,H.S.(D) No. 23709-23714 P.T. No. 8347-8352, H.S.(D) No. 23715 P.T. No. 8353, H.S.(D) No. 23719 P.T. No. 8357 & H.S.(D) No. 24713 P.T. No. 9953Mukim of RawangDistrict of GombakSelangor Darul EhsanLot 1033 Grant 44266, Lot 1037 Grant 44268, Lot 1038 Grant 41264 & Lot 1039 Grant 44261Bandar KundangDistrict of GombakSelangor Darul Ehsan

Freehold 7.91 Vacant land,approved for Mixed

Development

1996 - 12,309

Mukim of RawangDistrict of GombakSelangor Darul EhsanLot P.T. Nos. 13769, 13773, 13774, 13796, 13897,13900, 13910, 13911, 13919-13922, 13926, 13931-13933, 13971, 13977,13980, 13981, 13983, 13986, 13991,14158, 14159, 14271-14273, 14275-14277, 14292, 21681-21742, 21744,21747-21750, 21762-21765, 21767-21774,21820-21822, 21832, 21847-21852, 21855,21857-21859, 21862 , 21864-21871,21873, 21875, 21877, 21878, 21881,21882, 21885, 21887, 21888, 21890,21893, 21895, 21896, 21898-21903,21905, 21910, 21912, 21920, 21929-21940, 21953-22030, 22196,22199, 22200 & 22201

Freehold 94.09 Vacant land,approved for Mixed

Development

1996 - 97,125

All in Mukim of Pusat Bandar Rasah JayaSeremban, Negeri SembilanLots P.T. No. 10106 to 10118 &Lots P.T. No. 10121 to 10125

Freehold 0.74 18 units4 storey shop

offices

2002 - 6,840

Mukim of PlentongDaerah Johor BahruNegeri Johor Darul TakzimH.S.(D) No. 212162 P.T. No. 111260

Freehold 1.44 1 1/2 storeydetached &

Semi-detachedfactory

1996 5 years 880

Lot No. 104, 105 and 106Geran 63, 64 and 65Town of Kuala LumpurNo. 1, Persiaran LedangOff Jalan Duta, Kuala Lumpur

Freehold 1.52 Serviced apartments

and service outletscomprising a pub, a

coffee house, aseminar room,

office and businesscentres within Duta

Vista ExecutiveSuite

1997 12 years 19,267


List of Properties as at 31st December 2004 (cont’d)

70




Age ofProperties


H.S.(D) No. 12882 to 12887 P.T. No. 2830 to 2835Mukim of Pasir PanjangDistrict of Port DicksonNegeri Sembilan Darul Khusus

Freehold 1.44 Resortknown as Duta

Hacienda RivieraResort

2002 - 8,256

H.S.(D) No. 22621 P.T. No. 7259Mukim of Rawang District of Gombak Selangor Darul Ehsan

Freehold 4.65 Existing Resortknown as DutaPalms Resort &Anglers' Club

1997 9 years 15,000

H.S.(D) No. 717 to 719 P.T. No. 35 to 37Mukim and District of Hulu TerengganuTerengganu Darul Iman


the year 2054

172.88 Existing Resortknown as DutaLakes Resort

1998 12 years 3,800

H.S.(M) No. 1238 to 1243P.T. No. 2125 to 2130Mukim of BeserahDistrict of KuantanPahang Darul Makmur

Freehold 1.12 Existing Resortknown as DutaSands Beach

Resort

1998 12 years 4,350

H. M. Land Registry K444270Country of KentDistrict of Shepway, England

Freehold 5.00 Existing Resortknown asHavenfield

Hall

1998 67 years 2,780

H. M. Land Registry K113517& K314104Country of Kent, District ofAshford, England

Freehold 19.48 Existing Resortknown as Cloth Hall

1998 585 years 4,700

4 On Rp 222092Parish of MudgeerabaCountry of WardQueensland, Australia

Freehold 120.09 Existing Resortknown as

Coolalinga Lodge

1998 25 years 13,095


Shareholdings Structureas at 29th April 2005

71

Analysis of Shareholdings

Distribution of Shareholdings

Thirty Largest Shareholders as per Register of Members

Authorised Share Capital - RM1,000,000,000.00Issued and Paid-up Share Capital - RM334,886,726.00Type of Share - Ordinary Shares of RM1.00 eachNumber of Shareholders - 14,854Voting Rights - One vote per Ordinary Share

Range of Shareholdings No ofShareholders

Percentage (%)of Shareholders

No of Shares Percentage (%)of Shares

Less than 100 347 2.34 14,503 0.00100 - 1,000 2,404 16.19 2,135,869 0.64

1,001 - 10,000 8,932 60.13 41,499,872 12.39

10,001 - 100,000 2,880 19.39 84,526,416 25.24

100,001 to less than 5% of issued shares 290 1.95 176,401,130 52.685% and above of issued shares 1 0.00 30,308,936 9.05

Total 14,854 100.00 334,886,726 100.00

Name No. of Shares Percentage (%)AMMB Nominees (Tempatan) Sdn BhdPledged Securities Account for Dato' Tan Jing Nam 30,308,936 9.05AMMB Nominees (Tempatan) Sdn BhdPledged Securities Account for Aznan bin Abdul Aziz 16,067,159 4.80AMMB Nominees (Tempatan) Sdn BhdPledged Securities Account for Aznan bin Abdul Aziz 14,411,346 4.30AMMB Nominees (Tempatan) Sdn BhdPledged Securities Account for Dato' Tan Jing Nam 13,965,632 4.17AMMB Nominees (Tempatan) Sdn BhdPledged Securities Account for Lembah Koleksi Sdn Bhd 5,751,312 1.72AMMB Nominess (Tempatan) Sdn BhdPledged Securities Account for Aznan bin Abdul Aziz 5,304,964 1.58AMSEC Nominees (Tempatan) Sdn BhdAmFinance Berhad for Michael Chai Sze Hou 5,272,000 1.57Permodalan Nasional Berhad 5,000,000 1.49Amsec Nominees (Tempatan) Sdn BhdAmFinance Berhad For Lim Sen @ Lim Jit Kuan 4,493,000 1.34CIMSEC Nominees (Tempatan) Sdn BhdCIMB FOR Dato' Tan Jing Nam 4,235,704 1.27RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account For Mohd Nafizal Bin Mohd Noor 4,000,000 1.19RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account For Dato' Tan Jing Nam 3,900,709 1.17HLB Nominees (Tempatan) Sdn BhdPledged Securities Account For Lim Fong Teng 3,477,800 1.04

Michael Chai Sze Hou 2,620,200 0.78

Sithambaram A/L Meyappan 2,565,134 0.77

Mayban Nominees (Tempatan) Sdn BhdPledged Securities Account for Tan Chuan Ming 2,354,200 0.70Amsec Nominees (Tempatan) Sdn BhdAmFinance Berhad for Chan Fook Choy 2,215,000 0.66Lee Kee Hong 1,451,110 0.43HLG Nominee (Tempatan) Sdn BhdPledged Securities Account for Harbans Kaur A/P Saudagar Singh 1,404,927 0.42


Shareholdings Structureas at 29th April 2005 (cont’d)

72

Name No. of Shares Percentage (%)Siew Hoi Pat 1,394,800 0.42Menteri Kewangan MalaysiaSection 29 1,240,124 0.37HLG Nominees (Tempatan) Sdn BhdPledged Securities Account for Dr. Kartar Singh A/L Pall Singh 1,230,836 0.37

Mohd Daim Bin Ab Rahim 1,188,224 0.36HSBC Nominees (Asing) Sdn BhdHSBC SG For Lee Rubber Company Pte Ltd 1,182,132 0.35Hong Chang Meng 1,135,000 0.34TA Nominees (Tempatan) Sdn BhdPledged Securities Account For Wong Tak Ming 1,130,000 0.34Wong Yook Phooi 1,123,900 0.34Citicorp Nominees (Tempatan) Sdn BhdPledged Securities Account For Siew Hoon Hin 1,111,000 0.33RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account For Phoa Boon Ting 1,100,000 0.33 HLB Nomineees (Tempatan) Sdn BhdPledged Securities Account Fro Mah Siew Seong 1,080,000 0.32

141,715,149 42.32

No. of shares heldName of Shareholders Direct Percentage (%) Indirect Percentage (%)

Dato' Tan Jing Nam 53,120,2001 15.86 - -Aznan bin Abdul Aziz 42,960,0582 12.83 - -

1 Of the 53,120,200 shares, 44,274,568 are held through AMMB Nominees (Tempatan) Sdn Bhd, 4,235,704 are held throughCimsec Nominees (Tempatan) Sdn. Bhd., 709,219 are held through Mayban Nominees (Tempatan) Sdn. Bhd. and 3,900,709 areheld through RHB Capital Nominees (Tempatan) Sdn. Bhd.

2 Of the 42,960,058 shares, 35,783,469 are held through AMMB Nominees (Tempatan) Sdn Bhd and 7,168,141 are heldthrough Bumiputra-Commerce Nominees (Tempatan) Sdn Bhd.

Substantial shareholders as per the Register of Substantial Shareholders (Excluding Bare Trustees) as at29th April 2005.

Notes: -


Warrant Holdings Structureas at 29th April 2005

73

Analysis of 2002/2008 Warrants holdings

Type of securities - 2002/2008 WarrantsVoting rights - One vote per 2002/2008 warrant

Distribution of 2002/2008 Warrants holdings

Thirty Largest 2002/2008 Warrant Holders per Register of Members

Range of WarrantsHoldings

No ofWarrant Holders

Percentage (%)of Warrant Holders

No of Warrants Percentage (%)of Warrants

Less than 100 244 3.33 10,242 0.01

100 - 1,000 1,254 17.09 1,085,931 0.651,001 - 10,000 4,461 60.81 20,025,269 11.9610,001 - 100,000 1,207 16.45 37,725,945 22.53100,001 to less than 5%of issued warrants 167 2.28 68,737,002 41.05

5% and above of issuedwarrants 3 0.04 39,858,974 23.80

Total 7,336 100.00 167,443,363 100.00

Name No. of Warrants Percentage (%)AMMB Nominees (Tempatan) Sdn BhdPledged Securities Account for Dato' Tan Jing Nam 15,154,468 9.05AMMB Nominees (Tempatan) Sdn BhdPledged Securities Account for Aznan bin Abdul Aziz 13,298,874 7.94AMMB Nominees (Tempatan) Sdn BhdPledged Securities Account for Dato' Tan Jing Nam 11,405,632 6.81AMMB Nominees (Tempatan) Sdn BhdPledged Securities Account for Aznan bin Abdul Aziz 7,205,673 4.30

Michael Chai Sze Hou 6,600,000 3.94AMMB Nominees (Tempatan) Sdn BhdPledged Securities Account for Lembah Koleksi Sdn Bhd 2,875,656 1.72AMMB Nominees (Tempatan) Sdn BhdPledged Securities Account for Aznan bin Abdul Aziz 2,652,482 1.58Hong Chang Meng 1,712,700 1.02Tan Keng Hock 1,449,600 0.87Maybank Nominees (Tempatan) Sdn BhdPedged Securities Account For Lee Heng Teong 1,336,000 0.80Chuah Seng Hoo 1,270,000 0.76Mohd Daim Bin Ab Rahim 1,225,562 0.73Khor Yeong Ping 1,100,000 0.66

Abdul Muis Bin Hassan 1,000,000 0.60

On Thiam Chai 1,000,000 0.60Mayban Nominees (Tempatan) Sdn BhdPledged securities account for Vivekanandan a/l Ams. Periasamy 971,800 0.58TA Nominees (Tempatan) Sdn BhdPledged Securities Account For Tan Toh Thai 910,000 0.54Chin Yook Yong 900,000 0.54Lee Kee Hong 757,514 0.45Hiew Fook Ong 730,000 0.44Hah Kee Loon 723,900 0.43

Affin Nominees (Tempatan) Sdn Bhd Pedged Securities Account For Roti Sedap Sdn Bhd 642,000 0.38


Warrant Holdings Structureas at 29th April 2005 (cont’d)

74

Name No. of Shares Percentage (%) Tan Shoo Li 590,000 0.35Goh Leong Chuan 572,110 0.34TA Nominees (Tempatan) Sdn BhdPledged Securities Account For Wong Tak Ming 565,000 0.34Mayban Nominees (Tempatan) Sdn BhdPledged Securities Account For Kek Lian Lye 560,000 0.33Affin Nominees (Tempatan) Sdn BhdPledged Securities Account For Teh Swee Bee 538,000 0.32HLG Nominees (Tempatan) Sdn BhdPledged securities account for Dr. Kartar Singh A/L Pall Singh 530,000 0.32Harbans Kaur A/P Saudagar Singh 513,361 0.31Mohd Azham Bin Hussain 510,000 0.31

79,300,332 47.36


Statements of Directors’ Interestin the company and related corporations as at 29th April 2005 (as per the Register of Directors’ securities holdings)

75

The CompanyTanco Holdings Berhad

Ordinary Shares of RM1.00 each

Note:(1) Less than 0.01%

2002/2008 Warrants

Note:(1) Less than 0.01%

Subsidiary CompaniesMedan Melati Sdn Bhd

Tanco Enterprise Sdn Bhd

By virtue of their interests in the Company, Aznan bin Abdul Aziz, Dato' Tan Jing Nam, James Wong Kwong Yew, Dato' Dr. Mohd.Aminuddin bin Mohd. Rouse, Dato' Dr. Mohd. Noordin bin Haji Keling and Dato' Tan Lee Sing are also deemed interested in theshares of all the other subsidiary companies of the Company to the extent the Company has an interest.

No. of ordinary shares of RM1.00 eachName of Directors Direct % Indirect %

Dato' Abdul Rahim bin Saibu - - - -

Aznan bin Abdul Aziz 42,960,058 12.83 - -Dato' Tan Jing Nam 53,120,200 15.86 - -James Wong Kwong Yew 5,000 - (1) 5,751,312 1.72Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse 70,000 0.02 - -Dato' Dr. Mohd. Noordin bin Haji Keling 62,510 0.02 - -

Dato’ Tan Lee Sing 5,000 - (1) - -

Loh Chen Peng - - - -

No. of 2002/2008 WarrantsName of Directors Direct % Indirect %

Dato' Abdul Rahim bin Saibu - - - -Aznan bin Abdul Aziz 23,157,029 13.83 - -Dato' Tan Jing Nam 26,560,100 15.86 - -James Wong Kwong Yew - - 2,875,656 1.72

Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse - - - -Dato' Dr. Mohd. Noordin bin Haji Keling 31,255 0.02 - -

Dato’ Tan Lee Sing 2,500 - (1) - -

Loh Chen Peng - - - -

No. of shares held

Name of Directors Direct % Indirect %Dato' Dr. Mohd. Aminuddin bin Mohd. Rouse 200 10.00 - -

No. of shares held

Name of Directors Direct % Indirect %

Aznan bin Abdul Aziz 15,002 4.84 - -Dato' Tan Jing Nam 15,002 4.84 - -

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