STRONG LOCAL POSITIONS…

Incorporated in 1950 and started Malaysia’s first cement plant in

1953, Malayan Cement Berhad is today the parent of a group of

companies with leading position in each of our core businesses.

TRADING OF BUILDING MATERIALSMajor distributor of building materials in Malaysiaand Singapore. We specialise in various types ofcement, cementitious products and other relatedbuilding materials.

Main operating companies:

Malaysia Simen Utama Sdn BhdCMCM Perniagaan Sdn BhdKedah Cement Marketing Sdn Bhd

Singapore Lafarge Cement Singapore Pte Ltd

CEMENT OPERATIONSMarket leader with a nationwide network of facilities throughout Peninsular Malaysia which include 3 integrated plants located in Rawang, Kanthan and Langkawi, a grinding plant in Pasir Gudang anddistribution channels by road, rail and sea. We also operate a bulk import terminal in Singapore.

Main operating companies:

Malaysia Associated Pan Malaysia Cement Sdn BhdMalayan Cement Industries Sdn BhdSouthern Cement Industries Sdn Bhd

Singapore Lafarge Cement Singapore Pte Ltd

READY-MIXED CONCRETE OPERATIONSMajor producer with 32 plants throughout Peninsular Malaysia,4 plants in East Malaysia, 6 plants in Singapore and 1 plant in Vietnam.

Main operating companies:

Malaysia Supermix Concrete (Malaysia) Sdn BhdSupermix Concrete Industries Sdn BhdSupermix Concrete (East Malaysia) Sdn Bhd

Singapore Supermix Concrete Pte Ltd

Vietnam Supermix Concrete (Vietnam) Co Ltd

2 2001 HIGHLIGHTS

4 CORPORATE INFORMATION

6 CHAIRMAN’S STATEMENT

10 CHIEF EXECUTIVE’S REVIEW

15 CORPORATE GOVERNANCE

19 STATEMENT OF INTERNAL CONTROLS

20 REPORT OF THE AUDIT COMMITTEE

22 FINANCIAL STATEMENTS

55 LIST OF PROPERTIES

60 FIVE-YEAR STATEMENT

61 ANALYSIS OF SHAREHOLDINGS

CONTENTS

REINFORCED BY LAFARGE’S INTERNATIONAL LEADERSHIP…Following the acquisition of Blue Circle Industries PLC by Lafarge, we are now a member ofthe Lafarge Group, the world leader in building materials with operations in 75 countries and83,000 employees worldwide. The access to an even wider base of experience, knowledgeand expertise as well as a stronger international trading network, will help us reinforce ourcommitment to fulfilling customers’ requirements with excellence and remain at the forefrontof our industry.

A major milestone for

Malayan Cement in 2001

was its integration into Lafarge,

the world leader in building materials.

Malayan Cement will benefit from being part of

the world’s largest cement producer through

sharing of experience and expertise as well as

access to resources and capabilities to ensure

continuous technical improvements and

development.

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2 9 February SPMS became the first ready-mixed concrete company inSingapore to achieve the OHSAS 18001 certification.This certification is in addition to the earlier ISO 9002and ISO 14001 certifications attained in 1994 and 2000respectively.

6 April BCMS (now known as Lafarge Cement Singapore)officially opened its new drymix plant in Tuas whichproduces cementitious pre-packed materials and buildingchemicals. With the opening of the Tuas plant, thecompany is able to achieve greater productivity, efficiencyand product consistency, thereby enabling us to serve ourcustomers even better.

11 July Malayan Cement became a member of the Lafarge Group when Lafarge completed the acquisition ofBlue Circle Industries PLC, the parent of Malayan Cement. With the integration, Malaysia is now aprominent feature within the Lafarge Group with Kuala Lumpur as the regional office for South EastAsia and the location of Asia Technical Centre.

2001 Highlights

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4 December Langkawi Works joined Rawang and Kanthan Works in the Group’scertification to OHSAS 18001. Rawang and Kanthan Works were the firstcement plants in Malaysia to be awarded the certification in December2000 and Malayan Cement remains the only one in the industry with thecertification.

5 March 2002Malayan Cement Berhad was awarded the KLSE Corporate Sectoral Award 2001 forMain Board - Industrial Products in recognition of its exemplary corporate conduct incomplying with KLSE’s listing requirements and high standards of corporategovernance, disclosure and transparency coupled with proactive investor relationsefforts.

(RM'000 unless indicated) 2001 2000

Revenue 1,657,299 1,576,637

Profit before tax 74,562 107,438 Profit after tax 69,539 86,950 Net profit for the year 64,801 80,353

Dividend 41,669 41,669 Net earnings per share (sen) 2.24 2.80

15 NovemberLafarge Cement Singapore (LCS) achievedboth the ISO 14001 and OHSAS 18001certifications. LCS is the first dry-mix andcement company in Singapore to achievethe certifications, thus reflecting ourcontinuous commitment to provide anenvironmentally friendly, safe and healthyworking environment for our people.

20 July SPMV achieved the ISO 9002 certificationand became the first foreign joint ventureready-mixed concrete supplier in Vietnamto achieve this certification.

Financial Highlights

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Guillaume Roux (Age 42, French)

Non-Executive Director (Vice Chairman)

He was appointed as director and Vice Chairman of the Board on 1 March 2002. Graduated with a degree in Business Administrationfrom the Institute of Political Studies, Paris in 1980 and joined the Lafarge Group Headquarters in the same year. Between 1996 to1999, he was Vice President, Strategic Planning and Marketing at Lafarge North America. He was appointed Chief Executive Officerof Lafarge's Turkey operations in 1999 where he served until his recent appointment as President of Lafarge's ASEAN Region on 1 March 2002.

Y.A.M. Tunku Tan Sri Abdullah

ibni Almarhum Tuanku Abdul Rahman (Age 76, Malaysian)

DKYR, PSM, PPT

Independent Non-Executive Director (Chairman)

An independent non-executive director since April 1965, and appointed as Chairman in July 1979. Academic qualifications include aDiploma in Public Administration from the University of Glasgow, Scotland. A member of the Negeri Sembilan Royal Family andserved as a Member of Parliament for the constituency of Rawang from 1964 to 1974. Chairman of the Melewar Group Berhad,MAA Holdings Berhad,Georgetown Holdings Berhad,UCP Resources Berhad and Datuk Keramat Holdings Berhad. He is the SeniorIndependent Director and chairs the Audit Committee and the Remuneration and Nomination Committee of the Company.

Board Of Directors

Registered Office Level 12, Bangunan TH Uptown 3No. 3, Jalan SS21/39, 47400 Petaling Jaya, Selangor Darul EhsanTel - 603 7723 8200Fax - 603 7722 4100Website - www.malayancement.com.my

Auditors Deloitte Touche Tohmatsu

Share Registrars Malaysian Share Registration Services Sdn Bhd7th Floor, Exchange Square, Bukit Kewangan, 50200 Kuala LumpurTel - 603 2026 8099Fax - 603 2026 3736

Stock Exchange Listing Kuala Lumpur Stock Exchange Main Board

Company Secretaries Teoh Yow KeeChew Tee Kheng

Yeoh Khoon Cheng (Age 43, Malaysian)

Executive Director (Senior Vice President & CFO)

Appointed Finance Director in January 1999. Qualified as an accountant in 1983 after four years of articleship with a professionalfirm of accountants, and is a member of the Malaysian Institute of Accountants and the Malaysian Institute of Certified PublicAccountants. Joined Malayan Cement in 1987 as Finance Manager, and has held various positions involving in business development,mergers and acquisitions and corporate finance activities and acting as Company Secretary from 1990 to 1998 before taking up hiscurrent position. He also sits on the Board of Kedah Cement Holdings Berhad.

Quah Thain Khan (Age 44, Malaysian)

Executive Director (President & CEO)

He was appointed President & Chief Executive Officer of the Company on 1 March 2002. He graduated with a Bachelor’s degreein Mechanical Engineering (Honours) from Monash University, Australia in 1980 and obtained his Master's degree in BusinessAdministration from Cranfield in 1987. He is also a member of the Institute of Engineers, Malaysia and the Malaysian chapter of theAmerican Concrete Institute. Following an early career in engineering, manufacturing, marketing and management consultancy, hejoined APMC in 1993 as its Deputy General Manager, a position he held until 1996 when he was appointed as the General Managerof Simen Utama, the marketing arm of APMC. He was later appointed as Marketing Director of the Company’s Malaysian cementoperations in July 1999, a position he held until his appointment as Chief Executive Officer of the Company’s Malaysian cementoperations on 1 April 2000.

Corporate Information

Y.A.M. Tunku Tan Sri Imran ibni Tuanku Ja'afar (Age 54, Malaysian)

DKYR, PSM, SPSN, AMN, PJK

Independent Non-Executive Director

An independent non-executive director since July 1979. Graduated with a Bachelor of Law (Honours) degree from NottinghamUniversity, UK in 1970 and called to the Bar at Gray’s Inn in 1971. Tunku Imran has held senior management positions with variouscompanies including Perbadanan Nasional Berhad and Haw Par (Malaysia) Sdn Bhd from 1971 to 1976. He has been the ChiefExecutive Officer of the Antah Group of Companies from 1976 until he stepped down at the end of January 2001. He currently sitson the Board of several other public companies, namely Aluminium Company of Malaysia Berhad, Austral Enterprises Berhad,Hwang-DBS (Malaysia) Berhad, Hwang-DBS Securities Berhad, Island & Peninsular Berhad, Minho (Malaysia) Berhad and CommercialUnion Assurance (Malaysia) Berhad. He is a member of the Remuneration and Nomination Committee and Audit Committee of theCompany.

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Chan Hua Eng (Age 73, Malaysian)

R OBE

Independent Non-Executive Director

An independent non-executive director since July 1979. Graduated with a Bachelor of Law (Honours) degree from Bristol Universityin 1952. Called to the English Bar in 1953 and the Malayan Bar in 1955. Career in legal practice started in 1954 in Shearn Delamore& Co. and Drew & Napier until retirement in January 1987 as a Senior Partner. Areas of specialisation during his legal career werein corporate, banking and land law. Formerly,Chairman of the Malayan Bar. Sits on the Board of Directors of Pacific & Orient Berhad,Rohas-Euco Industries Berhad, Carlsberg Brewery Malaysia Berhad, Lingui Developments Berhad, Gleanealy Plantations (Malaya)Berhad. He is a member of the Remuneration and Nomination Committee and Audit Committee of the Company.

Dato' Dr Ikmal Hisham Albakri

@ Ikmal Hisham Hariri bin Mustapha Albakri (Age 71, Malaysian)

DPCM, DPMS

Independent Non-Executive Director

An independent non-executive director since July 1979. Graduated with a Diploma in Architecture from Sheffield University in 1956and later a Diploma in Tropical Architecture from AA School of Architecture, UK in 1962. Executive Director of Kumpulan ArkitekSdn Bhd, an architectural practice, since 1964. President of the Malaysian Institute of Architects from 1967 to 1969 and 1973 to1975, President of the Commonwealth Association of Architects from 1987 to 1989 and Vice President of the International Unionof Architects since 1999. Conferred many awards and honours in recognition of his contribution to the profession of architects.He is a member of the Remuneration and Nomination Committee and Audit Committee of the Company.

Charles Tan Poh Tei (Age 63, Malaysian)

Independent Non-Executive Director

Appointed as non-executive director since January 1999 following his retirement as the Finance Director, a position he has held sinceAugust 1978. An accountant by profession, he joined the Group in 1964 and held various positions prior to his appointment asFinance Director. A member of the Malaysian Institute of Accountants, the Australian Society of Certified Practising Accountants andthe Institute of Chartered Secretaries & Administrators, UK. Sits on the Board of Directors of Kedah Cement Holdings Berhad andCourts Mammoth Berhad. He is a member of the Remuneration and Nomination Committee and Audit Committee of theCompany.

James R H Loudon (Age 59, British)

Non-Executive Director

Appointed as non-executive director in May 1989. Graduated with a Bachelor of Arts degree from Magdalene College, Cambridge,UK in 1965 and a Master's degree in Business Administration from Stanford Graduate School of Business, USA in 1971. Joined BlueCircle in 1977. In 1983, he became the Finance Director of Blue Circle's operations in the United States, and in September 1987was appointed Group Finance Director for Blue Circle Group. His position was renamed Chief Financial Officer in 1999, a positionhe held until his retirement in year 2001.

Saw Ewe Seng (Age 63, Malaysian)

Non-Executive Director

Appointed as an executive director in April 2000 and remains as a non-executive director since October 2000 following hisretirement after 36 years of service with the Group. Obtained his fellowship Diploma in Civil Engineering from the Royal MelbourneInstitute of Technology, Australia in 1960. A member of the Institute of Engineers (Malaysia). He joined the Group in 1964, and hasheld various positions until his appointment as Managing Director/Group Chief Executive of the Group's operating units in 1981, aposition he held until his retirement in September 2000. He is a member of the Remuneration and Nomination Committee of theCompany. He holds 55,000 shares directly and 110,000 shares indirectly in the Company.

OTHER INFORMATION ON DIRECTORS

Save as disclosed, none of the Directors holds any securities in the Company or its subsidiaries nor has any family relationship with anydirector/substantial shareholder of the Company, nor any personal interest in any business arrangement involving the Company. Save andexcept for traffic offences, if any, none of the Directors has been convicted for any offences within the past ten years.

Michel Rose (Age 59, French)

Non-Executive Director

Appointed as a director on 18 February 2002. Graduated from Ecole des Mines, France and obtained a Master's degree in BusinessAdministration from IMI, Geneva. Joined the Lafarge Group in 1970 and became Executive Vice President for Human Resource andCorporate Communications in 1984. He was appointed to his current position as Senior Executive Vice President in the LafargeGroup in 1989, and also held the position of President & Chief Executive Officer, Lafarge Corporation in North America from 1992to 1996. He is also a Director of Lafarge S A, the ultimate holding company of Malayan Cement Berhad.

Jean-Jacques Gauthier (Age 42, French)

Non-Executive Director (alternate to Michel Rose)

Appointed as an alternate director on 18 February 2002. Holds an Accounting degree, a degree in Economic Science and a Master’s degree in Business Law.He joined the Lafarge Group in February 2001 as Executive Vice President and Chief Financial Officer. Prior to that, he was Chief Financial Officer of the French-British venture Matra-Marconi Space, a position which he retained following the merger between Matra-Marconi Space and the aerospace operationsof Daimler-Benz in 2000. He is also a member of the Executive Committee of Lafarge S A, the ultimate holding company of Malayan Cement Berhad.

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On behalf of the board of directors, it is my pleasure to present to you the annual report and the annual financialstatements of Malayan Cement Berhad for the financial year ended 31 December 2001.

FINANCIALS

The Group recorded a 5% increase in revenue, despite a flat cement demand in Peninsular Malaysia and a 16%contraction in cement consumption in Singapore during the year under review. However, as the increase inrevenue came from lower margin segments (trading of other building materials and ready-mixed concrete) and asa result of significantly higher cost of sales, Group pretax profit declined by 30% from RM107.4 million in 2000 toRM74.6 million in 2001. The increase in cost of sales is due to lower production output and significantly higherrepairs costs at the plants caused mainly by technical difficulties encountered with the newly installed coolers atboth Rawang and Kanthan Works. Root causes for these problems have been identified and modifications are beingcarried out during the first half-year of 2002 to coincide with the regular plant maintenance shutdowns after whichthe plant performance is expected to be restored to its optimal level.

Group net borrowings increased marginally from RM875.6 million in 2000 to RM876.3 million in 2001 althoughcash flow from operations remained strong. The marginal increase in net borrowings is a result of cash flow fromoperations having been used for capital expenditure, acquisitions of remaining 49% equity in Southern CementIndustries Sdn Bhd and a 100% equity in Pengkalen Concrete Sdn Bhd (now known as Supermix ConcreteIndustries Sdn Bhd) as well as the payment of dividends to shareholders.

Bagi pihak Lembaga Pengarah, saya dengan sukacitanya membentangkan laporan tahunan dan kenyataankewangan tahunan Malayan Cement Berhad bagi tahun kewangan berakhir 31 Disember 2001.

KEWANGAN

Kumpulan telah mencatatkan peningkatan pendapatan sebanyak 5% walaupun pertumbuhan permintaan simen diSemenanjung Malaysia adalah mendatar dan penggunaan simen di Singapura menguncup sebanyak 16%. Walaubagaimanapun, disebabkan peningkatan pendapatan diperolehi dari segmen margin yang lebih rendah (perniagaanbahan-bahan binaan lain dan konkrit siap-bancuh) dan disebabkan oleh kos jualan yang lebih tinggi, keuntungansebelum cukai Kumpulan menurun sebanyak 30% dari RM107.4 juta pada tahun 2000 kepada RM74.6 juta padatahun 2001. Peningkatan dalam kos jualan adalah disebabkan oleh pengeluaran yang lebih rendah dan kospembaikan yang lebih tinggi di kilang-kilang yang disebabkan terutamanya oleh masalah teknikal berkaitandengan alat-alat penyejuk baru di Kilang Rawang dan Kanthan. Punca utama masalah-masalah ini telahdikenalpasti dan kerja-kerja pengubahsuaian sedang dijalankan dalam setengah tahun pertama 2002 selaras denganjadual penyelenggaraan kilang. Selepas itu, kilang dijangka akan kembali beroperasi ke paras optimanya.

Aliran tunai dari operasi kekal kukuh meskipun pinjaman bersih Kumpulan meningkat secara marginal dariRM875.6 juta pada tahun 2000 kepada RM876.3 juta pada tahun 2001. Peningkatan marginal dalam pinjamanbersih adalah disebabkan oleh aliran tunai dari operasi yang digunakan untuk perbelanjaan modal,pengambilalihan baki ekuiti sebanyak 49% dalam Southern Cement Industries Sdn Bhd dan 100% ekuitiPengkalen Concrete Sdn Bhd (kini dikenali sebagai Supermix Concrete Industries Sdn Bhd) serta pembayarandividen kepada pemegang-pemegang saham.

“... Untuk mengekalkan daya saingannya, Kumpulan akan terus berusaha untukmencapai kecekapan operasi dan kecemerlangan dalam kualiti produk danperkhidmatan pelanggan. Kumpulan yakin bahawa ia akan meningkatkan prestasikewangannya pada 2002.”

Chairman’s Statement

PENYATA PENGERUSI“...To distinguish itself from the competition,the Group will continue to strive for operationalefficiency and excellence in product quality andcustomer services. The Group is optimistic that itwill be able to improve on its financialperformance in 2002.”

Y.A.M.TUNKU TAN SRI ABDULLAH IBNI ALMARHUM TUNKU ABDUL RAHMANCHAIRMAN PENGERUSI

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The Board has declared an interim dividend of 2.0 sen (less tax at 28%) per share, equivalent to RM41.7 million andis at the same level as in 2000. Your directors do not propose any final dividend for the financial year ended 31December 2001.

CORPORATE DEVELOPMENTIt was mentioned in the 2000 Annual Report that the Company proposed to implement a special issue of up to557,168,461 new ordinary shares of RM0.50 each within a 3-year period to Bumiputera investors to be approvedby the Ministry of International Trade and Industry ("MITI"). This proposed special issue was approved by theSecurities Commission ("SC"), Foreign Investment Committee and MITI, with the SC requiring the Company toimplement the entire proposed issue of shares by 5 April 2002. A letter was sent to MITI in October 2001 seekingtheir assistance in identifying prospective approved Bumiputera investors who could be interested in the proposedspecial issue. As the response from Bumiputera investors was significantly below the number of shares required tobe issued, the SC has given an extension of time for the Company to implement the proposed special issue by 26April 2003 following an appeal submitted by our adviser on behalf of the Company.

On 21 January 2002, the Company ("MCB"), Kedah Cement Holdings Berhad ("KCHB"), EON Bank Berhad ("EBB"),EON Capital Sdn Bhd ("ECB") and EON Berhad entered into a conditional agreement for the proposed reversetake-over of KCHB ("Proposed Corporate Exercise"). Through the Proposed Corporate Exercise involvingschemes of arrangement of KCHB and EBB, MCB will acquire a 100% interest in KCHB while EBB will be injectedinto ECB which will assume the listing status of KCHB. As an integral part of the Proposed Corporate Exercise,KCHB shareholders other than MCB ("KCHB Minority Shareholders") will be allotted ECB shares on the basis ofone (1) ECB share for every one (1) KCHB share originally held by KCHB Minority Shareholders. Upon completionof the Proposed Corporate Exercise and listing of ECB shares on the Main Board of Kuala Lumpur Stock Exchange,EON Berhad will extend the mandatory offer at an offer price of RM2.67 for every one (1) ECB share held byKCHB Minority Shareholders. The Proposed Corporate Exercise is conditional upon approvals of the regulatoryauthorities and will in due course be tabled for shareholders’ approval.

Lembaga Pengarah telah mengumumkan dividen interim sebanyak 2.0 sen (tolak cukai sebanyak 28%) untuk setiapsaham, bersamaan RM41.7 juta dan di paras yang sama seperti tahun 2000. Pengarah-pengarah tidakmencadangkan sebarang dividen akhir bagi tahun kewangan berakhir 31 December 2001.

PERKEMBANGAN KORPORATLaporan Tahunan 2000 telah menyatakan bahawa Syarikat bercadang untuk melaksanakan keluaran khas sehingga557,168,461 saham biasa yang baru pada kadar RM0.50 setiap saham dalam tempoh tiga tahun untuk pelabur-pelabur Bumiputera bagi kelulusan Kementerian Perdagangan Antarabangsa dan Industri ("MITI"). Keluaran khasyang dicadangkan ini telah diluluskan oleh Suruhanjaya Sekuriti ("SC"), Jawatankuasa Pelaburan Asing dan MITIdengan SC menetapkan bahawa Syarikat melaksanakan keseluruhan cadangan keluaran saham khas itu sebelum 5April 2002. Surat telah dihantar kepada MITI pada bulan Oktober 2001 untuk meminta bantuan kementerian bagimengenalpasti pelabur-pelabur Bumiputera berpotensi yang telah diluluskan yang mungkin berminat dalamcadangan keluaran khas ini. Oleh kerana maklumbalas dari pelabur-pelabur Bumiputera adalah kurang dari jumlahsaham yang perlu dikeluarkan, SC telah memberikan tempoh lanjutan kepada Syarikat untuk melaksanakancadangan keluaran khas sebelum 26 April 2003 berikutan rayuan yang dikemukakan oleh penasihat yang bertindakbagi pihak Syarikat.

Pada 21 Januari 2002, Syarikat ("MCB"), Kedah Cement Holdings Berhad ("KCHB"), EON Bank Berhad ("EBB"),EON Capital Sdn Bhd ("ECB") dan EON Berhad telah menandatangani perjanjian bersyarat bagi cadanganpengambilalihan songsang KCHB ("Proposed Corporate Exercise"). Menerusi "Proposed Corporate Exercise" yangmeliputi skim penyusunan saham-saham KCHB dan EBB, MCB akan mendapat 100% kepentingan dalam KCHBmanakala EBB akan dimasukkan ke dalam ECB yang akan meneruskan status penyenaraian KCHB. Sebagaibahagian yang penting dalam "Proposed Corporate Exercise", pemegang-pemegang saham KCHB selain daripadaMCB ("Pemegang Saham Minoriti KCHB") akan diperuntukkan saham-saham ECB atas dasar satu (1) saham ECBuntuk setiap satu (1) saham KCHB yang pada asalnya dipegang oleh Pemegang-pemegang Saham Minoriti KCHB.Selepas penyempurnaan "Proposed Corporate Exercise" dan penyenaraian saham-saham ECB di Papan UtamaBursa Saham Kuala Lumpur, EON Berhad akan mengeluarkan tawaran mandatori pada harga tawaran RM2.67 bagisetiap satu (1) saham ECB yang dipegang oleh Pemegang-pemegang Saham Minoriti KCHB. "Proposed CorporateExercise" adalah bersyarat dan tertakluk kepada kelulusan pihak berkuasa kawalan dan akan dibentangkan untukkelulusan pemegang-pemegang saham apabila tiba masanya.

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The Proposed Corporate Exercise is in the best interest of both the Company and KCHB Minority Shareholders as it will allow KCHBMinority Shareholders to hold listed ECB Shares whereby they will have the option either to realise their investments for cash ofRM2.67 per ECB Share through the mandatory offer by EON Berhad or to retain their investment in ECB and participate in thepotential growth of EBB Group. The Proposed Corporate Exercise will also enable MCB to fully integrate the KCHB cementoperations under MCB and to realise its share of the listing premium of KCHB hence lowering the cost of acquisition of the remaining23% interest in KCHB.

OUTLOOK 2002Given the uncertainty in global economy, particularly the economy in the United States and the effects it will have on the country’sexports, growth prospect for the Malaysian economy in 2002 will depend heavily on domestic demand and consumer spending. Tostimulate domestic activities, the government has taken various measures such as maintaining low interest rates, reducing personalincome taxes and continuing to pump prime the economy. With high government spending on development and private sectorparticipation in infrastructure projects, the construction and building materials sectors in Malaysia are expected to achieve positivegrowth in 2002. However, the prospects in Singapore remain uncertain as the Singapore economy is expected to register marginalgrowth in 2002.

Despite the more encouraging outlook in Malaysia, the Group will still be operating in an industry with surplus capacity and the marketcondition is therefore likely to remain competitive and challenging in 2002. To distinguish itself from the competition, the Group willcontinue to strive for operational efficiency and excellence in product quality and customer services. The Group is optimistic that itwill be able to improve on its financial performance in 2002.

HOLDING COMPANYLafarge S A became the ultimate holding company of MCB in July 2001 when it concluded the acquisition of Blue Circle IndustriesPLC. Being a member of the Lafarge Group, the world’s largest cement producer, Malayan Cement will benefit from its ability to drawfrom an even wider international base of experience and technical expertise and a broader international trading network.

"Proposed Corporate Exercise" adalah untuk kebaikan pihak Syarikat dan Pemegang-pemegang Saham Minoriti KCHB kerana iamembenarkan Pemegang-pemegang Saham Minoriti KCHB memegang Saham-saham ECB yang disenaraikan di mana merekamempunyai pilihan sama ada untuk merealisasikan pelaburan mereka dengan tunai sebanyak RM2.67 bagi setiap saham ECB menerusitawaran mandatori oleh EON Berhad atau mengekalkan pelaburan mereka dalam ECB dan menyertai perkembangan Kumpulan EBB."Proposed Corporate Exercise" juga membolehkan MCB menggabungkan sepenuhnya operasi simen KCHB di bawah MCB danmerealisasikan premium penyenaraian KCHB dari saham yang dimilikinya, seterusnya mengurangkan kos pengambilalihan bagi baki23% kepentingan dalam KCHB.

GAMBARAN KESELURUHAN 2002Ketidakpastian yang dialami oleh ekonomi global, khususnya di Amerika Syarikat dan kesannya terhadap eksport negaramenyebabkan prospek pertumbuhan ekonomi Malaysia pada 2002 banyak bergantung kepada permintaan domestik dan perbelanjaanpengguna. Untuk merangsangkan aktiviti-aktiviti domestik, pihak kerajaan telah mengambil pelbagai langkah seperti mengekalkankadar faedah yang rendah, mengurangkan cukai pendapatan perseorangan dan membantu pertumbuhan ekonomi. Denganperbelanjaan kerajaan yang tinggi untuk pembangunan dan penglibatan sektor swasta dalam projek-projek infrastruktur, sektorpembinaan dan bahan-bahan binaan di Malaysia dijangka mencapai pertumbuhan positif dalam 2002. Walaubagaimanapun, prospekdi Singapura terus berada dalam keadaan tidak menentu kerana ekonomi Singapura dijangka mencatatkan pertumbuhan marginalpada 2002.

Meskipun gambaran keseluruhan di Malaysia adalah lebih menggalakkan, Kumpulan akan terus beroperasi dalam industri yangmempunyai kapasiti berlebihan dan dengan itu keadaan pasaran besar kemungkinannya akan kekal dalam keadaan yang mencabardan bersaing dalam 2002. Untuk mengekalkan daya saingannya, Kumpulan akan terus berusaha untuk mencapai kecekapan operasidan kecemerlangan dalam kualiti produk dan perkhidmatan pelanggan. Kumpulan yakin bahawa ia akan meningkatkan prestasikewangannya pada 2002.

SYARIKAT INDUKLafarge S A menjadi syarikat pemegangan utama MCB pada bulan Julai 2001 apabila ia menyempurnakan pengambilalihan Blue Circle Industries PLC. Sebagai ahli Kumpulan Lafarge, pengeluar simen yang terbesar di dunia, Malayan Cement akan mendapatmanfaat dari pengalaman antarabangsa yang lebih luas dan kepakaran teknikal serta rangkaian perdagangan antarabangsa yang lebihluas.

ANUGERAH KORPORAT BSKL 2001Saya berasa amat bangga untuk melaporkan bahawa pada bulan Mac 2002, Malayan Cement telah menerimaAnugerah Korporat BSKL 2001 bagi Papan Utama - Sektor Barangan Perindustrian. Anugerah Korporat BSKLmengiktirafkan syarikat-syarikat yang disenaraikan di Papan Utama dan Papan Kedua bursa saham yang telahmenunjukkan tindak laku korporat yang boleh dicontohi dalam mematuhi peraturan penyenaraian BSKL danmenunjukkan piawaian yang tinggi dalam urus tadbir korporat, penzahiran dan ketelusan serta usaha hubunganpelabur yang proaktif.

LEMBAGAEncik Alistair Cox telah meletak jawatan sebagai Pengarah Urusan Syarikat berkuatkuasa 1 Mac 2002. Bagi pihakLembaga Pengarah, saya ingin merakamkan penghargaan dan ucapan terima kasih para Pengarah di atas sumbanganbeliau sepanjang perkhidmatannya dengan Syarikat dan kami mengucapkan selamat maju jaya kepada beliau.Menggantikan beliau, saya mengalu-alukan kedatangan Encik Quah Thain Khan yang telah dilantik sebagaiPresiden dan Ketua Pegawai Eksekutif Syarikat berkuatkuasa 1 Mac 2002. Untuk makluman, Encik Quahmerupakan warga Malaysia yang pertama untuk memegang jawatan penting ini dalam sejarah Malayan Cement.Saya juga mengalu-alukan kedatangan Encik Michel Rose dan pengarah silih gantinya Encik Jean-Jacques Gauthieryang telah dilantik sebagai pengarah-pengarah bukan eksekutif pada 18 Februari 2002 serta Encik Guillaume Rouxyang dilantik sebagai Naib-Pengerusi bukan eksekutif Syarikat pada 1 Mac 2002.

PENGIKTIRAFAN DAN PENGHARGAANSaya ingin mengucapkan terima kasih kepada semua kakitangan Kumpulan di atas komitmen, dedikasi dansumbangan mereka semasa kita berdepan dengan tahun yang sukar. Saya juga ingin merakamkan penghargaankepada rakan-rakan Pengarah di atas sokongan dan nasihat mereka dan juga kepada pemegang-pemegang saham,rakan-rakan perniagaan dan para pelanggan di atas sokongan padu dan keyakinan mereka terhadap Kumpulan.

Y.A.M. TUNKU TAN SRI ABDULLAH IBNI ALMARHUM TUANKU ABDUL RAHMAN DKYR, PSM, PPTPengerusi

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KLSE CORPORATE AWARDS 2001I am very pleased to report that in March 2002 Malayan Cement received the KLSE Corporate Awards 2001 for Main Board – Industrial Products Sector. KLSE Corporate Awards recognise companies listed on the Main Boardand Second Board of the stock exchange which have shown exemplary corporate conduct in complying withKLSE's listing requirements and demonstrated high standards of corporate governance, disclosure andtransparency coupled with proactive investor relations efforts.

BOARDMr Alistair Cox tendered his resignation as Managing Director of the Company with effect from 1 March 2002.On behalf of the Board, I wish to place on record the appreciation and gratitude of the Board for his contributionduring his service with the Company and offer him our best wishes for his future endeavours. In his place, I wouldalso like to welcome Mr Quah Thain Khan who was appointed the President and Chief Executive Officer of theCompany with effect from 1 March 2002. It is noteworthy that Mr Quah is the first Malaysian in the history ofMalayan Cement to hold this key position.

I would also like to welcome Mr Michel Rose and his alternate Mr Jean-Jacques Gauthier who were appointed asnon-executive directors on 18 February 2002 and Mr Guillaume Roux who was appointed the non-executive Vice-Chairman of the Company on 1 March 2002.

ACKNOWLEDGEMENT AND APPRECIATIONI would like to thank all employees of the Group for their commitment, dedication and contributions in what hasbeen a very difficult year. I would also like to thank my fellow directors for their invaluable support and advice andalso to our shareholders, business associates and customers for their unwavering support and confidence in theGroup.

Y.A.M.TUNKU TAN SRI ABDULLAH IBNI ALMARHUM TUANKU ABDUL RAHMAN DKYR, PSM, PPTChairman

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MALAYSIAN OPERATIONS

CEMENT AND TRADING OPERATIONS2001 saw a global economic slowdown that had an adverse impact on the Malaysian economy. Lower exportearnings, cautious consumer spending, low private investments due to excess capacities and the aftermath of theSeptember 11 incident in New York resulted in the Malaysian GDP registering only a marginal growth of 0.4% in2001. In line with this slowdown in the economy and with slow implementation of infrastructural projects underthe government’s expansionary fiscal policy, there was hardly any growth in cement consumption in 2001. Cementselling prices remained stable throughout the first half of the year but came under pressure in the second half andfell marginally although on the whole, the average net selling price in 2001 was still an improvement over 2000.Average net selling prices in 2000 were depressed due to the intense price war during the first two months of2000. Export sales were down due to production shortfalls. Export selling prices however, remained stable in 2001.

Sales of other building materials by our trading subsidiary CMCM Perniagaan Sdn Bhd were higher than 2000. Thiswas achieved as a result of an increase in customer base and the introduction of new products and more aggressivemarketing in what was still a very challenging environment.

Despite the higher sales, earnings from the cement and trading division in 2001 fell by 17% due to unfavourablesales mix with increased revenue coming from lower margin sales, lower production output, substantially higherrepairs and maintenance costs as well as higher coal prices. As mentioned in the 1999 Annual Report, the Grouphad embarked on capital projects to increase plant efficiencies under the Operational Improvement Programme("OIP"). One of the improvement projects implemented in 2001 was the modification of the inefficient kiln coolersat both Rawang and Kanthan Works. Unfortunately, the performance of the coolers did not meet the designspecifications after completion in early 2001 and resulted in sub-optimal performance of the kilns and othersections of the plants, leading to higher repairs and maintenance costs and lower production output in 2001. Asmentioned by the Chairman, root causes for the poor performance of the plants, including the coolers, have alreadybeen identified and improvements are being made.The rectification work on the coolers is expected to be carriedout during the regular plant maintenance shutdowns in the first half of 2002. The plant performance at both Rawangand Kanthan Works is expected to be substantially restored to its optimal level by the middle of 2002.

OPERASI-OPERASI DI MALAYSIA

OPERASI SIMEN DAN DAGANGAN Tahun 2001 menyaksikan kelembapan ekonomi global yang mendatangkan kesan buruk kepada ekonomi Malaysia. Pendapataneksport yang lebih rendah, perbelanjaan berhati-hati oleh pengguna, pelaburan peribadi yang rendah yang disebabkan oleh kapasitiberlebihan dan kesan dari peristiwa 11 September di New York telah menyebabkan Keluaran Dalam Negara Kasar Malaysia hanyamencatatkan pertumbuhan marginal sebanyak 0.4% pada tahun 2001. Selaras dengan kelembapan ekonomi ini dan pelaksanaanperlahan projek-projek infrastruktur di bawah polisi perkembangan fiskal kerajaan, terdapat hampir tiada pertumbuhan dalampenggunaan simen pada tahun 2001. Harga jualan simen kekal dalam keadaan stabil sepanjang setengah tahun pertama tetapimengalami kejatuhan marginal pada setengah tahun kedua walaupun secara keseluruhannya, harga jualan bersih purata pada 2001mencatatkan peningkatan berbanding tahun 2000. Harga jualan bersih purata pada tahun 2000 meleset disebabkan oleh perang hargayang hebat pada dua bulan pertama dalam tahun 2000. Jualan eksport menurun disebabkan oleh pengurangan pengeluaran. Hargajualan eksport bagaimanapun berada dalam keadaan yang stabil pada 2001.

Jualan bahan-bahan binaan lain oleh anak syarikat dagangan kami, CMCM Perniagaan Sdn Bhd meningkat berbanding 2000. Inidicapai hasil daripada peningkatan pelanggan dan pelancaran produk-produk baru serta pemasaran yang lebih agresif dalam suasanayang begitu mencabar.

Walaupun terdapat jualan yang lebih tinggi, pendapatan dari bahagian dagangan dan simen pada 2001 telah jatuh sebanyak 17%disebabkan oleh peningkatan pendapatan dari jualan margin yang rendah, pengeluaran yang lebih rendah, kos penyelenggaraan danpembaikan yang lebih tinggi serta harga arang batu yang lebih tinggi. Seperti yang dinyatakan pada Laporan Tahunan 1999,Kumpulan telah memulakan projek-projek modal untuk meningkatkan kecekapan kilang di bawah Program Peningkatan Operasi(OIP). Salah satu projek peningkatan yang dilaksanakan pada 2001 ialah pengubahsuaian penyejuk relau yang tidak efisien di KilangRawang dan Kanthan. Malangnya, prestasi penyejuk-penyejuk berkenaan tidak menepati spesifikasi rekaan selepas disiapkan padaawal 2001 dan menyebabkan prestasi relau yang sub-optima dan juga menjejaskan bahagian-bahagian lain kilang yang menyebabkankos penyelenggaraan dan pembaikan yang lebih tinggi dan pengeluaran yang lebih rendah dalam 2001. Seperti yang dinyatakan olehPengerusi, punca utama prestasi kilang-kilang yang kurang memuaskan, termasuk penyejuk, telah dikenalpasti dan pembaikan sedangdijalankan. Kerja-kerja pembaikan ke atas penyejuk dijangka akan dijalankan ketika penutupan kilang untuk penyelenggaraan padasetengah tahun pertama 2002. Prestasi Kilang Rawang dan Kanthan dijangka akan pulih semula ke tahap optimanya menjelangpertengahan tahun 2002.

Chief Executive’s Review

ULASAN KETUA EKSEKUTIF

QUAH THAIN KHAN

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READY-MIXED CONCRETE OPERATIONSOur Malaysian ready-mixed operations, through Supermix Concrete Sdn Bhd ("SPMM"), recorded an increase in sales on the back ofan enlarged ready-mixed concrete market in 2001. During the year, we also increased our market share with the acquisition ofPengkalen Concrete Sdn Bhd (now known as Supermix Concrete Industries Sdn Bhd) as well as organic growth through the settingup of plants in new locations and project sites. Average selling prices in 2001 were not significantly different from 2000, but theincrease in sales volume enabled SPMM to achieve a higher operating profit in 2001.

The year 2001 also saw SPMM embarking on a performance improvement programme using lessons learnt from the OIP undertakenby the cement operations as well as the process used by Lafarge Aggregates & Concrete Division which has implemented suchprogrammes successfully worldwide. The initial results are encouraging and when the various projects are underway, SPMM’sperformance is expected to improve further.

SINGAPORE OPERATIONS

CEMENT AND TRADING OPERATIONSThe impact of the slowdown in the world economy in 2001 has been greater in Singapore. Substantial decline in exports, risingunemployment, cautious consumer spending and the aftermath of the September 11 incident have contributed to the GDP shrinkingby 2.1% in 2001. As a result of this and the resultant depressed property market, the construction sector suffered further contractionin 2001. With lower construction activity, cement consumption declined by a further 16% in 2001, having fallen 7% in 2000. This,coupled with the surplus in cement supply still existing around the region, put further pressure on selling prices in the fragmentedSingapore cement market.

The grinding operations at Tanjong Kling were finally closed and the site returned to Jurong Town Corporation in June 2001. Followingthe shut down of the grinding plant, the Singapore cement operations, which has changed its name from Blue Circle MaterialsSingapore Pte Ltd to Lafarge Cement Singapore Pte Ltd ("LCS"), is now operating a bulk cement terminal at Jurong and a plantmanufacturing specialised cementitious products at Tuas.

Despite the thin margins from domestic cement sales, cost savings and some write back of over-provision relating to the shut downof the grinding plant, contributions from the specialised cementitious products business and oil well cement exports have enabled theSingapore cement operations to remain profitable.

OPERASI KONKRIT SIAP-BANCUHOperasi siap-bancuh kami di Malaysia yang dijalankan oleh Supermix Concrete Sdn Bhd ("SPMM"), mencatatkanpeningkatan jualan dalam pasaran konkrit siap-bancuh yang semakin meluas pada 2001. Pada tahun 2001, kamitelah meningkatkan bahagian pasaran kami ekoran dari pengambilalihan Pengkalen Concrete Sdn Bhd (kinidikenali sebagai Supermix Concrete Industries Sdn Bhd) dan pertumbuhan secara organik menerusi penubuhankilang di lokasi-lokasi baru dan tapak-tapak projek. Harga jualan purata pada 2001 tidak banyak berbeza dari tahun2000, tetapi peningkatan jumlah jualan membolehkan SPMM mencapai keuntungan operasi yang lebih tinggi padatahun 2001.

Tahun 2001 juga menyaksikan permulaan program peningkatan prestasi oleh SPMM berdasarkan pengajaran-pengajaran dari OIP dalam operasi simen dan proses yang digunakan oleh Bahagian Agregat & Konkrit Lafargeyang telah melaksanakan program-program yang serupa dengan jayanya di seluruh dunia. Keputusan awal adalahmenggalakkan dan dengan terlaksananya projek itu nanti, prestasi SPMM dijangka akan terus meningkat.

OPERASI-OPERASI DI SINGAPURA

OPERASI SIMEN DAN DAGANGAN Kesan dari kelembapan ekonomi dunia pada 2001 lebih dirasai di Singapura. Penurunan mendadak dalam eksport,pengangguran yang meningkat, perbelanjaan berhati-hati oleh pengguna dan kesan dari peristiwa 11 Septembertelah menyumbang kepada kesusutan Keluaran Negara Kasar sebanyak 2.1% pada 2001. Keadaan ini dan tekananke atas pasaran hartanah telah menyebabkan sektor pembinaan terus terjejas pada 2001. Dengan aktivitipembinaan yang menurun, penggunaan simen menurun sebanyak 16% pada 2001 selepas menurun 7% pada tahun2000. Faktor ini, ditambah dengan bekalan simen yang berlebihan di rantau ini, terus menekan harga jualan dalampasaran simen di Singapura.

Operasi pengisaran di Tanjong Kling akhirnya ditutup dan tapak kilang itu dikembalikan kepada Jurong TownCorporation pada Jun 2001. Berikutan dengan penutupan kilang pengisaran itu, operasi simen di Singapura, yangtelah bertukar nama dari Blue Circle Materials Singapore Pte Ltd kepada Lafarge Cement Singapore Pte Ltd("LCS"), kini menjalankan operasi terminal simen pukal di Jurong dan kilang yang mengeluarkan produk-produkkhas berasaskan simen di Tuas.

Walaupun margin dari jualan simen domestik adalah kecil, penjimatan kos dan kesan dari penutupan kilangpengisar serta sumbangan dari perniagaan produk khas berasaskan simen serta eksport simen "oil well" telahmembolehkan operasi simen di Singapura mengekalkan keuntungannya.

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READY-MIXED CONCRETE OPERATIONS In line with the decline in cement consumption, demand for ready-mixed concrete in Singapore contracted by 14%in 2001. The shrinking market and the entrance of a new player into the industry resulted in more intensecompetition, causing selling prices to fall. With lower volume and selling prices, the performance of SupermixConcrete Pte Ltd ("SPMS") suffered significantly and, for the first time after many years of uninterrupted profits, aloss was recorded.

SPMS is undertaking a similar performance improvement programme as SPMM and we expect this to significantlymitigate the effects of a continuing depressed ready-mixed market in Singapore.

On a brighter note, our ready-mixed operations in Vietnam, which have been recording losses in recent years,appear to be turning around. A combination of an increase in construction activities in Ho Chi Minh City wherethe plant is located and better cost management has resulted in a profit for 2001.

INTEGRATION WITH LAFARGE

Following the acquisition of Blue Circle by Lafarge on 11 July 2001, Malayan Cement is now a member of Lafarge,the largest cement company in the world and a global leader in building materials with operations in 75 countriesand 83,000 employees. Significant synergistic benefits were identified during the integration process, whichculminated in the launching of a new corporate logo on 21 January 2002. The new logo reflects Malayan Cement’smembership of the Lafarge Group while enhancing our leadership position in Malaysia with the strengths andinternational leadership position of Lafarge.

The integration process also resulted in the decision by Lafarge to relocate its ASEAN Regional Head Office as wellas to set up its Asia Technical Centre ("ATC") in Kuala Lumpur. The ATC will support all the Lafarge-affiliatedcement plants across Asia and is expected to be fully operational by the middle of 2002. As the objective of Lafargeis to expedite the introduction of new technologies and products as well as the sharing of technical knowledge andexpertise among the Asian business units, the siting of the ATC in Malaysia represents the confidence of the Groupin our country. More importantly, it will also allow us to be at the forefront of future R & D work and theopportunities this will provide.

OPERASI KONKRIT SIAP-BANCUHSelaras dengan penurunan penggunaan simen, permintaan untuk konkrit siap-bancuh di Singapura telah turun sebanyak 14% pada2001. Pasaran yang kian susut dan kemasukan sebuah syarikat baru dalam industri telah membawa kepada persaingan yang lebih hebatdan menyebabkan kejatuhan harga jualan. Dengan harga dan jumlah jualan yang lebih rendah, prestasi Supermix Concrete Pte Ltd("SPMS") jelas terjejas dan buat kali pertamanya selepas beberapa tahun mencatatkan keuntungan, kerugian telah dicatatkan.

SPMS sedang menjalankan program peningkatan prestasi yang serupa dengan SPMM dan kami menjangka ini akan mengurangkankesan-kesan dalam pasaran siap-bancuh yang tertekan di Singapura.

Namun begitu, sukacita dinyatakan bahawa operasi konkrit siap-bancuh kami di Vietnam yang telah mengalami kerugian untukbeberapa tahun kebelakangan ini, nampaknya semakin pulih. Gabungan peningkatan aktiviti pembinaan di Ho Chi Minh City dimana terletaknya kilang kami dan pengurusan kos yang lebih baik telah menghasilkan keuntungan pada tahun 2001.

INTEGRASI DENGAN LAFARGE

Berikutan pengambilalihan Blue Circle oleh Lafarge pada 11 Julai 2001, Malayan Cement kini merupakan ahli Lafarge, syarikat simenyang terbesar di dunia dan peneraju dunia dalam bahan-bahan binaan dengan operasi di 75 buah negara dan jumlah pekerja seramai83,000 orang. Manfaat-manfaat penting dari sinergi ini dikenalpasti semasa proses integrasi yang telah berakhir dengan pelancaranlogo korporat yang baru pada 21 Januari 2002. Logo baru itu mencerminkan keahlian Malayan Cement dalam Kumpulan Lafarge sertamengukuhkan kedudukan pimpinan kami di Malaysia dengan kekuatan dan kedudukan Lafarge sebagai pemimpin pasaranantarabangsa.

Proses integrasi ini juga telah membawa kepada keputusan Lafarge untuk menempatkan semula Ibu Pejabat Kawasan ASEAN sertamenubuhkan Pusat Teknikal Asia ("ATC") di Kuala Lumpur. ATC dijangka beroperasi sepenuhnya pada pertengahan tahun 2002dan akan menyokong semua kilang simen yang merupakan ahli Lafarge di Asia. Oleh kerana objektif Lafarge adalah untukmempercepatkan pengenalan produk-produk dan teknologi-teknologi baru serta berkongsi kepakaran dan pengetahun teknikal dikalangan unit-unit perniagaannya di Asia, penempatan ATC di Malaysia jelas menunjukkan keyakinan Kumpulan terhadap negarakita. Lebih pentingnya, ia membolehkan kami tampil ke hadapan dari segi usaha-usaha Penyelidikan dan Pembangunan (R&D) danpeluang-peluang yang akan diwujudkan.

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HEALTH, SAFETY & ENVIRONMENT ("HSE")

We see the attainment of a high level of health and safety as well as environmental protection as an integral and fundamental part ofexcellence in the workplace. 2001 was a significant year in our endeavour to continuously improve our HSE performance. On 9 February 2001, SPMS became the first ready-mixed concrete ("RMC") company in Singapore to achieve the OHSAS 18001certification. This was followed by the achievement of ISO 9002 certification by Supermix Concrete (Vietnam) Pte Ltd on 20 July 2001, making us the first foreign joint venture RMC company in Vietnam to attain this certification. In Singapore, LCS receiveddouble recognition on 15 November 2001 when their plant at Tuas was certified to ISO 14001 and OHSAS 18001 simultaneously.Once again, we became the first dry-mix plant to achieve both certifications in Singapore. We ended 2001 with another greatachievement - the OHSAS 18001 certification for Langkawi Works. With this certification, all three of our integrated cement plantsare now OHSAS 18001 certified and we remained the first and only one in the industry to be awarded this certification.

Whilst we are proud of these certifications, we are more proud of the fact that we continue to make significant strides towardsexcellence in the HSE area in 2001 with further improvements in our safety record (45% reduction in number of lost time accidents)and environmental record (average plant emissions about 50% below the legal limits).

COMMUNITY RELATIONS

We continue to be committed to the community in which we operate. To this end, we have expanded our "Schools Project" to moreschools, particularly in Langkawi which was included in the project only recently when Kedah Cement joined the Malayan CementGroup. This project is aimed at promoting academic excellence in the schools around our plants by providing financial assistance inthe form of bursaries to needy and deserving students and annual academic excellence awards to those who excel in the UPSR andSPM examinations. Todate, 16 schools are covered under this project.

In 2001, as part of our wider community service programme, we also organised numerous activities around the various locations.These included plant open days,“gotong-royongs”, campaigns on safety and crime prevention, blood donations and providing assistanceto the homes for the less fortunate.

KESIHATAN, KESELAMATAN DAN ALAM SEKITAR ("HSE")

Kami menganggap pencapaian taraf kesihatan, keselamatan dan perlindungan alam sekitar yang tinggi sebagaiperkara utama dan asas untuk mencapai kecemerlangan di tempat kerja. Tahun 2001 merupakan tahun yangpenting bagi Syarikat dalam usaha kami untuk terus meningkatkan prestasi HSE. Pada 9 Februari 2001, SPMSmenjadi syarikat konkrit siap-bancuh ("RMC") yang pertama di Singapura untuk mencapai pensijilan OHSAS18001. Ini diikuti oleh pencapaian pensijilan ISO 9002 oleh Supermix Concrete (Vietnam) Pte Ltd pada 20 Julai2001, menjadikan kami syarikat RMC usahasama asing yang pertama di Vietnam untuk mencapai pensijilan ini.Di Singapura, LCS menerima dua pengiktirafan pada 15 November 2001 apabila kilang di Tuas menerimapensijilan ISO 14001 dan OHSAS 18001 secara serentak. Sekali lagi, kami menjadi kilang bancuh kering yangpertama untuk mencapai kedua-dua pensijilan ini di Singapura. Kami mengakhiri tahun 2001 dengan satu lagipencapaian besar - pensijilan OHSAS 18001 bagi Kilang Langkawi. Dengan pensijilan ini, ketiga-tiga kilang simenkami kini mendapat pensijilan OHSAS 18001 dan kami merupakan satu-satunya Syarikat dalam industri simendengan pensijilan berkenaan.

Biarpun bangga dengan pensijilan ini, kami lebih berbangga dengan hakikat bahawa kami terus mengorak langkahuntuk mencapai kecemerlangan dalam bidang HSE pada tahun 2001 dengan peningkatan seterusnya dalam rekodkeselamatan kami (penurunan 45% dalam jumlah kemalangan hilang masa) dan rekod alam sekitar (puratapengeluaran asap rendah sebanyak 50% di bawah paras yang dibenarkan di bawah undang-undang).

PERHUBUNGAN KOMUNITI

Kami terus komited terhadap komuniti di tempat kami beroperasi. Kami telah mengembangkan "Projek Sekolah"ke lebih banyak sekolah khususnya di Langkawi yang hanya terlibat dalam projek ini baru-baru ini apabila KedahCement menyertai Kumpulan Malayan Cement. Projek ini bertujuan menggalakkan kecemerlangan akademik disekolah-sekolah di sekitar kilang-kilang kami menerusi bantuan kewangan dalam bentuk dermasiswa kepadapelajar-pelajar miskin dan mereka yang layak dan anugerah kecemerlangan akademik kepada mereka yangcemerlang dalam peperiksaan UPSR dan SPM. Kini, sejumlah 16 sekolah diliputi dalam projek ini.

Pada tahun 2001, sebagai sebahagian dari program perkhidmatan komuniti kami, Syarikat telah menganjurkanpelbagai aktiviti di kawasan-kawasan kami. Ini termasuk hari terbuka kilang, gotong-royong, kempen keselamatandan pencegahan jenayah, derma darah serta menghulurkan bantuan kepada golongan yang kurang bernasib baik.

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OUTLOOK

Growth in the Malaysian construction sector is expected to improve in 2002, arising from higher residentialconstruction activities and a more effective implementation of infrastructure projects. Consequently the demandfor both cement and ready-mixed concrete is expected to be better than 2001. The Singapore outlook is, however,less optimistic as the market continues to be plagued by dwindling volumes and prices and the economy showinglittle signs of improvement.

Notwithstanding the Singapore situation and despite the plant performance setbacks in 2001, the Company’sfundamental strengths and the long-term benefits of the OIP remain intact. These, together with the expectedimprovement in the Malaysian market, underpin our confidence to deliver a much better result in 2002. In deliveringthis, we will be able to call on the wider technical base and experience of Lafarge worldwide. In 2002, we will alsobe preparing for the potential opening up of our markets when the ASEAN Free Trade Agreement comes into forcein 2003. Whilst a lot of the preparation involves strengthening our domestic competitive position, we are againconsiderably well placed by being part of Lafarge as we can call on the international trading network of Lafargewhen necessary.

ACKNOWLEDGEMENT

I would like to acknowledge the tremendous efforts put in by all my teammates in Malayan Cement to ensure thebest possible performance by the Company despite a very difficult year. On behalf of them, I would like to expressour sincere thanks to the Board for their understanding and support as the team faced the challenges of 2001. Iwould also like to thank our customers and suppliers for their continuing strong support, and our local communitiesfor their close cooperation.

QUAH THAIN KHANPresident & Chief Executive Officer

TINJAUAN

Pertumbuhan dalam sektor pembinaan di Malaysia dijangka akan meningkat pada 2002 disebabkan oleh peningkatan dalam aktiviti-aktiviti pembinaan rumah dan juga perlaksanaan projek-projek infrastruktur yang lebih berkesan. Akibatnya, permintaan untuksimen dan konkrit siap-bancuh dijangka lebih baik berbanding 2001. Gambaran keseluruhan di Singapura bagaimanapun tidak begitubaik kerana pasaran terus dibelenggu oleh saiz dan harga yang semakin merosot serta keadaan ekonomi yang kurang menunjukkanpeningkatan.

Meskipun gambaran keseluruhan di Singapura kurang baik dan prestasi kilang terjejas pada 2001, kekuatan asas Syarikat dan manfaatjangka panjang dari OIP tidak terjejas. Semua ini disertai dengan jangkaan peningkatan dalam pasaran di Malaysia, menambahkankeyakinan kami untuk mencapai keputusan yang lebih baik pada 2002. Untuk mencapainya, kami boleh mendapatkan asas teknikaldan pengalaman sejagat yang lebih luas dari Lafarge di seluruh dunia. Pada 2002, kami juga bersiap sedia untuk pembukaan pasaranapabila Perjanjian Perdagangan Bebas ASEAN berkuatkuasa pada 2003. Biarpun pelbagai persiapan membabitkan pengukuhankedudukan kami dalam persaingan domestik, kami juga berada dalam kedudukan yang lebih baik disebabkan kami merupakansebahagian daripada Lafarge yang membolehkan kami menggunakan rangkaian perdagangan antarabangsa Lafarge apabila diperlukan.

PENGHARGAAN

Saya ingin merakamkan penghargaan kepada semua temankerja Malayan Cement di atas usaha cemerlang mereka untuk memastikanSyarikat meraih pencapaian yang terbaik biarpun berdepan dengan tahun yang amat sukar sekali. Bagi pihak mereka, saya inginmengucapkan terima kasih kepada Lembaga Pengarah di atas kefahaman dan sokongan mereka semasa kami berdepan dengancabaran-cabaran tahun 2001. Saya juga ingin merakamkan penghargaan kepada para pelanggan dan pembekal kami di atas sokonganberterusan mereka dan juga terima kasih kepada masyarakat tempatan di atas kerjasama erat mereka.

QUAH THAIN KHANPresiden & Ketua Pegawai Eksekutif

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The Malaysian Code of Corporate Governance (“Code”), which was introduced in 2000, essentially sets out the principles andbest practices on structures and processes that companies may use in achieving optimal governance framework. In 2001, therevamped Listing Requirements of Kuala Lumpur Stock Exchange ("Listing Requirements") made it mandatory for listedcompanies to disclose their compliance with the Code.

The Board of Directors fully supports the recommendation of the Code and appreciates the importance of adopting highstandards of corporate governance within Malayan Cement Berhad (“the Company”) and its group of companies (“the Group”)as a fundamental part of discharging its responsibilities to protect and enhance shareholder value and the Group’s financialperformance. Towards this end, the Board is pleased that the Company has been awarded the KLSE Corporate Sectoral Award2001 in the Main Board Industrial Products category.

Set out below is a statement, which outlines the main corporate governance principles and best practices that were in place inthe Group throughout the financial year.

A. BOARD OF DIRECTORS

BOARD COMPOSITION AND BALANCEThe Board currently has eleven members, comprising nine Non-Executive Directors (five of whom including the Chairman areindependent) and two Executive Directors. A brief profile of each Director is presented on pages 4 to 5 of this annual report.

The concept of independence adopted by the Board is in accordance with the definition of an independent Director in Section 1.01 of the Listing Requirements. The key elements for fulfilling the criteria are the appointment of an independentDirector who is not a member of management (a non-executive Director) and who is free of any relationship which couldinterfere with the exercise of independent judgement or the ability to act in the best interests of the Company. The Boardcomplies with paragraph 15.02 of the Listing Requirements which requires that at least two Directors or one-third of the Boardof the Company, whichever is the higher, are independent Directors.

The Directors, with their different backgrounds and specialisations, collectively bring with them a wide range of experience andexpertise.

To ensure a balance of power and authority, there is a clear division of responsibility between the Chairman and the President &Chief Executive Officer, the latter position created on 1 March 2002 in place of the position of Managing Director.

MEETINGSThe Board ordinarily meets at least four (4) times a year at quarterly intervals with additional meetings convened when urgentimportant decisions need to be taken between the scheduled meetings. During the year ended 31 December 2001, the Board met on four (4) occasions and every Director attended all the Board meetings held during his tenure except for Y.A.M.Tunku Tan Sri Imran ibni Tuanku Ja’afar and Dato’ Dr Ikmal Hisham Albakri who attended three (3) meetings each.

BOARD COMMITTEESThe Board of Directors delegates certain responsibilities to Board Committees, namely an Audit Committee and a Remunerationand Nomination Committee in order to enhance business and operational efficiency as well as efficacy. The Remuneration andNomination Committee was established on 19 February 2001.

Both committees have written terms of reference and the Board receives reports of their proceedings and deliberations.

SENIOR INDEPENDENT DIRECTORY.A.M. Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul Rahman was appointed as the Senior Independent Director on 29 November 2000. In his capacity, he provides a focus for the Non-Executive Directors to express any concerns that they mayhave.

Corporate Governance

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SUPPLY OF INFORMATIONPrior to the meetings of the Board and the Board Committees, papers which include the agenda and reports relevant to theissues of the meetings were circulated to all the Directors. These papers were issued in sufficient time to enable the Directorsto obtain further explanation, where necessary, in order to be properly briefed before the meeting. The papers include, amongothers, minutes of preceding meetings of the Board and Board Committees, reports on group financial performance, industrytrend, quarterly results announcements, internal audit reports covering the review of internal controls and risks and otherrelevant information.

All Directors have access to the advice and services of the company secretaries in carrying out their duties. The Board ofDirectors, whether as a full board or in their individual capacity, may also take independent professional advice, where necessaryand in appropriate circumstances, in furtherance of their duties, at the Group's expense.

REMUNERATION AND NOMINATION COMMITTEEThe Remuneration and Nomination Committee consisting wholly of non-executive Directors, comprised the following memberssince its establishment in February 2001:

Y.A.M.Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul Rahman Chairman, Independent Non-Executive Director

Y.A.M.Tunku Tan Sri Imran ibni Tuanku Ja'afar Independent Non-Executive Director

Chan Hua Eng Independent Non-Executive Director

Charles Tan Poh Tei Independent Non-Executive Director

Saw Ewe Seng Non-Executive Director

The Committee is responsible for recommending to the Board, candidates for directorship on the Board, assessing theeffectiveness of, the Board, its Committees and the contribution of each individual Director.

In addition, the Committee is also responsible for recommending to the Board the remuneration packages of the ExecutiveDirectors.The determination of the remuneration packages of Directors is a matter for the Board as a whole and individuals arerequired to abstain from discussion on their own remuneration.The Committee met once during the financial year.

APPOINTMENT PROCESSThe Board through the Remuneration and Nomination Committee's appraisal believes that the current composition of the Boardbrings the required mix of skills and core competencies required for the Board to discharge its duties effectively. Furthermore,the Board continuously reviews its size and composition with particular consideration on its impact on the effective functioningof the Board.

The Board appoints its members through a formal transparent selection process. This process has been reviewed, approved andadopted by the Board. New appointees will be considered and evaluated by the Remuneration and Nomination Committee. TheCommittee will then recommend the candidates to be approved and appointed by the Board. The Company Secretary will ensurethat all appointments are properly made, that all information necessary is obtained, as well as all legal and regulatory obligationsare met.

DIRECTORS' TRAININGThe Board through the Remuneration and Nomination Committee ensures that it recruits to the Board only individuals ofsufficient calibre, knowledge and experience to fulfil the duties of a Director appropriately. There is no formal training programmefor existing and new Directors. The Board is mindful of the best practice in the Code in this regard and will review the necessityfor formal training from time to time. However, during the financial year, all Directors have attended and successfully completedthe Mandatory Accreditation Programme conducted by the Research Institute of Investment Analysis Malaysia. The Directors willcontinue to undergo other relevant training programmes to further enhance their skills and knowledge where relevant.

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RE-ELECTIONIn accordance with the Company’s Articles of Association, all Directors who are appointed by the Board are subject to electionby the shareholders at the Annual General Meeting subsequent to their appointment. The Articles of Association of the Companyalso provided that all Directors are required to retire from office once at least in each three years, but may submit themselvesfor re-election. An amendment was further incorporated in the Articles of Association to provide that the Managing Director(now re-designated President & Chief Executive Officer) also rank for re-election as provided by the Listing Requirements.Theseprovide opportunity for the shareholders to renew their mandates. The election of each Director is voted on separately.

Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance withSection 129 (6) of the Companies Act 1965.

DIRECTORS' REMUNERATIONDetails of Director's remuneration are set out below and in Note 4 to the financial statements.

(a) Aggregate remuneration of Directors categorised into appropriate components:

Basic Other Benefits-in-Fees Salaries Emoluments* kind TotalRM RM RM RM RM

Executive Directors - 890,140 115,002 243,962 1,249,104

Non-Executive Directors 195,000 - - 32,200 227,200

* Other emoluments include bonus and contribution to Employees’ Provident Fund.

(b) The number of Directors of the Company whose total remuneration falls within the following bands:

Number of DirectorsRange of remuneration Executive Non-Executive

Below RM50,000 - 6RM50,001 to RM100,000 - 1RM500,001 to RM550,000 1 -RM700,001 to RM750,000 1 -

Executive Directors receive bonuses based on the achievement of specific goals related to the performance of the Group.Non-executive Directors do not receive any performance related remuneration.

B. SHAREHOLDERS

The Company recognises the importance of communicating with investors and does this through the annual report,Annual General Meeting, Company website (www.malayancement.com.my) and analyst meetings.

While the Company endeavours to provide as much information as possible to its shareholders and stakeholders, it is also mindfulof the legal and regulatory framework governing the release of material and price-sensitive information.

During the financial year, the Managing Director and the Finance Director met regularly with analysts, institutional shareholdersand investors.

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C. ACCOUNTABILITY AND AUDIT

AUDIT COMMITTEEThe Audit Committee of the Board currently comprises five Non-Executive Directors with Y.A.M. Tunku Tan Sri Abdullah ibniAlmarhum Tuanku Abdul Rahman as Chairman. The report by the Audit Committee for the year ended 31 December 2001 is setout on pages 20 to 21.

FINANCIAL REPORTINGThe Board aims to present a balanced and meaningful assessment of the Group's financial performance and prospects throughthe annual financial statements, quarterly announcements of results as well as the Chairman's statement and Chief Executive’sreview in the annual report. The Board is assisted by the Audit Committee, established since 1994 to oversee the Group'sfinancial reporting process and the quality of its financial reporting.

DIRECTORS' RESPONSIBILITY STATEMENT IN RESPECT OF THE PREPARATION OF THE AUDITEDFINANCIAL STATEMENTSThe Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the state of affairsof the Group and of the Company as at the end of the accounting period and of their profit or loss and cashflows for the periodthen ended. In preparing the financial statement, the Directors have ensured that applicable approved accounting standards inMalaysia and the provisions of the Companies Act, 1965 have been applied.

In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and madereasonable and prudent judgement and estimates.

The Directors also have a general responsibility for taking such steps as are reasonable open to them to safeguard the assets ofthe Group and to prevent and detect fraud and other irregularities.

STATE OF INTERNAL CONTROLSThe Board acknowledges their responsibilities for the Group’s systems of internal control covering not only financial controls butalso operational and compliance controls as well as risk management. The internal control system involves each business and keymanagement from each business and is designed to manage the risks to which it is exposed. The systems can therefore onlyprovide reasonable, and not absolute, assurance against material misstatement or loss.

The internal audit function which services the Group provides independent and objective reports on the Group’s management,records, and controls to the Audit Committee. The internal audits include evaluation of the processes by which risks areidentified, assessed, monitored and managed and ensure that controls which are instituted are appropriate and can effectivelyaddress acceptable risk exposures.

The Statement on Internal Control furnished on page 19 of the annual report provides an overview of the state of internalcontrols within the Group.

RELATIONSHIP WITH THE AUDITORSKey features underlying the relationship of the Audit Committee with the external auditors are included in the Audit Committee'sterms of reference as detailed on pages 20 to 21of the annual report.

D. ADDITIONAL STATEMENT

MATERIAL CONTRACTS INVOLVING SUBSTANTIAL SHAREHOLDERIn addition to those disclosed in Note 22 of the Notes to Financial Statements, on 13 November 2001 the Company enteredinto two agreements with Standard Chartered Bank Malaysia Berhad as Facility Agent and Arranger and a substantial shareholderof the Company, the Employees Provident Fund Board, for two unsecured Syndicated Bank Guaranteed Fixed Rate Term Loansof RM100 million and RM115 million bearing interest rates at 5.35% per annum and 5.50% per annum respectively for the purposeof refinancing the existing facilities described in Note 17(c)(ii) of the Notes to Financial Statements.These loans are repayable insingle bullet payments in February 2004 and February 2005 respectively.

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A. INTRODUCTION

Paragraph 15.27(b) of the Listing Requirements of Kuala Lumpur Stock Exchange requires the Board of Director of public listedcompanies to include in its annual report a statement about the state of their internal controls. The Board of Directors iscommitted to maintaining a sound system of internal control in the Group and is pleased to provide the following statement,which outlines the nature and scope of internal control of the Group during the year.

B. RESPONSIBILITY

The Board affirms its responsibility over the Group's overall systems of internal control and risk management, which include theestablishment of an appropriate control environment and framework, and for reviewing the adequacy and integrity of thosesystems. It should be noted, however, that due to the limitations that are inherent in any systems of internal control and riskmanagement, such systems are designed to manage, rather than eliminate, the risk that may impede the achievement of theGroup’s business objectives. Accordingly, it can only provide reasonable but not absolute assurance against material misstatementor loss.

The Group’s system of internal control has been in place for the entire year under review. The key features of the internal controlsystems which operated throughout the period covered by the financial statements are described under the following headings.

BUSINESS RISKThe Group has an embedded process for the identification, evaluation and reporting of the major business risks within the Group.Policies and procedures have been laid down for the regular review and management of these risks. Reported progress with themanagement of these risks is filtered through the management structure to the Audit Committee and the Board. Regular reviewsof the most significant areas of risk are undertaken to ensure that key control objectives remain in place. Reports on such regularreviews are presented to the Board and the Audit Committee on a regular basis.

INFORMATION SYSTEMSThere is a comprehensive budgeting system with an annual budget approved by the Board each year. Management accountscontaining actual and budget results and revised forecasts for the year are prepared and reported on a quarterly basis to theBoard. These management reports analyse and explain variances against plan and report on key indicators.

MAIN CONTROL PROCEDURESThe Group has defined procedures and controls, including information systems controls, to ensure the reporting of complete andaccurate accounting information.These cover systems for obtaining authority for major transactions and for ensuring compliancewith laws and regulations that have significant financial implications. Procedures are also in place to ensure that assets are subjectto proper physical controls and that the organisation remains structured to ensure appropriate segregation of duties.

MONITORINGThe monitoring of control procedures is achieved through management review by the responsible Executive Director reportingto the Board.These are supplemented by comprehensive reviews undertaken by the internal audit function on the controls inoperation in each individual business. Regular reports are produced and addressed to senior management that assess the impactof control issues and recommend appropriate actions.

The system of internal control was satisfactory and has not resulted in material losses, contingencies or uncertainties that wouldrequire disclosure in the Group’s annual report.

Statement Of Internal Controls

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A. MEMBERS AND MEETINGS

A total of four meetings were held during the year.The membership status and attendance record of each of the members duringthe year or since the date of his appointment are as follows:

Name Membership Status Attendance

Y.A.M.Tunku Tan Sri Abdullah ibni Chairman, Independent 4 out of 4 meetingsAlmarhum Tuanku Abdul Rahman Non-Executive Director

Alistair Richard Cox (resigned on 1.03.2002) Managing Director 4 out of 4 meetings

Y.A.M.Tunku Tan Sri Imran ibni Tuanku Ja'afar Independent Non-Executive Director 3 out of 4 meetings

Dato' Dr Ikmal Hisham Albakri Independent Non-Executive Director 3 out of 4 meetings

Chan Hua Eng Independent Non-Executive Director 4 out of 4 meetings

Charles Tan Poh Tei (a member of the Malaysian Independent Non-Executive Director 3 out of 3 meetingsInstitute of Accountants; appointed on 19.02.2001)

B. TERMS OF REFERENCE

During the year, the terms of reference of the Audit Committee was revised to conform to the Listing Requirements of the KualaLumpur Stock Exchange (“Listing Requirements”). The new terms of reference are as follows:

STRUCTURE OF THE AUDIT COMMITTEEThe Audit Committee shall be appointed by the Board and shall comprise at least three (3) directors with the majority of themembers to be independent non-executive directors. The Chairman of the Committee shall be an independent non-executivedirector and be elected from amongst their members. All members of the Committee, including the Chairman, will hold officeuntil otherwise determined by the Board. In the event of any vacancy in the Audit Committee resulting in non compliance withthe Listing Requirements, the Board of Directors shall within three (3) months of that event appoint such new member(s) as maybe required to comply with the Listing Requirements.

AUTHORITYThe Committee is authorised by the Board to investigate any activity within its terms of reference and to seek any informationit requires from any employee. All employees are directed to cooperate with any request made by the Committee.

The Committee is authorised by the Board to obtain independent legal and professional advice and to secure the attendance ofoutsiders with relevant experience and expertise if it considers this to be necessary.

FUNCTIONSi. To review the Interim and Annual financial statements before approval by the Board, focusing particularly on:

- any change in accounting policies and practices;- major judgemental areas;- significant audit adjustments;- departure from accounting standards; and- compliance with KLSE and other statutory requirements.

ii. To discuss with the external auditors the scope of their audit findings.

iii. To discuss with the external auditor their evaluation of the system of internal controls.

Report Of The Audit Committee

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iv. To review the adequacy of the scope, functions and resources of the internal audit functions, the internalaudit programme, processes, the result thereto and recommendations made by the internal audit function.

v. To review from time to time management information received by the Board.

vi. To make recommendations to the Board on the appointment and remuneration of the external auditorsand questions of resignation or dismissal.

vii. To review any related party transaction and conflict of interest situation that may arise including anytransaction, procedure or course of conduct that raises questions of management integrity.

viii. To carry out any additional duties as may from time to time be prescribed by the Board.

MEETINGS AND MINUTESThe Committee shall meet at least four times a year and the quorum for any meeting shall be three (3)members, majority of members present must be independent directors. The Finance Director will normallybe invited to attend all meetings of the Committee and the external auditors will be invited to attend whenappropriate. The external auditors may request a meeting if they consider one necessary.

The Company Secretary shall be the secretary of the Committee and as a reporting procedure, the minutesshall be circulated to all members of the Board.

C. SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

The Audit Committee carried out its duties in accordance with its terms of reference during the year.

The main activities undertaken by the Committee during the year were as follows:

• Reviewed with external auditors the results of the audit and the audit report.• Consideration and recommendation to the Board for approval of the audit fees payable to external

auditors.• Reviewed letter of resignation from the external auditors and the recommendation to the Board of new

external auditors.• Reviewed the internal audit reports, programmes and plan for the financial year under review and

recommend actions taken to improve system of internal control, procedures and risk management.• Reviewed quarterly results and year-end financial statements prior to submission to the Board for their

consideration and approval focusing particularly on any changes of accounting policy, significant andunusual event and compliance with applicable accounting standards approved by MASB and other legalrequirements.

• Reviewed quarterly unaudited financial results announcements prior to recommending them for approvalby the Board.

• Reviewed the related parties transactions entered into by the Group.

23 DIRECTORS’ REPORT

27 STATEMENT BY DIRECTORS

27 STATUTORY DECLARATION

28 REPORT OF THE AUDITORS

29 INCOME STATEMENTS

30 BALANCE SHEETS

31 STATEMENT OF CHANGES IN EQUITY

32 CASH FLOW STATEMENTS

34 NOTES TO THE FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

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The Directors submit their report and the audited financial statements of the Group and of the Company for the financialyear ended 31 December 2001.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding.

The principal activities of the subsidiaries are set out in note 9 to the financial statements. There have been no significantchanges in the nature of these activities during the financial year.

FINANCIAL RESULTS

GROUP COMPANYRM'000 RM'000

Net profit for the year 64,801 52,099Retained earnings brought forward 441,688 134,066

Profit available for appropriation 506,489 186,165Interim dividend (41,669) (41,669)

Retained earnings carried forward 464,820 144,496

There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in thefinancial statements.

In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year havenot been substantially affected by any item, transaction or event of a material and unusual nature.

DIVIDENDS

Dividends paid and payable since the end of the Company's last financial year are as follows:

RM'000

a) in respect of the year ended 31 December 2000 and dealt with in the previous directors’ report:- an interim dividend of 2.0 sen per share less tax at 28%, paid on 18 May 2001 41,669

b) in respect of the year ended 31 December 2001:- an interim dividend of 2.0 sen per share less tax at 28%, payable on 22 May 2002 41,669

DIRECTORS

The names of the Directors in office since the date of the last report are as follows:

Y.A.M.Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul RahmanYeoh Khoon ChengCharles Tan Poh TeiChan Hua EngY.A.M.Tunku Tan Sri Imran ibni Tuanku Ja'afarDato' Dr Ikmal Hisham AlbakriJames R H LoudonSaw Ewe Seng

Directors’ Reportas at March 2002

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DIRECTORS (Cont’d)

Michel Rose (Appointed on 18 February 2002)Guillaume Roux (Appointed on 1 March 2002)Quah Thain Khan (Appointed on 1 March 2002)Jean-Jacques Gauthier (Alternate to Michel Rose) (Appointed on 18 February 2002)Alistair Richard Cox (Resigned on 1 March 2002)Roy Gary Gentles (Alternate to James R H Loudon) (Resigned on 21 September 2001)

DIRECTORS' BENEFITS

Neither at the end of the financial year, nor at any time during the financial year, did there subsist any arrangement to whichthe Company was a party, whereby the Directors might acquire benefits by means of the acquisition of shares in, or debenturesof, the Company or any other body corporate except for the employees’ share options granted to an executive director asdisclosed in the directors' interests below.

Since the end of the previous financial year, no Director has received or become entitled to receive any benefits (other thanthe remuneration and money value of benefits disclosed in Note 4 to the financial statements) by reason of a contract madeby the Company or a related corporation with any Director or with a firm in which he is a member, or with a company inwhich the Director has a substantial financial interest except for the share options granted to an executive director asdisclosed in the directors' interests below.

DIRECTORS' INTERESTS

According to the Register of Directors' Shareholdings, none of the Directors who held office at end of the financial year hadany interests in shares of the Company and its related corporations during the financial year.

According to the Register of Directors' Shareholdings, particulars of the interest of Directors who held office at the end ofthe financial year in the options over the shares of the Company pursuant to the Employees' Share Option Schemeimplemented during the year are as follows:

No. of options over ordinary shares of RM0.50 eachOptions over the ordinary Balance Balance shares of the Company held by: at 1.1.2001 Granted Exercised at 31.12.2001

Yeoh Khoon Cheng - 500,000 - 500,000

EMPLOYEES' SHARE OPTION SCHEME

During the financial year, the Company implemented an Employees' Share Option Scheme ("Scheme"). The Scheme is governedby the by-laws which were approved by the shareholders on 7 December 2000. The salient features of the Scheme are asfollows:

(a) The total number of shares to be issued by the Company under the Scheme shall not exceed 10% of the issued and paid-up share capital of the Company at any point in time during the duration of the Scheme.

(b) The Subscription price shall be the higher of (i) weighted average market price of the shares for the 5 market days quotedon the Kuala Lumpur Stock Exchange immediately preceding the date of offer with a discount of up to 10%, to bedetermined at the discretion of the Board Options Committee or (ii) par value of the shares.

(c) Eligible persons are employees including full-time Directors of the Company or any company comprised in the Groupwho had been confirmed in their employment with at least one (1) year of continuous service.

(d) The exercise of the Options is conditional upon the achievement of an earnings per share target ("EPS target") determinedby the Board Options Committee. If the EPS target has not been achieved by the end of the particular year, theentitlement to exercise such Options shall be carried forward to subsequent years within the Option period.

(e) The Scheme is for a period of five calendar years and will expire on 29 January 2006.

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EMPLOYEES' SHARE OPTION SCHEME (Cont’d)

The movements in the number of options over the Company's unissued shares during the financial year are as follows:

Balance at Balance at1.1.2001 Granted Exercised 31.12.2001

Number of unissued shares under options - 106,880,000 - 106,880,000

The Company has been granted exemption by the Registrar of Companies from having to disclose the list of option holdersand their holdings.

OTHER STATUTORY INFORMATION

(a) Before the income statements and balance sheets of the Group and of the Company were made out, the Directors tookreasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provisionfor doubtful debts and satisfied themselves that all known bad debts had been written off and adequate provision hadbeen made for doubtful debts; and

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

(b) At the date of this report, the Directors are not aware of any circumstances which would render:

(i) the amounts written off or provided for bad and doubtful debts of the Group and of the Company inadequate to anysubstantial extent; or

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

(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would renderadherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading orinappropriate.

(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report orfinancial statements of the Group and of the Company which would render any amount stated in the financial statementsmisleading.

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

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

(ii) any contingent liability in respect of the Group and of the Company which has arisen since the end of the financialyear.

(f) In the opinion of the Directors:

(i) no contingent liability or other liability has become enforceable or is likely to become enforceable within the periodof twelve months after the end of the financial year which, will or may affect the ability of the Group and of theCompany to meet their obligations as and when they fall due; and

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

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HOLDING COMPANY

On 11 July 2001, Blue Circle Industries PLC ("BCI"), the holding company of Malayan Cement Berhad, received the sanctionof the High Court of Justice of England and Wales on the Scheme of Arrangement pursuant to the offer by Lafarge SA("Lafarge") through its wholly-owned subsidiary, Lafarge Minerals Limited to acquire all the issued shares of BCI not alreadyowned by Lafarge. Accordingly, as of the abovementioned date, the Directors regard Lafarge as the ultimate holding company.

AUDITORS

Pursuant to an Extraordinary General Meeting held on 10 December 2001, Deloitte Touche Tohmatsu were appointed asauditors in place of Ernst & Young.

Deloitte Touche Tohmatsu have expressed their willingness to continue in office.

Signed on behalf of the Boardin accordance with a resolution of the Directors,

QUAH THAIN KHANDirector

YEOH KHOON CHENGDirector

Petaling Jaya, Selangor Darul Ehsan1 March 2002

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The Directors of MALAYAN CEMENT BERHAD state that, in their opinion, the accompanying balance sheets and statementsof income, cash flows and changes in equity are drawn up in accordance with the provisions of the Companies Act, 1965 andthe applicable approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Groupand of the Company as of 31 December 2001 and of the results of their businesses and the cash flows of the Group and ofthe Company for the year ended on that date.

Signed on behalf of the Board in accordance with a resolution of the Directors,

QUAH THAIN KHANDirector

YEOH KHOON CHENGDirector

Petaling Jaya, Selangor Darul Ehsan1 March 2002

I,YEOH KHOON CHENG, being the Director primarily responsible for the financial management of MALAYAN CEMENTBERHAD, do solemnly and sincerely declare that the accompanying balance sheets and statements of income, cash flows andchanges in equity are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true,and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by theabovenamed YEOH KHOON CHENG atPetaling Jaya, Selangor Darul Ehsanon 1 March 2002 YEOH KHOON CHENG

Before me,

Ng Kok Song, PCB (No. B113)Commissioner for Oaths

Pursuant To Section 169(15) Of The Companies Act, 1965

Pursuant To Section 169(16) Of The Companies Act, 1965

Statement By Directors

Statutory Declaration

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We have audited the accompanying balance sheets as of 31 December 2001 and the related statements of income, cash flowsand changes in equity for the year then ended. 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 approved standards on auditing in Malaysia. These standards require that we planand perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by Directors, as well as evaluating the overallfinancial statements' presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

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

(i) the state of affairs of the Group and of the Company at 31 December 2001 and of the results and the cash flows ofthe Group and of the Company for the year then ended; and

(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements andconsolidated financial statements;

(b) the accounting and other records and registers required by the Act to be kept by the Company and its subsidiaries forwhich 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 the subsidiaries of which we have not acted as auditors,as mentioned under Note 9 to the financial statements, being the financial statements that have been included in theconsolidated financial statements.

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

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not includeany comment made under subsection 3 of Section 174 of the Act.

The financial statements of the previous year were examined by another firm of auditors and are presented herein forcomparative purposes

DELOITTE TOUCHE TOHMATSUAF 0834Chartered Accountants

TAN BUN POO1304/5/02 (J/PH)Partner

Petaling Jaya, Selangor Darul Ehsan1 March 2002

To The Members Of Malayan Cement Berhad (1877-T) (Incorporated in Malaysia)Report Of The Auditors

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GROUP COMPANYNote 2001 2000 2001 2000

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

Revenue 3 1,657,299 1,576,637 - -

Cost of sales (1,239,161) (1,125,818) - -

Gross profit 418,138 450,819 - -

Selling and distribution expenses (208,721) (198,431) - -Administration expenses (62,948) (65,904) (5,242) (4,618)Other operating expenses (5,496) (1,734) - -Other operating income 8,030 5,900 1,395 385Investment income 4 176 5,021 66,914 6,656Interest income 4 2,415 3,352 33,175 31,475

Profit from operations 151,594 199,023 96,242 33,898

Finance costs 4 (75,055) (87,856) (33,083) (31,156)Share of results of associates (1,977) (3,729) - -

Profit before taxation 4 74,562 107,438 63,159 2,742

Income tax expense 5 (5,023) (20,488) (11,060) (1,693)

Profit after taxation 69,539 86,950 52,099 1,049

Minority interests (4,738) (6,597) - -

Net profit for the year 64,801 80,353 52,099 1,049

Earnings per share (sen) 6 2.24 2.78

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

Income Statementsfor the year ended 31 December 2001

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GROUP COMPANYNote 2001 2000 2001 2000

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

PROPERTY, PLANT AND EQUIPMENT 8 2,899,666 2,918,909 3,911 4,361INVESTMENT IN SUBSIDIARIES 9 - - 1,269,458 183,550AMOUNT DUE FROM SUBSIDIARIES 9 - - 1,795,216 2,945,109ASSOCIATES 10 18,287 20,228 - -OTHER INVESTMENTS 11 7,746 9,181 1,255 1,255GOODWILL ON CONSOLIDATION 1,030,218 1,029,258 - -

CURRENT ASSETSInventories 12 239,261 238,313 - -Trade receivables 13 302,540 303,278 - -Other receivables and prepayments 61,512 58,334 2,295 8,364 Amount due from holding companies 14 4,097 698 4,097 698Amount due from subsidiaries 9 - - 119,843 94,201Term deposits 15 6,550 56,145 - -Cash and bank balances 38,740 67,211 - 13

652,700 723,979 126,235 103,276

CURRENT LIABILITIESTrade payables 196,728 181,811 - - Other payables and accruals 16 116,053 120,912 6,863 10,409 Amount due to holding companies 14 20,145 12,636 - - Amount due to subsidiaries 9 - - - 36,392 Tax liabilities 14,228 16,478 225 225 Borrowings 17 525,202 141,302 108,202 70,220 Dividend payable 41,669 41,669 41,669 41,669

914,025 514,808 156,959 158,915

NET CURRENT ASSETS/(LIABILITIES) (261,325) 209,171 (30,724) (55,639)

3,694,592 4,186,747 3,039,116 3,078,636

Represented by:SHARE CAPITAL 18 1,446,828 1,446,828 1,446,828 1,446,828 RESERVES 19 1,635,793 1,620,125 1,292,026 1,281,596

3,082,621 3,066,953 2,738,854 2,728,424 MINORITY INTERESTS 141,937 184,804 - -

3,224,558 3,251,757 2,738,854 2,728,424

LONG TERM LIABILITIESBorrowings 17 396,412 857,662 300,000 350,000 Deferred taxation 20 43,432 47,426 - - Retirement benefits 21 30,190 29,902 262 212

470,034 934,990 300,262 350,212

3,694,592 4,186,747 3,039,116 3,078,636

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

Balance Sheetsat 31 December 2001

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Exchange CapitalShare Share Capital Equalisation Retained Redemption

GROUP Note Capital Premium Reserve Reserve Earnings Reserve TotalRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 January 2000 1,446,828 1,113,732 34,224 38,090 403,004 159 3,036,037

Exchange translationdifferences - - - (7,684) - - (7,684)

Net profit for the year - - - - 80,353 - 80,353

Interim dividend - - - - (41,669) - (41,669)

Arising from issue of shares by a subsidiary - 8 - - - - 8

Expenses incurredin respect of rightsissue in prior year - (92) - - - - (92)

At 31 December 2000/1 January 2001 1,446,828 1,113,648 34,224 30,406 441,688 159 3,066,953

Exchange translationdifferences - - - (7,464) - - (7,464)

Net profit for the year - - - - 64,801 - 64,801

Interim dividend 7 - - - - (41,669) - (41,669)

At 31 December 2001 1,446,828 1,113,648 34,224 22,942 464,820 159 3,082,621

Share Share Capital Retained COMPANY Note Capital Premium Reserve Earnings Total

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

At 1 January 2000 1,446,828 1,113,732 33,890 174,686 2,769,136

Net profit for the year - - - 1,049 1,049

Interim dividend - - - (41,669) (41,669)

Expenses incurred in respect of rights issuein prior year - (92) - - (92)

At 31 December 2000/1 January 2001 1,446,828 1,113,640 33,890 134,066 2,728,424

Net profit for the year - - - 52,099 52,099

Interim dividend 7 - - - (41,669) (41,669)

At 31 December 2001 1,446,828 1,113,640 33,890 144,496 2,738,854

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

Statement Of Changes In Equityfor the year ended 31 December 2001

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Cash Flow Statementsfor the year ended 31 December 2001

GROUP COMPANY2001 2000 2001 2000

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

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 74,562 107,438 63,159 2,742

Adjustments for:Depreciation of property, plant and equipment 177,576 173,781 682 390 Provision for/(Writeback of provision for) retirement benefits 869 (370) 50 11 Writeback of doubtful debts provision (611) (2,863) - - Provision for inventories obsolescence 4,634 8,104 - - Inventories written off 2,281 - - - Share of results of associates 1,977 3,729 - - Finance costs 75,055 87,856 33,083 31,156 Interest income (2,415) (3,352) (33,175) (31,475)Provision for diminution in value of quoted investments 1,435 - - - Gain on disposal of quoted investments - (4,837) - - (Gain)/Loss on disposal of property, plant and equipment (1,614) (1,160) (141) 1 Property, plant and equipment written off 3,524 388 6 - Dividend income (88) (95) (66,878) (6,620)

Operating profit/(loss) before working capital changes 337,185 368,619 (3,214) (3,795)Inventories (7,165) 13,931 - -Receivables 13,799 (6,282) 6,069 (5,972)Payables (22,749) (1,586) (1,593) 7,407 Holding and related companies 4,110 6,770 (3,399) (2,876)Subsidiaries - - (1,940) (4,953)

Cash generated from/(used in) operations 325,180 381,452 (4,077) (10,189)Retirement benefits paid (581) - - - Income tax paid (11,151) (17,476) - (638)

Net cash from/(used in) operating activities 313,448 363,976 (4,077) (10,827)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal of property, plant and equipment 6,894 18,361 142 - Proceeds from disposal of investments - 10,709 - - Purchase of unquoted investments - (470) - (430)Purchase of additional equity interests in an existing subsidiary (31,208) - (31,208) -Interest received 2,415 3,352 33,175 31,475 Dividend received 88 2,095 38,425 6,620 Tax paid at source on dividends received (24) (546) (11,060) (1,693)Additions to property, plant and equipment (148,467) (68,623) (239) (1,559)Net cash paid for acquisition of subsidiaries (Note 9e) (5,883) - - - Loan repaid by/(granted to) subsidiaries - - 63,552 (348,338)Additional incidental acquisition costs incurred - (33) - -

Net cash from/(used in) investing activities (176,185) (35,155) 92,787 (313,925)

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GROUP COMPANY2001 2000 2001 2000

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

CASH FLOWS FROM FINANCING ACTIVITIES

Net (repayment)/drawdown of borrowings (78,038) (209,897) (12,708) 370,512 Interest paid (77,998) (87,856) (35,036) (31,156)Ordinary shares dividends paid (41,669) (14,584) (41,669) (14,584)Payment by subsidiaries to former shareholders for

share of pre-acquisition profits (12,686) - - - Issue of shares by a subsidiary pursuant to its

Employee Share Option Scheme - 16 - - Preference shares dividend paid by a subsidiary - (4,595) - - Additional rights issue expenses incurred - (92) - (92)

Net cash from/(used in) financing activities (210,391) (317,008) (89,413) 324,680

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS DURING THE YEAR (73,128) 11,813 (703) (72)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (5,628) (2,341) - -

CASH AND CASH EQUIVALENTS AT 1 JANUARY 123,356 113,884 13 85

CASH AND CASH EQUIVALENTS AT 31 DECEMBER 44,600 123,356 (690) 13

Analysis of cash and cash equivalents:Term deposits 6,550 56,145 - - Cash and bank balances 38,740 67,211 - 13 Bank overdraft (690) - (690) -

44,600 123,356 (690) 13

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

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1. GENERAL INFORMATION

(a) The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the MainBoard of the Kuala Lumpur Stock Exchange. The Company's registered office and principal place of business is locatedat Level 12, Bangunan TH Uptown 3, No.3, Jalan SS21/39, 47400 Petaling Jaya, Selangor Darul Ehsan, Malaysia.

(b) The principal activity of the Company is investment holding. The principal activities of its subsidiaries are set out inNote 9 to the financial statements.

(c) The immediate holding company is Blue Circle Industries PLC, a company incorporated in the United Kingdom whilstthe ultimate holding company is Lafarge S.A., a company incorporated in France.

(d) The total number of employees of the Group and the Company at end of financial year were 2,589 (2000: 2,489) and16 (2000: 17) respectively.

(e) The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of thedirectors on 1 March 2002.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Accounting Convention

The financial statements of the Group and of the Company are prepared under the historical cost conventionmodified by revaluation of certain properties and investments and comply with applicable approved accountingstandards issued by the Malaysian Accounting Standards Board and the provisions of the Companies Act, 1965.

(b) Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiaries madeup to the end of the financial year. The results of the subsidiaries acquired during the year are included in theconsolidated income statement from the date of their acquisition. Inter-company transactions and balances areeliminated on consolidation and the consolidated financial statements reflect external transactions only.

All the subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method ofaccounting, the difference between the purchase consideration and the fair value of the subsidiaries' net assets at thedate of acquisition is recognised as goodwill or reserve arising on consolidation in the consolidated balance sheet. Inthe opinion of the Directors, there has been no permanent impairment to the value of the goodwill on consolidationand therefore, no amortisation is considered necessary.

(c) Associates

Investment in associates is accounted for in the consolidated financial statements using the equity method ofaccounting. An associate is defined as a company, not being a subsidiary, in which the Group has a long term interestof not less than 20% of the equity and in whose financial and operating policy decisions the Group exercises significantinfluence.

The Group's share of the results of the associates is included in the consolidated income statement. The results andreserves of the associates are taken from the latest available audited or management accounts. The Group'sinvestment in associates are carried in the balance sheet at an amount that reflects its share of net assets of thesecompanies.

Notes To The Financial Statements31 December 2001

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2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

(d) Inventories

Inventories comprising raw and packing materials, finished and semi-finished goods and consumables are valued at thelower of cost and net realisable value. Cost of raw and packing materials and consumables comprises originalpurchase price plus costs incurred in bringing the inventories to their present location and condition. Cost of finishedand semi-finished goods comprise raw materials, direct labour, other direct costs and appropriate proportions ofproduction overheads. Cost is determined on a weighted average or first-in first-out basis. Provision is made fordeteriorated, damaged, obsolete and slow moving items.

(e) Investments

Investments in subsidiaries, associates and other investments that are held on a long term basis are stated at cost orvaluation and are not written down unless the Directors are of the opinion that there is a permanent diminution invalue of these investments.

Marketable securities are carried at the lower of cost and market value, determined on an aggregate portfolio basisby category of investment. Cost is derived at on the weighted average basis. Market value is calculated by referenceto selling prices quoted on the Kuala Lumpur Stock Exchange at the close of business on the balance sheet date.

Investments in subsidiaries which are stated at valuation were last revalued by the Directors during the financial yearended 30 November 1993 on the basis of their net tangible assets and deducting any surplus on revaluation of plantand machinery as at 31 March 1993. Surplus on revaluation is recognised in the capital reserve account. Therevaluation was carried out for the purpose of a bonus issue exercise undertaken by the Company in 1993 andtherefore, it is not the intention of the Directors to adopt a policy of regular periodic revaluation.

Investment properties are stated at cost less provision for any permanent diminution in value.

(f) Foreign Currencies

Transactions in foreign currencies are recorded at rates ruling at transaction dates or at contracted rates whereapplicable. Foreign currency assets and liabilities at year end are translated at the rates then ruling. Gains and lossesarising from translations are dealt with in the income statement.

In the Group financial statements, assets and liabilities of overseas subsidiaries are translated at exchange rates rulingat the balance sheet date whilst income statement items are translated at average exchange rates for the year.Exchange differences are dealt with through the exchange equalisation reserve account.

The principal closing rates used in translating foreign currency amounts are as follows:

2001 2000

1 US Dollar RM3.80 RM3.801 Singapore Dollar RM2.05 RM2.171 Sterling Pound RM5.50 RM5.60

(g) Leases

Leases of property and equipment where a significant portion of the risks and benefits of ownership are retained bythe lessor are classified as operating leases. Payments made under such leases are charged to the income statementas rental charges.

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2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

(h) Property, Plant and Equipment

Property, plant and equipment, except for freehold land and building of the Company, are stated at cost lessaccumulated depreciation.

The Group's policy is to state its property, plant and equipment at cost. Revaluation of the Company's freehold landand building in 1993 was carried out primarily to cater for the bonus issue exercise and was not intended to effecta change in accounting policy to revalue its properties. Hence, in accordance with the transitional provisions ofMalaysian Accounting Standards Board Approved Accounting Standard IAS 16 (Revised) Property, Plant andEquipment, these properties are stated at their last revalued amounts less accumulated depreciation.

Where an indication of impairment exists, the carrying amount of the concerned assets is assessed and written downto its recoverable amount. The write-down will be charged to the income statement or treated as revaluationreduction if it reverses a previous revaluation surplus.

Freehold land is not depreciated. Depreciation of other property, plant and equipment are computed on the straightline basis to write off the cost or valuation over their estimated useful lives.

The principal annual rates are:

Leasehold land Equal annual instalments over the remaining life of the leases ranging from 27 to 99 years

Buildings 1% to 10%Quarries 4%Plant, machinery, vessels and cement silos 3% to 33.33%Office equipment, furniture and fittings 5% to 20%Motor vehicles 12% to 33.33%

Capital work-in-progress are not depreciated until they have been completed and ready for commercial operation.

(i) Deferred Taxation

Deferred taxation is provided under the liability method in respect of material timing differences except to the extentthat it can be demonstrated, with reasonable probability, that the timing differences will continue in the foreseeablefuture. Deferred taxation benefits are only recognised when there is reasonable expectation of realisation in the nearfuture.

(j) Retirement Benefits

The Group makes statutory contributions to approved provident funds. In addition, several companies in the Groupoperate an unfunded final salary defined benefit plan for its employees. The retirement benefit accounting cost isassessed using the Project Unit Method. Under this method, the cost of providing retirement benefit is charged tothe income statement so as to spread the regular cost over the service lives of the employees in accordance withthe advice of qualified actuaries who carry out a valuation of the plan every three years.The latest actuarial valuationwas undertaken in December 2000.

The retirement benefit obligation is measured at the present value of the estimated future cash outflows usinginterest rates of government securities which have terms to maturity approximating the terms of the related liability.Actuarial gains and losses are recognised in the income statement in the year subsequent to the valuation of theretirement plan.

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2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

(k) Revenue Recognition

Revenue is generally recognised when products are shipped/delivered and when risks and rewards of ownership havepassed. Revenue is also recognised upon customer acceptance of services rendered. Other revenue earned by theGroup and Company are recognised on the following bases:

- Dividend income : when the shareholder's right to receive payment is establised.- Interest and rental income : as it accrues unless collectability is in doubt.

(l) Receivables

Known bad debts are written-off and specific provision is made for any debts considered to be doubtful of collection.

(m)Cash Flow Statements

The Group and Company adopt the indirect method in the preparation of the cash flow statements.

Cash and cash equivalents comprise cash and bank balances, term deposits and other short-term, highly liquidinvestments that are readily convertible into cash with insignificant risk of changes in value, against which bankoverdrafts, if any, are deducted.

3. REVENUE AND OPERATING COSTS

(a) Revenue

GROUP2001 2000

RM'000 RM'000

Sale of clinker, cement, ready-mixed concrete and other building materials 1,633,026 1,547,008Freight and chartering of vessels, and jetty services 24,273 29,629

1,657,299 1,576,637

Revenue from sale of clinker, cement, ready-mixed concrete and other building materials is stated net of rebates, discountsand commissions.

(b) Operating Costs Applicable to Revenue

GROUP COMPANY2001 2000 2001 2000

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

Raw and packing materials and other consumables used and changes in inventories of finished goods 767,625 663,758 - -

Other operating expenses 451,331 439,373 2,471 2,054 Staff costs (including directors' emoluments) 119,794 114,975 2,089 2,174 Depreciation of property, plant and equipment 177,576 173,781 682 390

1,516,326 1,391,887 5,242 4,618

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4. PROFIT BEFORE TAXATION

This is arrived at after charging/(crediting):

GROUP COMPANY2001 2000 2001 2000

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

Auditors' remuneration 450 428 14 14 Depreciation of property, plant and equipment 177,576 173,781 682 390 Directors' remuneration:

Directors of the Company- fees 195 183 195 183 - salaries and other emoluments 1,055 1,299 1,055 1,299 - estimated money value of benefits 276 249 276 249

Directors of the subsidiaries- fees 29 32 - - - salaries and other emoluments 3,642 4,093 - - - estimated money value of benefits 468 329 - -

Plant and equipment written off 3,524 388 6 - Rental of premises and equipment 12,616 8,331 - - Finance costs:

- Interest on fixed rate bonds 30,800 30,800 - - - Interest on floating rate notes 7,020 8,314 - - - Interest on commercial papers - 1,399 - - - Interest on term borrowings 28,067 30,597 26,822 24,991 - Interest on bankers' acceptances and revolving credit 5,612 9,199 5,496 5,650 - Interest on bank overdrafts 43 9 43 9 - Others 3,513 7,538 722 506

Provision for diminution in value of quoted investments 1,435 - - - Provision for inventory obsolescence 4,634 8,104 - - Inventories written off 2,281 - - - Provision for/(Writeback of provision for) retirement

benefits 869 (370) 50 18 (Gain)/Loss on disposal of property, plant and equipment (1,614) (1,160) (141) 1 Writeback of doubtful debts provision (611) (2,863) - - Realised gain on foreign exchange translation (1,556) (1,290) (1,255) (385)Interest income:

- Loans to subsidiaries - - (33,083) (31,156)- Term deposits, debentures and others (2,415) (3,352) (92) (319)

Investment income:- Gross dividends from investments:

- subsidiaries - - (66,878) (6,620)- quoted (88) (95) - -

- Gain on disposal of quoted investments - (4,837) - - - Rental income (88) (89) (36) (36)

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5. INCOME TAX EXPENSE

GROUP COMPANY2001 2000 2001 2000

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

MalaysiaCurrent

- Company and subsidiaries 8,511 14,457 11,060 1,693Deferred (2,562) 5,888 - -Over-provision in prior years (246) (233) - -

5,703 20,112 11,060 1,693ForeignCurrent

- subsidiaries 138 1,863 - -- associates (36) - - -

Deferred (776) 1,147 - -Over-provision in prior years (6) (2,634) - -

5,023 20,488 11,060 1,693

(a) The effective tax rates of the Group for the current and preceding year are lower than the statutory rate due toutilisation of brought forward unabsorbed capital allowances, reinvestment allowances and tax losses by certainsubsidiaries and exemption of shipping income earned by two other subsidiaries from taxation. The tax charge of theCompany for the current and preceding year relates to taxation deducted at source on dividend income.

(b) Subject to agreement by the Inland Revenue Board, the amount of unutilised tax losses of subsidiaries for which theirtax effects have not been recognised in the financial statements amounted to RM233,006,000 (2000: RM235,974,000).The amount of brought forward tax losses set off against taxable income during the year amounted to approximatelyRM913,000 (2000: RM60,488,000).

6. EARNINGS PER SHARE

Earnings per share is calculated based on the consolidated profit after taxation and minority interests of RM64,801,000 (2000: RM80,353,000) and on 2,893,655,156 (2000: 2,893,655,156) ordinary shares in issue during the year.

Fully diluted earnings per share for the financial year has not been disclosed as the average exercise price of the shareoptions granted pursuant to the Employee's Share Option Scheme is above the average fair value of the Company's sharesduring the financial year. The potential effect of the conversion of such options would be anti-dilutive.

7. DIVIDENDS

GROUP/COMPANY2001 2000

RM'000 RM'000

Interim dividend of 2.0 sen per share less tax at 28%(2000: Interim dividend of 2.0 sen per share less tax at 28%) 41,669 41,669

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8. PROPERTY, PLANT AND EQUIPMENT

Officeequipment,

furniture Plant,and fittingsmachinery, Capital

Freehold Leasehold land and motor vessels and work-in TOTALGROUP land Long term Short term Buildings vehicles cement silos progress 2001 2000

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

COST/VALUATION

At 1 January 37,682 60,399 67,054 248,572 65,889 2,705,992 46,323 3,231,911 3,202,557 Acquisition of

subsidiaries - 937 3,234 218 26,834 15,026 - 46,249 - Additions - 3 17,378 3,448 15,855 19,920 91,863 148,467 68,623 Reclassification (675) (5,726) 49,041 (36,887) (16) 18,974 (24,711) - - Disposals - - - (18) (5,841) (3,203) - (9,062) (24,278)Write-off - - - (481) (146) (7,041) (68) (7,736) (8,834)Exchange differences

and other adjustments - - - (1,079) 5,288 2,823 - 7,032 (6,157)

At 31 December 37,007 55,613 136,707 213,773 107,863 2,752,491 113,407 3,416,861 3,231,911

ACCUMULATEDDEPRECIATION

At 1 January - 1,512 9,919 29,535 22,320 249,716 - 313,002 142,700 Charge for the year - 907 7,651 14,260 14,453 140,305 - 177,576 173,781 Acquisition of

subsidiaries - 41 615 17 20,314 8,528 - 29,515 - Reclassification - - 3,692 (4,155) 314 149 - - - Disposals - - - (16) (3,137) (629) - (3,782) (807)Write-offs - - - - (15) (720) - (735) (5,587)Write-downs - - - - - - - - 3,477 Exchange differences

and other adjustments - - - 74 5,370 (3,825) - 1,619 (562)

At 31 December - 2,460 21,877 39,715 59,619 393,524 - 517,195 313,002

NET BOOK VALUE

At 31 December 37,007 53,153 114,830 174,058 48,244 2,358,967 113,407 2,899,666 2,918,909

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8. PROPERTY, PLANT AND EQUIPMENT (Cont’d)

Freehold Furniture and Motor TOTALCOMPANY land Buildings Fittings vehicles 2001 2000

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

COST/VALUATIONAt 1 January * 1,609 * 648 706 3,273 6,236 4,682Additions - - 237 2 239 1,558Disposals - - - (340) (340) (4)Write off - - - (21) (21) -

At 31 December 1,609 648 943 2,914 6,114 6,236

ACCUMULATEDDEPRECIATION

At 1 January - 209 505 1,161 1,875 1,488Charge for the year - 26 104 552 682 390Disposals - - - (339) (339) (3)Write off - - - (15) (15) -

At 31 December - 235 609 1,359 2,203 1,875

NET BOOK VALUEAt 31 December 1,609 413 334 1,555 3,911 4,361

* Stated at valuation

(a) Certain property, plant and equipment of the Group with net book value of RM1,304,683,000 (2000: RM1,337,936,000)are charged as security for borrowing facilities granted.

(b) The Company's freehold land and buildings were revalued by the Directors in 1993 based on professional appraisalsby independent valuers using open market values on an existing use basis. The carrying value of the properties thatwould have been included in the financial statements had they been carried at cost less depreciation amounts toRM406,000 (2000: RM424,000).

The tax effect in respect of the surplus arising from the revaluation has not been provided for as there is noforeseeable intention to dispose of these properties.

9. SUBSIDIARIES

COMPANY2001 2000

RM'000 RM'000

Unquoted shares:At cost 1,102,258 16,350At valuation 167,200 167,200

1,269,458 183,550Amounts due from subsidiaries (long term):

- Interest free loans 504,791 555,635- Interest bearing loans 300,000 350,000- Investment in indirect subsidiaries held by M-Cement Sdn Bhd 990,425 2,039,474

1,795,216 2,945,109

3,064,674 3,128,659Amounts due from subsidiaries (short term):

- Interest bearing loans 107,512 94,201- Outstanding balances receivable/(payable) for other operating transactions 12,331 (36,392)

119,843 57,809

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9. SUBSIDIARIES (Cont’d)

(a) One of the subsidiaries,Cement Marketing Company (Singapore) Pte Ltd,was revalued during the financial year-ended 30 November 1993 based on the subsidiary's audited net tangible assets as at 31 May 1993. The other subsidiarieswere revalued during the financial year-ended 30 November 1993 as associates to the Group before they becamesubsidiaries in December 1998 following the completion of the acquisition of additional equity interests in thesecompanies by M-Cement Sdn Bhd. The revaluation was carried out based on net tangible assets less revaluationsurplus on plant and machinery as at 31 March 1993.

(b) As part of an internal restructuring exercise to simplify the Group's corporate structure, the Group completed thetransfers of the Company's ("MCB") indirect shareholdings in several subsidiaries held through its wholly-ownedsubsidiary, M-Cement Sdn Bhd to MCB during the year. The subsidiaries concerned are Associated Pan MalaysiaCement Sdn Bhd ("APMC"),APMC Resources Sdn Bhd ("APMCR"),APMC Enterprises Sdn Bhd ("APMCE"), CMCMPerniagaan Sdn Bhd ("CMCM") and SPMS Holdings Sdn Bhd ("SPMSH"). Following these transfers, MCB holds directly100% of the share capital of APMC,APMCR,APMCE and CMCM and 72.46% of the share capital of SPMSH.

(c) The unsecured long term interest-bearing loans bear interest at rates ranging from 7.33% to 9.0% (2000: 8.3% to 9.0%)per annum whilst the unsecured short-term interest-bearing loans bear interest at rates ranging from 3.09% to 8.15%(2000: 3.43% to 3.61%) per annum.

(d) Particulars of the subsidiaries are as follows:

Group's effectiveequity interest

Name of company Principal activities 2001 2000% %

Incorporated in Malaysia

Associated Pan Malaysia Cement Manufacture and sale of clinker and cement 100.00 100.00 Sdn Bhd

Malayan Cement Industries Sdn Bhd Manufacture and sale of clinker and cement 77.41 77.08

Southern Cement Industries Sdn Bhd Manufacture and sale of cement 100.00 51.00

Simen Utama Sdn Bhd Distributor of cement 100.00 100.00

Kedah Cement Marketing Sdn Bhd Distributor of cement 77.41 77.08

CMCM Perniagaan Sdn Bhd Trading of cement and other building materials 100.00 100.00

Jumewah Shipping Sdn Bhd Shipping of bulk cement and chartering of vessels 77.41 77.08

Juta Integrasi (M) Sdn Bhd Shipping of bulk cement and chartering of vessels 77.41 77.08

Kedah Cement Jetty Sdn Bhd Management and operation of a jetty 77.41 77.08

Supermix Concrete (M) Sdn Bhd Manufacture and sale of ready-mixed concrete 61.74 61.74

Supermix Concrete Industries Sdn Bhd Manufacture and sale of ready-mixed concrete 61.74 -(formerly known as Pengkalen Concrete Sdn Bhd)

Supermix Concrete (East Malaysia) Manufacture and sale of ready-mixed concrete 61.74 -Sdn Bhd (formerly known as PengkalenConcrete (East Malaysia) Sdn Bhd)

Supermix Concrete SM-JV Sdn Bhd Manufacture and sale of ready-mixed concrete 43.22 -(formerly known as Pengkalen SM-JV Sdn Bhd)

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9. SUBSIDIARIES (Cont’d)

(d) Particulars of the subsidiaries are as follows: (Cont’d)

Group's effectiveequity interest

Name of company Principal activities 2001 2000% %

Incorporated in Malaysia

APMC Enterprises Sdn Bhd Investment holding and letting of premises 100.00 100.00

M-Cement Sdn Bhd Investment holding 100.00 100.00

Kedah Cement Holdings Bhd Investment holding 77.41 77.08

APMC Resources Sdn Bhd Investment holding 100.00 100.00

SPMS Holdings Sdn Bhd Investment holding 72.46 72.46

Taimet Concrete Industries Sdn Bhd Inactive 61.74 61.74

Simen Angkut Sdn Bhd Inactive 77.41 77.08

Incorporated in Singapore

Lafarge Cement Singapore Pte Ltd * Bulk import and sale of cement and trading in 100.00 100.00(formerly known as Blue Circle other building materialsMaterials Singapore Pte Ltd)

Supermix Concrete Pte Ltd * Manufacture and sale of ready-mixed concrete 51.00 51.00

Cement Marketing Company * Investment holding 100.00 100.00 (Singapore) Pte Ltd

PMCWS Enterprises Pte Ltd * Investment holding 100.00 100.00

Blue Circle Shipping & Trading Pte Ltd * Inactive 100.00 100.00

Supermix Asia Pte Ltd * Investment holding 55.62 55.62

Incorporated in Vietnam

Supermix Concrete (Vietnam) Co Ltd * Manufacture and sale of ready-mixed concrete 38.93 38.93

Incorporated in the British Virgin Islands

Kedah Cement (Myanmar) Limited Inactive - 77.08

Kedah Cement International Limited Inactive - 77.08

* The financial statements of these subsidiaries were audited by other member firms of Deloitte Touche Tohmatsu.

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9. SUBSIDIARIES (Cont’d)

(e) On 23 March 2001, one of the subsidiaries, Supermix Concrete (M) Sdn Bhd completed the acquisition of 100% equityinterest of Pengkalen Concrete Sdn Bhd (now known as Supermix Concrete Industries Sdn Bhd) and its subsidiaries("PCSB Group"). PCSB Group is engaged in the manufacture and sales of readymixed concrete. The effect of thisacquisition to the financial statements of the Group for the year are as follows:

(i) Post-acquisition results of the subsidiaries acquired

RM'000

Revenue 57,595Operating expenses (52,003)

Profit before tax 5,592Income tax expense (123)

Profit after tax 5,469Minority interests (2,102)

Increase in Group profit attributable to shareholders of the Company 3,367

(ii) Effects of the acquisition on the financial position of the Group as at year end is as follows:

RM'000

Net assets acquired at acquisition dateProperty, plant and equipment 16,734Current assets 22,511Current liabilities (35,569)Minority interests (26)

Net assets acquired 3,650Goodwill on consolidation 3,972

Total acquisition cost 7,622Less: Cash and cash equivalents acquired (1,739)

Cash flow on acquisition, net of cash acquired 5,883

(f) On 29 January 2001, the Company completed the acquisition of the remaining 49% equity interest in a subsidiary,Southern Cement Industries Sdn Bhd from Etika Setia Sdn Bhd for a purchase consideration of RM31.115 million.

(g) During the second quarter of the year, the Company increased its equity interests in Kedah Cement Holdings Berhadfrom 77.08% to 77.41% by the purchase of 1,394,000 ordinary shares of RM1.00 each from the open market for atotal cash consideration of RM2.902 million.

(h) On 1 May 2001, Kedah Cement (Myanmar) Limited and Kedah Cement International Limited, which had beendormant since incorporation, ceased to be subsidiaries of the Company following the Company's application to theRegistrar of Companies in the territory of British Virgin Island to strike off the companies from the register.

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10. ASSOCIATES

GROUP2001 2000

RM'000 RM'000

Unquoted shares at cost, representing share of net assets acquired 26,267 26,267Group's share of post acquisition reserves (7,980) (6,039)

18,287 20,228

At Group level, the carrying value of associates represents its share of net assets in the associates at balance sheet date.

Particulars of the associates are as follows:

Group's effectiveequity interest

Name of company Principal activities 2001 2000% %

Incorporated in Malaysia

Traders Acceptance Sdn Bhd Inactive 38.63 38.46

Lam Huat Properties Sdn Bhd Investment holding 38.63 38.46

Supermix-PL JV Sdn Bhd Inactive 30.87 30.87

Incorporated in Singapore

United Cement Pte Ltd* Trading and distribution of cement 37.93 37.77

* Shares in this associate are charged as security for borrowing facilities granted to a subsidiary.

11. OTHER INVESTMENTS

GROUP COMPANY2001 2000 2001 2000

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

At cost:Investment properties 3,390 3,390 - - Unquoted investments 166 166 - - Unquoted debentures 1,255 1,255 1,255 1,255 Quoted investments in Malaysia 4,274 4,274 - - Others 96 96 - -

9,181 9,181 1,255 1,255 less: Provision for diminution in value of quoted investments (1,435) - - -

7,746 9,181 1,255 1,255

Market value of quoted investments 2,982 3,039 - -

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12. INVENTORIES

GROUP2001 2000

RM'000 RM'000

At cost:Raw and packing materials 59,594 66,167Finished and semi-finished goods 48,335 53,013Consumables 157,593 150,027

265,522 269,207 Provision for inventory obsolescence (26,261) (30,894)

239,261 238,313

13. TRADE RECEIVABLES

GROUP2001 2000

RM'000 RM'000

Trade receivables 346,763 330,251Provision for doubtful debts (44,223) (26,973)

302,540 303,278

14. HOLDING COMPANIES

On 11 July 2001, Blue Circle Industries PLC ("BCI"), the holding company of Malayan Cement Berhad, received thesanction of the High Court of Justice of England and Wales on the Scheme of Arrangement pursuant to the offer by LafargeSA ("Lafarge") through its wholly-owned subsidiary, Lafarge Minerals Limited to acquire all the issued shares of BCI notalready owned by Lafarge. Accordingly, as of the abovementioned date, the Directors regard Lafarge as the ultimateholding company.

The amount due from/(to) holding companies is unsecured, interest-free and has no fixed terms of repayment.

15. TERM DEPOSITS

GROUP2001 2000

RM'000 RM'000

Term deposits are placed with the following:Licensed banks 4,433 32,530 Licensed finance companies 2,117 16,368 Other corporations - 7,247

6,550 56,145

16. OTHER PAYABLES AND ACCRUALS

Included in other payables and accruals of the Group is interest expense accrued for borrowings amounting toRM20,735,000 (2000: RM23,678,000)

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17. BORROWINGS

GROUP COMPANY2001 2000 2001 2000

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

CurrentSecuredFloating rate notes (a) 49,500 56,000 - - Fixed rate bonds (a) 350,000 - - - Term loans - 582 - -

UnsecuredBank overdraft 690 - 690 - Short term borrowings (b) 62,512 72,220 57,512 70,220Long term loans-current portion (c) 62,500 12,500 50,000 -

525,202 141,302 108,202 70,220

Non-CurrentSecuredFixed rate bonds - 350,000 - -Floating rate notes (a) 96,500 146,000 - -less: Discount on notes (88) (838) - -

UnsecuredLong-term loans (c) 300,000 362,500 300,000 350,000

396,412 857,662 300,000 350,000

Currency in which total borrowingsare denominated in:Ringgit Malaysia 921,614 998,382 408,202 420,220 US Dollar - 582 - -

921,614 998,964 408,202 420,220

Maturity of borrowings:Within 1 year 525,202 141,302 108,202 70,220Between 2 to 5 years 396,412 857,662 300,000 350,000

921,614 998,964 408,202 420,220

(a) The fixed rate bonds and floating rate notes are issued by a subsidiary, Malayan Cement Industries Sdn Bhd ("MCISB")and bear a fixed interest rate at 8.8% per annum and floating interest rate at 1.25% per annum over six monthsKLIBOR respectively. The fixed rate bonds were fully redeemed upon maturity on 28 January 2002.The floating ratenotes are repayable over 5 years from January 2000.

The fixed rate bonds, floating rate notes and commercial papers are secured by way of a debenture over all the assetsof MCISB, investment in an associate held by Kedah Cement Holdings Berhad ("KCHB"), and a corporate guaranteefrom KCHB. The facilities are also secured by way of a corporate guarantee extended by the Company who will payKCHB upon first demand in the event of default by MCISB.

(b) The unsecured short term borrowings comprise bankers' acceptances and revolving credits which bear interest atrates ranging from 3.09% to 3.36% (2000: 3.43% to 3.61%) per annum.

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17. BORROWINGS (Cont’d)

(c) Term loans comprise the following:

(i) Unsecured fixed rate term loan of RM50.0 (2000: RM50.0) million bearing fixed interest rate at 8.15% (2000: 8.3%) per annum and is repayable in one bullet payment in November 2002.

(ii) Two unsecured bank-guaranteed fixed rate term loans of RM100.0 (2000: RM100.0) million and RM115.0 (2000:RM115.0) million bearing fixed interest rates at 8.83% per annum and 8.98% per annum respectively. Theseloans are repayable in single bullet payments in February 2004 and February 2005 respectively.

(iii) Two unsecured fixed rate term loans of RM40.0 (2000: RM40.0) million and RM45.0 (2000: RM45.0) millionbearing fixed interest rate at 7.33% per annum. These loans are repayable in single bullet payments in March 2004and March 2005 respectively.

(iv) The unsecured term loans of RM7.5 (2000: RM15.0) million and RM5.0 (2000: RM10.0) million bearing fixedinterest rate at 6.15% per annum and a floating interest rate at 0.5% per annum plus the banks' effective cost offunds, respectively. The principal sum of the loans are repayable in 4 semi-annual instalments of RM6.25 millioneach commencing 1 June 2001.

18. SHARE CAPITAL

GROUP/COMPANY2001 2000

RM'000 RM'000

Authorised:Ordinary shares of RM0.50 each 3,000,000 3,000,000

Issued and fully paid:Ordinary shares of RM0.50 each 1,446,828 1,446,828

19. RESERVES

GROUP COMPANY2001 2000 2001 2000

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

Non-distributableCapital reserve 34,224 34,224 33,890 33,890Share premium 1,113,648 1,113,648 1,113,640 1,113,640Capital redemption reserve 159 159 - -Exchange equalisation reserve 22,942 30,406 - -

1,170,973 1,178,437 1,147,530 1,147,530DistributableRetained earnings 464,820 441,688 144,496 134,066

Total reserves at 31 December 1,635,793 1,620,125 1,292,026 1,281,596

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19. RESERVES (Cont’d)

(a) Subject to agreement with the relevant tax authorities, the Company has sufficient tax exempt profits, Malaysian andSingapore tax credits to frank the payment of dividends out of its retained earnings at 31 December 2001.

(b) Capital reserve arose from the revaluation of the Company's investments in subsidiaries and properties, plant andequipment.

(c) Share premium arose from the issuance of ordinary shares by the Company pursuant to the 6-for-1 Rights Issueexercise completed in 1999 and issuance of ordinary shares by one of its subsidiaries pursuant to Employees' ShareOption Scheme of that subsidiary concerned in 2000.

(d) Capital redemption reserve arose from the redemption of 159,200 preference shares by one of its subsidiaries in1999.

(e) Exchange differences arising from translation of foreign subsidiaries are taken to the exchange equalisation reserve.

20. DEFERRED TAXATION

GROUP2001 2000

RM'000 RM'000

At 1 January 47,426 46,214Transfer from/(to) income statement (3,338) 7,035Exchange adjustment (656) (428)Write-back taken to goodwill on consolidation - (5,395)

At 31 December 43,432 47,426

Deferred taxation is in respect of the following:On timing differences between depreciation and corresponding capital allowances 293,658 257,164On other timing differences (250,226) (209,738)

43,432 47,426

All material timing differences are recognised in the financial statements in arriving at the tax expense.

Estimated future tax benefits of the Group, the tax effects of which have not been recognised in the accounts amount toapproximately RM967,892,000 (2000: RM1,034,538,000). The tax benefits arise mainly from unabsorbed capital andreinvestment allowances and unutilised tax losses, offset by timing differences between depreciation and correspondingcapital allowances.

21. RETIREMENT BENEFITS

GROUP COMPANY2001 2000 2001 2000

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

At 1 January 29,902 30,272 212 201 Charged/(Credited) to income statement 869 (370) 50 11 Utilised during the year (581) - - -

At 31 December 30,190 29,902 262 212

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22. RELATED PARTY TRANSACTIONS

GROUP2001 2000

RM'000 RM'000

Internal audit services rendered by Blue Circle Industries PLC:- fee charged during the year 428 621 - outstanding balance at end of financial year 428 571

Technical consultancy services rendered by Blue Circle Industries PLC:- fee charged during the year 5,868 4,302- outstanding balance at end of financial year 5,868 4,142

Sales of cement and clinker to Circle Traders Asia Sdn Bhd- sales revenue during the year 112,360 -- outstanding balance at end of financial year 7,438 -

Time charter hire of vessels to Marine Cement Ltd- charter revenue earned during the year 2,462 -- outstanding balance at end of financial year - -

Purchases of building materials from Lafarge Roofing Systems Sdn Bhd- purchases during the year 3,960 - - outstanding balance at end of financial year 2,467 -

Purchases of cement from Circle Traders Asia Sdn Bhd- purchases during the year 1,766 - - outstanding balance at end of financial year - -

The Directors are of the opinion that the related party transactions are in the normal course of business and have beenestablished under terms that are no less favourable than those arranged with independent parties.

23. COMMITMENTS

(a) Capital Commitments

GROUP COMPANY2001 2000 2001 2000

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

Approved and contracted for 13,777 45,453 - 28,004Approved but not contracted for 39,584 83,279 - -

53,361 128,732 - 28,004

Analysed as follows:(i) Capital expenditure 53,361 95,021 - -(ii)Acquisition of:

- 100% equity interests in Pengkalan ConcreteSdn Bhd - 5,707 - -

- Remaining 49% interests in Southern CementIndustries Sdn Bhd - 28,004 - 28,004

53,361 128,732 - 28,004

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23. COMMITMENTS (Cont’d)

(b) Lease commitments

The Group has lease commitments in respect of rented premises for the plant and port operations andadministration offices, all of which are classsified as operating leases.The tenure of the minimum lease payments is asfollows:

GROUP2001 2000

RM'000 RM'000

Not later than 1 year 7,264 8,857Later than 1 year and not later than 5 years 14,280 21,173Later than 5 years 13,506 18,808

35,050 48,838

24. CORPORATE PROPOSALS

(a) On 9 April 2001, Commerce International Merchant Bankers Berhad ("CIMB") announced on behalf of the Companythat the Securities Commission ("SC") had on 6 April 2001 approved the Proposed Special Issue of up to 557,168,461new ordinary shares of RM0.50 sen each to Bumiputera Investors ("Proposed Special Issue") subject to certain termsand conditions. Subsequently, the approvals of the Foreign Investment Committee and Ministry of International Tradeand Industry were obtained on 24 April 2001 and 27 April 2001 respectively. On 4 May 2001, the Company submittedan appeal to the SC to extend the time for the implementation of the Proposed Special Issue on a staggered basiswithin a period of 3 years from the date of receipt of the last of all relevant approvals necessary to implement theProposed Special Issue. On 25 June 2001, CIMB on behalf of the Company announced that SC had in its letter dated21 June 2001 rejected the above appeal and required that the Proposed Special Issue be implemented within 12 months from the SC's approval letter of 6 April 2001. Subsequently, on 8 February 2002, the Company applied tothe SC for an extension of time up to 26 April 2004, to complete the Proposed Special Issue on a staggered basis.SC had vide its letter dated 26 February 2002 granted an extension of time up to 26 April 2003, instead of 26 April 2004 for MCB to implement the Proposed Special Issue.

(b) On 28 July 2001, the Company ("MCB"), Kedah Cement Holdings Berhad ("KCHB") and Edaran Otomobil NasionalBerhad (EON Berhad) (which owns 56.4% of equity interest in EON Bank Berhad ("EBB")) jointly announced thatMCB, KCHB, EBB, EON Berhad, RH Development Sdn Bhd and Ceria Alam Sdn Bhd had on 27 July 2001 entered intoa Memorandum of Understanding for the proposed disposal of the businesses and operations of KCHB (including itssubsidiaries and associates) and proposed injection of new businesses into KCHB ("Proposed Corporate Exercise")following the receipt of the approval of Bank Negara Malaysia (BNM) to commence negotiations with KCHB andMCB.

Through the Proposed Corporate Exercise, MCB will acquire a 100% interest in KCHB, while the transfer of KCHB'slisting status to EON Capital Sdn Bhd ("ECB") will facilitate the listing of the EBB Group. On 15 January 2002, theMinister of Finance via BNM approved the terms of the Proposed Corporate Exercise and the execution of theagreement in respect of the Proposed Corporate Exercise.

On 21 January 2002, the Company, MCB, EBB, ECB and EON Berhad entered into a conditional agreement in relationto the Proposed Corporate Exercise.

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24. CORPORATE PROPOSALS (Cont’d)

The key steps in the Proposed Corporate Exercise are set out below.

(i) Proposed KCHB Scheme of Arrangement

(1) The authorised share capital of the KCHB of RM500,000,000 comprising 500,000,000 ordinary shares ofRM1.00 each in KCHB ("KCHB Shares"), of which 419,659,001 have been issued and fully paid-up ("KCHB Scheme Shares"), shall be reduced to RM80,340,999 by the cancellation of the KCHB SchemeShares;

(2) The authorised share capital of KCHB shall be increased to its former amount of RM500,000,000 by thecreation of 419,659,001 new KCHB Shares and credit of RM419,659,001 arising from the cancellation of theKCHB Scheme Shares under (1) above will be applied in paying up in full at par such number of new KCHBShares equivalent to the number of KCHB Scheme Shares which will be allotted and issued by KCHB,credited as fully paid-up, to MCB or its nominees;

(3) In consideration for the new KCHB Shares issued to MCB or its nominees pursuant to the credit arisingfrom the cancellation of the KCHB Scheme Shares held by the KCHB Minority Shareholders, MCB shall payRM216,683,488 to ECB.

(4) In consideration of the payment of RM216,683,488 by the Company, ECB shall issue and allot new ordinaryshares of RM1.00 each in ECB ("ECB Shares") credited as fully paid-up to the KCHB Minority Shareholderson the basis of one (1) new ECB Share for every one (1) KCHB Scheme Share originally held by the KCHBMinority Shareholders.

(ii) Proposed EBB Scheme of Arrangement

The Proposed EBB Scheme of Arrangement involves a scheme of arrangement and amalgamation between EBBand its shareholders ("EBB Shareholders") under Sections 176 and 178 of the Companies Act, 1965 under whichall the ordinary shares held by EBB Shareholders ("EBB Scheme Shares") are to be transferred and vested in ECBfor a total consideration of RM2,011,000,000.

The total consideration was arrived at based on a willing-buyer willing-seller basis after taking into considerationthe earnings potential and the net tangible assets of EBB Group.

(iii) Proposed Transfer of Listing Status

Upon completion of the Proposed KCHB Scheme of Arrangement and Proposed EBB Scheme of Arrangement("Schemes"), KCHB's listing status on the Main Board of the Kuala Lumpur Stock Exchange ("KLSE") will betransferred to ECB. KCHB will be delisted from the Official List of the Main Board of the KLSE and ECB will beadmitted to the Official List for the listing and quotation of the entire issued and paid-up share capital of ECB onthe Main Board of the KLSE.

(iv) Proposed Offer

EON Berhad will extend the mandatory offer at an offer price of RM2.67 for every one (1) ECB Share held bythe KCHB Minority Shareholders.

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24. CORPORATE PROPOSALS (Cont’d)

(c) On 30 January 2002, the Company announced the proposal to raise financing via a term unsecured loan incorporatingpreference shares facility ("TULIPS facility") for a total amount of RM500 million which comprises two (2) tranchesof RM250 million each in order to fund the Group's operations at lower financing costs. The facility comprise aRM499.50 million term loan facility and 500 redeemable preference shares of RM1.00 each ("RPS") in the Companyto be issued at RM1,000 per RPS for a total consideration of RM500,000.

In order to accommodate the issuance of the RPS, the Company also proposes to increase its authorised share capitalto RM3,000,000,500 divided into 6,000,000,000 ordinary shares of RM0.50 each and 500 RPS of RM1.00 each.Furthermore, the Company also proposes to make certain amendments to its Articles of Association to facilitate theissuance of the RPS.

Proceeds from the TULIPs facility will be used to repay borrowings (RM496.0 million), finance working capital(RM1.0 million) and estimated expenses relating to the above proposals (RM3.0 million).

The above proposals are subject to approvals from the Securities Commission, shareholders of the Company, BankNegara Malaysia for the subscription of the RPS and existing lenders of the Company for the proposed amendmentsto the Company's Articles of Association.

(d) On 23 November 2001, the Company announced the following proposed transactions to internally re-organised andsimplify the Group's corporate structure:

(i) Transfer of the Company's indirect shareholdings in Simen Utama Sdn Bhd ("SUSB") and in Southern CementIndustries Sdn Bhd ("SCI") held through its wholly owned subsidiary,APMC Resources Sdn Bhd and its indirectshareholdings in Supermix Concrete (Malaysia) Sdn Bhd ("SPMM") held through its wholly owned subsidiary,APMCE, to the Company ("Proposed Transfers");

(ii) The Company will enter into an agreement with the minority shareholders of SPMS Holdings Sdn Bhd("SPMSH"), namely Ube Industries Limited ("Ube") and Yuasa Trading Co. Limited ("Yuasa"), for the acquisition ofthe remaining equity interests in SPMSH not already owned by the Company ("Proposed Acquisition");

(iii) SPMSH will enter into an agreement with Ube and Yuasa for the sale of 468,978 and 105,520 ordinary shares inSPMM ("SPMM Shares") held by SPMSH to Ube and Yuasa respectively ("Proposed Sale"). The SPMM Shares areequivalent to Ube and Yuasa's indirect interests in SPMM held through SPMSH prior to the above ProposedAcquisition mentioned in (ii) above.

Upon completion of the transactions (i) and (ii), the Company will hold directly 100% of the issued share capitalof SUSB, SCI and SPMSH and 40% of the issued share capital of SPMM. At the completion of proposedtransaction (iii), Ube and Yuasa will hold 8.26% directly in SPMM whilst SPMSH's direct equity interest in SPMMwill correspondingly be reduced to 21.74%.

The Proposed Transfers and Proposed Sale are subject to the approval of the Ministry of International Trade andIndustry and/or Foreign Investment Committee.

25. CONTINGENT LIABILITIES

COMPANY2001 2000

RM'000 RM'000

Corporate guarantee for borrowing facilities granted to several subsidiaries - unsecured 496,000 552,000

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26. SEGMENTAL REPORTING

PROFIT/(LOSS) REVENUE BEFORE TAX ASSETS EMPLOYED

2001 2001 2001 2001 2001 2001GROUP RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

By activity:Manufacture and sale of cement and

clinker and vessel operations 927,558 986,055 80,274 93,339 3,935,228 4,021,108 Trading 382,283 299,043 2,774 7,129 408,154 450,459 Manufacture and sale of

ready-mixed concrete 347,458 291,539 (3,394) 6,303 408,154 450,459

1,657,299 1,576,637 79,654 106,771 4,544,013 4,633,188 Investment and others 2,591 8,373 (5,092) 667 4,544,013 4,633,188

1,659,890 1,585,010 74,562 107,438 4,608,617 4,701,555

By geographical location:Malaysia 1,455,841 1,316,398 76,537 100,676 4,315,571 4,340,126Singapore 188,747 257,953 (3,152) 7,055 283,812 354,147Vietnam 15,302 10,659 1,177 (293) 9,234 7,282

1,659,890 1,585,010 74,562 107,438 84,608,617 4,701,555

Inter-segment pricing is mutually agreed between the segments based on market prices determined in the normal courseof business.

Certain comparative segmental amounts have been reclassified to reflect the appropriate segments' financialperformances.

27. COMPARATIVE FIGURES

The following significant reclassifications of comparative figures were made in the financial statements:

(a) An amount of RM16,600,000 was reclassified from selling and distribution expenses to Cost of sales in the Groupincome statement to reflect the appropriate classification of expenses; and

(b) An amount of RM2,395,109,000 was reclassified from amount due from subsidiaries categorised under current assetsto non-current assets in the Company level's balance sheet to reflect the appropriate nature and maturity of thebalances.

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Date of last Age of Net Book Approximate revaluation/Date Buildings Value

Location/Title No. Area Tenure Description of acquisition Years RM'000

Malayan Cement Berhad12, Laman Tunku, Kuala Lumpur 2,965 sq m Freehold Residential double-storey 11-06-1993 31 1,758

detached house

513, 514, Jalan TTJ 1/4 306 sq m Freehold 2 units of 3-storey 11-06-1993 18 264 Taman Tuanku Ja'afar shophousesSungei Gadut, Negeri Sembilan

2,022

Kedah Cement Holdings BerhadLot Nos. 46210, 46243, 46204, 46245 9 ha Freehold Agricultural land 11-04-1991 - 1,047 Batu Caves, Gombak, Selangor Darul Ehsan

Lot No. 3652, 3a 2r 30p Freehold Agricultural land 11-04-1991 - 55 Batu Caves, Gombak, Selangor Darul Ehsan

Lot No. 46205 11a 2r 10p Freehold Agricultural land 11-04-1991 - 198 Batu Caves, Gombak, Selangor Darul Ehsan

Lot No. 34471 41,490 sq ft Freehold Industrial development 15-05-1991 - 3,100 Batu Caves, Gombak, Selangor Darul Ehsan land (Investment property)

4,400

APMC Enterprises Sdn BhdLot No. 1229 to 1232 9 acres Freehold Agricultural land 30-11-1984 - 239 Rawang, Selangor Darul Ehsan

No. 2, Jalan Kilang, Petaling Jaya 6 acres Leasehold Office/industrial 26-9-1983 (Land) 16 20,457 46050 Selangor Darul Ehsan expiring in 2068 complex March 1986 (Building)

20,696

Associated Pan Malaysia CementSdn BhdLot No. 1955 94 acres Leasehold Limestone quarry 31-03-1990 - 303 Rawang, Selangor Darul Ehsan expiring in 2055

Lot No. 1956 49 acres Leasehold Cement factory complex 31-03-1990 2-26 31,726 Rawang, Selangor Darul Ehsan expiring in 2056 and ancillary buildings

Lots. 675 & 9 2 acres Leasehold Industrial land 31-03-1990 - 270 Rawang, Selangor Darul Ehsan expiring in 2056

Lot No. 1401 0.6 acres Freehold Industrial land 31-03-1990 - 165 Rawang, Selangor Darul Ehsan

Lot No. 4222 348 acres Leasehold Limestone quarry and 31-03-1990 26 6,395 Rawang, Selangor Darul Ehsan (Total gross floor expiring in 2003 ancillary buildings

area of buildings:approximately

28,403 sq ft)

Lot No. 3847 284 acres Leasehold Shale quarry 31-03-1990 - 350 Rawang, Selangor Darul Ehsan expiring in 2005

Lots 11 & P.T. 2464 respectively 98 acres Leasehold Shale quarry 31-03-1990 - 56 Rawang, Selangor Darul Ehsan expiring in 2003

Lot P.T. 10 55 acres Leasehold Shale quarry 1-02-1992 - 20 Rawang, Selangor Darul Ehsan expiring in 2002

Lot No. 479 and 480 52 acres Freehold Agricultural land 1-03-1992 - 4,839 Rawang, Selangor Darul Ehsan

Lot No. 813 31 acres Freehold Industrial land 31-03-1990 - 5,626 Rawang, Selangor Darul Ehsan

List Of Properties31 December 2001

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Date of last Age of Net Book Approximate revaluation/Date Buildings Value

Location/Title No. Area Tenure Description of acquisition Years RM'000

Lot No. 478 24 acres Freehold Industrial land 31-03-1990 - 4,730 Rawang, Selangor Darul Ehsan

Lot No. 473 10 acres Freehold Agricultural land 31-03-1990 - 732 Rawang, Selangor Darul Ehsan

Lot No. 911 12 acres Freehold Agricultural land 31-10-1990 - 1,084 Rawang, Selangor Darul Ehsan

Lot Nos. 3546 to 3548, 3551,3554 112 acres Freehold Agricultural land 1-03-1993 - 7,939 3555 and 3557 to 3560Rawang, Selangor Darul Ehsan

Lots P.T. 4632 to 4637 and P.T. 4614 16,500 sq ft Freehold 10 units of 2-storey 1-05-1998 3 1,201 to 4617 respectively intermediate Rawang, Selangor Darul Ehsan terrace house

Lot No. 3489 2.96 acres Freehold Recreational club 31-03-1990 11 902 Rawang, Selangor Darul Ehsan (Total gross floor

area of buildings:approximately

11,131 sq ft)

Lot No. 1957 57 acres Leasehold Employees' quarters 31-03-1990 27 8,199 Rawang, Selangor Darul Ehsan (Total gross floor expiring in 2056 comprising 6 bungalows

area of buildings: and 24 units single approximately storey houses.

46,893 sq ft)

Title No. H.S.(D) 21948 14 acres Leasehold Employees' quarters 31-03-1990 27 1,469 P.T. 8723 (Total gross floor expiring in 2053 comprising 6 units Rawang, Selangor Darul Ehsan area of buildings: 2-storey houses.

approximately11,913 sq ft)

Title No. H.S.(D) KA 119/84 33 acres Leasehold Cement factory complex 31-03-1990 2-26 19,349 P.T. 63166 expiring in 2005 and ancillary buildingsKanthan, Perak Darul Ridzuan

Lot No. 46613 6 acres Freehold Cement factory complex 1-03-1997 4 1,689 Kanthan, Perak Darul Ridzuan (Total gross floor and ancillary buildings

area of buildings:approximately

12,805 sq ft)

Lot No. 127219 5 acres Freehold Cement factory complex 31-03-1990 4 749 Kanthan, Perak Darul Ridzuan (Total gross floor and ancillary buildings

area of buildings:approximately

7,857 sq ft)

Lot No. 23 3 acres Freehold Industrial land 1-06-1992 - 322 Kanthan, Perak Darul Ridzuan

Lots PT 80041, PT 22032, PT 20062 8 acres Leasehold Industrial land 1-08-1997 - 4,616 PT 131714, PT 131737, Lot No. 202092 expiring betweenKanthan, Perak Darul Ridzuan 2012 to 2055

Lot Nos. 143504 and 143503 4 acres Leasehold Cement factory 30-03-1990 4 534 Kanthan, Perak Darul Ridzuan expiring in 2047 ancillary buildings

Title No. H.S. (D) KA. 299/82P.T. No. 20062 1 acre Leasehold Industrial land 30-03-1990 - 167 Kanthan, Perak Darul Ridzuan expiring in 2012

Title No. H.S. (D) KA. 21628 98 acres Leasehold Crusher and ancillary 31-03-1990 - 6,753 P.T. No. 115640 expiring in 2052 buildings, stockpile area Kanthan, Perak Darul Ridzuan and water retention

Lot No. 35244 25 acres Leasehold Limestone crusher & 31-03-1990 3-26 4,768Kanthan, Perak Darul Ridzuan (Total gross floor expiring in 2050 employees’ quarters

area of buildings:approximately

66,199 sq ft)

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Date of last Age of Net Book Approximate revaluation/Date Buildings Value

Location/Title No. Area Tenure Description of acquisition Years RM'000

Lot 46497 and Lot 15 393 acres Leasehold Limestone quarry and 31-03-1990 11 15,421 Kanthan, Perak Darul Ridzuan (Total gross floor expiring in 2020 ancillary buildings

area of buildings:approximately

39,672 sq ft)

Lots 13742 to 13746, 13751 to 13755, 37 acres Freehold Agricultural land 1-01-1993 - 1,037 13568 to13572, 13767 to 13778,13792 to 13794,13804 to 13806 and 13817Kanthan, Perak Darul Ridzuan

Title No. Geran 21347 12 acres Freehold Agricultural land 31-05-1999 - 451 Part of Lot 24Kanthan, Perak Darul Ridzuan

Lot Nos.18561 & 18562 19 acres Freehold Agricultural land 31-03-1990 - 1,413 Kanthan, Perak Darul Ridzuan

Title No. H.S. (D) KA.34781 30 acres Leasehold Industrial land 31-03-1990 - 39 P.T. No 115858 expiring in 2004Kanthan, Perak Darul Ridzuan

Lot 22885 30 acres Freehold Industrial land 31-03-1990 - 321 Kanthan, Perak Darul Ridzuan

Lot 14183 1,271 sq m Leasehold 2-storey 1-05-1992 9 577 Ipoh, Perak Darul Ridzuan (Total gross floor expiring in 2894 detached house

area of building:4,963 sq ft)

Part of Lot 67978 100 acres Sub-lease Clay extraction 1-01-1993 - 290 Kanthan, Perak Darul Ridzuan expiring in 2021

Lot W-5 13 acres Leasehold Industrial land 29-02-2000 - 2,982 Lumut Port Industrial Park expiring in 2098Perak Darul Ridzuan

Lot 11688 143,520 sq m Leasehold Industrial land 31-12-2000 2 4,243 PT No 6146 - 6151 expiring in 2098Sg Siput, Perak Darul Ridzuan

Tampin Depot (Gross floor Land on rental Bulk cement depot 31-12-2000 19 51 Section 1. Pulau Sebang Town area of building:Melaka 7,573 sq ft)

Tampoi Depot (Gross floor Land on rental Bulk cement depot 31-03-1990 19 96 Tampoi area of building:Johore Darul Takzim 10,213 sq ft)

Lot 1508, Jalan Hilir 0.3285 acres Leasehold Single storey 31-03-1990 15 95 Wakaf Baru (Gross floor expiring in 2014 cement warehouseKelantan Darul Naim area of building:

9,600 sq ft)

Apartment No.A 205 and A307 - Freehold 2 units of apartment 31-03-1990 10 214 Tanjung Biru, Port DicksonNegeri Sembilan Darul Khusus

Lot 36417 11 acres Freehold Industrial land & 31-07-2001 15 5,559 Kanthan, Perak Darul Ridzuan (Total gross floor factory building

area of buildings:approximately

16,586 sq ft)

147,742

Malayan Cement Industries Sdn BhdPlot A, H.S. (D) 5/1983 86.5 acres Leasehold Employees' housing 31-08-1991 17 7,873 Telok Ewa, Langkawi (Total built-up expiring on Area BKedah Darul Aman area: 1/6/2043

approximately137,810 sq ft)

Plot B, H.S. (D) 6/1983 35 acres Leasehold Employees' housing 31-08-1991 17 8,819 Telok Ewa, Langkawi (Total built-up expiring on Area AKedah Darul Aman area: 1/6/2043

approximately58,173 sq ft)

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Date of last Age of Net Book Approximate revaluation/Date Buildings Value

Location/Title No. Area Tenure Description of acquisition Years RM'000

Plot C, H.S. (D) 7/1983 196 acres Leasehold Cement factory complex 31-08-1991 17 86,605 Telok Ewa, Langkawi expiring on and ancillary buildingsKedah Darul Aman 1/6/2043

P.T. 301, H.S. (D) 7/86 674a 2r 25p Leasehold Limestone quarry 31-08-1991 - 48,423 Mukim Air Hangat expiring onLangkawi, Kedah Darul Aman 16/3/2016

P.T. 301, H.S. (D) 3/1985 350 acres Leasehold Shale quarry 31-08-1991 - 2,860 Mukim Air Hangat expiring onLangkawi, Kedah Darul Aman 31/7/2009

Cement Terminal 7,095 sq m Leasehold Bulk terminal and buildings 30-09-1992 10 323 Lot 1294, Prai (Total built-up expiring on for the purpose of packing Pulau Pinang area of buildings: 15/10/2006 and cement storage

approximately1,835 sq m)

Cement Terminal (Approximately Leasehold Bulk terminal and buildings 1-03-1998 5 2,368 West Port, Klang 8.0 acres) expiring on for the purpose of packing Selangor Darul Ehsan 348,480 sq ft 31/8/2024 and cement storage

Cement Terminal 217,809 sq ft Leasehold Bulk terminal and buildings 31-03-1997 6 5,660 Lot PTD 9035 Fasa IV (Total built-up expiring on for the purpose of packing Pelabuhan Pasir Gudang area of buildings: 31/12/2022 and cement storageJohor Darul Takzim approximately

2,070 sq m

162,929

Southern Cement Industries Sdn BhdLot 2, Jalan Kontena, 9 acres Leasehold Cement grinding plant 1-01-1999 4 16,022 Kawasan Pelabuhan Johor, expiring in & ancillary buildings.81700 Pasir Gudang, December 2022Johor Darul Takzim.

CMCM Perniagaan Sdn Bhd480/480A, Jalan Kuala Kangsar 1,500 sq ft Freehold Double-storey link 31-03-1986 16 130 Ipoh, Perak Darul Ridzuan shophouse

104/104A, Jalan Rotan Batu 1,642 sq ft Freehold Double-storey link 31-01-1988 13 130 Batu Pahat, Johor Darul Takzim shophouse

391A,Taman Peringgit Jaya 1,680 sq ft Leasehold Double-storey link 16-09-1988 25 136 75400 Melaka expiring in 2075 shophouse

2877, 2877-A & 2877-B 3,373 sq ft Freehold 3-storey shop house 13-08-2001 1 538 Jalan Baru, Bandar Perai JayaSeberang Perai Tengah 13600Pulau Pinang

G-04-D2, G-06-D2 & G-07-D2, Total 1,800 sq ft Leasehold 3 units of single storey 13-08-2001 6 441 Jalan Perai Jaya 3 expiring in 2094 shoplot13600 Seberang Perai TengahPulau Pinang

No. 88 Jalan 2/3 7,524 sq ft Freehold Bungalow 1-11-2001 1 480 Taman Desa Country Homes48000 Rawang, Selangor

No. 1727 & 1728, Jalan Sri Putri 4 3,735 sq ft Freehold 3-storey shoplot 1-11-2001 1 1,487 Taman Putri, 81000 KulaiJohor Darul Takzim

3,342

Kedah Cement Marketing Sdn BhdNo. 5, Jalan Bakawali 48, 1,540 sq ft Freehold Double-storey 5-03-1988 13 290Taman Johor Jaya shop lot81700 Johor Bahru (Investment property)Johor Darul Takzim

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Date of last Age of Net Book Approximate revaluation/Date Buildings Value

Location/Title No. Area Tenure Description of acquisition Years RM'000

Supermix Concrete (M) Sdn BhdLot 23528 53,361 sq ft Freehold Site for batching plant 2-06-1993 18 225Mukim of Hulu KintaDistrict of KintaPerak Darul Ridzuan

Lot No. P.T. 182 & 183 69,300 sq ft Leasehold Vacant 14-02-1996 5 443Bandar Panchor, Seremban expiring in 2096Negeri Sembilan Darul Khusus

No. 1-17, Mukim of Cheng 71,580 sq ft Leasehold Site for batching plant 14-06-1991 8 695Melaka expiring in 2096

Lot No. PTD 62922, Mukim Tebrau 102,318 sq ft Freehold Vacant 3-03-1993 7 2,815Johor BahruJohor Darul Takzim

4,178

Supermix Concrete Industries Sdn BhdLot 13 Seksyen 92A 37,038 sq ft Leasehold Site for batching plant 12-11-1992 5 1,128 Grant No. 20006 to 2017Kuala Lumpur

Lot No. PTB 13338 81,947 sq ft Leasehold Vacant September 1994 15 1,404 H.S.(D) 135115, Larkin to 2046Johor Bahru, Johor Darul Takzim

Parcel No. D1-G-04, D1-G-09 & D1-G-03 56 sq m Leasehold Apartments 18-05-2001 2 480Lot No. P.T. 3884 expiring in 2093H.S.(D) 5361, Seberang Perai TengahPenang

3,012

Supermix Concrete (East Malaysia)Sdn BhdPlot 27 1.2 hectares Leasehold Site for batching plant 25-09-1997 4 1,086Kidurong Industrial Area (Kinda)Bintulu, Sarawak

Lafarge Cement Singapore Pte Ltd110, Pulau Damar Laut 6,226 sq m Leasehold Bulk cement 1-05-1993 4 5,108 Singapore 618402 expiring in 2014 import terminal

28,Tuas South Avenue 8 6,044 sq m Leasehold Dry-mix product factory 1-11-1998 3 10,550 Singapore 637648 expiring in 2028

15,658

Supermix Concrete Pte Ltd72 Sungei Kadut Street 1 13,327 sq m Rented Land Site for batching plant and 1-02-1986 16 394 Singapore 729372 administration office block

27 Kaki Bukit Road 4 6,300 sq m Rented Land Site for batching plant April 1994 to 1 to 8 101 Singapore 417796 September 2001

Plot 8 Tampines Industrial, Street 62 7,515 sq m Rented Land Site for batching plant October 1999 to 3 55 7 Tampines Industrial November 1999Singapore 528814

550

Supermix Concrete (Vietnam) Co Ltd7th km, Ha Noi Highway 8,000 sq m Rented Land Site for batching plant and 16-12-1994 7 511 Thu Due District, Ho Chi Minh City administration office blockVietnam

Total held by the Group 382,438

Held as:Land and buildings 379,048

Investment Properties 3,390

382,438

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Five-Year Statement

(RM'000 unless indicated) 1997(1) 1998 1999 2000 2001

Revenue 921,943 608,210 1,179,077(4) 1,576,637(4) 1,657,299(4)

Operating profit before finance costs 13,678 14,508 54,028 199,023 151,594Finance costs - - (74,874) (87,856) (75,055)

Operating profit/(loss) 13,678 14,508 (20,846) 111,167 76,539 Share of results of associates 158,601 69,027 (830) (3,729) (1,977)

Profit/(loss) before tax 172,279 83,535 (21,676) 107,438 74,562 Income tax expense (28,383) (25,141) 3,727 (20,488) (5,023)

Profit/(loss) after tax 143,896 58,394 (17,949) 86,950 69,539 Minority interests - - 9,128 (6,597) (4,738)

Net profit/(loss) for the year/period 143,896 58,394 (8,821) 80,353 64,801

Share Capital 206,690 206,690 1,446,828 1,446,828 1,446,828 Reserves:

Non-distributable 77,811 1,275,770 1,186,205 1,178,437 1,170,973 Distributable 397,111 426,568 403,004 441,688 464,820

Shareholders' Funds 681,612 1,909,028 3,036,037 3,066,953 3,082,621

Net tangible assets per share (RM) 1.65 3.26 0.70 0.70 0.71Net earnings/(loss) per share (sen) 32.10(2) 14.10 (0.9)(3) 2.80 2.24 Gross dividend per share (sen) 17.5 7.0 0.7 2.0 2.0Return on shareholders' funds (%) 21.1 3.1 - 2.6 2.1 Gearing - net borrowings as a percentage of

shareholders' funds and minority interests (%) - 8.8 34.0 26.9 27.2Share price (RM) - Year High 5.50 3.02 3.74 1.60 1.20Share price (RM) - Year Low 2.00 0.75 0.97 1.00 0.80

Notes:(1) For 13-month financial period due to the change in financial year end from 30 November to 31 December.

(2) Net earnings per share has been calculated based on the annualised Group profit after taxation of RM132.827 million andon the Company's enlarged number of ordinary shares in issue at the end of that financial period of 413,397,308.

(3) Net loss per share is calculated based on the Group’s net loss of RM8,821,000 divided by the weighted average numberof ordinary shares in issue of 990,977,793.

(4) Revenue for financial years ended 1999 to 2001 are stated net of rebates, discounts and commissions. Revenue forfinancial years ended 1997 and 1998 are stated at gross before deduction of rebates, discounts and commissions.

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SHARE CAPITAL

No. of shares Type Amount (RM) Amount (RM)

Authorised 6,000,000,000 ordinary shares of RM0.50 each 3,000,000,000Issued and paid-up 2,893,655,156 ordinary shares of RM0.50 each 1,446,827,578Voting right 1 vote per share

Distribution according to size of shareholdings (as at 19 April 2002)

No. of Holders No. of Shares %Size of Shareholdings M'sian Foreign M'sian Foreign M'sian Foreign

Less than 1,000 272 133 77,321 52,329 0.00 0.001,000 - 10,000 18,591 1,216 67,373,017 5,268,128 2.33 0.1810,001 - 100,000 3,987 710 119,079,105 23,830,261 4.12 0.82100,001 to less than 5% of issued shares 610 197 554,441,124 122,444,242 19.16 4.235% and above of issued shares 1 2 239,429,500 1,761,660,129 8.28 60.88

Subtotal 23,461 2,258 980,400,067 1,913,255,089 33.89 66.11

Grand Total (Malaysian + Foreign) 25,719 2,893,655,156 100.00

Directors’ shareholdings (Based on the Register of Directors' Shareholdings as at 19 April 2002)

I ---------------- Direct ---------------- I I --------------- Indirect --------------- IName Nationality No. of ordinary Percentage of No. of ordinary Percentage of

shares of share capital shares of share capitalRM0.50 each % RM0.50 each %

Y.A.M.Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul Rahman Malaysian - - - -

Mr Guillaume Roux French - - - -

Mr Quah Thain Khan Malaysian - - - -

Mr Yeoh Khoon Cheng Malaysian - - - -

Y.A.M.Tunku Tan Sri Imran ibni Tuanku Ja'afar Malaysian - - - -

Dato' Dr Ikmal Hisham Albakri @ Ikmal Hisham Hariri bin Mustapha Albakri Malaysian - - - -

Mr Charles Tan Poh Tei Malaysian - - - -

Mr Chan Hua Eng Malaysian - - - -

Mr James R H Loudon British - - - -

Mr Saw Ewe Seng Malaysian 55,000 @ 110,000 @

Mr Michel Rose French - - - -

Mr Jean-Jacques Gauthier (Alternate to Mr Michel Rose) French - - - -

Note: @: Less than 0.01%

Thirty Largest Securities Accounts Holder (According to Register of Depositors as at 19 April 2002)

HoldingsNames No. %

1 Blue Circle Industries PLC 1,522,592,619 52.62

2 Employees Provident Fund Board 239,429,500 8.27

3 Associated International Cement Limited 239,067,510 8.26

4 Amanah Raya Nominees (Tempatan) Sdn Bhd (Kuala Lumpur Growth Fund) 35,403,000 1.22

5 Amanah Raya Nominees (Tempatan) Sdn Bhd (Kuala Lumpur Index Fund) 23,020,000 0.80

6 Malaysian International Reinsurance Berhad 21,978,250 0.76

7 Amanah Raya Nominees (Tempatan) Sdn Bhd (Amanah Saham Malaysia) 19,906,500 0.69

8 Mayban Nominees (Tempatan) Sdn Bhd (Mayban Trustees Berhad for Kuala Lumpur Regular Savings Fund) 19,838,000 0.69

9 Amanah Raya Nominees (Tempatan) Sdn Bhd (Kuala Lumpur Savings Fund) 18,120,000 0.63

10 Permodalan Nasional Berhad 17,425,000 0.60

11 Loke Wan Yat Realty Sdn Bhd 17,210,495 0.59

12 Malaysia Nominees (Tempatan) Sdn Bhd (Lee Foundation, States of Malaya) 12,545,400 0.43

13 Mayban Nominees (Tempatan) Sdn Bhd (Mayban Trustees Berhad for Kuala Lumpur Aggressive Growth Fund) 10,893,000 0.3814 Mayban Nominees (Tempatan) Sdn Bhd (Mayban Trustees Berhad for Kuala Lumpur Balance Fund) 10,820,000 0.3715 Citicorp Nominees (Tempatan) Sdn Bhd (Prudential Assurance Malaysia Bhd (Par Fund)) 10,608,250 0.37

Analysis Of Shareholdingsas at 19 April 2002

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Thirty Largest Securities Accounts Holder (According to Register of Depositors as at 19 April 2002) (Cont’d)

HoldingsNames No. %

16 DB (Malaysia) Nominees (Asing) Sdn Bhd (DBSPN for Prudential Assurance Company Singapore Pte Ltd) 10,268,000 0.35

17 Citicorp Nominees (Asing) Sdn Bhd (American International Assurance Co Ltd (P Core)) 10,233,500 0.35

18 Amanah Raya Nominees (Tempatan) Sdn Bhd (Sekim Amanah Saham Nasional) 10,224,125 0.35

19 Lembaga Tabung Haji 9,779,250 0.34

20 Mayban Nominees (Tempatan) Sdn Bhd (Mayban Trustees Berhad for Kuala Lumpur Industry Fund) 9,687,000 0.33

21 Pertubuhan Keselamatan Sosial 8,313,625 0.29

22 Universiti Malaya 6,635,000 0.23

23 Mayban Nominees (Tempatan) Sdn Bhd (Mayban Trustee Berhad for Kuala Lumpur Ittikal Fund) 6,006,000 0.21

24 Bumiputra-Commerce Trustee Berhad (Amanah Saham Darul Iman) 5,651,500 0.20

25 Alliance Group Nominees (Tempatan) Sdn Bhd (Pheim Asset Management Sdn Bhd for Employees Provident Fund) 5,494,000 0.19

26 Citicorp Nominees (Asing) Sdn Bhd (CB LDN for Stichting Pensioen Fonds Voor De Gezondheid Geestelukeen Maatschappeluke Belangen) 5,144,000 0.18

27 Malaysian National Insurance Berhad 5,056,375 0.17

28 AM Nominees (Tempatan) Sdn Bhd (Pertubuhan Keselamatan Sosial) 5,028,000 0.17

29 Universal Trustee (Malaysia) Berhad (Alliance First Fund) 4,941,000 0.1730 Alliance Group Nominees (Tempatan) Sdn Bhd (Pheim Asset Management Sdn Bhd for Employees Provident Fund) 4,700,000 0.16

TOTAL 2,326,018,899 80.38

Substantial Shareholders (According to the Company’s Register of Substantial Shareholders as at 19 April 2002)

I ---------------- Direct ---------------- I I --------------- Indirect --------------- IName Place of No. of ordinary Percentage of No. of ordinary Percentage of

incorporation/ shares of share capital shares of share capitalNationality RM0.50 each % RM0.50 each %

Associated International Cement Limited ("AIC") UK 239,067,510 8.26 - -

Blue Circle Housing Products ("BCHPL") UK - - (1) 239,067,510 8.26

Blue Circle Industries PLC ("BCI") UK 1,522,592,619 52.62 (2) 239,067,510 8.26

Lafarge SA ("Lafarge") France - - (3) 1,761,660,129 60.88

SOFIMO * France - - (4) 1,761,660,129 60.88

ARICINQ France - - (5) 1,761,660,129 60.88

Financiere Lafarge SA ("FLSA") France - - (6) 1,761,660,129 60.88

Lafarge Asland SA ("LASA") Spain - - (7) 1,761,660,129 60.88

Cementia Holdings AG ("CHAG") Switzerland - - (8) 1,761,660,129 60.88

Lafarge Building Materials Limited ("LBML") United Kingdom - - (9) 1,761,660,129 60.88

Lafarge Minerals Limited ("LML") United Kingdom - - (10) 1,761,660,129 60.88

Danubia Holding AG ("Danubia") Switzerland - - (11) 1,761,660,129 60.88

Lafarge (Swiss) Holdings ("LSH") Trust created underthe laws of the Stateof New York - - (12) 1,761,660,129 60.88

Employees Provident Fund Board Malaysia 239,429,500 8.27 (13) 32,048,000 1.09

* Societe Financiere Immobiliere et Mobiliere

Notes:

(1) BCHPL : Deemed interest by virtue of its 100% shareholding in AIC

(2) BCI : Deemed interest by virtue of its 100% shareholding in BCHPL

(3) Lafarge : Deemed interest by virtue of its 100% direct shareholding in SOFIMO, which in turn holds 100% indirect interest in BCI

(4) SOFIMO : Deemed interest by virtue of 100% direct shareholding in ARICINQ and FLSA and its 99.62% direct and indirect shareholding in LASA, which in turn holds 22.48% direct interest in BCI

(5) ARICINQ : Deemed interest by virtue of its 22.87% direct shareholding in LASA, which in turn holds 22.48% direct interest in BCI

(6) FLSA : Deemed interest by virtue of its 100% direct shareholding in LBM and LSH, its 48.24% direct shareholding in CHAG and its 22.83% indirect shareholding in LASA

(7) LASA : Deemed interest by virtue of its 22.48% direct shareholding in BCI

(8) CHAG : Deemed interest by virtue of its 22.83% direct shareholding in LASA, which in turn holds 22.48% direct interest in BCI

(9) LBML : Deemed interest by virtue of its 100% direct shareholding in LML, which in turn holds 77.52% direct interest in BCI

(10) LML : Deemed interest by virtue of its 77.52% direct interest in BCI

(11) Danubia : Deemed interest by virtue of its 47.30% direct shareholding in CHAG

(12) LSH : Deemed interest by virtue of its 100% direct shareholding in Danubia

(13) EPF : Held through Alliance Merchant Bankers Berhad, Mayban-UBS Asset Management Sdn Bhd, PHEIM Asset Management Sdn Bhd, Amanah SSCM Asset Management Berhad, MIMB Aberdeen Assets Management Sdn Bhd, Nomura Asset Management (Singapore) Ltd and SBB Asset Management Sdn Bhd

MALAYAN CEMENT BERHAD 1877-T

NOTICE IS HEREBY GIVEN that the Fifty-Second Annual General Meeting of MALAYAN CEMENT BERHAD will be held atKristal Ballroom, Hilton Petaling Jaya, No. 2, Jalan Barat, 46200 Petaling Jaya, Selangor Darul Ehsan on 17 June 2002 at 10.00 a.m. forthe following purposes:

AGENDA

As Ordinary Business1. To receive and adopt the Reports of the Directors and Auditors and the Statement of Accounts for the

year ended 31 December 2001.

2. To re-elect the following Directors retiring under Article 85 of the Articles of Association of the Company:

(i) Y.A.M.Tunku Tan Sri Imran ibni Tuanku Ja'afar

3. To re-elect the following Directors retiring under Article 91 of the Articles of Association of the Company:

(i) Mr Michel Rose(ii) Mr Guillaume Roux(iii) Mr Quah Thain Khan

4. To re-appoint the following Directors who are retiring in accordance with Section 129 of the CompaniesAct, 1965 as Directors of the Company and to hold office until the next Annual General Meeting:

(i) Y.A.M.Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul Rahman(ii) Mr Chan Hua Eng(iii) Dato' Dr Ikmal Hisham Albakri @ Ikmal Hisham Hariri bin Mustapha Albakri

5. To re-appoint Messrs Deloitte Touche Tohmatsu as auditors for the ensuing year at a remuneration to bedetermined by the Directors.

6. To consider any other business for which due notice shall have been given.

As Special Business7. To consider and, if thought fit, to pass the following as an Ordinary Resolution:

Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965.

"That subject always to the Companies Act, 1965, the Articles of Association of the Company and theapprovals of the relevant governmental/regulatory authorities, the Directors be and are herebyempowered, pursuant to Section 132D of the Companies Act, 1965, to issue shares in the Company at anytime and upon such terms and conditions and for such purposes as the Directors may, in their absolutediscretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution doesnot exceed 10% of the issued capital of the Company for the time being and that the Directors be and arealso empowered to obtain the approval for the listing of and quotation for the additional shares so issuedon the Kuala Lumpur Stock Exchange and that such authority shall continue in force until the conclusionof the next Annual General Meeting of the Company".

8. To consider and, if thought fit, to pass the following as an Ordinary Resolution:

Authority to Directors on purchase of the Company's own shares.

"That subject to the Companies Act, 1965 ("the Act"), rules, regulations and orders made pursuant to theAct, provisions of the Company's Memorandum and Articles of Association and the requirements of theKuala Lumpur Stock Exchange ("KLSE") and any other relevant authority, the Directors of the Companybe and are hereby unconditionally and generally authorised to make purchases of ordinary shares ofRM0.50 each in the Company’s issued and paid-up share capital through the KLSE at anytime and upon suchterms and conditions and for such purposes as the Directors may, in their discretion deem fit, subjectfurther to the following:

(i) the maximum number of shares which may be purchased and/or held by the Company shall be289,365,516 representing ten per centum (10%) of the issued and paid-up ordinary share capital forthe time being of the Company as at 19 April 2002 ("Shares");

Resolution 1

Resolution 2

Resolution 3Resolution 4Resolution 5

Resolution 6Resolution 7Resolution 8

Resolution 9

Resolution 10

Resolution 11

Notice Of Annual General Meeting

MALAYAN CEMENT BERHAD 1877-T

(ii) the maximum fund to be allocated by the Company for the purpose of purchasing the Shares shallnot exceed the retained profits and the share premium account of the Company. As of 31 December 2001 the audited retained profits and share premium of the Company were RM144.5million and RM1,113.6 million respectively;

(iii) the authority conferred by this resolution will commence upon the passing of this ordinary resolutionand will expire at the conclusion of the next Annual General Meeting ("AGM") of the Company,(unless earlier revoked or varied by ordinary resolution of the shareholders of the Company ingeneral meeting or the expiration of the period within which the next AGM is required by the law tobe held, whichever occurs first) but not so as to prejudice the completion of purchase(s) by theCompany made before the aforesaid expiry date and, in any event, in accordance with the ListingRequirements of the KLSE or any other relevant authority;

(iv) upon completion of the purchase(s) of the Shares by the Company, the Directors of the Company beand are hereby authorised to deal with the Shares in the following manner:

(a) cancel the Shares so purchased; or

(b) retain the Shares so purchased as treasury shares for distribution as dividend to theshareholders and/or resale on the market of KLSE and/or for cancellation subsequently; or

(c) retain part of the Shares so purchased as treasury shares and cancel the remainder;

and in any other manner as prescribed by the Act, rules, regulations and orders made pursuant to theAct and the requirements of the KLSE and any other relevant authority for the time being in force;

AND THAT the Directors of the Company be and are hereby authorised to take all such steps as arenecessary or expedient (including the appointment of a Stockbroking firm and the opening andmaintaining of a Central Depository Account designated as a Share Buy-Back Account and to enterinto any agreements, arrangements and guarantees with any party or parties to implement or to effectthe purchase(s) of the Shares with full powers to assent to any conditions, notifications, revaluations,variations and/or amendments (if any) as may be required by the relevant authorities".

By Order of the Board

TEOH YOW KEECHEW TEE KHENGCompany Secretaries

Petaling Jaya17 May 2002

Explanatory Notes to Item 7 of Agenda (Resolution 10)The ordinary resolution under item 7 above is proposed pursuant to Section 132D of the Companies Act, 1965, and if passed, will give the Directors of the Company from thedate of the above Annual General Meeting, authority to issue and allot shares from the unissued share capital of the Company for such purposes as the Directors deem fit andin the interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

Explanatory Notes to Item 8 of the Agenda (Resolution 11)The ordinary resolution under item 8 above will empower the Directors of the Company to purchase the Company’s shares up to ten percent (10%) of the issued and paid-up share capital of the Company ("Proposed Share Buy Back") by utilising the funds allocated which shall not exceed the total retained earnings and share premium of theCompany. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

Further information on the Proposed Share Buy Back are set out in the Circular to shareholders of the Company which is despatched together with the Company’s AnnualReport.

Notes:1. A member of the Company entitled to attend

and vote at the meeting is entitled to appointa proxy or proxies to attend and vote insteadof him and such proxy need not be a memberof the Company.

2. The instrument appointing a proxy must, to bevalid, be deposited at the Registered Office ofthe Company, Level 12, Bangunan TH Uptown3, No.3 Jalan SS21/39, 47400 Petaling Jaya,Selangor Darul Ehsan not less than forty-eight(48) hours before the time set for themeeting.

3. If the form of proxy is executed by acorporation, it must be either under its seal orunder the hand of any officer or attorneyauthorised.

MALAYAN CEMENT BERHAD 1877-T

1. The Directors* who are offering themselves for re-election at the 52nd AGM are as follows:

Date ofName Appointment Position Age Nationality

(i) Y.A.M.Tunku Tan Sri Abdullah ibni 25.05.2001 Independent 76 MalaysianAlmarhum Tuanku Abdul Rahman Non-Executive Director

(ii) Mr Chan Hua Eng 25.05.2001 Independent 73 MalaysianNon-Executive Director

(iii) Dato' Dr Ikmal Hisham Albakri @ 25.05.2001 Independent 71 MalaysianIkmal Hisham Hariri bin Mustapha Albakri Non-Executive Director

(iv) Y.A.M.Tunku Tan Sri Imran ibni Tuanku Ja'afar 26.05.1999 Independent 54 MalaysianNon-Executive Director

(v) Mr Michel Rose 18.02.2002 Non-Executive Director 59 French

(vi) Mr Guillaume Roux 01.03.2002 Non-Executive Director 42 French

(vii) Mr Quah Thain Khan 01.03.2002 Executive Director 44 Malaysian

* For further details on the Directors, please refer to the Profile of Directors on Pages 4 & 5 of the Annual Report.

2. Details of the Board meetings held during the financial year are as follows:

Date Time

19 February 2001 2.30 p.m.

29 May 2001 9.00 a.m.

1 August 2001 9.00 a.m.

22 November 2001 9.00 a.m.

All Board meetings were held at the registered office of the company except for the meeting on 1 August 2001 which was heldat the registered office of its holding company, Blue Circle Industries Plc.

3. Attendance

The details of attendance of directors at Board meetings held during the financial year ended 31 December 2001 are as follows:

Name Attendance

1. Y.A.M.Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul Rahman 4/4

2. Mr Alistair Richard Cox (resigned on 1 March 2002) 4/4

3. Mr Yeoh Khoon Cheng 4/4

4. Y.A.M.Tunku Tan Sri Imran ibni Tuanku Ja'afar 3/4

5. Dato' Dr Ikmal Hisham Albakri @ Ikmal Hisham Hariri bin Mustapha Albakri 3/4

6. Mr Chan Hua Eng 4/4

7. Mr Charles Tan Poh Tei 4/4

8. Mr James R H Loudon 4/4

9. Mr Saw Ewe Seng 4/4

Statement Accompanying

The Notice Of Annual General Meeting (“AGM”)

I/We________________________________________________________________________________________________________(Full name in block letters)

of__________________________________________________________________________________________________________(Address)

being a member/members of MALAYAN CEMENT BERHAD, hereby appoint____________________________________________

____________________________________________________________________________________________________________(Full name in block letters)

__________________________________________________________________________________________________________(Address)

or failing him/her, the Chairman of the meeting*,__________________________________________________________________

__________________________________________________________________________________________________________

as my/our proxy to attend and vote for me/us on my/our behalf at the Fifty-Second Annual General Meeting of the Company to beheld on 17 June 2002 at 10.00 a.m. at Kristal Ballroom, Hilton Petaling Jaya, No.2, Jalan Barat, 46200 Petaling Jaya, Selangor Darul Ehsanand at any adjournment thereof, and to vote as indicated below:

NO. RESOLUTIONS FOR AGAINST

1. Adoption of Reports and Accounts

2. Re-election of Y.A.M.Tunku Tan Sri Imran ibni Tuanku Ja'afar

3. Re-election of Mr Michel Rose

4. Re-election of Mr Guillaume Roux

5. Re-election of Mr Quah Thain Khan

6. Re-appointment of Y.A.M.Tunku Tan Sri Abdullah ibni Almarhum Tuanku Abdul Rahman

7. Re-appointment of Mr Chan Hua Eng

8. Re-appointment of Dato' Dr Ikmal Hisham Albakri @ Ikmal Hisham Hariri bin Mustapha Albakri

9. Re-appointment of Auditors

10. Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965

11. Authority to Directors on purchase of Company's own Shares

Please indicate with an "X" in the appropriate space above how you wish your vote to be cast. If you do not do so, the proxy willvote or abstain from voting at his discretion.

Number of Shares

Signed this _________ day of ____________________ 2002 Signature _______________________________

* Delete the words, “the Chairman of the meeting” if you wish to appoint some other person to be your proxy.

1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote instead of him and suchproxy need not be a member of the Company.

2. The instrument appointing a proxy must, to be valid, be deposited at the Registered Office of the Company, Level 12, Bangunan TH Uptown 3, No.3 JalanSS21/39, 47400 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for the meeting.

3. If the form of proxy is executed by a corporation, it must be either under its seal or under the hand of any officer or attorney authorised.

form of proxy MALAYAN CEMENT BERHAD(1877-T)

(Incorporated in Malaysia)

AFFIX

STAMP

MALAYAN CEMENT BERHADP.O. Box 47346670 Petaling JayaSelangor Darul EhsanMalaysia