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With reference to your letter reference LHY/SR/HTH/MF/LD8/99 dated 1 July 1999, we furnish the information relating to the status of our Group’s Y2K readiness as requested.

1. Details of your company and subsidiaries’ progress in relation to its activities to address the Y2K issue.

Companies within the Group are currently at various stages of redressing potential Y2K problems in their business application systems and other systems embedded in its manufacturing operations.

Business systems already rectified are progressively being tested for compliance and readiness. A few subsidiaries are currently implementing enterprise softwares that will replace and thereby eliminate the need to remedy certain existing systems. All applications crucial to the efficient running of the operations are currently expected to be completed between September and November 1999.

The Group has review ed the various systems embedded in its manufacturing processes and does not anticipate any significant disruption during the transition to year 2000.

2. The impact of the Y2K issue if your company and /or subsidiaries fail to be Y2K Ready or are unable to achieve full readiness by the estimated dates(s) mentioned above.

Systems that are currently not Y2K compliant are mainly accounting related, with inventory control being the most affected area. Apart from the objective of Y2K compliance, the new enterprise softwares are implemented in order to further enhance operating efficiency. A delay in implementation will delay the attainment of the efficiency target, but will not disrupt the overall operations of the businesses concerned.

3. The exposure of your company and/or subsidiaries to third parties who have material business relationships with your company or subsidiaries in relation to the third parties Y2K readiness.

The exposure of the Group from the direct impact of third parties that have material business relationships arising from their internal Y2K readiness is not expected to be significant. In respect of selective resources critical to our continued production, the buffer stocks currently being carried may be increased to cushion such exposure. Given that the Group’s main businesses are consumer or broad base in nature, its dependence and consequently exposure to any single party is likely to be insignificant.

However, there is still uncertainty about the broader scope of the Y2K issue and how this may affect the economy of the country, consumer sentiments and third parties (like government agencies involved in the movement and registration of motor vehicles) that are critical to the Group’s operations and operating results.

4. The total cost your company and subsidiaries have incurred or are expected to incur to address the Y2K issue.

The overall cost for the replacement of certain existing systems with enhancement, is estimated to be in the region of RM 4.0 m, excluding internal manpower related time cost. About 50% of this amount have been spent so far. Other additional or incremental expense is not expected to be material in relation to the Group’s results.

5. Describe your company and subsidiaries’ contingency plans in relation to the y2k issue to ensure continued operations.

The Group has commenced to prepare a contingency plan in respect of specific areas that may face possible disruptions. The plan will essentially focus on minimising the scope and duration of any disruptions by having sufficient personnel, inventory and other resources before hand. Such buffers will help the Group to reduce its dependence on third parties and IT based applications, if it should become necessary, for a period of time. Events unfolding during the second half of 1999 and the state of readiness of other organizations will affect the extent and scope of the eventual contingency plan.