Investor Relations

Contents :

Reference is made to your letter dated 12 October 2000 (ref no:NM-001012-37992) pertaining to the above mentioned.

As requested, we append below the additional information for your attention:-

1. Appointment of Special Administrators and Going Concern

The onset of the economic crisis has hampered sales of development property, tour and travel arrangements and tenantable space. Accordingly, the turnover of the Group declined by 31.4% to RM95 million in the financial year concerned, resulting in a loss before tax of RM196 million. Apart from the deteriorating turnover, the higher loss before tax as well as exceptional loss of RM381 million are attributable to several factors such as:

• Escalating exposure to loan interest and greater debt service obligations;
• Provisions made on doubtful debts;
• Provision for corporate guarantee granted to a vendor; and
• Deficit arising from revaluation of development properties, investment properties and fixed assets.
  
As at 30 June, 1999, the Group and the Company incurred a net loss of RM572 million and RM402 million respectively and, as of that date, the Group and the Company have net current liabilities of RM748 million and RM257 million and shareholders’ deficit of RM323 million and RM177 million respectively.

Special Administrators were appointed by Pengurusan Danaharta Nasional Berhad on 9 September, 1999 to manage the operations and assets of the company and prepare a workout proposal to restructure the Company.

The Special Administrators’ proposed corporate restructuring exercise of the Company and the Group is currently ongoing and is not finalised as of to date. In view of the significance of the above matters, the going concern of the Group and The Company is dependent upon the outcome of the restructuring exercise, its subsequent approval by the relevant parties and its successful implementation. As the outcome is still pending as of the date of their report, the auditors have highlighted this fact in their report.

2. Land and Buildings

The land and buildings of the Group and the Company were revalued by the directors based on valuations carried out by independent professional valuers on an open market basis in May and December, 1999.

In view of the significant change in the property prices since the balance sheet date, the auditors’ are unable to ascertain the appropriateness of the carrying values and as such have also highlighted this fact in their report.

Query Letter Contents :

We refer to your Company's Annual Report 1999.
In accordance with the Exchange's requirements, kindly furnish the Exchange
immediately with your detailed explanation(s) on the qualifications stated in
the Auditors' Report of your Annual Report 1999 for public release.

Yours faithfully

INDERJIT SINGH
Senior Manager
Listing Operations
WR/NIK
Copy to : Securities Commission (via fax)