Straits Trading FA

The Straits Trading Company Ltd

116Years of Heritage {1887 - 2003}

Annual Report 2003

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The Straits Trading Company Limited Annual Report 2003

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The pillar with its base featuring The Straits Trading Company Limited logo, represents the solid foundations on which the Company was built, and how it continues to remain steadfast 116 years. The pillar is also a sundial that symbolises the rich history, resilience and longevity of the Company.

Contents

01 Corporate Profile

02 Board of Directors

04 Corporate Information

06 Chairman’s Statement

Business Review

08 Hotel Operations

10 Financial Investments

12 Property Development & Investment

14 Media Advertising

16 Tin Smelting

18 Group Financial Highlights

20 Report on Corporate Governance

28 Key Executives

30 Financial Calendar

31 Financial Report

67 Shareholder Information

71 Notice of Meeting

Proxy Form

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Corporate Profile116 Years of Heritage {1887 - 2003}

The founding history of The Straits Trading Company Limited can be traced to the 19th century with the formation of a partnership for tin smelting

between James Sword, a Scottish businessman, and Herman Muhlinghaus, a German entrepreneur. The partnership evolved successfully to become one of the largest tin smelters in the world. To raise capital for expanding the business, The Straits Trading Company Limited was incorporated on 8 November 1887 with an initial capital of S$150,000.

Backed by 116 years of prudent and astute business management, the corporation is an investment holding company with shareholders’ funds of S$1,065,834,000 as at 31 December 2003. Its business interests span the Asia Pacific region. Apart from tin smelting, its associated and subsidiary companies engage in property development and investment, hotel development and management, financial investments and fund management, and media advertising.

The Straits Trading Company Limited is committed towards achieving higher returns for its shareholders. With a clear focus on shareholder value, the Group will continue to review its business strategy and redeploy capital from its asset-based investments to more income-generating activities.

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Board of Directors

Mr Howe Yoon Chong ChairmanBA Hons, Hon D Litt

Independent and Non-Executive Director Last re-elected : 2003

Mr Howe was appointed to the Board in 1992 and has held the position of Chairman since then. He was also the Chief Executive Officer of the Group until he stepped down on 1 January 2000. Prior to joining the Group, the former top civil servant, politician and banker held many senior appointments including Head of Civil Service, Permanent Secretary to major ministries, as well as Chairman and Chief Executive of major statutory boards like HDB, PSA and others. He was the Chairman and Chief Executive Officer of The Development Bank of Singapore Limited (1985 to 1990), the Minister of Defence (1979 to 1982) and Health (1982 to 1984). After retiring from public service, Mr Howe chaired the Boards of The Great Eastern Life Assurance Company Ltd (1992 to 2000) and Great Eastern Holdings Ltd (1999 to 2000).

Mr Tang I-FangDeputy ChairmanDUBC, B Sc, MBA

Independent and Non-Executive Director Last re-elected : 2003

Appointed to the Board in 1981 and the Deputy Chairman since 1989, Mr Tang is currently the Executive Chairman of WBL Corporation Ltd, the Chairman of United Engineers Ltd and Wearnes International (1994) Ltd. He is also a Director of Lee Kuan Yew Exchange Fellowship Ltd, Singapore Press Holdings Ltd, OCBC Wearnes & Walden Investments (Singapore) Ltd and several overseas companies. He was awarded the Singapore Businessman of the Year in 1989. When he was in public service, he led several UN Economic Missions for Asian countries and was Chairman of EDB (1968 to 1972) and its Executive Committee (1975 to 1986); Chairman of JTC (1979 to 1986); Chairman of the Sub-Committee on Service Sector of Singapore Economic Committee (1985).

Y.A.Bhg. Jen (B) Tun Ibrahim Bin IsmailPMN, SPMJ, SPMP, SPDK, DIMP, PIS

Independent andNon-Executive Director Last re-elected : 2003

Prior to joining the Board in 1978, Tun Ibrahim Bin Ismail served in the Malaysian Armed Forces and retired in 1977 after holding the appointment of Chief of the MalaysianArmed Forces for over 7 years. He is currently the Chairman of Malaysia Smelting Corporation Bhd, a Director of WBL Corporation Ltd and Permodalan Nasional Berhad. In June 2000, he was conferred the highest civilian award in Malaysia, the prestigious and honourable title of Seri Setia Mahkota (SSM) award which carries the title Tun. He was also awarded the Honorary Degree of Doctor of Science (Management) from Universiti Utara Malaysia in 2000.

Mr Michael Wong PakshongBA Hons, Hon LLD, CPA

Independent andNon-Executive DirectorLast re-elected : 2003

Mr Wong Pakshong, a Fellow of the Institute of Chartered Accountants in England and Wales, was appointed to the Board in 1981 and served as the Managing Director from 1981 to end of 1986. He presently chairs the boards of Great Eastern Holdings Ltd Group, Robinson & Company Ltd Group and Sime Singapore Ltd. He is a Director of Bukit Sembawang Estates Ltd Group, Oversea-Chinese Banking Corporation Limited Group, WBL Corporation Ltd and Sime Darby Berhad. He was the former Managing Director of the Monetary Authority of Singapore (1971 to 1981), Chairman of Neptune Orient Lines Ltd (1970 to 1984) and Chairman of e Esplanade Company Ltd (1997 to 2003).

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Professor Lim Chong Yah BA Hons, MA, D Phil, BBM,PJG, DUBC


Appointed a Director in 1989, Professor Lim currently serves as Professor of Economics at the Nanyang Business School of the Nanyang Technological University. Prior to this, he was Senior Professor at the National University of Singapore, founder Chairman of the National Wages Council and the Skills Development Fund. He was also co-founder of the Federation of ASEAN Economic Associations, the East Asian Economic Association and the Pacific Economic Co-operation Conference. He was a Director of the Industrial and Commercial Bank and the United Overseas Bank Ltd, a founding Director of Delifrance Asia, and an International Adviser of the NEC (Japan). Currently a member of the Presidential Council of Minority Rights, Professor Lim was conferred the ‘Distinguished Service Order’ by the Singapore Government in August 2000.

Mr Michael HwangPBM, MA, BCL


Mr Hwang, a Senior Counsel and international arbitrator, was first appointed to the Board in 1989. Upon his appointment as a Judicial Commissioner of the Supreme Court in 1991, he resigned from the Board, but rejoined the Board in 1993. He sits on the boards of Econ International Ltd and Del Monte Pacific Limited, and chairs the Singapore Dance Theatre Limited. Mr Hwang also serves as Singapore’s Non-Resident Ambassador to Switzerland. A former partner of M/s Allen & Gledhill, the largest law firm in Singapore, Mr Hwang now heads his own law firm ‘Michael Hwang S.C.’ which services other law firms and specialises in arbitration matters. He is also a Fellow of the Singapore Institute of Directors.

Tan Sri Dato’ Dr Lin See-YanPSM, DPMP, DSAP, JMN, JSM, AMN, BA Hons, MPA, MA, PhD, C Stat


Tan Sri Lin, a London trained Chartered Statistician, is also a banker and economist. He has been a Director since 1994 and presently sits on the boards of Great Eastern Holdings Ltd Group, Ancom Bhd Group, F&N Holdings Bhd, Genting Bhd, Resorts World Bhd and Axis Systems Holdings Limited. In Malaysia, he is a member of the Government’s National Economic Action Council (NEAC) Working Group; Pro-Chancellor, Science University Malaysia; and Chairman of LIN Associates and Cabot Malaysia. Tan Sri Lin is also Chairman of the Harvard Graduate School Alumni Council at Harvard University as well as its Harvard Alumni Association’s Regional Director for Asia. Prior to 1998, he was Chairman and CEO of the Pacific Bank Bhd Group and for 14 years previously, Deputy Governor of Bank Negara Malaysia, having been a central banker for 34 years. Tan Sri Lin also served as Director of Khazanah Nasional Bhd (1994 to 2000) and from 1999 to 2000, as Chairman of its Executive Board.

Mr Norman Ip Ka CheungPresident & CEOB Sc, CPA

Non-Independent and Executive DirectorLast re-elected : 2002

Appointed to the Board in 2000, Mr Ip, a Chartered Accountant and a Fellow of the Institute of Chartered Accountants in England and Wales, is the President and Chief Executive Officer of the Group. He was the former Chief Financial Officer and General Manager of the Group from 1990 to 1999. Prior to joining the Group in 1983, he was with Ernst & Whinney (now known as Ernst & Young), specializing in audits of conglomerates. He also sits on the boards of the following listed companies in Malaysia : Malaysia Smelting Corporation Bhd, Tronoh Mines Malaysia Bhd and Killinghall (Malaysia) Bhd, and in Australia : Marlborough Resources NL.

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Corporate Information

Courtyard of Rendezvous Hotel, Singapore

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Honorary Life President

Board of Directors

Secretaries

Registered Office

Corporate Offices

Registrars

Auditors

Principal Bankers

Tan Sri Dr Tan Chin TuanPSM, CBE, JP, Hon LLD, Hon D Litt

Mr Howe Yoon Chong (Chairman)BA Hons, Hon D Litt

Mr Tang I-Fang (Deputy Chairman)DUBC, B Sc, MBA

Y.A.Bhg. Jen (B) Tun Ibrahim Bin IsmailPMN, SPMJ, SPMP, SPDK, DIMP, PIS

Mr Michael Wong PakshongBA Hons, Hon LLD, CPA

Professor Lim Chong YahBA Hons, MA, D Phil, BBM, PJG, DUBC

Mr Michael HwangPBM, MA, BCL

Tan Sri Dato’ Dr Lin See-YanPSM, DPMP, DSAP, JMN, JSM, AMN, BA Hons,MPA, MA, PhD, C Stat

Mr Norman Ip Ka Cheung (President & CEO)B Sc, CPA

Mrs Victoria TseMBA, LLB (Hons), B Sc, CPA

Ms Emily TeoLLB (Hons)

9 Battery Road #21-00, Straits Trading BuildingSingapore 049910

9 Battery Road #21-00, Straits Trading BuildingSingapore 049910Tel : (65) 6535 4722 Fax : (65) 6532 7939E-mail : [email protected] : http://www.stc.com.sg

2 Lebuh Pasar Besar5th Floor, Straits Trading Building50050 Kuala LumpurTel : (03) 2698 7126 Fax : (03) 2693 7542E-mail : [email protected]

PricewaterhouseCoopers8 Cross Street #11-00, PWC BuildingSingapore 048424

Ernst & Young10 Collyer Quay #21-01, Ocean BuildingSingapore 049315Mr John Chin (Partner)Date of Appointment : 26 April 2002

Oversea-Chinese Banking Corporation LimitedDBS Bank LtdMalayan Banking BerhadStandard Chartered Bank

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Chairman’s StatementHowe Yoon Chong

A n encouraging result was achieved in 2003 despite a challenging year. The Group’s businesses faced a broad range of challenges in the first half of 2003,

most notably the adverse economic impact of the SARS outbreak in a number of Asian countries. The warin Iraq further dampened the already poor global business environment.

Profit attributable to shareholders for the year was S$41.4 million, compared to S$32.7 million in the previous financial year, representing an increase of 26.7%. In view of the better result, the Board proposed a second interim dividend of 4 cents (2002 : 3 cents)per share less income tax at 20% (2002 : 22%) for the year ended 31 December 2003, which together with the first interim dividend of 2 cents (2002 : 2 cents) paid on 8 October 2003, gives a total distribution of 6 cents for the year. This is an increase over last year’s 5 cents per share.

The impact of SARS was felt particularly in the retail and hospitality sectors as the numbers of travelers fell drastically. Despite measures taken to reduce costs, the Group’s Singapore hotel recorded a loss for the first time since it commenced operations in 1998. This loss was mitigated by the improved performance of the hotels in Australia with the opening of the Rendezvous Stafford Hotel in Sydney in the first quarter of 2003 and, partly aided by the strong Australian dollar. In an important milestone, the Group’s hotel management company, Rendezvous Hotels International Private Limited (RHI), has made a significant progress in securing a new management contract for the 350-room Rendezvous Merry Hotel in Shanghai, China. After a major refurbishment, Rendezvous Merry Hotel officially opened for business on 1 March 2004. The plan to secure more hotel management contracts remains on schedule with the opening of a hotel in Broome, Western Australia later this year.

The current year started on a firmer footing, and the benefit of RHI’s development strategy will become more apparent as contributions from new hotels increase with a more geographically diversified earnings base.

The performance of global equity markets was poor in the first half of 2003. The volatile investment climate should be viewed against the backdrop of the Iraq war,

the tensions on the Korean peninsular, and the SARS outbreak in South East Asia. A sharp turnaround, however, was seen in the second half of the year with the swift resolution of the war in Iraq and the concerted efforts to contain the spread of SARS. Capitalising on the much improved market conditions, the Group realized substantial profits from securities trading. At the same time, the Group undertook a review of its long-term investments and disposed of non-performing investments. Consequently, the Group entered into a conditional share sale agreement to divest its remaining 8.5% interest in Tronoh Mines Malaysia Bhd. The buyers have from February this year until April 2004 to complete the sale. With the completion of this sale, the Group will realize a gain of approximately S$9.5 million. However, the Group deemed it prudent to make a S$10 million provision for impairment in value of its investment in Killinghall (Malaysia) Bhd. Overall, as at 31 December 2003, the Group’s quoted short and long-term investment portfolios showed an overall surplus of S$112 million. In 2004, despite short-term volatility, the long-term fundamentals of the Group’s investment portfolios remain intact and, barring unforeseen circumstances, the portfolios should remain in surplus.

The Singapore market for office space continued to be lacklustre with few transactions. Market sentiment continued to be weighed down by the overall weak leasing market, which could prevail for some time to come. Despite keen competition in the Central Business District, Straits Trading Building managed to maintain its occupancy rate at 83%. The China Square Central development secured an average occupancy of around 63%. With active marketing, the occupancy rate may rise to about 80% before the end of 2004. Going forward, there are signs that the improved economic conditions will generate a greater demand for office space than hitherto.

Based on the latest independent valuations of the Group’s investment properties, the Revaluation Reserve has been written down from S$168.8 million at the end of 2002 to S$154.6 million at the end of 2003. The Group’s debt-equity ratio, however, fell to 0.48 times as at 31 December 2003 from 0.58 times as at 31 December 2002, as bank borrowings were partly reduced with the completion of the sale of the Great Eastern Centre.

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With the weak sentiment in Singapore residential market in 2003, the Group adopted a cautious approach for the Cable and Nathan Road development. The site has been partitioned into 17 good-class bungalow plots. During the year, the Group sold a few apartment units in Gallop Gables and will continue to do so as and when prices meet our expectations. The leasing of the upmarket residential development at Gallop Green exceeded our expectations. The Group managed to lease all units and the development is generating reasonable rental income. Our joint venture company in Malaysia, Johan Kekal Sdn Bhd, launched the sale of the exclusive residential development at Federal Hill in Kuala Lumpur with reasonably good results.

The Group recognises that property is inherently cyclical and that the economic environment in Singapore will continue to be challenging for the property market. The Group aims to extract value from its existing real estate assets, while minimizing further investment until its property exposure is reduced.

Our tin mining and smelting associate, Malaysia Smelting Corporation Bhd (MSC), achieved another year of sterling performance with impressive growth in earnings and shareholders’ funds. MSC’s profi t before taxation for the year ended 31 December 2003 recorded an increase of 32%, registering a new high of RM52.3 million. The strong performance was achieved on the back of a 20% increase in the global tin price, and relentless efforts in cost and capacity rationalization. With strategic business acquisitions in the past few years, the combined production of tin metal by the MSC Group rose to 37,058 tonnes in 2003. This positions MSC as a leading global producer of tin metal and tin-based products, contributing about 15% of the world’s tin production. In view of the fi rm tin price, MSC is expected to perform better in 2004.

With intense competition from the outdoor advertising agents as well as the two TV companies in Singapore, the Group’s media advertising business, Straits Media Private Limited (Straits Media), has seen not only falling advertising rates but also shorter contract periods in 2003. Straits Media reported a small loss of S$0.2 million compared to a profi t of S$0.3 million a year ago. The outdoor advertising business depends primarily on the quality of the locations. The Group will redirect

resources to focus on more strategic and eye-catching sites with superior publicity value and concentrateon improving the quality and technology of thesesites. Only in this way can Straits Media secure a comparative advantage over its competitors. At the same time, the Group continues to look out for overseas expansion opportunities.

Despite a diffi cult 2003, coming after several years of disruptions in Asia, we were able to achieve a satisfactory result in 2003. Capital values of the Group’s Singapore properties should stabilise as economic conditions improve. With a resilient past and a committed workforce, we expect the Group to continue to be profi table in 2004.

On behalf of the Board, I would like to thank our staff for their dedicated work and contributions. Most importantly, I would like to express our sincere appreciation to all valued and loyal shareholders, customers, tenants, business associates and bankers for their invaluable support. I am also grateful to my fellow Directors for their wise counsel and commitment.

Howe Yoon ChongChairman18 March 2004

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Hotel Operations

Rendezvous Hotel, Singapore

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Earnings of the Group’s hotel operations as a whole were only marginally lower in 2003, despite the outbreak of SARS, the war in Iraq and the overall economic

uncertainty during the first half of the year.

The hotel business in Singapore was, however, severely affected. The Group’s Rendezvous Hotel, Singapore (Hotel) incurred a loss for the first time since it opened for business in 1998. In response to the changed competitive landscape, the Hotel introduced various cost-cutting measures, including wage cuts to improve efficiency. Despite the challenging environment, the Hotel continues to improve in the customer service quality.

In 2003 we opened hotels in Melbourne and Sydney. This brings to five the number of hotels in Australia with Rendezvous represented in all major capital cities. The Marque Hotel, Melbourne opened in February 2003 and the Rendezvous Stafford Hotel, Sydney in March 2003. There were good performances from operations in Australia with all of our hotels increasing profitability from the previous year. This trend has continued into the first two months of 2004 and we expect that this will continue.

Improved occupancy combined with productivity gains resulted in good growth in profitability for the Group’s Rendezvous Observation City Hotel in Perth in 2003. The market in Perth remains difficult with limited demand growth. However, we do not expect any material increase in the number of available rooms in the market, which should result in stable, if not slightly improved, conditions in 2004. We will be undertaking a refurbishment of the guest rooms in the Rendezvous Observation City Hotel in 2004 which should provide an opportunity to increase the hotel’s yield from the latter part of 2004 onward.

The Rendezvous Hotel, Brisbane continues to be a strong contributor to the management company, Rendezvous Hotels International Pte Ltd’s (RHI) profitability, increasing profit by over 20% on the prior year. The Rendezvous Allegra Hotel, Adelaide further matured in 2003 and we expect a strong profit contribution from this hotel in 2004. The Rendezvous Stafford Hotel, Sydney exceeded our forecasts in its first year of operation. The Sydney hotel market is showing strong growth again following the downturn after the 2000 Olympics. The Marque Hotel in Melbourne in its first year experienced difficult trading conditions. We expect the market and the hotel to improve in 2004.

We anticipate a strong hotel demand environment in Australia in 2004. The increasing strength of the Australian dollar has not, as yet, had any tangible effect on inbound tourist numbers to Australia. Whilst we

have a presence now in every capital city in Australia we still have further opportunities to expand and develop our RHI Group in the region.

In an important milestone in RHI’s development strategy, RHI was awarded the contract to manage a 350-room property in Shanghai, known as Merry Hotel in December 2003. The hotel was completely refurbished and upgraded to a 4-star hotel and re-opened as the Rendezvous Merry Hotel on 1 March 2004. This will be the first hotel in China under Rendezvous management. The plan to secure more hotel management contracts remains on schedule with the opening of a hotel in Broome, Western Australia in the later part of this year.

During the year, the RHI group has also entered into a marketing partnership with Choice Hotels International (Choice), which is the world’s second largest international hotel group. RHI’s alignment with this major brand family will strengthen its distribution worldwide and enable it to expand the business potential in those countries where Choice already operates.

Looking ahead, RHI expects hotel performance in most markets it operates to improve given that there are already signs of a general economic recovery. The current year has started on a firmer footing, and the benefit of RHI’s development strategy to focus on getting pure management contracts, will become more tangible as contributions from new hotels increase and provide more balanced geographic earnings from its hotel operations.

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Rendezvous Merry Hotel, Shanghai

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Financial Investments

Always looking out for investment opportunities

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Global equity prices plummeted at the beginning of 2003 as fears of the SARS epidemic and the long drawn conflict between the United States and Iraq

gripped investors. However, the selling peaked around March when the war finally broke out and the coalition forces captured Baghdad within weeks. In Asia, the fear from SARS also receded by May as authorities fought to contain the spread of the disease. Sentiment thereafter improved dramatically and equity markets rebounded with fervour in the latter half of the year.

Risk premiums gradually shrank as economies started to emerge from the doldrums. Central banks, led by the US, eased monetary policy aggressively in aneffort to jumpstart their economies. Against a favourable low interest rate environment, consumers as well as corporates, started spending which spurred the economy.

A cyclical recovery fuelled by a surge in consumption, investment and exports also gained momentum in many Asian countries, supported by easier monetary conditions. Asia also benefited from the emergence of China as an industrial giant, and its breakout in terms of discretionary spending levels. Furthermore, a stronger US growth and a weak US dollar presented the perfect backdrop for an Asian recovery.

In 2003, the cyclical sectors namely technology, basic materials and commodities, led the economies out of their recession, whilst China ‘H’ and Thailand equity markets were the best performing markets, recording a 152% and 116% return respectively from the previous year. During the year, profits of S$38.6 million were realized from both the Group’s long and short-term investment portfolios as equity markets appreciated and stock valuations became stretched.

Against the backdrop of a strong equity market, the Group undertook an impairment review of its long-term investments and decided, on the ground of prudence, to make a provision of S$10 million against its investment in Killinghall (Malaysia) Bhd because over the years, the carrying cost of this investment has risen substantially higher than its market price. The Group had also entered into a conditional share sale agreement to divest its remaining 8.5% interest in Tronoh Mines Malaysia Bhd. The buyers have from February this year until 12 April 2004 to complete the sale. With the completion of this sale, the Group will realize a gain of approximately S$9.5 million.

Going into 2004, stocks are generally fairly priced and trading is expected to be more volatile. In the short-term, the region is somewhat overbought, but the long-term story is still intact. The Group will continue to look for companies with good earnings growth at fair valuations.

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Screening the world for investment ideas Economic cycles present opportunities

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Property Development& Investment

Conservation shophouses at China Square Central, Singapore

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A mid great economic uncertainties, the Singapore residential market in 2003 registered one of the lowest levels of demand. Despite poor market

conditions, all 13 townhouses and 40 apartments in the Group’s Gallop Green, an exclusive low-rise condominium at Woollerton Park, Singapore were leased at fair market rentals by end of the year,a reflection of the quality of the product and the exclusivity of the location. During the year, the Group sold a few more apartments in Gallop Gables at Farrer Road, Singapore and will continue to sell if the prices are within expectations. Meanwhile, about 70% of the remaining 122 apartments were leased out. To stay competitive, the Group will upgrade the interior of some apartments to meet tenants’ expectations.

Commercial properties in Singapore were affected by global economic uncertainties, especially in the office sector. Notwithstanding negative market sentiment, the Group achieved a respectable occupancy rate of 83% for its Straits Trading Building at Battery Road, Singapore. The China Square Central development, comprising a 15-storey office and retail building known as Marsh & McLennan Centre and restored shophouses, achieved a satisfactory occupancy rate of about 63%. With indications of an economic recovery in 2004, the occupancy may increaseto over 80% in 2004 based on negotiations currentlyin progress.

Given the lacklustre property markets for the year 2003, the Group did not embark on any new developments. Nonetheless, in anticipation of improving market conditions, all preparations have been made to proceed in phases with the development of good-class bungalows at the Group’s site at Cable and Nathan Road, comprising 17 plots. As this is a niche development, it is less affected by the general market conditions. Nevertheless, the Group will monitor the demand situation before embarking on the construction of the buildings.

Plans to re-develop the Straits Trading Building in Singapore are currently being explored, and it is unlikely that the Group will commence any redevelopment work in the near term given the current oversupply of office premises in the Central Business District.

The Group’s joint-venture company, Johan Kekal Sdn Bhd (Johan Kekal), launched the sale of the upmarket residential dwellings known as Sri Bukit Persekutuan located at Federal Hill, Kuala Lumpur. All the 44 townhouses and semi-detached houses and over 76% or 61 condominium units were sold by the end of the year. Johan Kekal has just started to market its 24 bungalow units and the response has been very encouraging.

The Group appointed independent property valuers to conduct revaluations of all its investment properties as at 31 December 2003. The S$23.5 million net revaluation deficit after deducting minority interest’s share was charged to the profit and loss account as the Group has fully utilised its revaluation reserve in respect of these commercial investment properties.

Besides being a property developer and managing its own properties, the Group’s wholly-owned subsidiary, Straits Developments Private Limited has also been appointed project manager and project advisor fora number of residential and commercial projects ofthe Great Eastern Group. We hope to continue to grow this business.

In line with the Group’s strategy to divest non-core property assets, the Group will be selling its 16-level commercial building known as Australia Place, located within Perth’s Central Business District. Formal marketing commenced in early 2004. Active steps are also taken to review opportunities of unlocking the values from the Group’s properties including those located in various parts of West Malaysia.

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Conservation shophouses at Nankin Mall,China Square Central

Fountain Square at China Square Central

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Media Advertising

Billboard at CK Tang underpass, Singapore

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2003 continued to be another difficult year for the Group’s media operating arm, Straits Media Private Limited (Straits Media). The weak market sentiments, the sluggish

Singapore economy for most part of the year and the oversupply in advertising media led to a decline in advertising expenditure for secondary media such as outdoor billboards.

The uncertainty in the economy resulted in advertisers preferring short-term advertising commitments of 1 to 3 months as opposed to the past when advertisers were prepared to sign on for longer periods of 1 to 2 years. During the outbreak of SARS, the public kept away from crowded areas such as shopping centres. As a result, some advertisers cancelled or postponed their advertisements.

With increased competition between the two TV companies, fast moving consumer goods advertisers were able to air their TV commercials island wide with smaller budgets. Thus the drop in TV advertising rates adversely affected the occupancy rate of our electronic billboard at Orchard Road.

During the year, two thousand billboards at bus shelters were added to the market. With an oversupply of advertising media fighting for the same advertising dollar, advertising rate for our billboards at CK Tang underpass dipped significantly.

Since CK Tang underpass became a prime location for Straits Media’s billboard advertising, we have been actively sourcing for a high-speed scrolling billboard to compete with the international players. In order to meet our high standard and design, Straits Media took up the challenge of designing and developing a high-speed scrolling billboard jointly with a tertiary institution. The product development is estimated to take nine months. Upon completion, Straits Media will have the necessary product knowledge and technology to compete with other operators in this high-speed scrolling billboard and to expand the business into the region.

Under this competitive environment, Straits Media undertook a review to rationalise some of its billboard locations. Locations that can no longer commanda superior viewing presence have been removed. Resources are being directed to further improve the quality and technology of the billboards in the remaining prime locations.

Straits Media expects 2004 to be another challenging year. To stay competitive, we will continue to manage costs and increase productivity in order to improve margins. At the same time, Straits Media will continue to broaden its revenue base by exploring new business opportunities in the region.

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Advertising banner at CK Tang Advertising billboards at CK Tang underpass

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Tin Smelting

Straits Refined Tin Ingots

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Our tin mining and smelting associate, Malaysia Smelting Corporation Bhd (MSC), achieved another year of outstanding performance and

impressive growth in earnings and shareholders’ funds. Group profit before taxation for the year ended 31 December 2003 recorded an increase of 32%, registering a new high of RM52.3 million. Group profit after taxation was higher by 39% at RM36.5 million. Group’s turnover in 2003 increased by 9% to RM783.4 million compared to RM719.5 million in 2002. The strong performance was achieved on the back ofa 20% increase in the global tin price, relentless efforts in cost and capacity rationalization, and strategic positioning of the Group’s smelting, mining, commercial and marketing operations.

MSC’s smelting operations at Butterworth managed to achieve a reasonable level of profitability in 2003, despite the significant downsizing of capacity utilization from October 2002 onwards, which resulted in a reduction of over 40% in metal production from 30,841 tonnes in 2002 to 18,210 tonnes in 2003. Metal production from MSC’s 75% subsidiary, PT Koba Tin in Indonesia, however, increased by 17% to a new record level of 18,848 tonnes in 2003. The MSC Group’s combined production of tin metal in 2003 was 37,058 tonnes which strategically strengthened MSC’s position as a leading global producer of tin metal and tin-based products, contributing about 15% to the world’s tin production.

During the year, MSC completed the acquisition of a 30% interest in Marlborough Resources NL, Australia (MBG) at a total cost of A$6.76 million. MBG operates an open pit alluvial tin mine in Ardlethan, New South Wales and all its production of tin concentrates are sent to MSC’s smelting plantfor smelting.

MSC Group’s new project development and exploration strategy is to expand its tin mining operations through in-house exploration, joint ventures and the acquisition of quality exploration assets. In December 2003, MSC entered into a strategic co-operation agreement with an Indonesian based company to undertake extensive exploration over approximately 15,000 hectares of prospective areas in Bangka Island, Indonesia for new tin deposits and reserves under a production sharing arrangement. A wholly-owned subsidiary company, PT MSC Indonesia was established to undertake the proposed exploration and new project development.

With the continuing firm tin prices, MSC is expected to perform better in the current year.

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Tapping of slag at the furnace Refining of tin

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Group Financial Highlights

2003 2002 2001 2000 1999 S$’000 S$’000 S$’000 S$’000 S$’000

Operating Profit Before Tax 48,988 36,705 49,760 60,122 58,106Total Attributable Profit 41,381 32,666 38,903 46,510 50,765Shareholders’ Funds 1,065,834 1,032,550 1,017,934 1,022,448 993,187Earnings per Share# 11.6¢ 9.2¢ 10.9¢ 13.0¢ 14.2¢Net Asset Value per Share# $2.99 $2.90 $2.86 $2.87 $2.79

Balance Sheet

Non-Current Assets

Property, plant and equipment, net 160,813 155,356 180,408 230,855 248,807Investment properties, net 927,554 962,527 307,719 283,808 272,211Associated companies, net 82,923 85,210 79,625 70,061 56,126Investments, net 162,059 146,881 150,288 152,574 153,830Properties under development, net 75,813 74,928 658,498 930,744 827,886Intangible assets, net 1,501 1,253 304 349 438Deferred tax assets 1,499 1,454 62 40 -Other non-current assets, net 720 - - 55 78

1,412,882 1,427,609 1,376,904 1,668,486 1,559,376

Net Current Assets/(Liabilities) 60,974 (121,616) 203,248 111,400 (234,601)

Non-Current Liabilities

Long-term loans (390,000) (270,000) (533,976) (722,007) (300,768)Other non-current liabilities (20,683) (7,554) (11,016) (12,991) (9,873)Deferred tax liabilities (9,550) (8,593) (15,416) (22,110) (20,603)

(420,233) (286,147) (560,408) (757,108) (331,244)

NET ASSETS 1,053,623 1,019,846 1,019,744 1,022,778 993,531

EquityIssued capital 356,400 356,400 356,400 356,400 297,000Reserves 709,434 676,150 661,534 666,048 696,187

1,065,834 1,032,550 1,017,934 1,022,448 993,187Minority interests (12,211) (12,704) 1,810 330 344EQUITY & MINORITY INTERESTS 1,053,623 1,019,846 1,019,744 1,022,778 993,531

# Adjusted to the current issued capital of S$356.4 million.

18


19



10

20

30

40

50

60

70

Operating Profi t Before Tax

0

10

20

30

40

50

60

1999

2000

2001

2002

2003

Total Attributable Profi t

0

200

1999 20

00

2001 20

02 2003

Shareholders ̓Funds

1.0

1.5

2.0

2.5

3.0

3.5

1999 20

00

2001 20

02

2003

Net Asset Value Per Share

S$ million S$ million

S$ million S$ Dollar

2000

2001

2002

2003

1999

400

600

800

1000

1200

0

0.5

0

20


21


Report on Corporate Governance

The Board is pleased to provide the following report, which outlines the corporate governance policies and practices adopted by the Company and which generally complied with the guidelines set out in the Code of Corporate Governance (Code) issued by the Singapore Exchange Securities Trading Limited (SGX), unless otherwise stated.

The Group’s corporate governance policies and practices are outlined with specific reference to the principles of the Code :

The Board’s Conduct of its AffairsPrinciple 1 : Every company should be headed by an effective Board to lead and control the company.

1. The Board meets at least 6 times a year at regular intervals and as warranted by circumstances. Meetings by means of a conference telephone or similar communications equipment are permitted in the Company’s articles of association. The Directors’ attendance at the Board and various committee meetings during the year are as follows :

Directors’ Meetings in 2003

The number of Directors’ meetings (including committee meetings) held and the number of meetings attended by each member of the respective meetings during the year were :

Board Executive Nominating Remuneration Audit Board Committee Committee Committee Committee

No. of meetings held 6 6 1 1 4

Directors No. of Meetings Attended

Howe Yoon Chong 6 6 1 Tang I-Fang 5 6 1 4 Y.A.Bhg Jen (B) Tun Ibrahim Bin Ismail 4 3 Michael Wong Pakshong 6 6 1 1 Lim Chong Yah 6 1 Michael Hwang 4 1 4 Tan Sri Dato’ Dr Lin See-Yan 6 Norman Ip Ka Cheung 6 1

2. The Board approves the Group’s strategic plans, appointment of Board members and senior management staff, key business initiatives, major investments and funding decisions, and interested person transactions. These functions are carried out by the Board directly and through its committees.

Board Executive Committee

The Board Executive Committee, which comprises 3 Board members, meets regularly with senior management of the Group to review operations, investment opportunities and strategic planning.

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Report on Corporate Governance (cont’d)

The Committee comprises the following members :

Mr Howe Yoon Chong (Chairman) Mr Tang I-Fang Mr Michael Wong Pakshong

Nominating Committee (please refer to page 22 for a description of the Committee’s activities).

Remuneration Committee (please refer to page 23 for a description of the Committee’s activities).

Audit Committee (please refer to page 25 for a description of the Committee’s activities).

3. As part of the Company’s continuing education programme for all Directors, the Board maintains a policy for any Director to attend relevant seminars and courses at the Company’s expense. New Directors are briefed on the Group’s businesses and policies.

Board Composition and BalancePrinciple 2 : There should be a strong and independent element on the Board, which is able to exercise objective judgementon corporate affairs independently, in particular, from Management. No individual or small group of individuals should beallowed to dominate the Board’s decision making.

1. The composition of the Board and key information pertaining to each Director are set out in pages 2 to 3. The Board consists of 8 directors, of whom 7 are independent and non-executive directors, who provide objective and independent judgment to the decision making of the Board. All 8 members hail from diversified backgrounds and collectively bring with them a wide range of experience and expertise and participate fully in decisions on the key issues facing the Group.

Chairman and Chief Executive OfficerPrinciple 3 : There should be a clear division of responsibilities at the top of the company – the working of the Board and the executive responsibility of the company’s business – which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.

1. The Board is led by Mr Howe Yoon Chong as the Non-Executive Chairman and the executive management of the Company is led by Mr Norman Ip Ka Cheung, the President and Chief Executive Officer (CEO). The Chairman is responsible for leading the Board and ensures that all Directors receive sufficient relevant information (both financial and non-financial) to enable them to participate effectively in Board discussions and decisions. The Chairman assists in ensuring compliance with the corporate governance policies of the Company. The CEO is responsible for the daily management of the business as well as implementation of the Board’s policies and decisions.

Board MembershipPrinciple 4 : There should be a formal and transparent process for the appointment of new directors to the Board. As a principle of good corporate governance, all directors should be required to submit themselves for re-nomination and re-election at regular intervals.

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23



Board PerformancePrinciple 5 : There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by eachdirector to the effectiveness of the Board.

1. The Nominating Committee (NC) comprises the following Directors who are independent and non-executive :

Mr Michael Wong Pakshong (Chairman) Mr Howe Yoon Chong Mr Tang I-Fang

The functions of the NC include the evaluation of the Board’s effectiveness, each Director’s contributions and independence, as well as the making of recommendations on the appointment and re-nomination of Directors for the Board and various Board Committees. The role and functions of the NC are set out in the Terms of Reference for the NC, which has been approved by the Board.

2. The NC met to review the overall Board composition and size, and to assess the performance and independence of each Director. Apart from Mr Norman Ip Ka Cheung, who is the sole executive Director, the NC considered and determined the rest of the Board members to be independent. Although the majority of the Directors have multiple board representations, the NC is satisfied that these Directors have devoted sufficient time and attention to the Group’s affairs. The NC evaluated the performance of each Director taking into account individual Director’s self-assessment. This evaluation process takes into account, among others, each Director’s attendance at meetings and his contributions outside and during meetings. Having regard to the nature and scope of the operations, as well as the core competencies, performance and independence (or otherwise) of each Director, the NC is of the view that the current Board size of 8 Directors is appropriate and each individual Director has contributed to the effectiveness of the Board as a whole.

3. The NC assessed and recommended to the Board, the Directors to be re-appointed pursuant to Section 153(6) of the Companies Act, Cap.50, and re-elected pursuant to article 99 of the Company’s articles of association; at the forthcoming annual general meeting. Each NC member abstained from participating in deliberations in respect of himself.

4. The NC also assessed the effectiveness of the Board through a self-assessment process whereby each Director assessed the Board’s performance, adequacy and size of the Board, its team spirit, the balance of focus between in-house issues and external concerns, overall assessment of the Board’s effectiveness and each Director’s contributions towards the Board’s effectiveness.

Access to InformationPrinciple 6 : In order to fulfil their responsibilities, board members should be provided with complete, adequate and timelyinformation prior to board meetings and on an on-going basis.

1. Information and data are important to the Board’s understanding of the Group’s businesses and essential to prepare the Board members for effective meetings. Management provides Board members with the presentation materials in advance of each meeting unless doing so would compromise the confidentiality of competitive information. When required, background information, copies of budget and forecasts relating to matters to be brought before the Board or the Board Committees are also provided. Occasionally, management also supplements the meeting papers with presentations on active operations and strategic issues. If necessary, senior management may be invited to attend the meetings to answer any further enquiries from Directors.

2. The Directors have access to the services of the company secretaries, who are responsible for ensuring that Board procedures are followed and applicable rules and regulations are complied with.

3. In the furtherance of their duties and if management’s explanations are not satisfactory, Directors may seek independent professional advice at the Company’s expense after consultation with the Chairman.

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23



Procedures for Developing Remuneration PoliciesPrinciple 7 : There should be a formal and transparent procedure for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

Level and Mix of RemunerationPrinciple 8 : The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more for this purpose. A proportion of the remuneration, especially that of executive directors, should be linked to performance.

Disclosure on RemunerationPrinciple 9 : Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration, in the company’s annual report.

1. The Remuneration Committee (RC) comprises the following members, the majority of whom are non-executive and independent :

Mr Michael Hwang (Chairman) Mr Michael Wong Pakshong Professor Lim Chong Yah Mr Norman Ip Ka Cheung

Professor Lim has wide experience in advising on the implementation and formulation of remuneration policies.

The functions of the RC include the recommendation of a framework of remuneration for the Board and senior executives of the rank of senior vice president and above, and the recommendation of specific remuneration packages for the executive Director, for the Board’s approval. The RC consults the Chairman of the Board on their recommendations before submitting the same to the Board for its consideration. The role and functions are set out in the Terms of Reference for the RC, which has been approved by the Board.

2. Taking into account the performance of the Group and the responsibilities and performance of the Directors, directors’ fees (for the Board and the various Board Committees) are set in accordance with a remuneration framework comprising responsibility fees and attendance fees. The executive Director does not receive directors’ fees. Non-executive Directors are paid directors’ fees, subject to approval at the annual general meeting. The non-executive Directors have no service contracts. No individual Director fixes his own remuneration.

3. The remuneration for senior executives is set at a level that is fair and reasonable for the responsibilities involved and sufficiently dependent upon performance to attract, retain and motivate individuals of the required calibre. Remuneration is determined according to 4 general components : salary, contractual bonus, incentive bonus and performance bonus. The President & CEO’s service contract does not contain any onerous removal clause. Presently, the Company does not have any share option scheme.

24


25



4. The RC met to review, discuss and approve the compensation of the CEO and the senior executives of the Group.

The remuneration information of the Directors and senior executives are set out below :

Summary compensation table for the Directors of the Company in all capacities for the year ended 31 December 2003 :

Benefits Name of Director Remuneration band Salary Bonus in kind Directors’ fees Total Howe Yoon Chong Below S$250,000 - - 42% 58% 100% Tang I-Fang Below S$250,000 - - - 100% 100% Y.A. Bhg. Jen (B) Tun Below Ibrahim Bin Ismail S$250,000 - - - 100% 100% Michael Wong Pakshong Below S$250,000 - - - 100% 100% Professor Lim Chong Yah Below S$250,000 - - - 100% 100% Michael Hwang Below S$250,000 - - - 100% 100% Tan Sri Dato’ Dr. Lin Below See-Yan S$250,000 - - - 100% 100% Norman Ip Ka Cheung S$500,000 to S$749,999 80% 9% 11% - 100%

There are no employees of the Group who are immediate family members of a Director or CEO earning more than S$150,000 a year.

The 5 most highly compensated senior executives within each band of remuneration were as follows :

2003 2002

S$250,000 to S$499,999 1 1

Below S$250,000 4 4

Total 5 5

5. The information required to be disclosed in the annual remuneration report is provided herein. The Directors’ fees are subject to shareholders’ approval. The overall remuneration policies for the Board and senior executives are reviewed annually by the RC, who in turn reports to the Board. Further, shareholders are welcome to comment on such policies at the annual general meeting. Accordingly, the Board is of the opinion that there is no necessity to invite the shareholders to approve such policies.

AccountabilityPrinciple 10 : The Board is accountable to the shareholders while the Management is accountable to the Board.

1. The Board provides a balanced and meaningful assessment of the Group’s financial performance and prospects regularly through the financial statements, announcements of results to shareholders and the SGX as well as the Chairman’s statement, and review of operations in the annual report. In turn, the management of the Company provides the Board with balanced and understandable accounts of the Company’s performance, financial position and business prospects on a regular basis.

24


25



Audit CommitteePrinciple 11 : The Board should establish an Audit Committee with written terms of reference which clearly set out itsauthority and duties.

Internal ControlsPrinciple 12 : The Board should ensure that the Management maintains a sound system of internal controls to safeguard theshareholders’ investments and the company’s assets.

Internal AuditPrinciple 13 : The company should establish an internal audit function that is independent of the activities it audits.

1. The Audit Committee comprises the following members :

Mr Tang I-Fang (Chairman) Y.A.Bhg. Jen (B) Tun Ibrahim Bin Ismail Mr Michael Hwang

The three members of the Committee are both independent and non-executive. All members are financially literate and have accounting or related financial management expertise or experience.

The role of the Committee is documented in a Charter (Terms of Reference) which has been approved by the Board. The Charter defines the purpose, authority and responsibilities of the Committee. The Committee is authorised to investigate any matters specified in the Charter.

In performing its functions, the Committee reviews the overall scope of both internal and external audits and the assistance given by the Company’s officers to the auditors. It meets with the Company’s internal and external auditors to discuss the results of their respective examinations and their evaluation of the Company’s system of internal accounting and financial controls. The Committee reviews interested person transactions to ensure that they are carried out on normal commercial terms and are not prejudicial to the interests of the Company and its minority shareholders. The Committee also reviews the consolidated financial statements including announcements to shareholders and the SGX before submission to the Board.

The Committee meets with the external and internal auditors, without the presence of management, at least once a year.

In discharging its functions, the Committee is provided with adequate resources, has full access to and co-operation by the management and the internal auditors, and has full discretion to invite any Director or executive officer to attend its meetings. All major findings and recommendations are brought to the attention of the Board of Directors.

The Committee reviewed all non-audit services provided by the firm of external auditors to the Company and was satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors. The Committee annually reviews the independence of the external auditors.

The Committee recommends that Ernst & Young be nominated for re-appointment as auditors at the forthcoming annual general meeting (AGM) to be held on 28 April 2004. Ernst & Young have indicated their willingness to accept re-appointment.

26


27


2. During the year, the Committee has reviewed the effectiveness of the Group’s material internal controls, including financial, operational and compliance controls, and risk management. The processes used by the Committee to review the effectiveness of the system of internal control and risk management include discussions with management, external and internal auditors on the risks identified and the review of significant issues arising from internal and external audits.

The Directors understand that they have responsibility for the Group’s system of internal control that covers all aspects of the business. In recognition of this responsibility, the Directors set policies and seek regular assurance that the system of internal controls is operating effectively. However, the Directors are also aware that such a system can only provide reasonable assurance against material misstatement or loss. The Directors are of the opinion that, based on the results of the internal and external audits, the system of internal controls is operating satisfactorily. Nothing has come to the attention of the Directors to indicate that any material breakdown in the controls has occurred during the year under review.

3. The internal auditors report directly to the Chairman of the Committee on audit matters and reports to the CEO on administrative matters.

The Standards for Professional Practice of Internal Auditing (Standards) as set out by The Institute of Internal Auditors have been adopted and continuous adherence to the Standards will be ensured.

The Committee reviews and approves the annual internal audit plans and ensures that the internal audit functions are adequately resourced to carry out its duties effectively.

Communications with ShareholdersPrinciple 14 : Companies should engage in regular, effective and fair communication with shareholders.

Principle 15 : Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company.

1. The Company communicates with its shareholders through the Company’s website, Annual Report, AGM and Extraordinary General Meetings, shareholders’ circulars and MASNET announcements through the SGX. While the Company endeavours to provide as much and as prompt information as is possible to its shareholders, it is also concerned of the legal and regulatory framework governing the release of material and price-sensitive information. The Company does not engage in selective disclosure and releases all price-sensitive information through MASNET.

2. At the AGM, shareholders are encouraged to ask questions both about the resolutions being proposed and about the Group’s operations in general. The articles of association of the Company permit a member of the Company to appoint 1 or 2 proxies to attend and vote instead of the member. As there is still a major concern on the security of information transmitted over the Internet, the Board has decided that it is not appropriate, for the time being, to amend its articles of association to allow for in absentia voting methods.

3. The Company ensures separate resolutions are proposed at general meetings on each distinct issue. The external auditors, the chairpersons of the various Board Committees and (where necessary), the legal advisers are present to assist the Directors in addressing any relevant queries by shareholders.


26


27


Risk Management

1. The Company does not have a Risk Management Committee. However, the Audit Committee, the internal audit department and senior operational managers assume the responsibility and set the Group risk management policy and strategy.

During the year, the Group has undertaken a control self-assessment exercise to assess the key business risks and adequacy of the existing controls to minimise risks. In determining the appropriate measures to control and mitigate the risks identified, the cost of control/risk management, and the impact of risks occurring will be balanced with the benefits of reducing risk.

The senior management and the operational managers continuously evaluate and monitor the significant risks. The internal audit department regularly reviews all significant control policies and procedures and highlights all significant matters to the senior management and the Audit Committee. The Audit Committee has reviewed the Group’srisk management process and is satisfied that there are adequate internal controls in place to manage the significantrisks identified.

Securities Transactions

1. The Group has issued an Internal Compliance Code on dealings in the Company’s securities to the Directors and employees of the Company and its subsidiary companies, setting out implications of insider trading and the recommendations of the Best Practices Guide issued by the SGX with regard to dealings in the Company’s securities.


28


29


Key Executives

Mrs Victoria TseExecutive Vice President

Victoria joined the Group in July 1987 and was appointed Executive Vice President and Group Chief Financial Officer in January 2000. She is responsible for the financial and corporate affairs of the Group including overseeing the operations of various business units. She also sits on the boards of the subsidiaries of the Group. Before she assumed the position of Executive Vice President and Group Chief Financial Officer, Victoria was the Assistant General Manager from 1996 to 1999. Prior to joining the Group, Victoria worked as an auditor and subsequently as a management consultant, with international professional accounting firms. A Chartered Accountantwith the Institute of Chartered Accountants in England and Wales, Victoria graduated with a Bachelor of Science (Economics) from the London School of Economics. She also holds a Master degree in Finance from City University as well as a Bachelor of Law degree from the University of London.

Mr Tan Aik HongSenior Vice President

Aik Hong joined the Group in January 1993. Between 1994 to 1997, he was the Deputy General Manager for the Group’s hotel in Perth, Rendezvous Observation City Hotel. He returned to Singapore in 1998 to open Rendezvous Hotel, Singapore and has since been General Manager of the hotel. Aik Hong is a board member of the Group’s hotel management arm, Rendezvous Hotels International Private Limited, and is responsible for the Group’s hotel business development activities in the Asia Pacific region. Before he joined the Group, Aik Hong served in various capacities in a number of industries including banking, property, trading and manufacturing. He first began his career as a project analyst with The Development Bank of Singapore Limited. Aik Hong is a B.Eng. (Industrial & Systems) graduate from the University of Singapore.

Mr Tan Choon Wong Senior Vice President

Choon Wong joined the Group in July 1993. A Director of the Company’s media advertising subsidiary, Straits Media Private Limited (Straits Media), he is responsible for its operations. Choon Wong was the Assistant General Manager of Plastic And Metal Industries before joining the Group. Under his leadership, the company obtained the ISO9002 manufacturing quality certification in 1992. Before that, he served in various capacities as a production engineer for Hewlett Packard Pte Ltd, as an Operation Manager of Degussa Electronics Pte Ltd, overseeing production, engineering, quality assurance and gold refinery departments and as the Material Manager of Chartered Electronics Pte Ltd, managing production control, purchasing, procurement engineering and warehousing. He holds a Bachelor of Science in Electronic Engineering (Honours) degree fromNorth Staffordshire University and a Master degree in Management from Birmingham University, United Kingdom.

Mr Tan Tai SoonSenior Vice President

Tai Soon joined the Group in September 1995. He is responsible for the development of the Group’s properties; from acquisition of new sites to implementation of projects, such as the Gallop Gables and Gallop Green condominiums and the mega complex at China Square Central. He has more than 20 years of diverse experience in the property and construction industry, having held positions in the three cornerstones of the industry: as a developer, consultant and contractor; including a stint with the Mass Rapid Transit Corporation. He holds a Bachelor of Science (Building) (Honours) degree from the University of Singapore.

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29


Mr Fidelis Kong Chan WanVice President

Fidelis joined the Group in September 2000. He is responsible for the sales and marketing of the Group’s properties in Singapore. Before he joined the Group, Fidelis was with Jones Lang LaSalle Property Consultants Pte Ltd for 5 years where he last held the post of Director of Residential Department. He was a Director of JLW Homes Pte Ltd, overseeing the Company’s associates agency. Between 1989 and 1996, he served as a property consultant and as an adviser to a local logistic service company, exploring business opportunities in Singapore and overseas. Fidelis started his career with DBS Land group and held various positions in project development, property management and property marketing. He left DBS Land group in 1989 as Senior Manager. Fidelis holds a Professional Diploma in Valuation and is a Licensed Appraiser in Singapore and a member of the Institute of Surveyors and Valuers.

Mr Lew Kook YongVice President

Kook Yong joined the Group in September 1992. He heads the property management services division which looks after the Group’s properties in Singapore and Malaysia. Kook Yong was previously in charge of project management of the Group’s Rendezvous Hotel, Singapore and the refurbishment of Straits Trading Building, Singapore. Before joining the Group, he was with Jones Lang Wootton for six years, responsible for the management of commercial, office and residential properties, and left JLW as Assistant Manager. He graduated with B. Sc (Hons) in Building from Heriot-Watt University, Edinburgh.

Mr Alan Donald FeatherbyChief Executive, Rendezvous Hotels International Private Limited (RHI)

Alan has been with the RHI group since its inception in 1997. Prior to joining the RHI group, he was the Deputy Managing Director for Radisson Hotels in Australia overseeing 6 international quality hotels. In 1995, he was promoted to Chief Operating Officer for Radisson Hotels in Indonesia and Malaysia. Before that, Alan was a former Director of Hecron Limited, a public company in Australia, which subsequently took over the Four Seasons Hotel group. Alan graduated with a Bachelor of Commerce from Melbourne University and qualified as a Chartered Accountant.

YBhg. Dato’ Dr Mohd Ajib AnuarChief Executive Officer, Malaysia Smelting Corporation Berhad (MSC)

YBhg. Dato’ Dr Mohd Ajib Anuar has been the Chief Executive Officer (CEO) and executive Director of the Group’s associate, MSC, since June 1994. He has more than three decades of experience and expertise in the global tin industry. He is currently the Chairman of the Kuala Lumpur Tin Market, President of ITRI Limited, United Kingdom, the tin industry’s international research and development body, President of the Malaysian Chamber of Mines and Chairman of the Malaysian Tin Industry (Research and Development) Board. Prior to his appointment as the CEO of MSC, he had spent more than 23 years within the Malaysia Mining Corporation Berhad group of companies (MMC), serving in various senior positions including General Manager of Finance division, Director of Business Development and Managing Director of MMC’s International Marketing Division. He also served as Deputy Chairman of the Kuala Lumpur Commodity Exchange from 1988 to 1993 and as Chairman of the Malaysian Futures Clearing Corporation from 1990 to 1993. He obtained the professional qualifications of the Association of Chartered Certified Accountants, United Kingdom in 1974.

30


31


Financial Calendar

Financial Year Ended 31 December 2003

Announcements of results for the 28 February 2003year ended 31 December 2002and second interim dividend for 2002

2002 Annual General Meeting 25 April 2003

Payment of second interim dividend for 2002 2 May 2003

Announcement of results for the 28 May 2003quarter ended 31 March 2003

Announcements of results for the second 28 August 2003quarter and the half year ended30 June 2003 and first interim dividend for 2003

Payment of first interim dividend for 2003 8 October 2003

Announcement of results for the third quarter 27 November 2003and the nine months ended 30 September 2003

Announcements of results for the year ended 27 February 200431 December 2003 and second interimdividend for 2003

2003 Annual General Meeting 28 April 2004

Payment of second interim dividend for 2003 5 May 2004

Financial Year Ending 31 December 2004

Announcement of first quarter results 13 May 2004

Announcement of second quarter results 12 August 2004

Announcement of third quarter results 12 November 2004

Announcement of full year results To be announced in due course

30


31


Financial Report

32 Report of the Directors

34 Statement by the Directors

35 Auditors’ Report

36 Balance Sheets

37 Consolidated Profit and Loss Account

38 Consolidated Statement of Changes in Equity

39 Consolidated Statement of Cash Flows

41 Notes to the Financial Statements

32


Report of the Directors


33

Group Financial Highlights The Straits Trading Company Limited Annual Report 2003

Report of the DirectorsThe Directors have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the year ended 31 December 2003.

Directorate

The Directors in office at the date of this report are :

Mr Howe Yoon Chong (Chairman)Mr Tang I-Fang (Deputy Chairman)Y.A.Bhg. Jen (B) Tun Ibrahim Bin IsmailMr Michael Wong PakshongProfessor Lim Chong YahMr Michael HwangTan Sri Dato’ Dr Lin See-YanMr Norman Ip Ka Cheung

The Director retiring by rotation pursuant to Article 99 of the Articles of Association is Mr Norman Ip Ka Cheung who, being eligible, offers himself for re-election.

Mr Howe Yoon Chong, Mr Tang I-Fang, Y.A.Bhg. Jen (B) Tun Ibrahim Bin Ismail, Mr Michael Wong Pakshong and Professor Lim Chong Yah retire pursuant to Section 153(2) of the Companies Act, Cap.50. Resolutions will be proposed for the re-appointment of Mr Howe Yoon Chong, Mr Tang I-Fang, Y.A.Bhg. Jen (B) Tun Ibrahim Bin Ismail, Mr Michael Wong Pakshong and Professor Lim Chong Yah as Directors under the provision of Section 153(6) of the said Act to hold office until the next Annual General Meeting of the Company.

According to the register kept under Section 164 of the Companies Act, Cap.50, the Directors who held office at the end of the financial year had an interest in the shares of the Company as stated hereunder :

Shareholdings in which Shareholdings in the Directors are deemed names of Directors to have an interest 1.1.03 31.12.03 1.1.03 31.12.03Y.A.Bhg. Jen (B) Tun Ibrahim Bin Ismail 6,000 6,000 - -Mr Michael Wong Pakshong 26,400 26,400 - -Professor Lim Chong Yah 12,000 12,000 - -Mr Michael Hwang 6,000 6,000 86,400 86,400Mr Norman Ip Ka Cheung 8,640 23,640 25,644 25,644

There was no change in any of the above-mentioned interests between the end of the financial year and 21 January 2004.

No Director who held office at the end of the financial year had an interest in any shares or debentures of the Company’s subsidiary companies at the beginning or at the end of the financial year.

Neither at the end of nor at any time during the financial year did there subsist any arrangements to which the Company or Group is a party, whereby Directors might acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

Except as disclosed in the financial statements, since the end of the previous financial year, no Director has received or become entitled to receive benefits under contracts required to be disclosed by Section 201(8) of the Companies Act, Cap.50.

Options

There are presently no option schemes on unissued shares in respect of the Company and subsidiary companies within the Group.

32


Report of the Directors


33

Group Financial Highlights The Straits Trading Company Limited Annual Report 2003

Report of the DirectorsAuditors

Ernst & Young, Certified Public Accountants, have expressed their willingness to accept re-appointment as auditors and a resolution proposing their appointment will be submitted at the Annual General Meeting.

Other Information Required by SGX

Since the end of the previous financial year, the Company and its subsidiary companies did not enter into any material contracts involving interests of the Chief Executive Officer, Directors or controlling shareholders and no such material contracts still subsist at the end of the financial year except for a 3-year S$120 million term loan facility due September 2006, extended by The Great Eastern Life Assurance Company Limited, a controlling shareholder of the Company and financial institution licensed by the Monetary Authority of Singapore, in the ordinary course of its business and upon normal commercial terms, to the Group’s 51% subsidiary company, Straits Eastern Square Private Limited (SESPL). Interest rates range from 1.3% to 1.7% per annum and is payable on the last day of each interest period of either 1, 2, 3 or 6 months, at SESPL’s option. The facility is secured by, inter alia, a legal mortgage over the land and buildings erected on 3 Pickering Street, China Square Central and a debenture over the assets of SESPL.

Interested Person Transactions

The aggregate value of interested person transactions entered into during the financial year were as follows :

Name of interested person Aggregate value of all interested Aggregate value of all interested person transactions during the person transactions conducted financial year under review under shareholders’ mandate pursuant (excluding transactions less than to Rule 920 of the S$100,000 and transactions conducted SGX’s Listing Manual under shareholders’ mandate pursuant (excluding transactions less to Rule 920 of the SGX’s Listing Manual) than S$100,000)

The Great Eastern Life S$25,745,676 Not applicable Assurance Company Limited and its associates

On behalf of the Board

Tang I-Fang Norman Ip Ka CheungDirector Director

Singapore18 March 2004

34


34

Statement by the DirectorsPursuant to Section 201(15)


35


Auditors’ Report to the Membersof The Straits Trading Company Limited

We, Tang I-Fang and Norman Ip Ka Cheung, being two of the Directors of The Straits Trading Company Limited, do hereby state that, in the opinion of the Directors :

(i) the accompanying balance sheets, consolidated profit and loss account, consolidated statement of changes in equity and consolidated cash flow statement together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2003 and of the results of the business, changes in equity and cash flows of the Group, for the year then ended;

(ii) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the Board

Tang I-Fang Norman Ip Ka CheungDirector Director


34


34

Statement by the DirectorsPursuant to Section 201(15)


35


Auditors’ Report to the Membersof The Straits Trading Company Limited

We have audited the accompanying financial statements of The Straits Trading Company Limited (the Company) and its subsidiaries (the Group) set out on pages 36 to 66 for the year ended 31 December 2003. These financial statements are the responsibility of the Company’s Directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion :

(a) the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Companies Act (the Act) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2003 and the results, changes in equity and the cash flows of the Group for the financial year ended on that date; and

(b) the accounting and other records (excluding registers) required by the Act to be kept by the Company and by those subsidiary companies incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

We have considered the financial statements and auditors’ reports of all the subsidiary companies of which we have not acted as auditors, being financial statements included in the consolidated financial statements. The names of these subsidiary companies are stated in note 41 to the financial statements.

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations as required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification and in respect of subsidiary companies incorporated in Singapore did not include any comment made under Section 207(3) of the Act.

ERNST & YOUNGCertified Public Accountants


36


Balance Sheetsas at 31 December 2003 (In Singapore dollars)

37


Consolidated Profit and Loss Accountfor the Year Ended 31 December 2003 (In Singapore dollars)

Note Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

Non-Current AssetsProperty, plant and equipment, net 3 160,813 155,356 1,520 1,624Investment properties, net 4 927,554 962,527 43,815 45,753Subsidiary companies, net 5 - - 619,352 658,694Associated companies, net 6 82,923 85,210 49,882 49,882Investments, net 7 162,059 146,881 116,513 106,021Properties under development, net 8 75,813 74,928 - -Intangible assets, net 9 1,501 1,253 - -Deferred tax assets 10 1,499 1,454 - -Other non-current assets, net 720 - - -

1,412,882 1,427,609 831,082 861,974

Current AssetsProperties held for sale 51,780 54,309 - -Stocks 11 1,017 749 - -Marketable securities, net 12 110,428 110,562 - -Trade debtors, net 13 7,221 6,020 32 38Other debtors 14 30,185 73,195 12,458 10,254Cash at bank and on deposit 23,066 11,382 10,259 3,797

223,697 256,217 22,749 14,089

Current LiabilitiesShort-term loans 15 (125,740) (324,381) (47,840) (92,302)Trade creditors (9,005) (5,350) (410) (298)Other creditors 16 (25,131) (47,083) (2,888) (2,969)Provision for taxation (2,847) (1,019) - -

(162,723) (377,833) (51,138) (95,569)

Net Current Assets/(Liabilities) 60,974 (121,616) (28,389) (81,480)

Non-Current LiabilitiesLong-term loans 17 (390,000) (270,000) - -Other non-current liabilities 18 (20,683) (7,554) - -Deferred tax liabilities 10 (9,550) (8,593) (107) -

(420,233) (286,147) (107) -

NET ASSETS 1,053,623 1,019,846 802,586 780,494

EquityShare capital 19 356,400 356,400 356,400 356,400Reserves 20 709,434 676,150 446,186 424,094

1,065,834 1,032,550 802,586 780,494Minority interests 21 (12,211) (12,704) - -

EQUITY & MINORITY INTERESTS 1,053,623 1,019,846 802,586 780,494

The accounting policies and explanatory notes on pages 41 to 66 form an integral part of the financial statements.

36


Balance Sheetsas at 31 December 2003 (In Singapore dollars)

37


Consolidated Profit and Loss Accountfor the Year Ended 31 December 2003 (In Singapore dollars)

Note Group 2003 2002 $’000 $’000

RevenuesProperty revenue 41,106 36,701Hotel revenue 58,556 47,959Proceeds from sale of trading securities 69,220 33,623Investment income, gross 22 14,942 9,543Other revenue 23 249 2,332

Total Revenues 184,073 130,158

Costs and ExpensesStaff costs 24 (22,742) (22,252)Depreciation and amortisation 3, 9 (8,212) (7,208)Exchange gains/(losses) 55 (266)Costs of trading securities sold (51,330) (27,920)Amount of trading securities written down - (24,955)Other operating expenses (50,648) (40,600)

Total Costs and Expenses (132,877) (123,201)

Profit from Operations 51,196 6,957Finance costs 25 (8,412) (6,955)Share of profits of associated companies 22,291 16,520

Profit from Operations Before Exceptional Items 26 65,075 16,522Exceptional items 27 (16,087) 20,183

Profit from Operations Before Taxation and Minority Interests 48,988 36,705Taxation 28 (12,237) (4,541)

Profit from Operations After Taxation 36,751 32,164Minority interests 4,630 502

Profit Attributable to Members of the Company 41,381 32,666

Basic and Diluted :Earnings per share 31 11.6 cts 9.2 cts


38


Consolidated Statement of Changes in Equityfor the Year Ended 31 December 2003 (In Singapore dollars)

39


Consolidated Statement of Cash Flowsfor the Year Ended 31 December 2003 (In Singapore dollars)

Note Group 2003 2002 $’000 $’000

Issued CapitalBalance as at 1 January and 31 December 19 356,400 356,400

Revenue ReserveBalance as at 1 January 530,810 508,698Share of reserve movement of associated companies 136 3,346Profit for the year 41,381 32,666Dividends on ordinary shares : 30- 1st interim dividend for the year, paid (5,132) (5,560)- 2nd interim dividend for the year, proposed (11,405) (8,340)

Balance as at 31 December 555,790 530,810

Exchange Translation ReserveBalance as at 1 January (34,420) (32,690)Exchange adjustment 19,375 (1,730)

Balance as at 31 December (15,045) (34,420)

Revaluation ReserveBalance as at 1 January 168,786 175,194Cost adjustment to investment properties 2,901 -Net deficit on revaluation of properties 4, 8, 27 (17,037) (6,408)

Balance as at 31 December 154,650 168,786

Reserve on ConsolidationBalance as at 1 January and 31 December 2,634 2,634

Dividend ReserveBalance as at 1 January 8,340 7,6982nd interim dividend for previous year, paid 30 (8,340) (7,698)2nd interim dividend for the year, proposed 30 11,405 8,340Balance as at 31 December 11,405 8,340

Reserves 709,434 676,150

EQUITY 1,065,834 1,032,550

Net change in equity from non-owner sources excluding net profits 5,239 (8,138)


38


Consolidated Statement of Changes in Equityfor the Year Ended 31 December 2003 (In Singapore dollars)

39


Consolidated Statement of Cash Flowsfor the Year Ended 31 December 2003 (In Singapore dollars)

2003 2002 $’000 $’000

Cash flow from operating activities :Profit from operations 51,196 6,957

Adjustments for :

Interest income (119) (2,236)

Investment income (14,942) (9,543)

Depreciation of property, plant and equipment 8,040 7,142

Gain on disposal of property, plant and equipment (284) (517)

Property, plant and equipment written off 184 29

Amortisation of hotel management rights 172 66

Operating profit before working capital changes 44,247 1,898

Decrease in properties held for sale 2,507 3,373

Increase in stocks (268) (48)

Decrease/(Increase) in marketable securities, net 134 (12,870)

Increase in debtors (2,535) (3,652)

Increase in creditors 4,187 5,689

Cash generated from/(used in) operations 48,272 (5,610)

Interest expense (8,412) (6,955)

Income tax paid (9,837) (5,169)

Investment income 14,942 9,543

Dividends from associated companies 6,473 4,139

Interest income 119 2,236

Net cash flow from/(used in) operating activities 51,557 (1,816)

Cash flow from investing activities :(Decrease)/Increase in amount payable to associated company (25) 5

Proceeds from sale of property, plant and equipment 653 20,416

Compensation award on land acquired - 42

Purchase of property, plant and equipment (3,632) (2,395)

Proceeds from sale of investments 25,334 15,486

Purchase of investments (16,153) -

Purchase of hotel management rights (665) (529)

Expenditures incurred on properties under development (9,427) (112,746)

Tax paid on prior years’ sale of investments (3,688) (12,843)

Tax refund on prior years’ sale of investments 1,724 3,238

Proceeds from sale of tin slag - 2,143

Proceeds from sale of a commercial building 38,332 350,733

Net cash flow from investing activities 32,453 263,550


40


Consolidated Statement of Cash Flows (cont’d)

for the Year Ended 31 December 2003 (In Singapore dollars)

41


Notes to the Financial Statements (In Singapore dollars)

2003 2002 $’000 $’000

Cash flow from financing activities :

Repayment of loans, net (78,641) (260,143)

Payment of premium on interest rate cap (770) -

Net proceeds from issuance of share capital by subsidiary companies

to minority shareholders 4,899 9,800

Increase in amount due to minority shareholder of a subsidiary company 14,502 -

Payment of dividends to minority shareholders of subsidiary company - (78)

Payment of dividends to shareholders (13,472) (13,258)

Net cash flow used in financing activities (73,482) (263,679)

Net increase/(decrease) in cash and cash equivalents 10,528 (1,945)

Cash and cash equivalents at beginning of year 11,382 13,402

Effect of exchange rate changes on balances held in foreign currencies 1,156 (75)

Cash and cash equivalents at end of year 23,066 11,382

Cash and cash equivalents at end of year consist of :

Cash at bank and on deposit 23,066 11,382


40


Consolidated Statement of Cash Flows (cont’d)

for the Year Ended 31 December 2003 (In Singapore dollars)

41



1 Corporate Information

The financial statements of The Straits Trading Company Limited for the year ended 31 December 2003 were authorised for issue in accordance with a resolution of the Directors on 18 March 2004.

The Straits Trading Company Limited is a limited liability company incorporated in Singapore in 1887. The registered office of the Company is located at 9 Battery Road, #21-00 Straits Trading Building, Singapore 049910.

The principal activities of the Company are those of an investment holding company. The associated and subsidiary companies of the Group are primarily engaged in tin smelting, investment advisory and fund management, investment holding and trading, property development and investment, media advertising, and in the owning and managing of hotels and other assets. There have been no significant changes in the nature of these activities during the financial year.

The number of employees as at 31 December 2003 for the Group and Company was 472 (2002 : 403) and 13 (2002 : 13) respectively.

2 Summary Of Significant Accounting Policies

2.1 BASIS OF PREPARATION The financial statements have been prepared in accordance with Singapore Financial Reporting Standards

(FRS) as required by the Companies Act, Cap.50. In previous years, the financial statements were prepared in accordance with Singapore Statements of Accounting Standard (SAS). The transition from SAS to FRS did not result in any significant change in accounting policies.

The financial statements have been prepared on a historical cost basis except that investment properties and certain properties, plant and equipment and properties under development are stated at valuation.

The accounting policies have been consistently applied by the Group and the Company and, except for the change in accounting policy discussed below, are consistent with those used in the previous year.

2.2 CHANGE IN ACCOUNTING POLICY With effect from 1 January 2003, the Group has adopted FRS 21 on the Effects of Changes in Foreign Exchange

Rates. Accordingly, the financial results of foreign subsidiary companies and associated companies are now translated into Singapore dollars at the average exchange rates for the period. Previously, such results were translated at exchange rates on balance sheet date. The change in accounting policy is applied prospectively because the effects of adopting the FRS 21 are not significant.

2.3 BASIS OF CONSOLIDATION The financial statements of the Group consolidate the financial statements of the Company and its subsidiary

companies as at 31 December. All the subsidiary companies have a financial year ending 31 December. The results of subsidiary companies acquired or disposed of during the year are included in or excluded from the respective dates of acquisition or disposal, as applicable. Assets, liabilities and results of overseas subsidiary companies are translated into Singapore dollars on the basis outlined in note 2.6 to the financial statements.

2.4 GOODWILL ON CONSOLIDATION Goodwill represents the excess of the consideration given over the fair value of the identifiable net assets as at the

date of acquisition. Goodwill is amortised on a straight-line basis over its useful economic life up to a maximum of 20 years.

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2.5 ASSOCIATED COMPANIES Associated companies are companies, not being subsidiary companies, in which the Group holds 20% or more

of the equity and participates in Board management.

For equity accounting purposes, the Directors value the Group’s investments in associated companies at cost, plus or minus the Group’s share of retained earnings or losses and reserves since acquisition, less impairment loss.

In the Company’s balance sheet, the Company’s portion of the Group’s investments in associated companies is stated at cost. At each balance sheet date, the Company assesses whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated and provision for impairment is made, if any.

The accounting treatment of income from investments in associated companies is stated in note 2.24 to the financial statements.

2.6 CURRENCIES The financial statements are stated in Singapore dollars.

In the Company, transactions during the year in foreign currencies are converted at rates ruling on the transaction dates. Foreign currency monetary assets and liabilities are translated at rates prevailing at balance sheet date. Profits and losses arising from transactions during the year and translation at balance sheet date are taken to the profit and loss accounts.

On consolidation, all assets and liabilities and results of foreign subsidiary and associated companies are translated into Singapore dollars at rates of exchange prevailing at balance sheet date. Revenue and expenses are translated at average exchange rates for the year, which approximate the exchange rates at the date of transactions. The effects of such translation of these foreign subsidiary and associated companies are taken directly to exchange translation reserve. Exchange differences arising from the translation of foreign currency loans accounted for as a hedge of the Company’s net investment in foreign entities are taken to exchange translation reserve.

2.7 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment

loss. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repairs are charged to the profit and loss account. When assets are sold or retired, their cost and accumulated depreciation are removed from the financial statements and any gain or loss resulting from their disposal is included in the profit and loss account.

In note 3 to the financial statements, property, plant and equipment, land described as freehold land includes land held under 999 years leasehold which is regarded as equivalent to freehold.

2.8 DEPRECIATION Depreciation is provided on the straight-line method to write off the cost or valuation of relevant assets over their

estimated useful lives. No depreciation is provided on freehold or equivalent land.

The estimated useful lives are as follows : Hotel leasehold land - remaining lease term Buildings - 40 years Plant, equipment and vehicles - 5 to 15 years Furniture and fittings - 5 to 10 years

The depreciation charge on base stock of crockery, cutlery, linen and uniforms is not material as these items are continuously being replaced as required. Provision is made if the residual value of this base stock is materially below its carrying value.

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2.8 DEPRECIATION (cont’d) During the year, the Group revised the depreciation of hotel leasehold land to include leasehold land with tenure

of more than 50 years. The effect from this change in accounting estimate is to decrease the Group’s profit by $234,000.

2.9 INVESTMENT PROPERTIES Investment properties are properties which are held on a long-term basis for their investment potential and

income. They are included in the balance sheet at their open market value on the basis of annual Directors’ valuation. Professional valuation is made once in every 3 years.

The surplus on revaluation is credited to revaluation reserve and any deficit is charged to the profit and loss account to the extent that it exceeds any net surplus held in revaluation reserve.

2.10 INVESTMENTS Quoted and unquoted investments held on a long-term basis are stated at cost less impairment loss or at Directors’

valuation on an aggregate basis.

Marketable securities are stated at the lower of cost and market value on an aggregate basis.

2.11 PROPERTIES UNDER DEVELOPMENT Properties under development include land cost, development expenditures and where applicable, finance costs

and other related expenditures.

Properties under development held on a long-term basis for their investment potential and income are stated at their open market value on the basis of annual Directors’ valuation. The surplus on revaluation is credited to revaluation reserve and any deficit is charged to the profit and loss account to the extent that it exceeds any net surplus held in revaluation reserve.

Properties under development which are intended for sale in the ordinary course of business are stated at the lower of cost and net realisable value.

Development is considered complete upon the issue of Temporary Occupation Permit. Upon completion, property held for investment is classified as investment property and property developed for sale is shown as current asset as property held for sale.

2.12 BORROWING COSTS Borrowing costs that are directly attributable to acquisition and construction of property under development are

capitalised, commencing from the time these costs are incurred till the completion of development.

2.13 INTANGIBLE ASSETS Payments made to acquire management rights of hotels and properties of similar nature are capitalised and

amortised over their estimated useful lives of up to 10 years on a straight-line method.

2.14 PREMIUM ON INTEREST RATE CAP Premium paid on interest rate cap (cap) is included under other assets and amortised over the tenure of the cap

and included in interest expense.

2.15 PROPERTIES HELD FOR SALE Properties held for sale are those which are intended for sale in the ordinary course of business. They are stated at

the lower of cost and net realisable value.

2.16 STOCKS Stocks are stated at the lower of cost and net realisable value. Cost is generally determined on a weighted average

basis. Net realisable value represents the estimated selling price less anticipated cost of disposal and after making allowance for damaged, obsolete and slow-moving items.

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2.17 TRADE AND OTHER DEBTORS Trade and other debtors are recognised and carried at original invoice amount less an allowance for any

uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

Receivables from related parties are carried at cost, less an allowance for any uncollectible amount.

2.18 CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash on hand and on deposit which are readily convertible to cash and which

are not subject to a significant risk of changes in value, net of bank overdrafts which are repayable on demand.

2.19 LOANS AND BORROWINGS All loans and borrowings are recognised at cost.

2.20 TRADE AND OTHER CREDITORS Trade and other creditors are carried at cost which is the fair value of the consideration to be paid in the future

for goods and services received, whether or not these are billed.

Payables to related parties are carried at cost.

2.21 DEFERRED TAXATION Deferred taxation is provided, using the liability method, on all temporary differences at the balance sheet

date between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiary companies and associated companies except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised.

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax assets and unused tax losses can be utilised.

Current tax and deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.

2.22 PROVISIONS Provisions are recognised when there is a legal or constructive obligation where, as a result of a past event, it is

probable that an outflow of economic benefits will be required to settle the obligations and a reliable estimate can be made of the amount of obligation.

2.23 IMPAIRMENT OF ASSETS An assessment is made at each balance sheet date to determine whether there is objective evidence that the value

of an asset may be impaired. If such evidence exists, the estimated recoverable amount of that asset is determined and any impairment is charged to the profit and loss account unless it reverses a previous surplus in which case it will be charged to equity.

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2.23 IMPAIRMENT OF ASSETS (cont’d) The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the

estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

2.24 INCOME RECOGNITION Rental and room income, management fee and interest income are recognised on an accrual basis. Food and

beverage income is recognised upon sale. Profits from sale of completed properties and marketable securities are recognised upon conclusion of the contract for sale.

Dividend income from investments is brought into account on the basis of dividends declared payable.

In the financial statements of the Group, income from investments in associated companies is brought into account on the basis of the Group’s share of the profits less losses of the associated companies for each year ended 31 December, or ended not more than 3 months prior to that date, as evidenced by the latest available published financial statements or management financial statements.

2.25 LEASES

Where the Group is the lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

Where the Group is the lessor

Assets subject to operating lease are included in the balance sheet as property, plant and equipment, investment properties and properties held for sale accordingly.

2.26 EMPLOYEE BENEFITS

Defined contribution plan

As required by law, the Company makes contributions to the Central Provident Fund (CPF). CPF contributions are recognised as expenses in the same period as the employment that give rise to the contribution.

Employee Leave Entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for leave as a result of services rendered by employees up to balance sheet date.

2.27 DERIVATIVE FINANCIAL INSTRUMENTS The Group uses derivative financial instruments such as foreign exchange contracts, interest rate swaps and

interest rate cap agreements to hedge its risks associated with foreign currency and interest rates fluctuations. It is the Group’s policy not to trade in derivative financial instruments. Details of the Group’s financial risk management objectives and policies are set out separately in note 37 to the financial statements.

2.28 SEGMENT REPORTING The Group’s operating businesses are organised and managed in separate strategic business units according to the

nature of products and services provided.

Segment accounting policies are the same as the policies described in note 2 to the financial statements. Inter-segment sales and transfers are determined on an arm’s length basis. Revenues attributable to geographic areas are based on the location for which the revenue is earned or the business is transacted.

Segment information in respect of the Group’s business and geographical segments is presented in note 40 to the financial statements.

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3 Property, Plant and Equipment, net Plant Freehold Leasehold Equipment Land and Land and Vehicles Buildings Buildings Furniture Total $’000 $’000 $’000 $’000 GROUP At cost or valuation At 1 January 2003 37,312 111,511 73,903 222,726 Exchange adjustment 10,267 - 9,271 19,538 Additions - - 3,632 3,632 Disposals (548) - (510) (1,058) At 31 December 2003 47,031 111,511 86,296 244,838

Accumulated depreciation and impairment At 1 January 2003 7,076 18,131 42,163 67,370 Exchange adjustment 1,994 - 7,126 9,120 Charge for year 858 1,682 5,500 8,040 Applicable to disposals (176) - (329) (505)

At 31 December 2003 9,752 19,813 54,460 84,025

Charge for 2002 751 1,443 4,948 7,142

Net Book Value At 31 December 2003 37,279 91,698 31,836 160,813

At 31 December 2002 30,236 93,380 31,740 155,356

Cost or Valuation At 31 December 2003 At cost 46,285 111,511 86,296 244,092 At valuation prior to 1969 36 - - 36 At valuation 1974 710 - - 710

47,031 111,511 86,296 244,838

Cost or Valuation At 31 December 2002 At cost 36,566 111,511 73,903 221,980 At valuation prior to 1969 36 - - 36 At valuation 1974 710 - - 710

37,312 111,511 73,903 222,726

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3 Property, Plant and Equipment, net (cont’d) Plant Freehold Equipment Land and Vehicles Buildings Furniture Total $’000 $’000 $’000 COMPANY At cost or valuation At 1 January 2003 2,132 320 2,452 Additions - 5 5 Disposals (131) - (131)

At 31 December 2003 2,001 325 2,326

Accumulated depreciation At 1 January 2003 734 94 828 Charge for year 29 37 66 Applicable to disposals (88) - (88)

At 31 December 2003 675 131 806

Charge for 2002 30 36 66

Net Book Value At 31 December 2003 1,326 194 1,520

At 31 December 2002 1,398 226 1,624

Cost or Valuation At 31 December 2003 At cost 1,291 325 1,616 At valuation 1974 710 - 710

2,001 325 2,326 Cost or Valuation At 31 December 2002 At cost 1,422 320 1,742 At valuation 1974 710 - 710

2,132 320 2,452

The net book value of freehold land and buildings based on their historical cost cannot be reasonably determined.

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4 Investment Properties, net

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

At valuation :Balance as at 1 January 962,527 307,719 45,753 49,290Transferred from properties under development - 756,387 - -Net deficit on revaluation (44,374) (102,667) (1,938) (3,537)Exchange adjustment 9,401 1,088 - -

Balance as at 31 December 927,554 962,527 43,815 45,753

Investment properties are stated at professional valuations as at 31 December 2003 by DTZ Debenham Tie Leung (SEA) Pte Ltd and Jones Lang LaSalle Property Consultants Pte Ltd for Singapore properties, Ravindra Dass Property Services Sdn Bhd for Malaysian property and Jones Lang LaSalle Advisory Services Pty Limited for Australian property respectively on an open market value basis. Details of the properties are as follows :

Site Area Net Floor Area ExistingDescription of Properties Tenure sq.m. sq.m. Use

Straits Trading Building, a 21-storey 999 years 1,340 13,230 Officecommercial building at 9 Battery Road, LeaseholdSingapore

Straits Trading Building, a 7-storey 999 years 2,224 10,096 Officecommercial building at 2 Lebuh Pasar Besar, LeaseholdKuala Lumpur, Malaysia /Freehold

38 residential units and 1 shop unit at Gallop Freehold - 10,178 ResidentialGables condominium, Singapore

53 residential units at Gallop Green Freehold 13,309 17,658 Residentialcondominium, Singapore @

Gourmet Gallery, a 3-storey commercial 99 years 610 1,826 Retailbuilding at 9 Bras Basah Road, Singapore from 1994

Australia Place, a 16-level commercial Freehold 2,990 15,315 Officebuilding at 15 - 17 William Street, Perth,Australia

18/20/22 Cross Street, China Square 99 years 14,006 34,799 OfficeCentral, Singapore * from 1997 & Retail

3 Pickering Street, China Square Central, 99 years - 11,982 OfficeSingapore # from 1997 & Retail Live/Work

@ There is an assignment of the proceeds from the tenancies relating to the Gallop Green condominium for a bank facility granted to a subsidiary company (note 15).* The land and buildings erected on 18/20/22 Cross Street, China Square Central has been charged by way of a legal mortgage for bank facilities granted to a subsidiary company (note 17(a)).# The land and buildings erected on 3 Pickering Street, China Square Central has been charged by way of a legal mortgage for loan facilities made to a partly-owned subsidiary company (note 17(b)).

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5 Subsidiary Companies, net

Company 2003 2002 $’000 $’000

Unquoted shares - At Directors’ valuation 110,245 110,245Less: Provision for impairment of investments (80) -

110,165 110,245

Amounts receivable on current account 699,682 735,749Amounts payable on current account (270,140) (248,156)Loans receivable 79,645 60,856

619,352 658,694

The amounts receivable or payable on current account are non-trade related, unsecured, have no fixed terms of repayment and not expected to be repaid within 1 year. Accordingly, the Directors are of the view that the fair value of these balances cannot be reasonably determined.

The amounts receivable or payable on current account are interest-free except for the amounts receivable totalling $47,840,000 (2002 : $92,302,000) which bear interest ranging from 1.2% to 1.8% per annum (2002 : 1.2% to 2.6%) to the extent of the interest incurred by the Company in obtaining bank borrowings to advance loans to these subsidiary companies.

Loans receivable are non-trade related, unsecured, bear interest based on prevailing market rate rangingfrom 4.7% to 5.3% per annum (2002 : 4.8% to 5.0%), have no fixed terms of repayment and not expected to be repaid within 1 year. Accordingly, the Directors are of the view that the fair value of the loans cannot be reasonably determined.

6 Associated Companies, net

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

QuotedShares at cost 40,740 40,740 38,182 38,182Share of reserve movement 3,482 3,346 - -Share of reserves since acquisition 51,695 44,176 - -

95,917 88,262 38,182 38,182Exchange adjustment (20,210) (19,315) - -

75,707 68,947 38,182 38,182Less: Provision for impairment of investments (10,000) - - -

65,707 68,947 38,182 38,182

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6 Associated Companies, net (cont’d)

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

UnquotedShares at cost 11,700 11,700 11,700 11,700Change in group structure 2,511 2,511 - -Share of reserves since acquisition 4,887 3,835 - -

19,098 18,046 11,700 11,700

Exchange adjustment (1,883) (1,759) - -

17,215 16,287 11,700 11,700Amount receivable/(payable) on current account 1 (24) - -

17,216 16,263 11,700 11,700

Total Book Value 82,923 85,210 49,882 49,882

Market ValueAssociated companies, quoted shares 84,377 59,011 82,018 57,636

The amount receivable or payable on current account is non-trade related, unsecured, interest-free, has no fixed term of repayment and not expected to be repaid within 1 year. Accordingly, the Directors are of the view that the fair values of the amount receivable or payable cannot be reasonably determined.

The impact arising from the imposition of foreign exchange and capital controls by Malaysia is stated in note 29 to the financial statements.

7 Investments, net

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

Quoted shares in corporationsAt cost less amounts written off 161,897 146,579 116,351 105,859

Unquoted shares in corporationsAt Directors’ valuation 162 302 162 162

Total Book Value 162,059 146,881 116,513 106,021

Market ValueQuoted shares in corporations 248,920 169,066 188,383 111,907

Fair value of unquoted shares in corporations 3,352 3,538 3,352 3,480

The fair value of unquoted shares in corporations is based on the Group’s and Company’s interests in the attributable net assets of these corporations.


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8 Properties Under Development, net

Group 2003 2002 $’000 $’000

At Directors’ valuation 75,813 74,928

Revaluation surplus during the year 300 72,515

The property under development is as follows :

Stage of Site Area / Group’s Completion/ Gross Floor Effective Type of Expected Date of Area Interest inLocation Development Tenure Completion sq.m. Property

Cable/Nathan Residential Freehold Tender stage / 27,435/ 100%Road, Singapore March 2008 13,126

9 Intangible Assets, net

Group 2003 2002 $’000 $’000

Hotel management rights :

At costAt 1 January 1,420 401Exchange adjustment 448 15Additions 43 1,004

At 31 December 1,911 1,420

AmortisationAt 1 January 167 97Exchange adjustment 71 4Charge for year 172 66

At 31 December 410 167

1,501 1,253

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10 Deferred Tax Assets and Liabilities

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

Deferred tax assets :Unutilised tax losses 1,198 1,270 - -Provision 255 183 - -Exchange adjustment 46 1 - -

1,499 1,454 - -

Deferred tax liabilities :Difference in depreciation (6,098) (5,322) (107) -Unremitted foreign income and profits (3,452) (3,271) - -

(9,550) (8,593) (107) -

Deferred tax assets are recognised for tax losses of certain subsidiary companies on the basis that taxable profits will be generated to utilise these tax losses.

As at 31 December 2003, a subsidiary company has unutilised tax losses available for setting off against future taxable income subject to the provisions of the Income Tax Act and agreement by the Inland Revenue Authority of Singapore amounting to $57,500,000 (2002 : $79,700,000) for which deferred tax asset has not been recognised.

As at 31 December 2003, deferred tax liabilities of $8,091,000 (2002 : $5,233,000) were not provided for on the unremitted earnings of certain subsidiary companies.

11 Stocks

Group 2003 2002 $’000 $’000

At cost :Food 187 142Beverage 614 464General 216 143

1,017 749

12 Marketable Securities, net

Group 2003 2002 $’000 $’000

At cost less amounts written downQuoted shares in corporations 109,428 109,562Other quoted investments 1,000 1,000

110,428 110,562

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12 Marketable Securities, net (cont’d)

Group 2003 2002 $’000 $’000

At market valueQuoted shares in corporations 134,013 109,562Other quoted investments 943 1,000

134,956 110,562

Included in other quoted investments are secured bonds with fixed interest rate of 8% per annum and maturity date of 20 November 2012.


13 Trade Debtors, net

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

Bad debts written off directly to profit and loss account 42 11 - 1

14 Other Debtors

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

Tax recoverables 27,661 * 26,076 * 12,013 9,092Interest recoverable - 2,464 - -Balance receivable from sale of commercial building - 38,970 - -Others 2,524 # 5,685 # 445 1,162 #

30,185 73,195 12,458 10,254

* Included in tax recoverables are amounts totalling $14,368,000 (2002 : $14,121,000) which relate to payments made to the Inland Revenue Authority of Singapore (IRAS) with regard to prior years of assessments of certain subsidiary companies. Based on professional advice, the Directors are of the view that the amounts paid should be recoverable and accordingly objections have been raised with IRAS.

# Included proceeds receivable from sale of investments.

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15 Short-Term Loans

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

Short-term loans - unsecured 86,340 132,302 47,840 92,302 - secured 39,400 192,079 - -

125,740 324,381 47,840 92,302

The unsecured loans are repayable within 12 months and bear interest ranging from 1.1% to 1.8% per annum (2002 : 1.2% to 4.9%).

Included in the secured loans at 31 December 2003 is a short-term loan facility secured by an assignment of the proceeds from the tenancies relating to the Gallop Green condominium (note 4) of the borrowing subsidiary company. Interest for the facility ranged from 1.1% to 1.4% per annum.

The secured loans in the prior year had borne interest ranging from 1.3% to 3.0% per annum.

The effective interest rate of the short-term loans, computed based on weighted average rates at the balance sheet date, was 1.4% per annum (2002 : 1.8%).

16 Other Creditors

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

Accrual for development cost and 16,749 30,583 848 933 other chargesDeposits 6,020 4,939 306 299Others* 2,362 11,561 1,734 1,737

25,131 47,083 2,888 2,969

* Included in 2002 were additional tax assessments of $7,949,000 raised by the Inland Revenue Authority of Singapore on some of the subsidiary companies which have been settled in full in 2003.

17 Long-Term Loans

Group 2003 2002 $’000 $’000

Long-term loans - secured 390,000 270,000

Included in the secured loans at 31 December 2003 are :

(a) A $270 million 3-year syndicated transferable term loan facility due September 2005. Interest ranged from 1.5% to 1.8% per annum (2002 : 1.8% to 2.2%). The Company is the guarantor of this $270 million financing, which is secured by, inter alia, a legal mortgage over the land and buildings erected on 18/20/22 Cross Street, China Square Central (note 4) and a debenture over all the assets of the borrowing subsidiary company. Inter-company loans are subordinated to the full retirement of this facility.

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17 Long-Term Loans (cont’d)

(b) A $120 million 3-year term loan facility due September 2006. Interest ranged from 1.3% to 1.7% per annum. The facility is secured by, inter alia, a legal mortgage over the land and buildings erected on 3 Pickering Street, China Square Central (note 4) and a debenture over all the assets of the partly-owned borrowing subsidiary company.

The effective interest rate of the long-term loans computed based on the weighted average rates at the balance sheet date, was 1.6% per annum (2002 : 1.8%).

18 Other Non-Current Liabilities

Group 2003 2002 $’000 $’000

Unrealised profit on sale of property to an associated company 5,851 5,851Retention sum payable 165 1,608Amount due to minority shareholder of a subsidiary company 14,502 -Other liabilities 165 95

20,683 7,554

The amount due to minority shareholder of a subsidiary company relates to advances made to a partly-owned subsidiary company. The amount payable is non-trade related, unsecured, bears interest ranging from 1.3% to 1.5% per annum, has no fixed term of repayment and not expected to be repaid within 1 year. Accordingly, the Directors are of the view that the fair value of the amount payable cannot be reasonably determined.

19 Share Capital

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

Authorised Capital :600 million ordinary shares of $1 each 600,000 600,000 600,000 600,000

Issued and fully paid Capital :356.4 million ordinary shares of $1 each 356,400 356,400 356,400 356,400

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction.

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20 Reserves

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

Revenue reserve 555,790 530,810 403,638 382,825Exchange translation reserve (15,045) (34,420) - -Revaluation reserve 154,650 168,786 31,143 32,929Reserve on consolidation 2,634 2,634 - -Dividend reserve 11,405 8,340 11,405 8,340

709,434 676,150 446,186 424,094

Comprising :Distributable reserve 552,150 504,730 301,176 275,717Non-distributable reserve 157,284 171,420 145,010 148,377

709,434 676,150 446,186 424,094

21 Minority Interests

Included in minority interests is the share by a minority shareholder of the negative net worth of a subsidiary company arising mainly due to the revaluation deficit of an investment property. The minority shareholder’s share of such deficit amounted to $27.274 million (2002 : $23.744 million).

Pursuant to the terms of the joint venture agreement between the shareholders of this subsidiary company, the minority shareholder is obligated to provide additional shareholders’ equity as and when required.

22 Investment Income, gross

Group 2003 2002 $’000 $’000

Dividends from :Quoted shares in corporations 12,165 9,513Unquoted shares in corporations 2,688 -

14,853 9,513Interest income from :Other quoted investments 89 30

Total Investment Income 14,942 9,543

23 Other Revenue

Group 2003 2002 $’000 $’000

General revenue 130 96Interest income 119 2,236

249 2,332

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24 Staff Costs

Group 2003 2002 $’000 $’000

Wages, salaries and other allowances 21,748 21,168Defined contribution benefits 994 1,084

Total 22,742 22,252

25 Finance Costs

Group 2003 2002 $’000 $’000

Interest on overdrafts - 1Interest on bank loans, net of recoveries 8,412 6,954

8,412 6,955

26 Profit from Operations Before Exceptional Items Profit from operations before exceptional items is stated after charging the following :

Group 2003 2002 $’000 $’000

Directors’ emoluments- Directors of the Company - Salaries and fees 1,051 1,126 - Defined contribution benefits 27 36

- Other directors of subsidiary companies# - Salaries and fees 647 718 - Defined contribution benefits 50 63

Auditors remuneration- Auditors of the Company - Current year 251 214 - Underprovision in prior year 22 27

- Other auditors 78 59

Non-audit fees paid to- Auditors of the Company 243 429- Other auditors 129 128

Legal fees paid to a firm of which a Director is a partner* - 127

# Included salaries and fees of $633,000 (2002 : $685,000) and defined contribution benefits of $50,000 (2002 : $63,000) paid to key management personnel.

* Excluded an amount of $116,000 which formed part of the property development cost and an amount of $10,000 which had been recovered from tenant.

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27 Exceptional Items

Group 2003 2002 $’000 $’000

Net surplus on disposal of investments 20,670 15,845Provision for impairment of investments (10,000) -Net deficit on revaluation of commercial investment properties (27,037) -Net gain on disposal of property 280 472Net tax refund from prior years’ sale of investments - 3,824Compensation award on land - 42

(16,087) 20,183

28 Taxation Recognised in profit and loss account :

Group 2003 2002 $’000 $’000

Income tax expense : - Singapore 3,550 1,089 - Foreign 1,725 612 - Overprovision in respect of prior years (1,191) (417)

4,084 1,284

Deferred tax expense : - Singapore 849 1,337 Changes in tax rates - (472) - Foreign 5 71 - Underprovision/(Provision no longer required) 53 (3,035)

907 (2,099)

Associated companies 7,246 5,356

12,237 4,541

Tax included in exceptional items - (3,824)

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28 Taxation (cont’d)

Group 2003 2002 $’000 $’000

Reconciliation of effective tax rate :Profit from operations before taxation 48,988 36,705Tax included in exceptional items - (3,824)

48,988 32,881

Tax at statutory rate of 22% 10,777 7,234Effect of different tax rates in other countries 3,157 1,371Overprovision in prior years (1,138) (3,452)Changes in tax rate - (472)Expenses/Losses not claimable 9,569 2,288Income not subject to tax (6,572) (3,965)Deferred tax asset not recognised 16 1,252Utilisation of previously unrecognised tax losses (3,621) (144)Others 49 429

12,237 4,541

In 2002, a subsidiary company had transferred its current year unabsorbed trade losses to be deducted against the assessable income of the Company as defined under the loss-transfer system of group relief which took effect from the year of assessment 2003.

29 Foreign Exchange and Capital Controls

Included in the associated companies, investments and marketable securities of the Group and of the Company are investments in Malaysian corporations at book costs as at 31 December 2003 as follows :

Group Company $’000 $’000

Associated companies - Quoted 40,740 38,182 - Unquoted 8,975 8,975Investments - Quoted 54,389 43,475 - Unquoted 4 4Marketable securities - Quoted 26,899 -

131,007 90,636

Market Value

Quoted associated companies 84,377 82,018Quoted investments 90,124 72,032Quoted marketable securities 32,095 -

206,596 154,050

With the introduction of foreign exchange and capital controls by Malaysia in September 1998, the Group’s associated companies, investments and marketable securities are translated into S$ as at 31 December 2003 by reference to the official rate of exchange of RM3.80 to US$1.

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30 Dividends on Ordinary Shares

Group and Company 2003 2002 $’000 $’000

1st interim dividend of 2 cents per share less Malaysian income tax at 28% paid on 8.10.2003 5,132 5,560 (2002 : 2 cents per share less tax at 22%)

2nd interim dividend of 4 cents per share less Singapore income tax at 20% payable on 5.5.2004 11,405 8,340 (2002 : 3 cents per share less tax at 22%)

16,537 13,900

The 2nd interim dividend in respect of the year ended 31 December 2003 was declared by the Directors after the balance sheet date. There is no taxation consequence arising from the declared dividend on the Company.

31 Earnings Per Share

The calculations of basic and diluted earnings per share are based on the profit attributable to members of the Company of $41,381,000 (2002 : $32,666,000) and on 356,400,000 shares in issue.

32 Remuneration of Directors of the Company

The number of directors within each band of remuneration were as follows :

Number of Directors 2003 2002

$500,000 and above 1 1Below $250,000 7 7

8 8

33 Operating Lease Commitments

(a) The Group has entered into property leases on its property, plant and equipment, investment properties and properties held for sale. These non-cancellable leases have remaining non-cancellable lease terms of up to 8 years. Contingent rents are receivable subject to the revenue exceeding a level stated in the respective agreement.

Contingent rents recognised in the profit and loss account at Group level amounted to $84,000 (2002 : $25,000).

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33 Operating Lease Commitments (cont’d)

Future minimum lease payments receivable under non-cancellable operating leases are as follows:-

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

Within 1 year 33,250 26,411 1,030 1,355 More than 1 year but less than 5 years 42,964 46,292 838 1,890 More than 5 years 2,419 3,962 - -

78,633 76,665 1,868 3,245

(b) The Group has entered into operating lease agreements for office equipment and premises. These non- cancellable operating leases have remaining non-cancellable lease terms of up to 5 years. Contingent rents are payable subject to the related revenue exceeding a level stated in the respective agreement.

Operating lease payments recognised in the profit and loss account are as follows:-

Group 2003 2002 $’000 $’000

Minimum lease payments 3,560 817 Contingent lease payments 1,786 1,213

5,346 2,030

Future minimum lease payments payable under non-cancellable operating leases are as follows:-

Group 2003 2002 $’000 $’000

Within 1 year 5,019 1,078 More than 1 year but less than 5 years 6,395 1,453

11,414 2,531

34 Related Party Transactions

The following are the significant transactions entered into by the Group with related corporations at terms agreed between the parties :

(a) Transactions with associated companies :

Group 2003 2002 $’000 $’000

Advisory fee paid 115 100 Administrative services provided 7 7 Office rental received 345 282

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34 Related Party Transactions (cont’d)

(b) On 9 January 2002, the shareholders of the Company approved the sale of a commercial building at 1 Pickering Street, China Square Central, Singapore, at an estimated price of $389.703 million, computed on apportioned costs basis, to The Great Eastern Life Assurance Company Limited, a substantial shareholder of the Company. Following the execution of the sale and purchase agreement dated 7 February 2002, 90% of the estimated price was received on 21 February 2002 and a further amount of $38.332 million was received during the year. The proceeds were used for repayment of the Group’s borrowings.

35 Contingent Liabilities

Group Company 2003 2002 2003 2002 $’000 $’000 $’000 $’000

(a) Financial support given to those subsidiary companies having deficiencies in shareholders’ funds - - 230,431 198,215

(b) Undertaking for indemnity in respect of bank guarantee facilities utilised by subsidiary companies 5,455 8,315 5,455 8,315

36 Comparative Figures

Certain comparative figures have been reclassified to provide a proper comparison with the current year’s presentation.

37 Financial Risk Management

The Group’s activities expose it to a variety of financial risks. Apart from those risks generated from operations such as extending credits and cash flow management, other risks included the effects of changes in debt and equity market prices, foreign currency exchange rates and interest rates.

The Group’s management monitors its financial position closely with an objective to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments where appropriate, for its risk management activities but does not hold or issue derivative financial instruments for trading purposes.

The policies for managing these risks are summarised below.

(a) Foreign exchange risk

The Group has exposure to foreign exchange risk as a result of transactions denominated in foreign currencies, arising from normal trading and investment activities. The Group also has similar exposure from subsidiary companies operating in foreign countries, which generate revenue and incur costs denominated in foreign currencies. The Group uses foreign currency forward exchange contracts to manage these exposures which are relatively certain in their timing and extent.

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37 Financial Risk Management (cont’d)

(b) Interest rate risk

The Group’s exposure to market risk for changes in interest rates relates primarily to its debt obligations.

The Group’s policy is to manage its interest cost using a combination of fixed and floating rate debts and also derivative financial instruments such as interest rate swaps and interest rate cap agreements to hedge interest rate risks.

Surplus funds are placed with reputable banks to generate interest income for the Group.

(c) Credit risk

The Group has no significant concentrations of credit risk due to its diverse customer base. The credit risk arising from the Group’s normal commercial operations is controlled by individual operating units within strict credit controls and guidelines. Policies are in place to ensure on-going credit evaluation and active account monitoring.

(d) Liquidity risk

The Group manages its debt maturity profile, operating cash flows and the availability of fundings so as to ensure that all refinancing, repayment and funding needs are met in a timely and cost-effective manner. Procedures have been established to monitor and control liquidity on a daily basis adopting a cash flow management approach.

(e) Market risk

Changes in the market value of investment securities can affect the net income and financial position of the Group. The Group diversifies its investments by business sector and by country. It manages the risk of unfavourable changes by cautious review of the investments before investing and continuous monitoring of their performance and risk profiles.

38 Fair Values

For financial assets and liabilities of the Group and of the Company which have not been disclosed separately in the preceding notes, the fair values approximate their carrying amounts due to short to medium term maturity.

39 Subsequent Events

(a) In February 2004, the Group entered into a conditional share sale agreement to divest its remaining 8.5% interest in Tronoh Mines Malaysia Bhd, which may result in a gain of approximately $9.5 million.

(b) On 27 February 2004, the Singapore Finance Minister announced the revision in the Singapore corporate income tax rate (rate) from 22% to 20%.

The revised rate will apply for the financial year ending 31 December 2004. The resulting provision for deferred tax assets and liabilities for the Group would amount to $1,404,000 and $8,970,000 respectively. Deferred tax liabilities not provided for on the unremitted earnings of certain subsidiary companies would amount to $7,355,000.

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40 Segment Information

2003 Business Segments

Securities Investment Corporate/ Property Hotel Trading Holding Others Elimination Consolidated $’000 $’000 $’000 $’000 $’000 $’000 $’000

Segment Revenue Revenue from external 41,106 58,556 73,133 11,029 - - 183,824 Inter-segment revenue 502 - - - - (502) - Unallocated revenue - - - - 249 - 249

Total revenues 41,608 58,556 73,133 11,029 249 (502) 184,073

Segment result 17,243 3,018 21,126 10,835 249 - 52,471

Unallocated expenses (1,275)

Profit from operations 51,196Finance costs (8,412)Share of profits of associated companies 2,825 19,466 22,291Profit from operations before exceptional items 65,075Exceptional items (26,757) 20,670 (10,000) (16,087)Profit from operations before taxation and minority interests 48,988Taxation (12,237)Minority interests 4,630Profit attributable to Members of the Company 41,381

Segment Assets 999,270 164,407 113,162 162,463 10,109 - 1,449,411Investment in associated companies 9,221 - - - 73,702 - 82,923

1,008,491 164,407 113,162 162,463 83,811 - 1,532,334

Unallocated assets 104,245*

Total assets 1,636,579

Segment Liabilities 554,229 7,211 459 342 766 - 563,007

Unallocated liabilities 19,949

Total liabilities 582,956

Other segment information :Capital expenditures 2,304 2,726 - - - - 5,030**Depreciation 1,716 6,324 - - - - 8,040Amortisation - 172 - - - - 172

2003 Geographical Segments

Corporate/ Singapore Malaysia Australia Others Elimination Consolidated $’000 $’000 $’000 $’000 $’000 $’000

Segment Revenue Revenue from external 127,037 3,758 53,254 24 - 184,073 Inter-segment revenue 36 - 826 - (862) -

Total revenues 127,073 3,758 54,080 24 (862) 184,073

Other geographical information :Segment assets 1,386,766 151,774 97,999 40 - 1,636,579Capital expenditures 2,677 6 2,347 - - 5,030**

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40 Segment Information (cont’d)

2002 Business Segments

Securities Investment Corporate/ Property Hotel Trading Holding Others Elimination Consolidated $’000 $’000 $’000 $’000 $’000 $’000 $’000

Segment Revenue Revenue from external 36,701 47,959 35,965 7,201 - - 127,826 Inter-segment revenue 439 - - - - (439) - Unallocated revenue - - - - 2,332 - 2,332

Total revenues 37,140 47,959 35,965 7,201 2,332 (439) 130,158

Segment result 15,290 3,236 (18,679) 7,038 2,332 - 9,217

Unallocated expenses (2,260)

Profit from operations 6,957Finance costs (6,955)Share of profits of associated companies 20 16,500 16,520Profit from operations before exceptional items 16,522Exceptional items 514 19,669 20,183Profit from operations before taxation and minority interests 36,705Taxation (4,541)Minority interests 502Profit attributable to Members of the Company 32,666

Segment Assets 1,077,962 154,296 110,867 151,293 1,938 - 1,496,356Investment in associated companies 7,304 - - - 77,906 - 85,210

1,085,266 154,296 110,867 151,293 79,844 - 1,581,566

Unallocated assets 102,260*

Total assets 1,683,826

Segment Liabilities 631,809 5,850 2 307 784 - 638,752

Unallocated liabilities 25,228

Total liabilities 663,980

Other segment information :Capital expenditures 99,307 2,209 - - - - 101,516**Depreciation 1,470 5,672 - - - - 7,142Amortisation - 66 - - - - 66

2002 Geographical Segments

Corporate/ Singapore Malaysia Australia Others Elimination Consolidated $’000 $’000 $’000 $’000 $’000 $’000

Segment Revenue Revenue from external 86,783 3,343 39,971 61 - 130,158 Inter-segment revenue 36 - 601 - (637) -

Total revenues 86,819 3,343 40,572 61 (637) 130,158

Other geographical information :Segment assets 1,466,136 144,958 72,693 39 - 1,683,826Capital expenditures 99,372 4 2,140 - - 101,516**

* Including properties under development amounting to $75,813,000 (2002 : $74,928,000).** Including $585,000 (2002 : $98,117,000) for property developments.

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Shareholder Information

41 Subsidiary and Associated Companies

Country of Percentage of Cost of Incorporation equity held investment & Place of 2003 2002 2003 2002 Business Business % %Subsidiary Companies $’000 $’000Held by the Company :Alimento Sendirian Berhad* Malaysia Property 100 100 - -Atbara Holdings Private Limited Singapore Property 100 100 1,000 1,000Baxterley Holdings Private Limited Singapore Investment 100 100 20,000 20,000Bushey Park Private Limited Singapore Investment 100 100 29,992 29,992Glade Holdings Sendirian Berhad* Malaysia Property 100 100 - -Killin Limited* Hong Kong Investment 100 100 4 4Malayan Securities Private Limited Singapore Investment 100 100 5,500 5,500Malayan Tin Smelting Company Sdn Bhd* Malaysia Investment 100 100 702 702Merevale Holdings Private Limited Singapore Investment 100 100 10,000 10,000Rendezvous Hotels International Private Limited Singapore Hotels & resorts 80 80 80 80 managementSTC International Private Limited Singapore Restaurant 100 100 - -STC Realty (Butterworth) Sendirian Berhad* Malaysia Property 100 100 10,979 10,979Straits Developments Private Limited Singapore Property 100 100 5,988 5,988Straits Equities Private Limited Singapore Investment 100 100 1,000 1,000Straits Holdings Private Limited Singapore Investment 100 100 5,000 5,000Straits Media Private Limited Singapore Media Advertising 100 100 10,000 10,000Sword Investments Private Limited Singapore Investment 100 100 5,000 5,000Sword Private Limited Singapore Investment 100 100 - -Walthamston Private Limited Singapore Investment 100 100 5,000 5,000Wavertree Holdings Private Limited Singapore Investment 100 100 - -

110,245 110,245Held through subsidiary companies :Allegra Hotel Pty Ltd* Australia Hotel management 80 41Hotel Rendezvous Private Limited Singapore Hotel owning 100 100 & managementRendezvous Hotels (Australia) Pty Ltd* Australia Hotels & resorts 80 80 managementRendezvous Hotels (Queensland) Pty Ltd* Australia Hotels & resorts 80 80 managementRendezvous Hotels Management Pty Ltd* Australia Hotel management 100 100Rendezvous Properties Private Limited Singapore Property 100 100Straits Eastern Square Private Limited Singapore Property 51 51Straits Securities Private Limited Singapore Investment 100 100Straits Tinfields Private Limited Singapore Tin Mining 100 100Straits Unit Trust* Australia Property Trust 100 100Sword Properties Pty Ltd* Australia Trustee Company 100 100Sword Unit Trust* Australia Property Trust 100 100Unicorn Square Limited Singapore Property 100 100Rendezvous Hotels Asia Private Limited Singapore Hotels & resorts 80 80 management

Associated CompaniesHeld by the Company :Johan Kekal Sendirian Berhad ** Malaysia Property Development 45 45 8,975 8,975Killinghall (Malaysia) Berhad *** Malaysia Finance 20 20 12,780 12,780Malaysia Smelting Corporation Berhad * Malaysia Tin Smelting @37 37 25,402 25,402Straits Lion Asset Management Limited Singapore Investment Advisory 20 20 2,725 2,725 and Fund Management 49,882 49,882

Held through subsidiary companies :Malaysia Smelting Corporation Berhad* Malaysia Tin Smelting @3 3

The subsidiary and associated companies are audited by Ernst & Young, Singapore unless stated otherwise. * Audited by member firms of Ernst & Young Global in the respective countries. ** Audited by PricewaterhouseCoopers, Malaysia. *** Audited by Deloitte KassimChan, Malaysia. @ Combined interest of 40%.


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Group Five-Year of Financial Summary

2003 2002 2001 2000 1999 S$’000 S$’000 S$’000 S$’000 S$’000

Turnover# 121,000 92,000 105,000 121,000 106,000

Profit before exceptional items 65,075 16,522 60,416 61,651 54,210Exceptional items (16,087) 20,183 (10,656) (1,529) 3,896

Profit before taxation 48,988 36,705 49,760 60,122 58,106Taxation (12,237) (4,541) (10,763) (13,625) (7,252)

36,751 32,164 38,997 46,497 50,854Minority interests 4,630 502 (94) 13 (89)

Profit attributable to Members of the Company 41,381 32,666 38,903 46,510 50,765

# Turnover represents the gross value of sales, income from investment trading, rents and service charges from property and revenue from hotel operations.

PER S$1 SHARE cts cts cts cts cts

Profit before taxation 13.7 10.3 14.0 16.9 16.3Profit attributable to Members of the Company 11.6 9.2 10.9 13.0 14.2Dividend (gross) 6.0 5.0 5.0 5.0 4.2

Earnings and dividends per share in prior years have been adjusted to the current issued capital of S$356.4 million.

Balance Sheet S$’000 S$’000 S$’000 S$’000 S$’000

Non-Current AssetsProperty, plant and equipment, net 160,813 155,356 180,408 230,855 248,807Investment properties, net 927,554 962,527 307,719 283,808 272,211Associated companies, net 82,923 85,210 79,625 70,061 56,126Investments, net 162,059 146,881 150,288 152,574 153,830Properties under development, net 75,813 74,928 658,498 930,744 827,886Intangible assets, net 1,501 1,253 304 349 438Deferred tax assets 1,499 1,454 62 40 -Other non-current assets, net 720 - - 55 78

1,412,882 1,427,609 1,376,904 1,668,486 1,559,376

Net Current Assets/(Liabilities) 60,974 (121,616) 203,248 111,400 (234,601)

Non-Current LiabilitiesLong-term loans (390,000) (270,000) (533,976) (722,007) (300,768)Other non-current liabilities (20,683) (7,554) (11,016) (12,991) (9,873)Deferred tax liabilities (9,550) (8,593) (15,416) (22,110) (20,603)

(420,233) (286,147) (560,408) (757,108) (331,244)

NET ASSETS 1,053,623 1,019,846 1,019,744 1,022,778 993,531

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Shareholder InformationGroup Five-Year of Financial Summary (In Singapore dollars) (cont’d)

Balance Sheet (cont’d) 2003 2002 2001 2000 1999 S$’000 S$’000 S$’000 S$’000 S$’000

EquityIssued capital 356,400 356,400 356,400 356,400 297,000Reserves 709,434 676,150 661,534 666,048 696,187

1,065,834 1,032,550 1,017,934 1,022,448 993,187Minority interests (12,211) (12,704) 1,810 330 344

EQUITY & MINORITY INTERESTS 1,053,623 1,019,846 1,019,744 1,022,778 993,531

Voting Rights

Shareholders’ voting rights are set out in Article 72 of the Company’s Articles of Association :

On a show of hands, every member present in person or by proxy shall have one vote and upon a poll, every member present in person or by proxy shall have one vote for every share which he holds.

Ordinary Shares and Shareholders as at 13 March 2004

Size of Holdings No. of Shareholders % No. of Shares Held %

1 - 999 1,590 13.87 556,243 0.161,000 - 10,000 7,410 64.63 27,631,994 7.7510,001 - 1,000,000 2,439 21.27 110,047,821 30.881,000,001 and above 26 0.23 218,163,942 61.21

11,465 100.00 356,400,000 100.00

Twenty Largest Shareholders as at 13 March 2004

Registered Shareholders No. of Shares %

1. Oversea-Chinese Bank Nominees Private Limited 52,828,928 14.822. Great Eastern Life Assurance (Malaysia) Berhad 52,619,244 14.763. Sime Darby Singapore Limited 26,721,000 7.504. Lee Foundation 13,252,668 3.725. The Overseas Assurance Corporation Limited 11,704,620 3.286. Citibank Nominees Singapore Private Limited 7,382,220 2.077. DBS Nominees Private Limited 7,221,091 2.038. United Overseas Bank Nominees Private Limited 5,367,502 1.519. HSBC (Singapore) Nominees Private Limited 5,293,554 1.4910. PSA Corporation Limited 4,636,832 1.3011. The Great Eastern Life Assurance Company Limited 4,080,000 1.1412. Selat Private Limited 3,336,000 0.9413. Loke Wan Yat Realty Sendirian Berhad 2,519,632 0.7114. HL Bank Nominees (Singapore) Private Limited 2,498,004 0.7015. Raffles Nominees Private Limited 2,367,247 0.6616. UOB Kay Hian Private Limited 2,256,856 0.6317. Lee Rubber Company Private Limited 2,024,544 0.5718. University Of Malaya 1,999,992 0.5619. Morph Investments Limited 1,958,000 0.5520. The Asia Life Assurance Society Limited 1,872,000 0.53

211,939,934 59.47

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Shareholder InformationGroup Five-Year of Financial Summary (In Singapore dollars) (cont’d)

Substantial Shareholders

No. of Shares Direct Interest Deemed Interest %

Oversea-Chinese Banking Corporation Limited 33,575,976 82,982,832# 32.70Great Eastern Holdings Limited Nil 68,403,864## 19.19The Great Eastern Life Assurance Company Limited(1) 4,080,000 52,619,244 15.91GEL Capital (Malaysia) Berhad(2) Nil 52,619,244 14.76Great Eastern Life Assurance (Malaysia) Berhad(3) 52,619,244 Nil 14.76Sime Darby Berhad Nil 26,721,000 7.50Sime Darby Eastern Limited(4) Nil 26,721,000 7.50Sime Singapore Investments Limited(5) Nil 26,721,000 7.50Sime Singapore Limited(6) Nil 26,721,000 7.50Sime Darby Singapore Limited(7) 26,721,000 Nil 7.50

#Oversea-Chinese Banking Corporation Limited is deemed to have an interest in shares held by the following companies :

Name of Company No. of Shares

Oversea-Chinese Bank Nominees Private Limited 13,816,716 The Great Eastern Life Assurance Company Limited 4,080,000 Great Eastern Life Assurance (Malaysia) Berhad 52,619,244 The Overseas Assurance Corporation Limited 11,704,620 Raffles Investments (Singapore) Private Limited 762,252

82,982,832

##Great Eastern Holdings Limited is deemed to have an interest in shares held by the following companies :

Name of Company No. of Shares

The Great Eastern Life Assurance Company Limited 4,080,000 Great Eastern Life Assurance (Malaysia) Berhad 52,619,244 The Overseas Assurance Corporation Limited 11,704,620

68,403,864

(1) 100% subsidiary of Great Eastern Holdings Limited.(2) 100% subsidiary of The Great Eastern Life Assurance Company Limited.(3) 100% subsidiary of GEL Capital (Malaysia) Berhad.(4) 100% subsidiary of Sime Darby Berhad.(5) 100% subsidiary of Sime Darby Eastern Limited.(6) 100% subsidiary of Sime Singapore Investments Limited.(7) 100% subsidiary of Sime Singapore Limited.

Percentage of Shareholding held by the Public as at 13 March 2004

As at 13 March 2004, 59.69% of the issued share capital of the Company was held by the public and thus, Rule 723 of the SGX Listing Manual has been complied with.

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71

Proxy Form The Straits Trading Company Limited Annual Report 2003

Notice of Meeting

Group’s Major Properties

Hotel and Retail Complex Rendezvous Hotel - Bras Basah Road, Singapore Rendezvous Observation City Hotel - Perth, Australia

Commercial and Residential Properties - Butterworth, Malaysia

Commercial Properties 18/20/22 Cross Street - China Square Central, Singapore 3 Pickering Street - China Square Central, Singapore

Office Building Straits Trading Building - Kuala Lumpur, Malaysia Straits Trading Building - Battery Road, Singapore Australia Place - Perth, Australia

Residential Properties Gallop Gables - Singapore Gallop Green - Singapore Cable/Nathan Road - Singapore

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71


71

Proxy Form The Straits Trading Company Limited Annual Report 2003

Notice of Meeting

NOTICE IS HEREBY GIVEN that the Annual General Meeting of members of The Straits Trading Company Limited will be held at 9 Battery Road, #03-05 Straits Trading Building, Singapore 049910, on Wednesday, 28 April 2004 at 11.30 a.m. for the following business :

1. To receive and consider the report of the Directors and the financial statements for the year ended 31 December 2003.

2. To re-elect Mr Norman Ip Ka Cheung who retires by rotation pursuant to Article 99 of the Articles of Association of the Company.

3. To consider and, if thought fit, pass resolutions pursuant to Section 153(6) of the Companies Act, Cap.50, to re-appoint :

(a) Mr Howe Yoon Chong, (b) Mr Tang I-Fang, (c) Y.A.Bhg. Jen (B) Tun Ibrahim Bin Ismail, (d) Mr Michael Wong Pakshong, and (e) Professor Lim Chong Yah

as Directors of the Company to hold office until the next Annual General Meeting of the Company.

Note: Mr Tang I-Fang, if re-appointed, will continue as a member of the Audit Committee and will be considered an independent Director. Y.A.Bhg. Jen (B) Tun Ibrahim Bin Ismail, if re-appointed, will continue as a member of the Audit Committee and will be considered an independent Director.

4. To approve the payment of Directors’ fees of S$459,000 for the year ended 31 December 2003 (2002 : S$462,000).

5. To appoint auditors and to authorise the Board to fix the remuneration of the auditors.

6. As Special Business To consider and, if thought fit, pass the following resolution as Ordinary Resolution :

That the Directors of the Company be and are hereby authorised, pursuant to Section 161 of the Companies Act, Cap.50, to issue shares in the Company at any time to such persons and upon such terms and conditions and for such purposes as the Directors may deem fit provided always that the aggregate number of shares to be issued pursuant to this resolution shall not exceed 10% of the issued capital of the Company for the time being.

Note: This resolution, if passed, will renew the power given to the Directors at the last Annual General Meeting pursuant to Section 161 of the Companies Act, Cap.50, and will permit the Directors, until the next Annual General Meeting (unless such authority is sooner revoked or varied by the Company in general meeting), to issue shares up to a maximum of 10% of its existing issued capital.

7. To transact any other ordinary business of the Company.

By Order of the Board

Emily Teo (Ms)Secretary

Singapore12 April 2004

A member of the Company is entitled to appoint a proxy to attend the meeting and vote in his stead. A proxy need not be a member of the Company. Proxy forms must be deposited at the Company’s registered office not less than 48 hours before the time for holding the meeting or anyadjournment thereof.

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Proxy FormThe Straits Trading Company Limited Annual Report 2003

THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

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Proxy FormThe Straits Trading Company Limited Annual Report 2003

I/We, (Name) of (Address)being a member/members of THE STRAITS TRADING COMPANY LIMITED hereby appoint :

Name Address NRIC/ Proportion of Passport Shareholdings Number (%)

and/or (delete as appropriate)

Name Address NRIC/ Proportion of Passport Shareholdings Number (%)

as my/our proxy/proxies to vote for me/us on my/our behalf, at the Annual General Meeting of the Company, to be held at 9 Battery Road, #03-05 Straits Trading Building, Singapore 049910, on Wednesday, 28 April 2004 at 11.30 a.m., and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting.

No. Resolutions For Against

1. To adopt Directors’ Report and Audited Financial Statements.

2. To re-elect Mr Norman Ip Ka Cheung under the Articles of Association.

3. To re-appoint Directors pursuant to Section 153(6) of Companies Act, Cap.50 :

(a) Mr Howe Yoon Chong

(b) Mr Tang I-Fang

(c) Y.A.Bhg. Jen (B) Tun Ibrahim Bin Ismail

(d) Mr Michael Wong Pakshong

(e) Professor Lim Chong Yah

4. To approve Directors’ fees.

5. To appoint Auditors and to authorise Directors to fix their remuneration.

6. To empower Directors to issue shares pursuant to Section 161 of the

Companies Act, Cap.50.

7. Any other business.

Dated this day of 2004

Signature(s) of Member(s)/Common SealImportant: Please read notes overleaf

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IMPORTANT:1. For investors who have used their CPF monies to buy THE STRAITS TRADING COMPANY LIMITED shares, this Annual Report is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

The Straits Trading Company LimitedIncorporated in Singapore in 1887

Proxy Form

Total Numberof Shares

74

NOTES

1. A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead. Such proxy need not be a member of the Company.

2. Where a member appoints 2 proxies, the appointments shall be invalid unless he specifies the proportion of his holding (expressed as a percentage of the whole) to be represented by each proxy.

3. A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as defined in Section 130A of the Companies Act, Cap.50 of Singapore), he should insert that number. If the member has shares registered in his name in the Register of Members of the Company, he should insert that number. If the member has shares entered against his name in the Depository Register and registered in his name in the Register of Members, he should insert the aggregate number. If no number is inserted, the instrument appointing a proxy or proxies will be deemed to relate to all the shares held by the member.

4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 9 Battery Road, #21-00 Straits Trading Building, Singapore 049910 not less than 48 hours before the time set for holding the Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed under its common seal or under the hand of an attorney duly authorised in writing.

6. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

GENERAL

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

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The Straits Trading Company Ltd9 Battery Road #21-00,Straits Trading Building

Singapore 049910

Documents

Straits Trading FA