Year 2004 - Great Eastern Life

We’ve made Good ground. Accolades poured in for our brandand corporate transparency. We’re establishing a footholdin Southeast Asia and beyond. We are on top of the game.This has been a Great year.VISIONTo be the choice fi nancial service provider in the region and beyond, committed to providing fi nancial security for our customers,recognised for excellence in service and respected for our Integrity, Initiative and Involvement in the way we pursue our business.

FINANCIALHIGHLIGHTSOF THE GROUPFinancial year ended 31 December 2004 (2) 2003 (2) 2002 (2) 2001 (2) 2000 (2)&(3) 1999 (2) 1998 (2) 1997 (2) 1996 (2) 1995 (2)(1)(4)(5)(6)(6)(5) & (7)(8) & (9)(9) & (10)(5) & (9)(5) & (9)(9)(9)(11)GROUP STATISTICSTurnover (S$millions) 7,878.0 6,052.4 6,555.4 6,535.9 3,928.4 4,084.4 2,202.5 2,763.0 2,761.7 2,440.8Gross Premiums (S$millions) 5,374.9 5,055.9 5,271.7 5,680.5 3,037.6 2,593.8 2,225.8 2,081.0 2,162.5 2,028.6Profit Attributableto Shareholders (S$millions) 402.0 312.2 233.8 202.2 180.1 221.1 76.7 130.3 66.9 85.0Total Assets (S$millions) 36,256.6 32,351.7 27,346.3 23,833.7 19,119.5 13,800.0 10,887.7 9,821.5 9,555.1 8,024.8Shareholders’ Fund (S$millions) 2,324.7 2,024.0 1,630.0 1,531.2 1,407.5 971.8 763.1 586.9 469.3 415.3Stock Exchange Prices (S$) 13.00 10.70 8.50 9.95 5.55 4.85 2.25 2.53 6.13 7.55Market Capitalisation (S$millions) 6,153.1 5,044.6 4,006.0 4,689.3 2,615.7 1,885.2 874.6 981.5 2,380.8 2,934.7GROUP FINANCIAL RATIOSReturn on Equity 18.5% 17.1% 14.8% 13.8% 17.4% 25.5% 11.4% 24.7% 15.1% 22.4%Gross Premium Growth 6.3% -4.1% -7.2% 87.0% 17.1% 16.5% 7.0% -3.8% 6.6% 17.6%Basic Earnings per share (S$) 0.85 0.66 0.49 0.43 0.46 0.57 0.20 0.34 0.17 0.22Diluted Earnings per share (S$) 0.85 0.66 0.49 0.43 0.46 0.57 – – – –Net Asset Value per share (S$) 4.91 4.29 3.46 3.25 2.99 2.50 1.96 1.51 1.21 1.07Dividend per sharepaid during the year (cents) 30.0 21.0 17.0 17.0 17.1 4.5 4.7 4.1 3.3 3.5Dividend per share declaredfor the year:– Gross (cents) 35.0 24.0 20.0 17.0 16.1 17.0 4.3 4.8 4.3 5.3– Net (cents) 28.0 18.7 15.6 12.2 11.6 12.2 3.1 3.4 3.0 3.7– Cover (times) 3.0 3.5 3.2 3.5 3.3 4.6 6.4 6.0 5.8 6.0Footnotes:(1) Turnover for the Group is derived from the summation of components as follows: (i) Gross investment income,Interest income, Gain/(loss) on sale of investments (excluding fair value changes on held-for-trading investments)and Fees and other income from the Profit and Loss Statement; (ii) Gross premiums, Gross investment income,Interest income, Rental income and Gain/(loss) on sale of investments (excluding fair value changes on heldfor-tradinginvestments) from the Life Assurance Revenue Statement and (iii) Gross premiums, Gross investmentincome, Interest income and Gain/(loss) on sale of investments (excluding fair value changes on held-for-tradinginvestments) from the General Insurance Revenue Statement.(2) Effective from 1 January 2002, the Group adopted the Singapore Financial Reporting Standard No. 39, (“FRS39”), Financial Instruments: Recognition and Measurement (previously known as Singapore Statement ofAccounting Standard No.33, Financial Instruments: Recognition and Measurement) before its effective date(1 January 2005). From year 2002 onwards, all the financial highlights included the effects of adopting FRS 39,which accounts for all financial instruments at fair value in the financial statements.In accordance with the transitional provisions of FRS 39, the pre-existing accounting policies related to therecognition, derecognition and measurement of financial instruments, for periods prior to the adoptionof FRS 39, are not reversed. Consequently, the financial highlights for the years 1995 to 2001 have notbeen restated.(3) For year 2000, Turnover, Gross Premiums, Profit Attributable to Shareholders, Return on Equity, Gross PremiumGrowth, Basic Earnings per share and Diluted Earnings per share do not include those of OAC as the postacquisition results of OAC between 23 and 31 December 2000 were considered to be not material. However,Total Assets as at 31 December 2000 included those of OAC.(4) Profit attributable to shareholders is derived after accounting for income tax and exceptional items. 1997 profitattributable to shareholders included an exceptional item of S$51.5 million.(5) With the adoption of the Singapore Financial Reporting Standard No. 10: Events after the Balance Sheet Date(previously known as Singapore Statement of Accounting Standard No. 10: Events after the Balance Sheet Date)in 2001, Dividend Proposed for the year henceforth has been accounted for as an event after the balance sheetdate. Shareholders’ Fund, Return on Equity, Net Asset Value per share and Dividend per share paid during theyear for the years 1995 to 2000 have been restated accordingly.02(6) The Stock Exchange Prices and Market Capitalisation were obtained from Bloomberg.(7) The average of the opening (1 January) and closing (31 December) balances of Shareholders’ Fund has beenused in the computation of Return on Equity. As described in Footnote (3) above, the Profit Attributable toShareholders for the year ended 31 December 2000 does not include that of OAC, hence the computation ofReturn on Equity for the year 2000 has been adjusted for the exclusion of equity from OAC (S$313.6 million)which was consolidated as at 31 December 2000.(8) The Basic Earnings per share were based on the Group’s Profit Attributable to Shareholders divided by totalpaid-up shares.(9) The total number of ordinary paid-up shares for the years 1995 to 2000 was adjusted for the bonus issue andsub-division of ordinary shares of S$1 each, which took effect from 10 May 2000 and 25 May 2000 respectively.The two events resulted in the total number of paid-up ordinary shares of S$0.50 each, to be increased from97,175,882 to 388,703,528. The Basic Earnings per share, Diluted Earnings per share, Net Asset Value pershare and Dividend per share paid during the year and Dividend per share declared for the year has beenrecomputed to account for these changes.For the year 2000, in addition to the two events, the acquisition of OAC which was effective on 23 December2000, led to a further increase in the total number of paid-up ordinary shares of S$0.50 each as at 31 December2000 from 388,703,528 to 471,290,369. As described in Footnote (3) above, the Profit Attributable toShareholders for the year ended 31 December 2000 does not include that of OAC, hence the computation ofBasic Earnings per share and Diluted Earnings per share for the year 2000 was based on 388,703,528 ordinarypaid-up shares. However, Total Assets as at 31 December 2000 included those of OAC, hence the computationof Net Asset Value per share for the year 2000 was based on 471,290,369 ordinary paid-up shares.(10) There were no dilutive or potentially dilutive shares prior to 1999.(11) Dividend cover is based on Profit Attributable to Shareholders After Income Tax before Exceptional Items dividedby net dividend.

TURNOVERS$ Billions6.54 6.566.057.88GROSS PREMIUMSS$ Billions5.685.275.065.372.442.76 2.762.204.083.932.032.16 2.082.232.593.04‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04TOTAL ASSETSS$ Billions36.26PROFIT ATTRIBUTABLE TO SHAREHOLDERSS$ Millions402.032.3527.35312.223.838.029.56 9.8210.8913.8019.1285.066.9130.376.7221.1180.1202.2233.8‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04SHAREHOLDERS’ FUNDS$ Billions2.022.32DIVIDEND PER SHARECents30.01.411.531.6317.1 17.0 17.021.00.970.760.420.470.593.5 3.34.14.7 4.5‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘0403

MICHAEL WONG PAKSHONGChairman

CHAIRMAN’SSTATEMENTI am very pleased to report that Great Eastern Holdings Limited (“GEH” or the “Company”) andits subsidiaries (collectively, the “Group” or “Great Eastern”) crossed a significant milestone,achieving for the first time a Group profit after tax exceeding S$400 million for the financialyear ended 31 December 2004 (“FY2004”).FINANCIAL RESULTSGroup profit attributable to shareholders for FY2004 was S$402.0million, an increase of 29% over the preceding year’s profit of S$312.2million. The significant increase was due partly to improved profitsfrom the insurance operations and partly to the S$71.0 million profit(the portion attributable to shareholders) arising from the disposal (the“Disposal”) of the Group’s shareholdings in Oversea-Chinese BankingCorporation Limited (“OCBC Bank”), pursuant to a selective capitalreduction exercise undertaken by OCBC Bank. Return on equity rose to18.5% from 17.1% in 2003; earnings per share improved to S$0.85from S$0.66.Pre-tax profit from life assurance operations rose by 36% to S$382.9million from S$280.7 million in 2003. Non-Participating Fund profitcontinued to be the major contributor to insurance profits, rising by 38%to S$227.1 million. Profit from the Participating Fund grew by 25% toS$106.3 million, while the Investment-Linked Fund profit increased bya significant 56% to S$49.5 million. The improvement in insuranceprofits resulted from stronger underwriting performance, improvedinvestment returns including the realised gain from the Disposal, andthe declaration of a one-off special bonus to policyholders in respectof FY2004.The Group’s general insurance operations turned in a pre-tax profit ofS$32.8 million; the 30% increase was partly a consequence of betterunderwriting performance, and partly due to higher dividend incomereceived and the release of margin-of-solvency reserve following theclosure of a small overseas branch of a subsidiary.Group pre-tax profit from investments from the Shareholders’ Fundincreased from S$91.7 million to S$93.8 million.The Group’s total assets as at 31 December 2004 grew to S$36.26billion, 12% higher than the preceding year’s S$32.35 billion. Netasset value per share improved 14% to S$4.91 as at 31 December2004, from S$4.29 a year ago.DIVIDENDSIn September 2004, we paid a first interim dividend of 7 cents togetherwith a special interim dividend of 5 cents per ordinary share of 50cents each, less 20% Singapore income tax. In February 2005, werecommended, for shareholders’ approval, a final dividend of 20 centsand a special final dividend of 3 cents per ordinary share of 50 centseach, less 20% Singapore income tax. If the recommended dividendsare approved by shareholders, the total dividend in respect of FY2004will be 35 cents per share less 20% Singapore income tax, comparedwith 24 cents per share in FY2003. The amount of dividends (net oftax) to be distributed in respect of FY2004 will be S$132.52 millioncompared with the FY2003 distribution of S$89.98 million.05

LOOKING AHEADFollowing the voluntary unconditional offer (the “Offer”) made by OCBCBank to acquire all the issued shares of GEH (other than those alreadyowned or agreed to be acquired by OCBC Bank or its subsidiaries),after the close of the Offer on 30 June 2004, GEH became a 81.1%-owned subsidiary of OCBC Bank.We now have a dedicated task force working with OCBC Bank toidentify and enhance revenue synergies and to leverage on eachother’s capabilities and strengths, in particular in bancassurance,wealth management and in cross-selling, in Singapore, Malaysia andthe region.joined with effect from 7 January 2005 as Directors of the Companyand of Great Eastern Life and Overseas Assurance Corporation. Theirwealth of experience will be of great benefit to our Group.On behalf of the Board, I would like to thank all shareholders,policyholders, customers, business partners, staff and the agency forcefor their continued loyal and unstinting support. I would also like tothank my fellow Directors for their wise counsel and guidance.The improved economic growth and operating environment in 2004in Singapore and Malaysia is expected to continue in 2005, providedgeopolitical tensions do not significantly dampen growth prospects.The Group will continue to grow its core insurance business includingidentifying and pursuing appropriate regional expansion opportunities.We remain on track to meet our 2008 financial goals.ACKNOWLEDGEMENTSMr Peter Husum resigned as a Director of the Company with effect from31 October 2004, after serving for about five years on the boards of theCompany and our Company’s two insurance subsidiaries in Singapore.On behalf of the Board, I thank him for his valuable contributions to theGroup and wish him every success in his new endeavours in Denmark.We warmly welcome three new Board members – Dr Cheong ChoongKong, Chairman and Executive Director of OCBC Bank, Mr David Conner,Executive Director and CEO of OCBC Bank, and Mr Tan Yam Pin – whoMICHAEL WONG PAKSHONGChairmanSingapore15 February 200507

BOARD OFDIRECTORSMICHAEL WONG PAKSHONG, ChairmanTAN BENG LEE, Chief Executive Officer DR CHEONG CHOONG KONG DAVID PHILBRICK CONNERHO TIAN YEE LEE SENG WEE TAN SRI DATO’ DR LIN SEE-YANPROFESSOR NEO BOON SIONG SHAW VEE MENG TAN YAM PIN

MICHAEL WONG PAKSHONG, ChairmanMr Michael Wong Pakshong was first appointed to the Board ofGreat Eastern Holdings Limited (the “Company”) on 28 September 1999,and has been Chairman of the Company since April 2000; he was lastre-appointed as a Director on 22 April 2004. Mr Wong is a Directorof The Great Eastern Life Assurance Company Limited (“Great EasternLife”) since 1983, and its Chairman since April 2000, and is Chairmanof The Overseas Assurance Corporation Limited (“OAC”) since January2001. He is also Chairman of the Company’s principal Malaysiansubsidiaries, Great Eastern Life Assurance (Malaysia) Berhad (“GELM”)and Overseas Assurance Corporation (Malaysia) Berhad (“OACM”).He is presently Chairman of Robinson & Company Limited, and SimeSingapore Limited and is Vice Chairman of Oversea-Chinese BankingCorporation Limited (“OCBC Bank”). He is also a Director of TheStraits Trading Company Limited, WBL Corporation Limited, BukitSembawang Estates Limited and Sime Darby Berhad. He was previously(up to November 2003) Chairman of The Esplanade Company Limited.Mr Wong holds a Bachelor of Arts (Hons) and a Hon LLD from theUniversity of Bristol, United Kingdom. He is also a Fellow of the Instituteof Chartered Accountants in England & Wales and a Member of theInstitute of Certified Public Accountants in Singapore.TAN BENG LEE, Chief Executive OfficerMr Tan Beng Lee was first appointed to the Company’s Board on 23November 2000; he was last re-elected on 9 May 2002. He is currentlythe Executive Director and Chief Executive Officer of the Company,Great Eastern Life and OAC and has been on the Board of Great EasternLife since November 1997, and of OAC since January 2001. He is alsoon the Board of GELM, OACM and Alpha Financial Advisers PrivateLimited and is Chairman of Straits Lion Asset Management Limited, theCompany’s asset management subsidiary. He is presently a Directorof Singapore Reinsurance Corporation Limited and Singapore HealthServices Private Limited and is a Governor of the Singapore Collegeof Insurance Limited. He was formerly President of the Life InsuranceAssociation of Singapore for a term of two years until early March 2003,and was a Board member of the Singapore Insurance Institute. Mr Tanholds a Bachelor of Science (Hons) from the University of Singapore,Master of Science from Northeastern University, USA and is a Fellow ofthe Society of Actuaries, USA.DR CHEONG CHOONG KONGDr Cheong Choong Kong was first appointed to the Board of theCompany and its principal subsidiaries in Singapore, Great Eastern Lifeand OAC, on 7 January 2005. Dr Cheong is presently Chairman andExecutive Director of OCBC Bank, and a Director of Singapore PressHoldings Limited, OCBC Management Services Private Limited andUnited Eagle Airlines Co Limited. He was previously with SingaporeAirlines Limited where he worked for 29 years until June 2003, the last19 years as its Managing Director and Chief Executive Officer and thelast held position as its Deputy Chairman and Chief Executive Officer.Dr Cheong holds a Bachelor of Science (First Class Hons in Mathematics)from the University of Adelaide and a Master of Science and a Ph.D inMathematics from the Australian National University, Australia.DAVID PHILBRICK CONNERMr David Conner was first appointed to the Board of the Companyand its principal subsidiaries in Singapore, Great Eastern Life and OAC,on 7 January 2005. Mr Conner is presently the Chief Executive Officerand Director of OCBC Bank and is a Director of OCBC Bank (Malaysia)Berhad, Chairman and Executive Director of Bank of Singapore Limited,and a Director of KTB Limited and Asean Finance Corporation Limited.He is a Council Member of the Association of Banks in Singaporeand the Advisory Council of The American Chamber of Commercein Singapore. Mr Conner was previously with Citibank N.A., wherehe worked for 25 years, including as Managing Director and MarketManager for Citibank Japan from 1999 until early 2002. He holds aBachelor of Arts from Washington University and a Master of BusinessAdministration from Columbia University, USA.HO TIAN YEEMr Ho Tian Yee was first appointed to the Company’s Board on 26December 2000 and was last re-elected on 22 April 2004. He is onthe Board of OAC and Great Eastern Life and is the Executive Directorof Pacific Asset Management (S) Private Limited. Mr Ho is presentlya Director of Fraser and Neave Limited, Singapore Exchange Limited,Times Publishing Limited, Singapore Power Limited, and SPI AustraliaGroup Pty Ltd. He had served previously on the board of SingaporeMRT Limited. Mr Ho holds a Bachelor of Economics (Hons) from thePortsmouth University, UK.09

LEE SENG WEEMr Lee Seng Wee was first appointed to the Company’s Board on28 September 1999, and was last re-appointed on 22 April 2004. Hehas been on the Board of Great Eastern Life since February 1975 and ofOAC since January 2001. Mr Lee is presently a Director of OCBC Bank,having been its Director since 1966 and its Chairman from August1995 to June 2003. He is also a Director of GIC Real Estate Pte Ltd,Lee Rubber Group of companies and Lee Foundation. Mr Lee holdsa Bachelor of Applied Science in Engineering from the University ofToronto and a Master of Business Administration from the University ofWestern Ontario, Canada.TAN SRI DATO’ DR LIN SEE-YANTan Sri Dato’ Dr Lin See-Yan was first appointed to the Company’sBoard on 28 September 1999, and was last re-elected on 22 April2004. He is also on the Board of Great Eastern Life and OAC. He ispresently Chairman of Charles River Associates Sdn Berhad and KrisComponents Berhad, and is a Director of The Straits Trading CompanyLimited, Axis Systems Holdings Limited, Fraser & Neave HoldingsBerhad, Ancom Berhad, Genting Berhad, Resorts World Berhad, WahSeong Corporation Berhad and JobStreet Corporation Berhad. He isalso a Member of NEAC (Malaysia’s National Economic Action Council)Working Group, Pro-Chancellor of Universiti Sains Malaysia, Professorof Economics (Adjunct) of Universiti Utara Malaysia, Economic Advisorto the Associated Chinese Chambers of Commerce and Industry ofMalaysia, and President of Harvard Club of Malaysia. He is Chairman,Harvard Graduate School Alumni Council at Harvard University,Regional Director for Asia Harvard Alumni Association, and Member ofVisiting Committee on Asia Studies at the University. Tan Sri Dato’ DrLin holds a BA (Hons) from the University of Malaya in Singapore andholds, from Harvard University, USA, a MPA (Finance), MA (Economics)& Ph.D (Economics). He is also a Chartered Statistician, Fellow of theRoyal Statistical Society, London, UK, Fellow (Hon) of the MalaysianInsurance Institute and Fellow of the Malaysian Institute of Bankers.PROFESSOR NEO BOON SIONGProfessor Neo Boon Siong was first appointed to the Company’s Boardon 23 November 2000 and was last re-elected on 8 May 2003. Heis also a Director of Great Eastern Life and OAC. Professor Neo is aProfessor, and a Director of Information Management Research Centre,at the Nanyang Business School, Nanyang Technological University,Singapore. He is presently a Director of OCBC Bank, Keppel Offshore& Marine Limited and Informatics Holdings Limited, and a Member ofSecurities Industry Council, Institute of Defence and Strategic StudiesGoverning Board, National Community Leadership Institute Board,Goods and Services Tax Board of Review and Income Tax Boardof Review. Professor Neo holds a Bachelor of Accountancy (Hons)from the National University of Singapore and a Master of BusinessAdministration and Ph.D from the University of Pittsburgh, USA.SHAW VEE MENGMr Shaw Vee Meng was first appointed to the Company’s Board on26 December 2000, and was last re-appointed on 22 April 2004. Hehas been a Director of Great Eastern Life since January 1978 except forthe period April 2000 to December 2000, and a Director of OAC sinceJuly 1969 and its Chairman from April 2000 to December 2000. Heis presently Chairman of The Shaw Foundation Private and The ShawOrganisation Private Limited. He was previously Chairman of HarimauInvestments Limited (until its members’ voluntary liquidation) and aDirector of Shangri-La Hotel Limited. Mr Shaw was educated at StCatherine’s College, Oxford, UK and was a Barrister at-Law, Gray’sInn, London, UK. He is a Fellow of St Catherine’s College, UK.TAN YAM PINMr Tan Yam Pin was first appointed to the Board of the Company andits principal subsidiaries in Singapore, Great Eastern Life and OAC, on 7January 2005. Mr Tan is presently a non-executive Chairman of PowerSeraya Limited, and a Director of Keppel Land Limited, BHP Steel Limited(Australia) and East Asiatic Company Limited A/S (Denmark). He is alsoa Member of the Singapore Public Service Commission since 1990.He was previously with Fraser and Neave Limited until 2002, the lastheld position being as its Managing Director from 1993 to September2002. Mr Tan holds a Bachelor of Arts (Hons) from the University ofSingapore and a Master of Business Administration from the Universityof British Columbia, Canada. He is a Fellow of the Canadian Instituteof Chartered Accountants, Canada.10

KEY EXECUTIVESOF THE GROUPTAN BENG LEEDirector & Group Chief Executive OfficerALEX FOONGManaging Director,Customer ManagementDirector & CEO, Great Eastern LifeAssurance (M) BhdJoined Great Eastern in 1996. As MD of CustomerManagement, he is responsible for the Group’smarketing and actuarial functions, including product development fordifferent markets. As CEO of GELM, he is responsible for its operations andbottom line. Was previously with John Hancock Life Insurance (M) Bhd.Qualifications: Bachelor of Science (Hons) in Mathematics, University ofMalaya; Master of Actuarial Science, Northeastern University, USA; Fellow ofSociety of Actuaries, USA; Fellow of Life Management Institute, USA; Memberof American Academy of Actuaries, USATAN HOCK LYEManaging Director, OperationsJoined Great Eastern in 1997. Responsible forthe Group’s operations in the insurance valuechain starting from New Business Underwritingup to Claims. Responsible for re-engineering theprocesses in keeping with industry changes andfor regional projects. Was previously with the Port of Singapore Authority.Qualifications: BBA Hons, University of SingaporeLOH SOOK MEEManaging Director, Finance &Corporate AffairsJoined Great Eastern in 1997. Responsible for theGroup’s financial and corporate affairs functions,as well as the Group’s property assets. Alsoresponsible for drawing up a risk managementframework for the Group. Was previously with SAFE Bintan Resort Ltd andSentosa Development Corporation.Qualifications: B of Accountancy, University of Singapore; CPA, Institute ofCertified Public Accountants of SingaporeTAN CHING GUEIManaging Director,Investment ManagementJoined Great Eastern in 2003. Responsible for theinvestment of life insurance and shareholders’funds. Also responsible for developing investmentpolicy and ensuring that asset managers adhereto them. Was previously with OCBC Bank.Qualifications: BEng Hons (Civil), National University of Singapore; MBA(Accountancy), Nanyang Technological University; Chartered Financial Analyst;CPA, Institute of Certified Public Accountants of SingaporeCHIANG BOON KONGManaging Director,Strategic Resource ManagementJoined Great Eastern in 1997. Head HR, IT andCorporate Communications, and responsible forthe change programmes and development ofhuman capital in the Group. Was previously withSingapore Press Holdings Ltd.Qualifications: BBA Hons, National University of SingaporeTAN TIAM CHAIManaging Director, China OperationsJoined Great Eastern in 2004. Responsible fordeveloping the business in China. Will be theCEO-designate of the proposed joint venturecompany in Chongqing. Was with Great EasternLife Assurance (M) Bhd for six years up to 2003.Qualifications: BSc Hons, University of Malaya; Fellow of LifeManagement InstituteA K WONGManaging Director, General InsuranceDirector & CEO, Overseas AssuranceCorporation (M) BhdJoined Great Eastern in 1994. As MD of GeneralInsurance, he is responsible for the Group’s generalinsurance operations. As CEO of OACM, he isresponsible for its operations and bottom line. Was previously with JernehInsurance Corporation Sdn Bhd.Qualifications: BSc Hons (Mechanical Engrg), University of London; Associateof the City & Guild of London Institute in Mechanical Engrg; Fellow of theChartered Insurance Institute, UK11

GOINGGREAT GUNSIt’s not just what we do. It’s how wedo it. Judging by the many accoladesawarded for our corporate governanceand disclosures, we must be doingsomething right.

REPORT ONCORPORATEGOVERNANACEGreat Eastern Holdings Limited (the “Company” or “GEH”) and its subsidiaries (collectively,the “Group”) are committed to a high standard of corporate conduct and integrity intheir business operations and dealings, integrity being one of the three core values ofthe Group.The Group adopts corporate governance practices that are in conformitywith the Code of Corporate Governance (the “Code”) incorporatedin the Listing Manual of the Singapore Exchange Securities TradingLimited (the “SGX-ST”).BOARD OF DIRECTORSBoard Composition and Balance, Board’s Conduct of itsAffairs, Roles of Chairman and Chief Executive Officer,Board’s Access to InformationBoard Composition and BalanceThe Company’s Board of Directors has overall responsibility to lead andcontrol the Company. Presently, there are 10 Directors on the Board– nine non-executive Directors and one executive Director.The non-executive Directors are Mr Michael Wong Pakshong (Chairman),Dr Cheong Choong Kong, Mr David Conner, Mr Ho Tian Yee, Mr LeeSeng Wee, Tan Sri Dato’ Dr Lin See-Yan, Professor Neo Boon Siong,Mr Shaw Vee Meng and Mr Tan Yam Pin. All of the Company’s nonexecutiveDirectors are also non-executive Directors on the respectiveboards of the Company’s principal insurance subsidiaries in Singapore– The Great Eastern Life Assurance Company Limited (“Great EasternLife”) and The Overseas Assurance Corporation Limited (“OAC”).14The executive Director and Chief Executive Officer (“CEO”) of theCompany is Mr Tan Beng Lee. He is also the CEO and Director of GreatEastern Life and OAC (which are regulated by the Insurance Act, Chapter142 of Singapore and have to comply with the regulatory requirementsgoverning insurers, including Notices issued by the Monetary Authorityof Singapore (“MAS”) from time to time).In the beginning of 2004, there were two other non-executive Directors,Mr Ooi Sin Teik and Mr Peter Husum, on the Board of the Company andof Great Eastern Life and OAC but they had resigned during the year– Mr Ooi in early January 2004 and Mr Husum in October 2004.The Board size was reviewed by the Company’s Nominating Committeein the last quarter of 2004, taking into account the scope and natureof the operations of the Company and the Group, and the fact that theCompany had since 30 June 2004 become a 81.1%-owned subsidiaryof Oversea-Chinese Banking Corporation Limited (“OCBC Bank”),following the voluntary unconditional offer (the “Offer”) made by OCBCBank for the Company in May 2004. The Company’s Board size wasincreased to 10 with the nomination and subsequent appointment ofthree new Directors, Dr Cheong Choong Kong, Mr David Conner andMr Tan Yam Pin, with effect from early January 2005. The Board is ofthe view that the present Board size of 10 is appropriate for effectivedecision making.

The independence of the Directors is set out below under the sectionon “Nominating Committee”.Members of the Board come from diverse background and qualifications,with a wide range of business and management experience, knowledgeand capabilities. Collectively as a group, they provide the necessarybusiness acumen and core competencies, including insurance, bankingand other financial services, actuarial science, strategic planning,finance and accounting, investment and asset management, consumermarketing, real estate and property development.Information on each individual Director is set out on pages 9 to 10 ofthis Annual Report. The diversity of experience, skills and competenciesof the members of the Board enhances the effectiveness of the Board indischarging its responsibilities.Roles of Chairman and CEOThe roles of the Chairman and the CEO are distinct and separate, withclear division of responsibilities between them to ensure an appropriatebalance of authority, increased accountability and greater capacity ofthe Board for independent decision making. The Chairman and theCEO are not related to each other.The responsibilities of the Chairman include fostering Board effectivenessand assisting in overseeing compliance with guidelines on corporategovernance. In consultation with the CEO, the Chairman oversees thepreparation of the agenda of Board meetings and the scheduling ofmeetings to enable the Board to perform its duties responsibly. TheChairman also exercises control over the quality, quantity and timelinessof the flow of information between Management and the Board. TheCEO’s responsibilities include overall executive responsibilities overthe Group’s business operations and directions, risk management,operational and organisational efficiency and implementation of Boardapprovedpolicies and decisions.Board’s conduct of its affairsThe Board’s responsibilities include, but are not limited to, thefollowing – overseeing the formulation of the Group’s long-termstrategic objectives and directions and business strategies, reviewingand approving the Group’s annual business plans and budget, majorprojects and investments, and monitoring the achievement of theGroup’s corporate objectives and financial performance. The Boardoversees the management of the Group’s business affairs to ensure thatit is in accordance with policies and strategies approved by the Board,and regularly reviews the financial performance of the Group, includingapproving the quarterly financial results for the Group’s quarterlyannouncements. The Board provides general oversight over the Group’scorporate governance, internal controls and risk management.Other matters that require the Board’s approval include corporaterestructuring, mergers and acquisitions, major investments or projects,acquisitions and disposals of major properties and assets, corporatepolicies relating to key areas of operations and interested persontransactions of a material nature.The Board usually meets once every two months; additional meetingsare convened as and when required. In 2004, the Board held a total ofnine board meetings. The Board has established specialised committees(“Board Committees”) to assist it to more effectively carry out itsresponsibilities. These Board Committees comprise the NominatingCommittee, the Remuneration Committee, the Audit Committee,the Risk Committee and Committees of Independent Directors. Thenumber of meetings of the Board and Board Committees held in 2004and Directors’ attendance at these meetings are set out on pages 22and 23 of this Annual Report.Board’s access to informationOn an ongoing basis, Management provides the Board with informationand reports which are complete and adequate, in particular, prior toBoard meetings. Regular reports to the Board from the Company’s CEOand the respective CEOs of the principal subsidiaries within the Groupinclude the monthly financial performance of the Company and of itsprincipal subsidiaries, with explanations for material variances betweenactual results and the business plans/budget.Management usually provides background explanatory informationfor matters that require the Board’s decision. This may also be in theform of briefings to the Directors or formal presentations where seniormanagement executives or external consultants engaged on specificprojects (if any) are in attendance.The Board is apprised on a timely basis of relevant regulatory changesand other major changes or events in the industry. From time totime, the Company organises talks and presentations by externalprofessionals, consultants and advisers on relevant topics such asupdates on enterprise risk management, changes in legislation andaccounting standards, in particular those affecting the insuranceindustry, insurance guidelines and regulations, developments in theinsurance industries locally and in other developed countries, and onthe impact and implication that such developments may have on theGroup and on the Directors’ responsibilities.15

For newly-appointed Directors to the Board, Management organisesfamiliarisation/orientation briefings to present, inter alia, the Group’sprincipal activities and business operations (in particular, the insurancebusiness and practices, accounting by insurance and other fundsand regulatory requirements), the Group’s governance practices andenterprise risk management.The Board has separate and independent access to the Group CompanySecretary and to other senior management executives of the Companyand of the Group at all times in carrying out its duties. The GroupCompany Secretary attends all Board meetings and ensures thatappropriate Board procedures are followed and that applicable rulesand regulations are complied with.The Board takes independent professional advice as and whennecessary to enable it or the independent Directors to discharge theirrespective duties effectively, and the cost of such professional advice isborne by the Company and the Group, as applicable.BOARD COMMITTEESNOMINATING COMMITTEEBoard Membership (and Independent Directors),Board PerformanceComposition of Nominating CommitteeThe Nominating Committee (the “NC”) presently comprises fiveDirectors – Mr Michael Wong Pakshong (Chairman), Mr Lee Seng Wee,Mr Shaw Vee Meng, Mr Tan Beng Lee and Mr Tan Yam Pin (appointedeffective 7 January 2005). The majority of the NC members, includingthe Chairman, are non-executive independent Directors. The NC isguided by Board-approved written terms of reference setting out itsresponsibilities, which include the nomination and re-nomination ofDirectors, determination of Directors’ independence, and overseeingthe assessment of the performance of the Board and contribution byindividual Directors to the effectiveness of the Board.Board membershipThe NC makes recommendations and nominates the appointment ofnew Directors to the Board, and re-nominates Directors taking intoaccount each Director’s contribution and performance. Directors ofthe Company are required to retire by rotation in accordance withthe Company’s articles of association and submit themselves for16re-nomination and re-election at regular intervals, at least onceevery three years. At each Annual General Meeting (“AGM”) of theCompany, one-third of the Directors retire by rotation, being those whohave been longest in office since their last re-election or appointment.Such retiring Directors are eligible for re-election.At the end of 2004, the NC, after due review, was of the view thatDirectors with multiple board representations had been able to givesufficient time and attention to the affairs of the Company andthe Group in 2004, and had adequately carried out their dutiesas Directors.Directors appointed to the Board of the Company’s insurancesubsidiaries in Singapore and Malaysia also require the prior approvalof, and have been duly approved by, the respective insurance regulatoryauthorities in Singapore and in Malaysia.Key information regarding the Directors, including their academic andprofessional qualifications, first appointment as Director, date of last reelectionor re-appointment as Director, directorships and chairmanships,both present and held over the preceding three years in other listedcompanies and other major appointments are set out on pages 9 to 10of this Annual Report. Directors’ shareholdings in the Company and inthe Company’s parent company, OCBC Bank, and share options grantedto the executive Director to-date are disclosed in the Directors’ Report.Non-executive Directors are not granted share options. The Directors donot hold shares in the Company’s subsidiaries.Determination of independence of DirectorsOne of the responsibilities of the NC is to review the independenceof the Directors and annually determine whether or not a Directoris independent.For 2004, the non-executive Directors considered by the NC tobe independent, having regard to the guidelines in the Code, areMr Michael Wong Pakshong, Tan Sri Dato’ Dr Lin See-Yan, Mr PeterHusum, Mr Shaw Vee Meng and Mr Ho Tian Yee. A sixth non-executiveDirector, Professor Neo Boon Siong, who is a professor of the NanyangBusiness School, Nanyang Technological University, Singapore hadbeen determined by the NC in 2003 to be non independent. This wasbecause he provided consulting services to the Company and its principalinsurance subsidiaries in Singapore and Malaysia in 2003 and was paidfees totalling about S$340,000 for the consulting services rendered.He assisted the Group in the development of an effective framework

and tool for implementing business strategies and measurements forthe achievement of strategies in business performance (an area inwhich he has expert knowledge and experience). In 2003, he alsoconducted a series of seminars and workshops for the managementstaff of the Group’s insurance subsidiaries and provided facilitationand consultation services in the development of such framework, tooland measurements.Professor Neo completed his consulting services by the end of 2003 andsince then had ceased to render any further consulting services to theGroup. In accordance with the guidelines in the Code, the NC determinedthat Professor Neo continued to be a non-independent Director in 2004,but would be considered as an independent Director in 2005.In respect of the three new Directors who joined the Board with effectfrom 7 January 2005, the NC is of the view that Dr Cheong ChoongKong and Mr David Conner, both being executive Directors of OCBCBank, are considered as non-independent Directors on the Board;Mr Tan Yam Pin is considered an independent Director. Accordingly,the NC nominated Dr Cheong as a member of the RemunerationCommittee, Mr Conner as a member of the Risk Committee andMr Tan Yam Pin as a member of the Nominating Committee and of theAudit Committee. The Board approved the NC’s recommendations andthe appointments of these Directors to the respective Board Committeestook effect from 7 January 2005.In addition to the determination of independence of Directors by the NCas set out above, the independence of Directors in relation to certainspecific proposed transaction or corporate action is determined from timeto time based on the respective Directors’ declaration of their interestsin the proposed transaction and, where applicable, also on the adviceof the Company’s legal adviser engaged to advise on such transaction.The duties carried out by the independent Directors in 2004 are set outbelow under the section on “Committees of independent Directors”.Board performanceThe NC also has the responsibility to decide how the Board’sperformance may be evaluated and to propose objective performancecriteria for assessing the effectiveness of the Board as a whole and thecontribution by each individual Director.Since 2002, the Group implemented the Board-approved evaluationprocess and performance criteria to assess the performance of the Boardand contribution by individual Director. The same evaluation process wascontinued in 2004 with some minor enhancement to certain evaluationcriteria as approved by the NC. The assessment process involves andincludes inputs from all the Board members, applying the performancecriteria recommended by the NC and approved by the Board previously.The Directors’ inputs are collated and reviewed by the Chairman ofthe NC, who presents a summary of the overall assessment to the NCfor review. Areas where the Board’s performance and effectivenesscould be enhanced and recommendations for improvement are thensubmitted to the Board for discussion and for implementation.REMUNERATION COMMITTEEProcedures for Developing Remuneration Policies,Level and Mix of Remuneration, Disclosure on RemunerationComposition of Remuneration CommitteeThe Remuneration Committee (the “RC”) presently comprises five nonexecutiveDirectors – Mr Ho Tian Yee (Chairman of the RC), Mr MichaelWong Pakshong, Professor Neo Boon Siong, Mr Shaw Vee Meng andDr Cheong Choong Kong (appointed effective 7 January 2005). Themajority of the RC members, including the Chairman of the RC, areindependent Directors. The RC members are knowledgeable in the fieldof executive compensation, and also have access to expert advice fromexternal independent compensation consultants, where necessary.Level and mix of remunerationOne of the responsibilities of the RC is to recommend to the Boarda framework of remuneration for the Board and senior managementexecutives, and to determine the specific remuneration packages forthe CEO of the Company and the CEOs of the Company’s principalsubsidiaries. Aspects of remuneration considered by the RC include fees,salaries, allowances, bonuses, share options and other compensationsand benefits in kind. The RC’s recommendations are submitted forendorsement by the Board. No Director is involved in deciding hisown remuneration. Directors’ fees are recommended by the Board forapproval at the Company’s AGM.In 2004, the RC reviewed the existing framework of Directors’remuneration as approved by the Board in the previous year; nosignificant changes were recommended for the non-executive Directorswho are paid Directors’ fees which take into account contribution of theDirectors, attendance at meetings, effort and time spent, the respectiveresponsibilities of the Directors, and the need to pay competitive feesto attract, retain and motivate the Directors. Directors’ fees computedon this basis for 2004 have been reviewed by the RC and endorsed bythe Board for approval at the AGM to be held in March 2005.17

The CEO (who is also an executive Director of the Company) is not paidDirector’s fee but an annual remuneration package. In respect of theremuneration package for the CEO of the Company and the respectiveCEOs of the Company’s principal subsidiaries and the Group’s seniormanagement executives, the Board, having approved the overallframework of remuneration, delegates to the RC the responsibility todetermine and review annually their specific remuneration packages,comprising basic salaries, annual increments, performance bonuses,share options and other benefits. Key decisions of the RC are submittedto the Board for endorsement/approval.The overall remuneration package of the CEO of the Company andof the other senior management executives of the Group consists ofa fixed component for the year, the basic salary which is subject toannual review and annual increment, and a variable component thatincludes the variable bonus which is performance-based, and the grantof share options pursuant to the Great Eastern Holdings Executives’Share Option Scheme (“Option Scheme”) which takes into account,inter alia, the eligible participants’ performance, potential for futuredevelopment and contribution to the Group.The variable component of the remuneration package is performancebased,having regard to the financial performance of the Group asa whole, performance of the respective principal subsidiaries wherethe senior management executives are employed, and the individualperformance of the senior management executives. The respectiveremuneration packages are reviewed annually by the RC to ensure thatthey are market competitive and that rewards are commensurate withcontributions and performance.The RC administers the Option Scheme, assisted by the Group CompanySecretary. Members of the RC have not been granted share options in2004 or in the preceding years. Details of the Option Scheme and asummary of the options granted and exercised to-date are disclosed inthe Directors’ Report to the financial statements on pages 47 to 49 of thisAnnual Report. No share options were granted in 2004 in view of OCBCBank’s Offer for the Company. Further details are set out in the Directors’Report. The alternative recommended by the external compensationconsultants in lieu of the grant of options in 2004 was reviewed andapproved by the RC and also approved by the Board in 2004.Disclosure on RemunerationDirectors’ remuneration is disclosed in Note 8 to the financialstatements, set out on page 72 of this Annual Report. The breakdown(in percentage terms), showing the level and mix of each Director’s18remuneration is set out on page 24 of this Report. In respect of therecommendation in the Code to disclose the remuneration of the topfive key executives of the Group (who are not Directors of the Company),it has been decided, after very careful consideration and weighing thepros and cons of making the disclosure and taking into account thepossible competitive pressures that would result from the disclosure,not to make such disclosure for the time being.AUDIT COMMITTEEAccountability, Internal Controls, Internal AuditComposition of Audit CommitteeThe Audit Committee (the “AC”) presently comprises five non-executiveDirectors – Mr Michael Wong Pakshong (Chairman), Professor Neo BoonSiong, Tan Sri Dato’ Dr Lin See-Yan, Mr Ho Tian Yee and Mr Tan YamPin (appointed effective 7 January 2005). Mr Peter Husum was also amember of the AC until his resignation in October 2004. All the presentAC members are independent Directors. In FY2004, the majority of theAC members were independent; Professor Neo was not consideredindependent, for the reasons described above under the section on“Determination of independence of Directors”.The AC operates within the Board-approved terms of reference, whichset out the AC’s authority and duties, and carries out functions prescribedin Section 201B(5) of the Companies Act, Chapter 50 and in the Code.Accountability, Internal Controls, Internal AuditThe Board is accountable to the shareholders while Management isaccountable to the Board. Management provides the Board withmanagement accounts of the principal insurance subsidiaries andperiodic financial updates on the performance and position of theGroup, and also reports on the operation of each subsidiary and onsignificant events that have occurred in or affecting the industry.A sound internal control system has been set up by Management andcontinuously enhanced as applicable to ensure accountability and tosafeguard shareholders’ investments and the assets of the Companyand the Group.The internal audit function is independent of the activities it audits. TheHead of Internal Audit’s primary line of reporting is to the Chairmanof the AC, and reports administratively to the CEO. Resources havebeen made available to the AC to enable it to discharge its functionsproperly. The AC is empowered to conduct or authorise investigationsinto any matter within its scope of responsibility.

Principal functions performed by Audit CommitteeThe AC held a total of six meetings in 2004; attendance of the ACmembers at these meetings is disclosed on page 22 of this Report.The internal and external auditors were present at these meetings andthe CEO of the Company and the appropriate senior managementexecutives were also present to provide explanations where applicableto audit points discussed. The AC, in performing its functions, alsomeets annually with the internal and external auditors without thepresence of Management.Functions performed by the AC included the following:1 reviewed with the internal and external auditors –1.1 their audit plans, their evaluation of the system of internalcontrols, their audit findings and Management’s responsesto those findings;1.2 the effectiveness of material internal controls, includingfinancial, operational and compliance controls and overallrisk management of the Company and the Group; and1.3 the adequacy of the internal audit function, and the scopeand results of the internal audit procedures;2 reviewed with the external auditors –2.1 their scope and overall audit procedures and costeffectiveness, and their independence and objectivity takinginto consideration various factors including the nature andvolume of non-audit services provided by them;2.2 the audited financial statements of the Company and theGroup for the financial year for submission to the Board forconsideration and approval; and2.3 the implications and impact on the financial statementsof proposed implementation of new accounting standards,changes in accounting policies and regulatory requirements;3 nominated the external auditors for re-appointment for theensuing financial year; and4 reviewed interested person transactions and ascertained thatthe transactions were at arms’ length basis, on normal commercialterms and not prejudicial to the interests of the Company, itsminority shareholders and other relevant stakeholders.The AC has full access to, and the co-operation of, Management andthe internal auditors and has full discretion to invite any Director orsenior management executive to attend its meetings. The auditors,both internal and external, have unrestricted access to the AC.In the course of performing its functions, the AC is satisfied:(a) with the adequacy of the internal audit functions and the resourcesof the internal audit, which includes a number of certified publicaccountants in its audit team;(b) with the effectiveness of the Group’s key internal controls,including financial, operational and compliance controls andoverall risk management;(c) that the internal audit functions have met the Standards for theProfessional Practice of Internal Auditing set by The Institute ofInternal Auditors, and the Internal Audit has appropriate standingwithin the Company and the Group; and(d) that the nature and extent of the non-audit services providedby the external auditors would not affect their independence asexternal auditors of the Company.COMMUNICATION WITH SHAREHOLDERSThe Company places great importance on regular, effective and faircommunication with shareholders. The Company makes quarterlyannouncement of the financial results of the Company and the Groupwithin the time frame prescribed in the Listing Manual of the SGX-ST, accompanied by a balanced and comprehensive assessment ofthe performance and position of the Company and the Group. TheCompany’s Annual Report, containing the annual financial statementsof the Company and the Group, also contains other pertinentinformation and disclosures, including a review of the operationsand activities carried out during the year, to enable shareholders andinvestors to have a better understanding of the Group’s business andperformance. The Company’s Annual Report, announcement of resultsand other pertinent announcements and disclosures, including dividenddeclaration, notice of books closure and notice of AGM are transmittedvia SGXNET (previously via Masnet) to SGX-ST and are also posted onthe Company’s website.The Company’s Chairman and its CEO meet with the press andinvestment analysts to brief them on the financial results announced.Press release and relevant materials handed out to the press and theinvestment analysts are also webcasted to SGX-ST and posted on theCompany’s website to ensure fair disclosure of the information toshareholders and the public. Shareholders and the public can accessthe website of the Company for information, including the Company’s19

announced financial results, materials presented at briefings to themedia and financial analysts, other media releases and other corporateinformation on the Company. The Company has investor relationspersonnel who communicate with the Company’s investors andanalysts on a regular basis and attend to their queries.The Company’s Annual Report, containing the notice of AGM, is sentto every registered shareholder of the Company, giving the requisitenotice for the AGM. Notice of AGM is also published in the Singaporenewspapers. The Company provides ample opportunity for shareholdersto participate effectively and to communicate their views and vote atthe Company’s AGM or at any extraordinary general meeting (“EGM”).The Company’s articles of association provide that shareholders mayappoint one or two proxies to attend the AGM and/or EGM and to votein their stead.For AGMs and EGMs, separate resolutions are set out on distinct issues,such as proposed Directors’ fees, proposed dividend or proposed majorcorporate action or transaction, for approval by the shareholders. TheBoard members and the chairpersons of all Board Committees arepresent and available to address queries from shareholders. The externalauditors and the Company’s legal adviser are also in attendance atthese meetings.OTHER BOARD COMMITTEES CONTRIBUTING TOENHANCEMENT OF CORPORATE GOVERNANCERISK COMMITTEEEnterprise Risk ManagementThe Risk Committee (“RiC”) was established in September 2003. Itspresent members are Mr Michael Wong Pakshong (Chairman), Mr HoTian Yee, Mr Tan Beng Lee, Professor Neo Boon Siong and Mr DavidConner (appointed effective 7 January 2005).The RiC reviews the Group’s overall risk management framework beforesubmission for Board’s approval and also oversees the Group’s riskmanagement initiatives. The Board-approved terms of reference for theRiC include overview and periodic review of policies on asset liabilityand investment management, overview on enterprise risk management,and approval of significant investment, property and other financialtransactions that exceed the authorisation limits of the ManagementCommittees that the RiC oversees – the Asset Liability and InvestmentCommittee and the Credit Risk Committee. Investment-related activities20of material consequence are reviewed by the RiC and, where applicable,reported to the Board for information or for endorsement. The RiC helda total of five meetings in 2004, and members’ attendance at themeetings is disclosed on page 22 of this Report.With regulatory changes that require the Company’s insurancesubsidiaries in Singapore to implement the risk based capital frameworkin 2005 adopting a risk based approach in their operations, the Grouphas continued to enhance its risk management processes, includingthe establishment and implementation of risk management frameworkand measurements. The Group had engaged external risk managementconsultants to assist it to develop the Group’s risk managementframework and measurements, benchmarking against best practices inthe global financial services industry. Further details on the Group’s riskgovernance and management are set out in Note 26 to the financialstatements, on pages 93 to 99 in this Annual Report.COMMITTEES OF INDEPENDENT DIRECTORSCommittees of independent Directors are set up from time to time toconsider proposed transactions which are material and which certainmembers of the Board have, or are deemed to have an interest in andtherefore have to abstain from the deliberation and the decision-makingon the matter or the proposed transaction, including interested persontransactions (“IPTs”) under Chapter 9 of the Listing Manual of the SGX-ST, after due review of the proposed IPTs by the Audit Committee.The composition of the three committees of independent Directors (the“Independent Directors”) set up in 2004 and their meetings held in2004, which totalled nine meetings, are set out on page 23 of thisAnnual Report.Included in the transactions considered by the Independent Directorsin 2004 was the then proposed disposal (the “Disposal”) by the Groupof its entire stockholdings of about 6.2 per cent in the share capitalof OCBC Bank pursuant to a selective capital reduction exercise to beundertaken by OCBC Bank. The Disposal was considered an IPT underChapter 9 of the Listing Manual. Mr Michael Wong Pakshong andMr Lee Seng Wee, who are also Directors of OCBC Bank, abstainedfrom all deliberations and from making any recommendations on theDisposal. The Independent Directors, having considered carefully theproposed transaction, including the benefit of the Disposal to theGroup and the opinions of the Company’s Audit Committee and ofthe independent financial adviser appointed to advise the IndependentDirectors on the transaction, opined that the Disposal was on

normal commercial terms and was not prejudicial to the interests ofthe Company and its minority shareholders and recommended thatshareholders vote in favour of the ordinary resolution approving theDisposal. The shareholders subsequently at the Company’s EGM heldon 22 April 2004 approved the Disposal.Another transaction that was considered very carefully by the IndependentDirectors in 2004 was OCBC Bank’s Offer. The Independent Directors’recommendations, made after careful consideration of the advice ofthe appointed financial adviser, were set out in the Company’s circularto shareholders dated 27 May 2004 in relation to the Offer.MANAGEMENT COMMITTEESASSET LIABILITY COMMITTEE; CREDIT RISK COMMITTEEA number of Management Committees, including the following whichare not Board committees, have been set up and their responsibilitiesinclude monitoring and managing more effectively the risks within theGroup. Certain key information is set out below; further details are inNote 26 to the financial statements.ASSET LIABILITY COMMITTEE (“ALC”)The present members of the ALC consist of the following seniormanagement executives – Mr Tan Beng Lee (Director and Chief ExecutiveOfficer) as Chairman of ALC, Mrs Loh Sook Mee (Managing Director,Finance & Corporate Affairs), Mr Tan Ching Guei (Managing Director,Investment Management), Mr Daniel Chan (Executive Director, StraitsLion Asset Management Limited), Mr Winson Siu (Appointed Actuaryof Great Eastern Life and OAC) and Mr Joachim Toh (Head, InvestmentManagement of Great Eastern Life and OAC). The principal duties ofALC include the formulation of investment strategy, reviewing assetmix, pricing/re-pricing of insurance products and appropriate asset/liability matching, periodic review of approved investment policy andrecommending changes required, ensuring that investment policiesrelating to the insurance funds of Great Eastern Life and OAC areconsistent with the asset-liability management strategies required tosupport any new insurance products; implementation of investmentpolicy, review and approve, within given authorised limits, investmentproposals, asset allocation and related risk management activities, andreview of performance of the investment portfolio and performance offund managers. The ALC reports to the RiC on all its major decisions.CREDIT RISK COMMITTEE (“CRC”)The present members of the CRC consist of Mr Tan Beng Lee as Chairmanof CRC, Mrs Loh Sook Mee, Mr Tan Ching Guei, Mrs Elizabeth Teoh(Group Company Secretary and Executive Vice President, Secretariatand Legal (Corporate)) and Mr Joachim Toh. The in-house treasury andloan officers of Great Eastern Life and OAC are in attendance at allthe meetings to present their loan and related investment proposals.The principal duties of CRC are to monitor credit risk managementacross all categories of investments in accordance with the creditpolicy guidelines and authorised limits set, to review, evaluate andapprove, within given authorised limits, loans and related investmentproposals after evaluating the underlying risks and net exposures. TheCRC complements the ALC in managing risks arising primarily from thelending activities of Great Eastern Life and OAC within the regulatoryguidelines. The CRC reports to the RiC on all its major decisions.DEALINGS IN SECURITIESThe Company has adopted internal compliance guidelines in accordancewith the Best Practices Guide set out in the Listing Manual of SGX-STin relation to dealings in the Company’s shares by its officers. Directorsand executives of the Company and of the Group are advised, andregularly reminded, not to deal in the Company’s shares one monthbefore the Company’s announcement of its financial results for the yearand two weeks before the announcement of its quarterly results, not todeal in the Company’s shares for short term considerations, be mindfulof the law on insider trading and to ensure that their dealings are incompliance with the law.21

NUMBER OF MEETINGS OF BOARD AND BOARD COMMITTEES IN 2004 AND DIRECTORS’ ATTENDANCETotal Number of MeetingsHeld AttendedTotal Number of MeetingsHeld AttendedBoardMichael Wong Pakshong, Chairman 9 9Tan Beng Lee, Chief Executive Officer 9 9Ho Tian Yee 9 8Lee Seng Wee 9 9Tan Sri Dato’ Dr Lin See-Yan 9 7Professor Neo Boon Siong 9 9Shaw Vee Meng 9 8Peter Husum (1) 8 (1) 8 (1)Ooi Sin Teik (2) 1 (2) 1 (2)Audit CommitteeMichael Wong Pakshong, Chairman 6 5 (3)Ho Tian Yee 6 5Tan Sri Dato’ Dr Lin See-Yan 6 6Professor Neo Boon Siong 6 6Peter Husum (1) 5 (1) 5 (1)Nominating CommitteeMichael Wong Pakshong, Chairman 4 4Lee Seng Wee 4 4Shaw Vee Meng 4 4Tan Beng Lee 4 4Peter Husum (1) 3 (1) 3 (1)Remuneration CommitteeHo Tian Yee, Chairman 3 3Michael Wong Pakshong 3 3Professor Neo Boon Siong 3 3Shaw Vee Meng 3 3Ooi Sin Teik (2) – (2) – (2)Risk CommitteeMichael Wong Pakshong, Chairman 5 5Ho Tian Yee 5 5Professor Neo Boon Siong 5 5Tan Beng Lee 5 5Ooi Sin Teik (2) – (2) – (2)Notes(1)Resigned with effect from 31 October 2004(2)Resigned with effect from 12 January 2004(3)Mr Wong recused himself from the meeting where he was considered as not independentin respect of the transaction considered at that meeting.22

NUMBER OF MEETINGS OF BOARD AND BOARD COMMITTEES IN 2004 AND DIRECTORS’ ATTENDANCE (CONTINUED)Committees of Independent DirectorsTotal Number of MeetingsI Held AttendedTotal Number of MeetingsIIII Held AttendedHo Tian Yee, Chairman 3 3Tan Sri Dato’ Dr Lin See-Yan 3 3Professor Neo Boon Siong 3 3Shaw Vee Meng 3 3Peter Husum (1) 3 3Ho Tian Yee, Chairman 3 3Tan Sri Dato’ Dr Lin See-Yan 3 2Shaw Vee Meng 3 2Total Number of MeetingsII Held AttendedHo Tian Yee, Chairman 3 3Tan Sri Dato’ Dr Lin See-Yan 3 3Professor Neo Boon Siong 3 3Shaw Vee Meng 3 323

REQUIREMENTS OF THE LISTING MANUAL OF THE SINGAPORE EXCHANGE SECURITIES TRADING LIMITED1 DIRECTORS’ REMUNERATIONDirectors’ remuneration for the year ended 31 December 2004 is disclosed in Notes 8 and 8.1 to the financial statements on page 72 of thisAnnual Report; the breakdown in percentage terms and within remuneration bands of S$250,000 is as follows:NON–EXECUTIVE DIRECTORS (1) EXECUTIVE DIRECTORSVariable bonus &Directors’ Other compensation/fees benefits Salary other benefits Total% % % % %Below S$250,000Michael Wong Pakshong 93 7 – – 100Ho Tian Yee 100 – – – 100Lee Seng Wee 100 – – – 100Tan Sri Dato’ Dr Lin See-Yan 100 – – – 100Professor Neo Boon Siong 100 – – – 100Shaw Vee Meng 100 – – – 100Peter Husum (2) 100 – – – 100Ooi Sin Teik (2) 100 – – – 100S$1,250,000 to S$1,499,999Tan Beng Lee – – 39 61 100(1)Non-executive Directors are paid Directors’ fees; the amount payable in respect of the financial year ended 31 December 2004 totalled about S$634,000, subject to the approval ofshareholders at the Annual General Meeting.(2)Mr Ooi Sin Teik resigned in January 2004; Mr Peter Husum in October 2004.2 INTERESTED PERSON TRANSACTIONSMajor interested person transactions (“IPTs”) effected in 2004:Aggregate value of IPTsAggregate value of(excluding transactions less than S$100,000 andIPTs, conducted undertransactions listed in the exceptions shareholders’ mandate pursuantName of interested person pursuant to Rule 915 of the Listing Manual) to Rule 920 of the Listing ManualS$millionS$millionOversea-Chinese Banking Corporation Limited (“OCBC Bank”) 991.5 (1) NA(1)The S$991.5 million is the aggregate amount of cash consideration received from OCBC Bank in respect of the Disposal by three of the Company’s insurance subsidiaries of atotal of 80,192,220 OCBC Bank stock units pursuant to a selective capital reduction exercise undertaken by OCBC Bank in 2004. Further details are set out in Note 1 to thefinancial statements on page 60 of this Annual Report.3 OTHER INFORMATION3.1 Since the end of the previous financial year, the Company and its subsidiary companies did not enter into any material contractinvolving interests of Directors or controlling shareholders and no such contract subsists as at the end of the financial year, save asdisclosed in the Directors’ Report and in the financial statements.3.2 The remuneration of an employee of the Group who is an immediate family member of the Chairman is within the remuneration bandof > S$150,000 and

CORPORATE INFORMATIONGREAT EASTERN HOLDINGS LIMITED(COMPANY REGISTRATION NO. 199903008M)(INCORPORATED IN THE REPUBLIC OF SINGAPORE)BOARD OF DIRECTORSMr Michael Wong Pakshong, ChairmanMr Tan Beng Lee, Chief Executive OfficerDr Cheong Choong KongMr David Philbrick ConnerMr Ho Tian YeeMr Lee Seng WeeTan Sri Dato’ Dr Lin See-YanProfessor Neo Boon SiongMr Shaw Vee MengMr Tan Yam PinNOMINATING COMMITTEEMr Michael Wong Pakshong, ChairmanMr Lee Seng WeeMr Shaw Vee MengMr Tan Beng LeeMr Tan Yam PinREMUNERATION COMMITTEEMr Ho Tian Yee, ChairmanMr Michael Wong PakshongDr Cheong Choong KongProfessor Neo Boon SiongMr Shaw Vee MengREGISTERED OFFICE1 Pickering Street #16-01Great Eastern CentreSingapore 048659Telephone: (65) 6248 2846Facsimile: (65) 6438 3889Website: www.Lifeisgreat.com.sgEmail: wecare@Lifeisgreat.com.sgSHARE REGISTRARM & C Services Private Limited138 Robinson Road #17-00The Corporate OfficeSingapore 068906Telephone: (65) 6223 3036AUDITORSErnst & Young10 Collyer Quay #21-01Ocean BuildingSingapore 049315Partner In ChargeMr Mak Keat MengAUDIT COMMITTEEMr Michael Wong Pakshong, ChairmanMr Ho Tian YeeTan Sri Dato’ Dr Lin See-YanProfessor Neo Boon SiongMr Tan Yam PinRISK COMMITTEEMr Michael Wong Pakshong, ChairmanMr David Philbrick ConnerMr Ho Tian YeeProfessor Neo Boon SiongMr Tan Beng LeeGROUP COMPANY SECRETARYMrs Elizabeth Teoh Pek Har25

GOINGPLACESThe world is our oyster. As the marketleader in Singapore and Malaysia, weaim to be the choice financial serviceprovider in the region and beyond.

CEO’SREPORTThe Group achieved record earnings in 2004. Net Profit After Tax increased by 29% from$312.2 million in 2003 to $402.0 million in 2004. Even after excluding the $71.0 millionafter-tax profit on the sale of OCBC Bank shares through a Selective Capital Reduction (SCR)exercise by OCBC Bank, the increase in Net Profit After Tax was 6% to $331.0 million.Gross Profit before Expenses and Tax increased by 29% from $425.9 million to $548.9million. Excluding the $89.9 million pre-tax profit from OCBC Bank’s SCR, Gross Profitbefore Expenses and Tax increased by 8% to $459.0 million. Significant increases in earningscame from insurance operations and fee income.In S$ millions 2003 2004 2004*Participating Fund 84.8 106.3 106.3Non-Participating Fund 164.1 227.1 172.0Investment-Linked Fund 31.8 49.5 49.5General Insurance Fund 25.2 32.8 32.8Profit from Insurance Operations 305.9 415.7 360.6Profit from Shareholders’ Fund Investments 91.7 93.8 59.0Fees and Other Income 28.3 39.4 39.4Gross Profit before Expenses and Tax 425.9 548.9 459.0* excluding $89.9 million on sale of OCBC Bank shares through the SCRIMPACT OF FINANCIAL MARKETS ON OUR PERFORMANCE2004 was a good year for equity markets in the region, especially in thesecond half of the year. The STI increase of 17% to 2066 and the KLCIincrease of 14% to 907 had a positive impact on our earnings throughrealised gains of our equity portfolio in the Non-Participating Fund. TheInvestment-Linked Fund was also positively impacted with increasesin new business premiums and asset management fee income frominvestment-linked products.Interest rates decreased in 2004 after increasing significantly during thesecond half of 2003. The five-year swap rate in Singapore decreasedby 67 basis points to 2.28%, while the five-year swap rate in Malaysiadecreased by 102 basis points to 4.23%. This decline had no significantearnings impact.28In 2004, the Singapore Dollar (SGD) strengthened against the US Dollar(USD) by 3.6% to 1.6317. With the Malaysian Ringgit (MYR) peggedto the USD, a strengthening of the SGD relative to the USD impliesan equivalent strengthening of SGD relative to MYR. As a result, thecontribution by our Malaysian operations in SGD terms, both to ourearnings as well as Embedded Value, has dropped.STRENGTHENING OUR FINANCIAL POSITIONIn addition to posting record earnings, the Group continued tostrengthen its financial position in 2004. The Life Insurance FundSurplus and the Shareholders’ Fund which are available to providefinancial security to our policyholders experienced healthy growth. TheLife Insurance Fund Surplus grew by 227% from $1.49 billion in 1999

6.0STRONG FINANCIAL POSITION5.04.87(In SGD billions)4.03.02.01.01.490.971.641.412.761.532.381.634.022.022.320.01999 2000 2001 2002 2003 2004Life Insurance Fund SurplusShareholders’ Fundto $4.87 billion in 2004, and by 21% from $4.02 billion in 2003 to$4.87 billion in 2004. The Shareholders’ Fund grew by 139% duringthe same five-year period from $0.97 billion to $2.32 billion, and by15% from $2.02 billion in 2003 to $2.32 billion in 2004.INSURANCE OPERATIONSThe Group’s gross premium income totalled $5.38 billion in 2004, anincrease of 6% from $5.06 billion in 2003.In Singapore, the Group’s new business premium sales increased from$1.96 billion to $2.22 billion. We continued to be the market leaderin the life insurance industry with a 27.8% market share in terms ofweighted premium. In Malaysia, new business premiums amounted to$357 million, also ensuring our No.1 position with a market share of21.1% in terms of weighted premium. Annual premium investmentlinkedproducts experienced the biggest percentage increase in 2004,mainly due to our focused efforts to emphasise this product categorywhich provides great value for policyholders in combining protectionand flexible investment elements. Single premium investment-linkedproducts also saw an increase, partly due to the rising equity marketand resulting positive investor sentiments.In S$ millions 2003 2004 %Investment-LinkedSingle Premium 498 531 +7%Annual Premium 58 108 +86%Total Investment-Linked 556 639 +15%Non Investment-linkedSingle Premium 1,526 1,756 +15%Annual Premium 199 181 -9%Total Non Investment-Linked 1,725 1,937 +12%Total New Business Premiums 2,281 2,576 +13%29

EMBEDDED VALUEGreat Eastern has consistently grown its Embedded Value each year.Based on 473.3 million issued shares as at 31 December 2004, theEmbedded Value per share is $9.840, comprising the following:In Malaysia, New Business, Customer Service and Claims Departmentstogether with the Kuala Lumpur main office have all been ISO 9001accredited. All branches servicing processes and procedures nowcomply with ISO standards. This has enabled us to deliver qualityservice to meet the high service expectations of our customers.Singapore* Malaysia TotalValue of In-Force Business S$2.389 S$2.445 S$4.834Adjusted Shareholders’ Fund S$4.334 S$0.672 S$5.006Embedded Value S$6.723 S$3.117 S$9.840*including businesses in Brunei, Hong Kong, Sri Lanka and IndonesiaThe Embedded Value per share increased from $7.501 in 2001 to$7.825 in 2002, $9.349 in 2003 and finally $9.840 in 2004 which wasan increase of 5.3% over the preceding year.CONTINUING WITH OUR WORLD-CLASS CUSTOMER SERVICEWe are the market leader in life insurance, with over 900,000policyholders in Singapore and 1.5 million in Malaysia.In Singapore, we were awarded the Singapore Service Classcertification by SPRING for corporate service excellence, after havingbeen successfully assessed on our service leadership, service agility,customer experience and customer delight. Among nine pioneercompanies, we were the only financial institution to be conferred thisaward. We will continue to pursue service excellence to meet risingcustomer expectations.In keeping with changing customer lifestyles, we adopted the lateststate-of-the-art speech recognition technology for our award-winningCall Centre in Singapore. We are the first insurance company inSingapore to use speech recognition for our interactive voice responsesystem. Named Lee Lee, this bilingual, in English and Mandarin, voiceautomated attendant gives our callers, both policyholders and lifeplanners, round-the-clock convenience to obtain policy details. Allprocedures in Great Eastern Life and OAC in Singapore are ISO 9002certified. Bonus statements sent out to half a million policyholders in2004 were consolidated into one composite statement to policyholdershaving both Great Eastern Life and OAC policies.MAINTAINING OUR LEAD IN MARKET SHAREWith holistic financial planning as our key focus, we continued toprovide comprehensive solutions to meet customer needs, categorisedinto Protection, Investment, Education and Retirement, with productsranging from traditional plans like whole life, endowment, term, healthand personal accident to investment-linked policies.We continuously reviewed and enhanced our product range toensure that they remain relevant and competitive. One such productis the regular premium whole life investment-linked plan, GreatLinkSupremeLife, giving protection as well as potential investment returnsin any of the 21 GreatLink funds. With protection as the cornerstone offinancial planning, we introduced new and enhanced life insurance plans,including PayCare, a disability income plan; AccidentCare, an enhancedpersonal accident plan with high coverage at affordable premiums, andSupremeHealth, a CPF Medisave approved hospitalisation and surgicalplan, with the highest lifetime limit of $1.2 million in the industry.In our journey towards a customer-centric organisation, analytics teamsin Malaysia and Singapore critically examined the behaviour, needs,values and preferences of our policyholders and our agency force. Wewere then able to embark on insight-driven initiatives including moretargeted product offerings to specific policyholder groups, reconnectionwith our dormant policyholders and specific sales training andleadership programmes for life planners. In Singapore, insight-basedinitiatives now account for about 15% of new business premiums. InMalaysia, the first on-line broad-base campaign based on segmentation30

modelling was piloted through the agency portal e-partner to provideround-the-clock access and to increase the productivity of the agencyforce. These customer-centric strategies helped create sustainable andprofitable customer relationships.In Malaysia, a number of initiatives were rolled out to build brandawareness among the younger age groups, including integrating ourproducts and services with the lifestyles of the young. We had threesuccessful campaigns to penetrate this market segment, viz. theKhidmat Negara (National Service) insurance campaign, the GreatJunior Advantage campaign and the Young Savers campaign. We werethe first insurance company to offer free insurance including term lifeand personal accident death benefits of up to RM 20,000 to NationalService participants. The Great GoldenCare plan, a single premiumimmediate annuity plan, was launched together with Great SeniorCarePlus. Several new products were also launched for the bancassurancedistribution channel, including limited pay endowment plans. Wealso worked closely with major developers to enhance and re-launchthe property reward scheme, whereby the property developerswill package our investment-linked life insurance policy for eachproperty purchaser.DEVELOPING A COMPETENT AND PROFESSIONALAGENCY FORCEWe continue to strive for higher efficiency and professionalism amongour 2,100 tied life planners in Singapore and 17,000 agents in Malaysia,through proper recruitment, training and development, performancemonitoring and emphasis on ethics and professionalism.In Singapore, our drive to recruit young well-educated life plannersresulted in some 288 recruits. The new life planners were trained onan exclusive learning platform, the Enhanced Performance College,undergoing a series of intensive, comprehensive and structured trainingprogrammes to equip them with essential skills and knowledge.Our training arm, the Centre for Excellence, continued to provide roundthe-clocklearning facilities for all our life planners via our e-Campus atwww.cfe-campus.com.sg.We established the Training & Competency Unit in November toenhance the competency and professional level of our life planners.It also assists managers in performing their training and managerialroles through proper sales documentation in their coaching sessionswith their life planners. Market conduct briefings and qualitativerecommendation workshops were organised to educate the agencyon the importance of ethical conduct and the need for qualitativerecommendations and proper documentation.The use of e-mas (electronic mobile advisory solutions system) willresult in a standardised, paperless and high-quality sales advisoryexperience for our policyholders by 1 July 2005. By the end of 2004,more than 90% of our life planners have been trained to use e-masand were submitting more than 50% of their cases through e-mas.We launched LifeHub, a knowledge portal providing our life plannerswith a secure platform from which business-critical information on allproducts, practices and web-based applications can be accessed viaa single sign-on. LifeHub will also facilitate efficient communicationbetween our life planners and the corporate staff.In Malaysia, it was another challenging, yet rewarding year withincreases in new business premiums and in the number of MDAand MDRT qualifiers. We embarked on a number of programmes toenhance the quality of our agents, including training programmes onprofessional sales and effective leadership. Financial planning courseswere rolled out to promote the concept and skills of financial planningamong the agents.MAKING BANCASSURANCE A CONTINUED SUCCESSGreat Eastern Life was the first insurer to establish a bancassurancenetwork in Singapore, with an exclusive arrangement with OCBCBank in 1992. After the merger of Great Eastern Holdings and OACin December 2000, the Group’s bancassurance business in Singaporehas been conducted exclusively through OAC. For the third successiveyear, we commanded the market leadership position of 42% in termsof weighted premium in the bancassurance business, closing the yearwith $1,043 million in total new business premiums. Popular plansincluded the new investment-linked plan, MaxLink, and evergreensingle premium endowment plans such as Capital Protected Saverand Guaranteed Returns. A two-year guaranteed returns plan waslaunched in 2004. The entry age for single-premium insurance planwas extended to 76 years, a first for the industry.31

In Malaysia, we signed an agreement in January with Public BankBerhad to distribute the Guaranteed CashBack plan, a five-year singlepremium endowment plan, at all Public Bank branches nationwide.Measures were also undertaken to further promote our attractive andcompetitive mortgage reducing term assurance plans. Besides PublicBank, we continued to work together with OCBC Bank in Malaysiato promote other bancassurance plans. These strategic activities haveresulted in a significant increase in new business premiums.ALPHA FINANCIAL ADVISERS PTE LTDIncorporated in October 2003, Alpha Financial Advisers Pte Ltd wasofficially launched on 1 July 2004. It is 66% owned by Great EasternHoldings’ wholly-owned subsidiary Great Eastern International Pte Ltd,and 34% held by another subsidiary Straits Lion Asset Management Ltd.Alpha’s principal activity is to offer financial advisory services undera Financial Adviser’s licence from MAS. This company is testimony toour determination to consolidate our position as a leading financialservice provider. Already with a strong tied-agency force and aneffective leading bancassurance channel, we will use Alpha as the thirdcomplementary channel to provide holistic financial advisory services ofthe highest standard of professionalism and expertise. Alpha’s adviserswill deliver financial solutions, using its Infinitum Financial PlanningSystem with a multi-product-multi-manufacturer framework to handlemore than 250 funds from 23 fund managers, ten insurance principalsand three banks.Alpha targets to recruit 150 financial consultants and advisers byend 2006. Its strategy is not to build another large tied agency, butto attract quality and productive advisers. All its current advisers aretertiary qualified, with a quarter holding a Masters degree. Apart fromfocusing on the mass affluent and higher net worth clients, Alpha willdevelop its SME programme to include business-related insurance, taxand legal referral advice and aggregated pension fund capabilities.Within six operational months in 2004, Alpha has exceeded its targetand remains on track to achieving its six-year business plan targets.GROWING OUR GENERAL INSURANCE BUSINESSThe general insurance business is handled by OAC in Singapore andOACM in Malaysia.In Singapore, general insurance registered a gross premium of S$49.1million, with an overall underwriting profit of about 8.7% of grosspremiums. The largest growth came from fire insurance and the marine32cargo class of insurance business. Although plagued by the overdrawneffects of large losses suffered by the industry in past years, our motorinsurance portfolio emerged with a positive underwriting profit growthof $1.4 million. In January 2005, we launched the e-Cargo systemto facilitate the electronic submission of the marine cargo insurancebusiness and the instant issuance of policy contracts.In Malaysia, OACM saw a growth of nearly 11% in gross premiumsto RM156 million, contributed by all classes of insurance, particularlythe fire and miscellaneous insurance businesses. It achieved a 12%increase in underwriting profits to RM9.2 million. Improvements weremade to reduce the turnaround time for policy issuance and despatch,especially in the three OACM branches (Kuala Lumpur, Johor Bahru andPenang) with high volumes. The agency portal OACLink was revampedto create a more user-friendly and secure environment and used byagents to issue on-line motor insurance cover notes, as such on-linesubmissions become mandatory from 1 January 2005.DEVELOPING THE REGIONAL NETWORKWith the vision to be the choice financial service provider in the regionand beyond, we have strengthened our market position in Singapore andMalaysia. The next phase of growth is expansion in ASEAN and beyond.A Regional Team was established to support this regional expansion.ChinaOur Representative Office, established in Shanghai in 1997, hasbeen actively supporting educational and research activities for thedevelopment of the life insurance industry in China. It has also beenworking with the Shanghai University of Finance and Economicsin research issues affecting the China insurance industry, as well asproviding internship to students.In April, we signed a letter of intent with Chongqing Land PropertiesGroup to set up a 50-50 joint venture life insurance company inChongqing, China. Chongqing City has a sizeable population of 30million and an expected annual growth rate of between 8% and 10%.Chongqing Land Properties Group is a state-owned enterprise underthe Chongqing People’s Municipal Government. Following this, GreatEastern and Chongqing Land Properties Group jointly submitted anapplication to the China Insurance Regulatory Commission in Beijingin June for initial approval to commence preparatory works for the jointventure company. The application is under assessment by the RegulatoryCommission. The establishment of this joint venture signifies a majorstep in our regionalisation efforts.

VietnamVietnam is one of the emerging markets with one of the highestGDP growth rates in the region, but one of the lowest life insurancepenetration rates. This low rate, coupled with the large populationof 80 million, political stability and privatisation policy, offers greatpotential for the life insurance industry. A month after we obtainedthe licence from the Vietnam Ministry of Finance in August to set upa representative office in Hanoi, we were able to open our Vietnamrepresentative office. The main focus of this representative office is tocontribute to the development of the life insurance industry in Vietnam.In addition to development, education support, community involvementand corporate branding efforts, we will be offering attachmentprogrammes to Vietnamese students to study in Singapore.BruneiTwo new agency units were established to grow the distribution network.While single premium sales continued to be slow, annual premiumsales grew by 16% to reach S$1 million, especially after the launch ofGreatLink SupremeLife, an annual investment-linked plan. To promoteprofessional selling, monthly training seminars were organised for lifeplanners with the help of the experienced life planners from Singapore.For four consecutive years, we have contributed to the education ofthe nation’s youths by sponsoring the Great Eastern Bursary Award fordeserving students in four secondary schools.IndonesiaPT Asuransi Jiwa Asih Great Eastern achieved a 30% increase in grosspremium from Rp 17 billion to Rp 22 billion in 2004, coming mainlyfrom the mortgage reducing term assurance business. The company wasawarded the ‘Best Life Insurance Company 2004’ in the Rp 100 billioncategory by the Investor magazine. Asih Great Eastern will strengthen itsworking relationship with Bank NISP to offer bancassurance business.IMPROVING OUR RETURNS FROM REAL ESTATE ASSETSWe continued to achieve good returns from our properties as a result ofactive marketing and customer satisfaction initiatives.Great Eastern Centre at 1 Pickering Street houses the Group’s corporatehead office and enjoyed 100% occupancy, with about a third leased toexternal tenants. Two other buildings, Great Eastern House and GreatEastern @ Changi, are used exclusively by life planners, supervisorsand group managers. The latter is being refurbished to improve itsoperational and floor area efficiency, for occupation in the third quarterof 2005. Orchard Emerald is a mixed commercial building with officeand retail space; it achieved 100% occupancy with improved revenuethrough higher renewal rents and increased non-rental income.The major residential investment properties include Newton.GEMS, a190-unit condominium, Holland.GEMS, a 64-unit condominium andGallop Court, a 25-unit condominium. These properties averagedabove 90% occupancy as at end 2004. Eight good class bungalowsdeveloped in Gallop Gardens were completed in September, with sevenunits leased within three months. Haig Court, a 360-unit condominium,was launched successfully for sale in April, and is considered one of thetop three best selling residential projects in 2004.In Malaysia, the Great Eastern Mall firmly established itself as the favourite“neighbourhood mall” in the vicinity. Its occupancy as at end 2004stood at a healthy 88%. Menara Great Eastern has also established itselfas a premier 20-storey office tower, enjoying almost full occupancy of93%. In June, the Company took over the management and ownershipof Menara Weld, a prominent landmark in Kuala Lumpur’s goldentriangle. A number of branch premises were enhanced for consistencyin building design and to reinforce our branding and corporate image.FORGING AHEAD WITH TECHNOLOGYOur extensive use of leading-edge information technologies hasenabled us to create a unique customer experience and maintain ourleadership position.We embarked on the implementation of the Financial ProductsManagement System (FPMS) for both our Singapore and Malaysiaoffices. This project meets various objectives: it manages costs andresources effectively through the streamlining of business processes; itenhances customer service, making it more efficient and responsive; andit provides an effective platform to support our regional operations.Great Eastern won the Intelligent Enterprise Award 2004/2005 inSingapore, conferred by Intelligent Enterprise Asia, for the fourthconsecutive year. This year the company was conferred the awardfor our Distribution Channel Management System project, which wascommissioned in January. This is a flexible system that allows us tomanage multi-channel distribution in different markets, thereby providingus the competitive edge as we expand and grow in the region.33

In Malaysia, our Agent Empowerment Programme increased theproductivity of our agents through the use of various self-help electronictools and portals such as e-partner and supporting technologies likethe Short Message Service and Interactive Voice Response systems. Inline with our paperless strategy, we successfully implemented the e-submission of proposals and paperless underwriting via the AgencyPortal. The policy images of over 2.4 million policies were successfullymigrated from the existing Power Vision system to the EnterpriseDocument Management System, a high volume content repositorythat manages information for a more efficient and faster customerservice delivery.Great Eastern became the first company in Malaysia to implementthe Policy Document Management System (PolicyDoc), a straightthrough-processingsolution for quick and effective production of policydocuments, at a lower cost.GROWING A STRONG BRAND VALUEFor the third year running, Great Eastern has been recognised as one ofSingapore’s 15 Most Valuable Brands. In the sixth position, our brandvalue increased 36% from $429 million in 2003 to $583 million in2004. Organised by IE Singapore, this award recognises successfulSingapore-based companies which have leveraged on branding andcreated substantial value for shareholders. Also, with a strong brandpersonality that our staff and life planners are proud of, we are ableto build a “Life is great!” brand culture and attract quality peopleto join us.Great Eastern has been awarded Superbrand status by SuperbrandsInternational in 2004 for the second time, after being recognised forits market dominance, longevity, goodwill, customer loyalty and overallmarket acceptability. We were also voted by consumers as a GoldSuperBrand (Services Category) in both Singapore and Malaysia in theReader’s Digest SuperBrands 2004, based on top-of-mind awarenessand brand attributes of quality, value, trustworthiness, strong imageand understanding of consumer needs.The front-line agency force plays a crucial role in building the GreatEastern brand. We therefore placed the highest priority in raising theprofessional standards of our life planners and agents in both Singaporeand Malaysia, and spared no effort to equip them with knowledgeand skills to provide holistic financial planning and quality adviceto customers.The thrust of the Life Planning branding campaign in Singapore hastaken on a more customer-driven approach, based on the premise thateveryone is unique with different goals and aspirations and that LifePlanning can help one achieve them. The campaign generated goodbrand visibility and awareness as we made a foray in the outdoormedia scene. We were also the first insurer in Singapore to harness theinternet to bring financial planning lessons to homes and offices withthe launch of the “Walk of Life” on-line reality game. In Malaysia, wecontinued to promote the Company and “Life is great!” brand withinnovative outdoor advertising projects, to promote Great Eastern asMalaysia’s premier life insurance company.SPREADING THE “LIFE IS GREAT!” SPIRIT TOTHE COMMUNITYGreat Eastern continues to take the lead as a responsible corporatecitizen. Our belief in making life great for the under-privileged isdemonstrated in various events and activities, including charitysales, fund-raising campaigns and donation drives, for our staff andlife planners.In Singapore, Great Eastern was again conferred the Special EventPlatinum Award at the Community Chest Annual Award PresentationCeremony in October 2004. This is the 13th year that we have receivedthis prestigious award for our community projects, ChildrenCarestarted in 1987 and GoldenCare started in 1993. We raised more than$6.9 million for five children charities and five elderly homes underthe Community Chest since the inception of these two communityprojects. In October, we organised our fourth Charity Golf Challengeand raised $220,000 for GoldenCare. We organised two outings for34

the beneficiaries under GoldenCare: a luncheon party in a hotel forsome 50 elderly folks from Swami Home Help Service and a Christmasblock party for some 120 residents of AWWA Community Home forSenior Citizens. We contributed $100,000 to the Singapore Red CrossSociety to aid victims of the Asian tsunami crisis, in addition to $50,000raised by staff and life planners.In Malaysia, our community project, ChildrenCare, carried out theyearly fund-raising activities with the support of agents and staff.Besides the Orang Asli Youth Camp, we organised the first LegalAwareness Camp for students from secondary schools in Kuala Lumpurand Selangor. The ChildrenCare Trust Fund donated more thanRM150,000 to about 15 children homes. In total, about RM600,000has been donated in the form of special equipment and learning aidsto more than 50 charitable organisations under the umbrella of theNational Welfare Foundation. In Malaysia, the Company donatedRM100,000 to The Star Earthquake/Tsunami Relief Fund, in additionto RM26,000 from staff and agents, which were channelled to reliefwork through Mercy Malaysia and Tabung Bantuan Bencana Negara(National Disaster Relief Fund).REFINING OUR HUMAN CAPITALAs at the end of 2004, the Group has 791 staff in Singapore, 1,423 inMalaysia and 90 in the regional offices. Talent management continuesto play an integral role in our strategy to create a high performanceorganisation, and to attract talent to join us.We continued to forge ahead with our drive to identify and retainpromising employees. The on-line performance management systemprovides a rigorous review of our staff performance, with an emphasison job competencies and key performance indicators. We implementeda performance and potential banding framework to identify theperformers for rewards differentiation and career development,and instituted a succession planning process to ensure that ourCompany has the requisite human capital, skills and knowledge tomeet future business needs. To ensure that we remain current andcompetitive in our remuneration package, we improved our executivecompensation framework.As part of our strategy to develop and upgrade our talent pool, weimplemented training and development programmes around thecompetency framework, with an emphasis on leadership, servicemindset, personal and professional effectiveness and teamwork.Top and middle level executives in Singapore and Malaysia attendedleadership development programmes with a 360-degree feedback ontheir leadership styles. A job rotation programme was also initiated inboth Singapore and Malaysia for a more holistic development of staffcapabilities and for their career development.In Singapore, the annual staff feedback and opinion survey showed anoverall staff satisfaction of 74%, an improvement of 5 percentage pointsover the previous year. A similar survey was carried out in Malaysia, forthe first time, in 2004. Based on the results, a study on team dynamicsand communication patterns between department heads and staff wasalso developed to improve teamwork. In support of our two-prongedstrategy on talent management and regional expansion, scholarshipswere given in Malaysia to eight recipients in 2004.Union-management relationship remains good with mutual consultationstrengthening the trust between staff and management. The emphasison talent, which set in place robust and pro-talent policies, systemsand leadership, helped to buttress our strategy of creating a highperformance organisation.STRENGTHENING OUR INVESTOR RELATIONSIn 2004, Great Eastern Holdings Ltd became a substantially-ownedsubsidiary of OCBC Bank. At the close of OCBC Bank’s voluntaryunconditional offer for Great Eastern Holdings shares on 30 June 2004,the Bank has an effective shareholding of 81.1% in Great Eastern, upfrom 48.9% before the offer. Both the Bank and our Company havesince been focusing on delivering revenue synergies in Singapore andMalaysia and working closely to expand our regional presence.35

We are pleased that we have been able to generate sustainablelong-term returns to our shareholders, by focusing on value-addingactivities. In a Total Shareholder Return (TSR) ranking undertaken byLEK Consulting of some 54 companies with a market capitalisationof more than $1 billion as at end June 2004, we ranked No.5 with afive-year TSR of 20.4% and at No.8 with a ten-year TSR of 9.5%. Thecomparative returns for the ST Index are a negative 3.2% return overfive years and a 0.1% return over ten years.Throughout 2004, our Company continued the tradition of goodcorporate governance by providing clarity and transparency to theinvesting public, including the minority shareholders. A press andanalyst conference was held to announce the 2003 full year resultsin February, while teleconferences were held to announce the first,second and third quarter results in 2004. Key members of the seniormanagement team were involved in many one-on-one meetings withglobal institutional fund managers, investors and analysts to keepthem informed of business and industry developments. Twelve analystsin the region continued to provide active coverage of our stock. OurCompany’s score for the Corporate Transparency Index compiled byThe Business Times increased by 7 percentage points to 73% in 2004.From 1 January 2005, the new Risk Based Capital framework comesinto effect for the insurance industry in Singapore. Consistent with ourpast efforts of holding Embedded Value workshops to improve theunderstanding of the insurance business amongst the investing public,we held a workshop on the new Risk Based Capital framework in earlyFebruary 2005.STRENGTHENING OUR ASSET MANAGEMENTIncorporated in Singapore in 1996, Straits Lion Asset Management Ltdis jointly owned by Great Eastern Holdings Ltd and The Straits TradingCompany Ltd. It holds a Capital Markets Services Licence for fundmanagement under the Securities and Futures Act and is an approvedfund manager under the Central Provident Fund Investment Scheme. Itsareas of expertise include equities and fixed income with special focusin Asian mandates, structured assets, insurance asset managementand alternative investments. Its staff strength stands at 44, with 12investment professionals. Mr Daniel Chan has been appointed Directorand Chief Executive Officer in December.In April, Straits Lion launched a new joint venture company, FairfieldStraits Lion, with Fairfield Greenwich Ltd to focus on the creation anddistribution of hedge fund investment products to clients in Asia. WithCollateralised Debt Obligations (CDOs) becoming popular with investorsas interest rate spreads tightened and as the global economic recoveryreduced the risk of corporate defaults, Straits Lion established itself inthe region with three CDO offerings. In May, it launched the StraitsLion Asia CDO 1, one of the first Asian-managed deals in the region.This synthetic CDO deal has an underlying portfolio of credit default36

swaps of mostly Asian corporate and sovereign debt. Subsequently inAugust, it offered the first Singapore-dollar synthetic debt deal, StraitsLion SGD CDO 1 Ltd, backed by investment grade assets, worth anotional S$2.58 billion. It was awarded “Best Structured Product Deal2004” by FinanceAsia. The third deal, Straits Global ABS CDO 1, wasoffered in October.As at the end of 2004, Straits Lion had approximately S$25.2 billionof assets under management, an increase of nearly 60% from theprevious year. It is one of Singapore’s largest asset managers.TO BE THE CHOICE FINANCIAL SERVICE PROVIDER IN THEREGION AND BEYONDWe have strengthened our market position in the life industry in ourcore markets of Singapore and Malaysia, with a market share of 27.8%and 21.1% respectively in 2004. A major step in our regionalisationefforts is the establishment of a joint venture company in Chongqing,with a target to set up operations by early 2006.We are one of only two companies in Singapore to achieve a brand valueincrease of more than 35%, in a ranking undertaken by IE Singapore. Inaddition, we are pleased that we have been able to generate sustainablelong-term returns to our shareholders, by focusing on value-addingactivities. Throughout 2004, our Company continued the tradition ofgood corporate governance by providing clarity and transparency tothe investing public, including the minority shareholders. And wereinforced our strategy to create a high performance organisation,and to attract talent to join us.With all these strategies in place, we are confident of achievingour 2008 vision to be the choice financial service provider in theregion and beyond, with Profit After Tax of $500 million andAssets of $50 billion. It is an achievement made possible onlywith the unstinting support of our valued customers, life plannersand agents, employees, business partners and shareholders, towhom we will continue to deliver a high level of service andcorporate integrity.TAN BENG LEEDirector & Group Chief Executive OfficerGreat Eastern Holdings Limited15 February 200537

YEAR INREVIEWFEBRUARY• We announced our Full Year 2003 results, showing a record profit of$312.2 million.MARCH• A Voice of Customer Survey reaffirmed OACM’s customer service standards.APRIL• SPRING Singapore awarded Great Eastern the Singapore Service Class certificationfor corporate service excellence, after being successfully assessed on fourkey components: service leadership, service agility, customer experience andcustomer delight.• Haig Court was launched for sale, with the Haig Court 48-hour challenge, anevent covered extensively by the various media.• As a sequel to our book “Road to Call Centre Excellence” upon winning the 2002Best Call Centre Award, we published “Road to Customer Service Excellence” toshare our experience in attaining the Singapore Service Class.• We signed a letter of intent with Chongqing Land Properties Group to set up a50-50 joint venture life insurance company in Chongqing, China.• We were awarded Superbrand status by Superbrands International, and theReader’s Digest Asia’s SuperBrands 2004 survey (as a Gold SuperBrand).• Our subsidiary, Straits Lion Asset Management Ltd, launched a joint venturecompany, Fairfield Straits Lion, with Fairfield Greenwich Ltd, to focus on hedgefund investment products.• Bonus statements sent out to policyholders having both Great Eastern and OACpolicies were consolidated into one composite statement.MAY• Our new Centre for Excellence at Great Eastern Centre, was officially opened byDirector and Group CEO.JUNE• Great Eastern Holdings became a substantially-owned subsidiary of OCBC Bank,after having 81.1% of Great Eastern’s shares at the close of OCBC Bank’svoluntary unconditional offer.• Our Indonesian subsidiary, PTAGE, was awarded the “Best Life InsuranceCompany 2004” in the Rp100 billion category by the Investor Magazine.JULY• Our 2004 Customer Satisfaction Survey in Singapore revealed a customer loyaltyindex of 28%, an index which has been improving since 2002.• Alpha Financial Advisers Pte Ltd was officially launched.AUGUST• We launched Lee Lee, a state-of-the-art bilingual Voice Automated Attendant thatoffers both policyholders and life planners round-the-clock convenience to obtainpolicy details.• We obtained the license from the Vietnam Ministry of Finance to set up arepresentative office in Hanoi and opened our representative office in the HoanKiem District.• We organised our fourth “Life is great!” Photo Competition which had a positiveimpact on our branding.• We organised a Legal Awareness Camp for students from secondary schools inKuala Lumpur and Selangor.• PolicyDoc, a Policy Document Management System which allows straightthrough-processingfor quick and effective production of policy documents wasimplemented in Malaysia.SEPTEMBER• We received the merit award for the second year in the Singapore CorporateGovernance Award (Mainboard Category).OCTOBER• Our ElderShield policyholders were invited for a special Health Talk cum discountedmedical check-up.• We received the Special Event Platinum Award for raising more than $300,000 forour community projects, ChildrenCare and GoldenCare.• We organised our fourth Charity Golf Challenge, which raised more than $220,000for GoldenCare.• We won the Intelligent Enterprise Asia Award for the fourth year running, thistime for our Distribution Channel Management System project, which wascommissioned in January.NOVEMBER• We won two bronze awards “Best Manager” and “Best Professional” for ourstaff at the 2004 Call Centre Council of Singapore Awards presentation.• We established the Training and Competency Unit at our Centre for Excellence toenhance the competency and professional level of our life planners.• We launched the revamped agency portal OACLink in Malaysia to create a moreuser-friendly and secure environment.DECEMBER• We received “The Most Valuable Singapore Brands” award for the third yearrunning, and are one of only two with more than 35% increase in their brandvalues. Our brand value has increased to $583 million from $429 million in 2003.38

PRODUCTS LAUNCHED, ENHANCED OR REVISEDJANUARY• Launched a revised PayCare, a disability income standalone plan and riderwith options for level or escalating benefits for the policyholder to maintain areasonable standard of living while recuperating.• Signed an agreement with Public Bank Berhad to distribute the GuaranteedCashBack plan, a five-year single premium endowment plan, at all Public Bankbranches in Malaysia.• Launched Great LivingCare in Malaysia, a living assurance product with theunique feature of having the premium rates separated into guaranteed andnon-guaranteed components, giving policyholders more choice and flexibility tomaximise their coverage.MARCH• Launched Reward Saver, a five-year single premium product which offeredprojected returns of up to 3.05% per annum and 103% capital guaranteedupon maturity, while extending life insurance coverage of up to 125% oftheir investments.• Reward Saver offered to SRS customers.• Launched new investment-linked plan, Maxlink in OAC.• Started the Khidmat Negara (National Service) insurance campaign inMalaysia, and was the first company to offer free term life and personal accidentdeath benefits of up to RM20,000 to National Service participants.APRIL• Launched a revised personal accident standalone plan and rider namedAccidentCare Plus II which provides higher coverage and improved commissionsat affordable premiums.• The Easi-Travel and Easi-Golf insurance plans were re-designed by OACM.• Launched Annual Cashback Endowment (ACE) – 18 and 21 years, a regularpremium endowment plan, which gives policyholders the option of liquidity viaannual cashback from the second policy year onwards, or leaving the cashbackamount with the Company to accumulate more interest.• Launched Great Junior Advantage in Malaysia, a whole life plan with survivalbenefits and cash bonuses and the Junior Advantage Rider to opt to paypremiums for 10 years and receive cash benefits thereafter.MAY• Launched a revised Premier Health Plan, a guaranteed yearly renewablestandalone hospital and surgical plan where a death benefit was included andpremium rates were reviewed. In view of the new A&H Framework, the plan isnow classified as a Life product and is exempted from Goods and Services Tax.• Re-packaged the Property Reward Scheme in Malaysia to provide purchasersof property with an investment-linked life insurance policy, where the policy valuemay accumulate to the property purchase price after a number of years.JUNE• Launched the Great GoldenCare plan in Malaysia, a single premium immediateannuity plan that provides a level monthly payment to the policyholder throughouthis/her lifetime.JULY• Launched an enhanced SupremeHealth, a CPF Medisave approved hospitalisationand surgical plan – the Lifetime Benefit Limit was increased up to $1.2 million, thehighest in the market, and increased annual limits and sublimits were extended tonew and existing policyholders without any increase in premium.• Launched GreatLink SupremeLife, a regular premium whole life protectionplan which also provides flexibility and control to policyholders in investing theirmoney in any of the 21 GreatLink funds.• Launched Great FlexiSave in Malaysia, a limited pay endowment plan withcompound reversionary and terminal bonuses.• Launched the Annual CashBack plan in Malaysia, a five-year non-participatinganticipated endowment plan.AUGUST• Launched a 2-year guaranteed returns plan in OAC.• Launched Great CashBack in Malaysia, a term plan package that provides a100% premium refund benefit upon maturity and free extended personal accidentcoverage for a maximum of five years.SEPTEMBER• Launched the 4-year Guaranteed Saver, a single premium endowment planwhich guarantees returns of 2.1% per annum and capital at maturity, whileproviding policyholders with up to 150% insurance coverage of their investmentand tax savings if invested through SRS.• Launched Great SeniorCare Plus in Malaysia.• Launched GreatLink SupremeLife in Brunei.• Launched the Bancassurance version of Great FlexiSave in Malaysia under the namePB Assurance – Endowment with Limited Pay and PB Assurance – Educationwith Limited Pay.• Launched the Bancassurance version of Great CashBack in Malaysia under the namePB Assurance – Term with Premium Refund.OCTOBER• Started the Young Savers campaign in Malaysia, launched over a period of threemonths which gave 200 new lives assured aged 18-years & below a chance to wina ready deposit of RM150 in an OCBC Bank savings account and a Swatch watch.• Launched the 7-year Guaranteed Saver, a single premium endowment planwhich guarantees returns of 2.7% p.a. and capital at maturity, while providingpolicyholders with up to 150% insurance coverage of their investment and taxsavings if invested through SRS.NOVEMBER• Launched the 2-year Guaranteed Saver, a single premium endowment planwhich guarantees returns of 1.35% p.a. and capital at maturity, while providingpolicyholders with up to 150% insurance coverage of their investment and taxsavings if invested through SRS.• Re-launched the Triple Accident Protection Plan for a limited period only, astandalone Personal Accident plan which provides up to three times coverage in theevent of accidents, extending to acts of terrorism, with higher benefits if occurringwhile on a public conveyance.• Launched an enhanced Travel Ready Insurance Plan (TRIP) which providescomprehensive travel insurance protection for the individual or family on anannual or single trip basis.39

EMBEDDEDVALUEAn actuarial embedded value is a commonly used technique to estimatethe economic value of the existing business of a life insurance company.Looking at a company’s distributable profits for a year, or even a fewyears, is not a reliable guide to its long-term value. This is because thetiming of distributable profits arising from a policy, even for a profitablebusiness, may result in losses in the first policy year even though theremay be profits in later years and the policy is profitable overall. The lossin the first year is due to the initial expenses of writing new business,combined with the need to set aside capital to meet regulatory solvencyrequirements. As a result, in any one year, high growth of business maytend to lower distributable profits. Embedded values have thereforebeen developed as a way to estimate the long-term economic value ofa life insurance company for the existing blocks of business.The embedded value of Great Eastern Holdings Ltd has been determinedusing methodology that is typically adopted for embedded valuereporting, and comprises the sum of the value of In-Force Business andthe value of the adjusted Shareholders’ Funds.VALUE OF IN-FORCE BUSINESSThis represents an estimate of the economic value of projecteddistributable profits, i.e. after-tax cash flows less increases in statutoryreserves and solvency margins, from the In-Force Business at the valuationdate, i.e. 31 December 2004. The cash flows represent a deterministicprojection, using best estimate assumptions as to future operatingexperience and are discounted at a risk-adjusted discount rate.The use of a risk-adjusted discount rate, together with an allowance forthe cost of holding statutory reserves and solvency margins representsthe allowance for risk in the value of In-Force business together withan implicit allowance for the cost of options and guarantees providedto policyholders. It should be noted that this allowance for risk isapproximate and may not correspond precisely with the allowancedetermined using capital market consistent techniques.In projecting the value of In-Force Business, the statutory reservevaluation bases are assumed to be based on the new Risk BasedCapital (“RBC”) basis for Singapore and on the minimum basis allowedunder the regulations for Malaysia. Allowance for solvency marginshave been made under the new Capital Adequacy Requirement basisfor Singapore and the minimum basis allowed under the regulationsfor Malaysia.ADJUSTED SHAREHOLDERS’ FUNDThis represents the value of the Shareholders’ Funds from the variousentities of the Group that can be distributed to shareholders, afterallowing for tax. These are the amounts over and above the assetsrequired to meet statutory reserves, solvency margins and otherliabilities. Included in this are surpluses from the non-life funds.ASSUMPTIONS USEDThe assumptions adopted for the calculations have been determinedtaking into account the recent experience of, and expected futureoutlook for, the life insurance business of the companies involved,i.e. The Great Eastern Life Assurance Company Limited (Great EasternLife) and The Overseas Assurance Corporation Limited (“OAC”) inSingapore and Great Eastern Life Assurance (Malaysia) Berhad (“GELM”)in Malaysia.Investment returns assumed are based on the long term strategicasset mix and their expected future returns. The returns assumed,after investment expenses, are 5.25%, 4.25% and 7% for Singapore’sparticipating fund, non-participating fund and linked fund respectivelyand 7.0%, 6.5% and 7.5% for Malaysia’s participating fund, nonparticipatingfund and linked fund respectively. The risk-adjusteddiscount rate used is 9% for Singapore and 10% for Malaysia.40

EMBEDDED VALUE CALCULATIONThe value of In-Force Business has been calculated for the life insurancebusiness of Great Eastern Life and OAC in Singapore and GELM inMalaysia, along with the adjusted Shareholders’ Funds for the Group.Based on 473,319,069 Great Eastern Holdings Ltd shares, the resultsof the calculations are as follows:Embedded Value(per share) Singapore* Malaysia TotalLife BusinessValue of In-Force Business S$ 2.389 S$ 2.445 S$ 4.834Shareholders’Funds and Non-Life BusinessAdjustedShareholders’Funds S$ 4.334 S$ 0.672 S$ 5.006Total EmbeddedValue S$ 6.723 S$ 3.117 S$ 9.840INDEPENDENT REVIEWThe embedded value and the value of one year’s new business weredetermined by the Company. The Tillinghast business of Towers Perrinperformed a review of the assumptions used, the calculation methods(relative to those typically adopted for embedded value reporting) andthe reasonableness of the results.SENSITIVITY TESTINGIn addition, some sensitivity testings were conducted using differentinterest and discount rates. The results are summarised below:Discount DiscountBase Rate +1% Rate -1%Values per share Scenario Yield +0.50% Yield -0.50%Total EmbeddedValue (per share) S$ 9.840 S$ 9.914 S$ 9.747Economic Value ofOne Year’sNew Business(per share) S$ 0.394 S$ 0.382 S$ 0.409* “Singapore” column includes values from the businesses in Brunei, Hong Kong,Sri Lanka and Indonesia.ECONOMIC VALUE OF ONE YEAR’S NEW BUSINESSThe economic value of one year’s new business, defined as the valueof projected distributable profits from new business sold in the yearprior to the valuation date, can be used to determine the estimatedvalue of future distributable profits from new sales. Using the samebest estimate and reserving assumptions as those used for the In-ForceBusiness, the value of business written for the year ended 31 December2004 has been calculated as follows:Singapore Malaysia TotalEconomic Valueof One Year’sNew Business(per share) S$ 0.153 S$ 0.241 S$ 0.39441

GOINGFOR GOLDBeing competitive is good.Leading the competition is even better.As the leader in the insurance industry,we go for gold in everything we do.

CONTENTS45 Directors’ Report50 Statement by Directors51 Auditors’ Report52 Profi t & Loss Statements53 Balance Sheets54 Statements of Changes in Equity56 Consolidated Statement of Cash Flows58 Life Assurance Revenue Statement59 General Insurance Revenue Statement60 Notes to the Financial Statements

DIRECTORS’REPORTThe Directors of Great Eastern Holdings Limited (the “Company”or “GEH”) have pleasure in submitting their report to the memberthe audited financial statements of the Group and of the Company for the financial year ended 31 December 2004.s together with1 DIRECTORSThe Directors of the Company in office at the date of this report are:Mr Michael Wong Pakshong ChairmanMr Tan Beng Lee Chief Executive OfficerDr Cheong Choong Kong (appointed on 7 January 2005)Mr David Philbrick Conner (appointed on 7 January 2005)Mr Ho Tian YeeMr Lee Seng WeeTan Sri Dato’ Dr Lin See-YanProfessor Neo Boon SiongMr Shaw Vee MengMr Tan Yam Pin (appointed on 7 January 2005)Mr Tan Beng Lee and Professor Neo Boon Siong retire by rotation in accordance with Article 91 of the Company’s Articles of Association,and being eligible, offer themselves for re-election. Dr Cheong Choong Kong, Mr David Philbrick Conner and Mr Tan Yam Pin retire inaccordance with Article 97 of the Company’s Articles of Association, and being eligible, offer themselves for re-election.Mr Michael Wong Pakshong, Mr Lee Seng Wee and Mr Shaw Vee Meng retire pursuant to Section 153 of the Companies Act, Chapter50, and resolutions will be proposed for their re-appointment under Section 153(6) of the said Act, to hold office until the next AnnualGeneral Meeting.2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURESNeither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enablethe Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other bodycorporate, other than as disclosed in this report.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 45

DIRECTORS’REPORT3 DIRECTORS’ INTERESTS IN SHARES OR DEBENTURESAccording to the register of Directors’ shareholdings kept by the Company for the purposes of Section 164 of the Companies Act, Chapter50, the following Directors who held office at the end of the financial year have interests in shares in the Company as detailed below:(a) Shareholdings in the CompanyOrdinary shares of $0.50 eachShareholdings registeredShareholdings in which Directors arein name of Directorsdeemed to have an interestNumber of SharesNumber of SharesAs at 1.1.2004 As at 31.12.2004 As at 1.1.2004 As at 31.12.2004Mr Michael Wong Pakshong 72,160 75,160 36,000 36,000Mr Tan Beng Lee Nil 110,000 Nil NilMr Lee Seng Wee 1,463,465 Nil 450,560 NilMr Shaw Vee Meng 1,208,000 1,208,000 333,705 Nil(b) Shareholdings in related corporationAs disclosed in Note 1 to the financial statements, on 24 February 2004, Oversea-Chinese Banking Corporation Limited (“OCBCBank”) announced that subject to the fulfillment of certain pre-conditions, it would make a voluntary unconditional offer ( the “Offer”)for all the shares in GEH, other than those already owned or agreed to be acquired by OCBC Bank and its subsidiaries. OCBC Bankmade the Offer for GEH under the terms and conditions set out in its offer document dated 17 May 2004 (the “Offer Document”).GEH became a subsidiary of OCBC Bank on 28 May 2004, and upon the completion of the Offer on 30 June 2004, GEH was about81.1% held by OCBC Bank.According to the register of Directors’ shareholdings, the following Directors who held office at the end of the financial year haveinterests in the share capital of OCBC Bank, as follows:Holdings registeredHoldings in which Directors arein name of Directorsdeemed to have an interestAs at 28.5.2004 As at 31.12.2004 As at 28.5.2004 As at 31.12.2004Ordinary stock units of $1 eachMr Michael Wong Pakshong 45,053 45,053 22,958 22,958Mr Tan Beng Lee 2,100 163,630 Nil NilMr Lee Seng Wee 2,766,498 2,766,498 1,625,456 1,625,456Mr Shaw Vee Meng 419,352 419,352 Nil Nil4.2% non-cumulative non-convertibleClass G preference shares of $0.01 eachMr Michael Wong Pakshong 22,000 22,000 Nil NilMr Tan Beng Lee 1,050 1,050 Nil NilMr Lee Seng Wee 800,000 800,000 600,000 600,000Mr Shaw Vee Meng 209,676 209,676 Nil Nil4.5% non-cumulative non-convertibleClass E preference shares of $0.01 eachMr Shaw Vee Meng 5,000 5,000 Nil Nil46 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

DIRECTORS’REPORT(c) Interest in share optionsAccording to the register of Directors’ shareholdings, only one of the Directors holding office at the end of the financial year hadinterest in share options to subscribe for ordinary shares of the Company pursuant to Great Eastern Holdings Executives’ Share OptionScheme as set out below and under the heading “Share Options” in this report:Share options held directlyOptions in which Director is deemed toby Directorhave an interestNumber of unissued shares comprised in optionsAs at 1.1.2004 As at 31.12.2004 As at 1.1.2004 As at 31.12.2004Mr Tan Beng Lee 760,000 Nil Nil NilSave as aforesaid, the Directors did not hold any interest in shares in, or debentures of, the Company or any related corporation eitherat the beginning or end of the financial year.The Directors’ interests in shares and share options in the Company as at 21 January 2005 were the same as those as at 31 December2004, as disclosed above. Dr Cheong Choong Kong, Mr David Conner and Mr Tan Yam Pin who were appointed on 7 January 2005did not hold any interest in shares and share options in the Company as at 21 January 2005.4 DIRECTORS’ CONTRACTUAL BENEFITSSince the end of the previous financial year, no Director of the Company has received or has become entitled to receive benefits (by reasonof a contract made by the Company or a related corporation with the Director, or with a firm of which the Director is a member, or witha company in which the Director has a substantial financial interest) required to be disclosed under Section 201(8) of the Companies Act,Chapter 50, save as disclosed in this report and in the financial statements.5 SHARE OPTIONS5.1 Share Option SchemeThe Great Eastern Holdings Executives’ Share Option Scheme (the “Option Scheme”) was approved by shareholders on 27 November1999 and modifications to it were approved by shareholders on 9 May 2002.The Option Scheme was administered by a committee of Directors (the “Remuneration Committee”) comprising, in 2004, Mr HoTian Yee (Chairman of Remuneration Committee), Mr Michael Wong Pakshong, Professor Neo Boon Siong and Mr Shaw Vee Meng.Effective 7 January 2005, Dr Cheong Choong Kong was appointed as a member of the Remuneration Committee. Members of theRemuneration Committee were not participants in the Option Scheme.The Company had granted share options to selected senior executives of the Group pursuant to the Option Scheme since December1999, as summarised in section 5.4 below.Under the regulations of the Option Scheme, in the event of a takeover offer being made for the shares of the Company and subjectto certain additional requirements set out in the said regulations, all share options yet unexercised become exercisable in the periodcommencing on the date on which such offer is made (where the offer is an unconditional offer) and ending on the earlier of the expiryof six months thereafter or the date of expiry of the option period relating to such share options. Thereafter any options remainingunexercised shall lapse.Consequently, pursuant to the regulations of the Option Scheme, all unexercised share options (“Outstanding Options”) which wereoutstanding as of the date of the Offer became exercisable in the period commencing on 17 May 2004 (being the date on which the Offerwas made) and ending on the earlier of six months thereafter or the date of expiry of the option period relating to such share options.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 47

DIRECTORS’REPORT5.1 Share Option Scheme (Continued)In connection with OCBC Bank’s Offer, OCBC Bank made a proposal (the “Options Proposal”) to the holders of the GEH OutstandingOptions (“GEH Optionholders”), to accept the Options Proposal so as to receive new OCBC Bank shares on the terms and conditionsset out in the Options Proposal, thereby waiving their rights to exercise those share options.5.2 Share options issued in previous financial yearsParticulars of the share options granted by the Company in 1999, 2000, 2001, 2002 and 2003 to participants of the Option Schemehad been set out in detail in the Directors’ Reports to the Company’s financial statements for the respective financial years ended31 December 1999 to 2003, and certain relevant information is tabulated in section 5.4 below.5.3 Share options granted during the financial yearDuring the financial year 2004, no share options were granted under the Option Scheme.5.4 Options outstandingArising from OCBC Bank’s Offer and Options Proposal, Outstanding Options as at 17 May 2004 (date on which Offer was made)were either exercised by the GEH Optionholders or were cancelled upon the GEH Optionholders’ acceptance of OCBC Bank’s OptionsProposal within the period of six months from 17 May 2004; thereafter, a small number of the remaining Outstanding Options lapsedpursuant to the regulations of the Option Scheme. There were no Outstanding Options as at 31 December 2004. The movements in2004 are summarised below:Movements in 2004Outstanding Rights to exercise waived Outstanding Offering price perDate of grant Options as at Options Options on acceptance of OCBC Options as at share ofof options 1.1.2004 lapsed exercised Bank’s Options Proposal 31.12.2004 $0.50 each Option periods (1)22.12.1999 898,400 16,000 755,400 127,000 0 S$4.62 22.12.2002 – 21.9.200925.4.2000 1,218,000 8,100 860,200 349,700 0 S$5.98 25.4.2003 – 24.1.201029.5.2001 1,484,300 24,300 55,500 1,404,500 0 S$9.82 29.5.2004 – 28.2.201120.5.2002 1,164,100 94,200 100 1,069,800 0 S$11.82 21.5.2003 – 20.5.201230.5.2003 1,547,950 42,500 189,100 1,316,350 0 S$9.06 31.5.2004 – 30.5.2013Total 6,312,750 185,100 1,860,300 4,267,350 0(1)Following the Offer, the above option periods were no longer applicable; all Outstanding Options became exercisable within the six-month period commencing on17 May 2004.5.5 Statutory and other information on share optionsPursuant to the regulations of the Option Scheme:(a) For the exercise of an option, the offering price (“Offering Price”) per share to be paid by way of subscription for the unissuedshares comprised in the options is equal to the average of the last dealt prices of the Company’s shares on the SingaporeExchange Securities Trading Limited for five consecutive market days immediately preceding the date on which an offer of optionis made.(b) A holder of an option (the “Grantee”) may exercise the option during the option period by notice in writing to the RemunerationCommittee, accompanied by a remittance for the full amount of the Offering Price for the number of options to be exercised.(c) During the first, second and third year of the option period of an option granted in 1999, 2000 and 2001, not more than 25%,50% and 75% respectively of the number of shares comprised in such options may be exercised. During the first and second yearof the option period of an option granted in 2002 and 2003, not more than 33% and 66% respectively of the number of sharescomprised in such options may be exercised.48 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

DIRECTORS’REPORT(d) An option expires at the end of the option period but may lapse before that, for reasons such as the termination of employmentof the Grantee after the grant of an option and before its exercise, where no approval has been granted by the RemunerationCommittee for the exercise of the options after such termination.(e) The number of shares comprised in an option and the Offering Price are subject to adjustment in certain circumstances, such assub-division or consolidation of the Company’s shares or any issue of additional shares in the Company by way of rights orcapitalisation of profits or reserves, made while an option remains unexercised.(f) The aggregate nominal amount of shares over which options may be granted, when added to the nominal amount of sharesissued and issuable in respect of all options granted, shall not exceed 10% of the issued share capital of the Company on theday preceding the date of the grant.(g) The persons to whom options have been granted by the Company have no right to participate (by virtue of the options) in othershare issues/option scheme of other companies, unless otherwise determined by the Remuneration Committee.5.6 Issue of shares arising from exercise of optionsDuring the financial year, 1,860,300 new ordinary shares of $0.50 each fully paid were issued by the Company arising from theexercise of options pursuant to the Option Scheme.5.7 Other informationNo option had been granted to controlling shareholders of the Company and their associates. No participant in the Option Scheme hadreceived 5% or more of the total number of options available under the Option Scheme. No option was granted at a discount sincethe commencement of the Option Scheme. Further details are disclosed in Note 23 to the financial statements.6 AUDIT COMMITTEEThe members of the Audit Committee at the date of this report are Mr Michael Wong Pakshong (Chairman), Mr Ho Tian Yee, Tan Sri Dato’Dr Lin See-Yan, Professor Neo Boon Siong and Mr Tan Yam Pin.The Audit Committee performs the functions specified in the Companies Act, Chapter 50. It reviews with the auditors their audit plan, theiraudit procedures and their evaluation of the system of internal accounting controls. It also reviews interested person transactions. The AuditCommittee reviews the financial statements of the Company and of the Group and the auditors’ report thereon and submits them to theBoard of Directors. Details of the functions performed by the Audit Committee are set out in the Report on Corporate Governance.The Audit Committee has nominated Ernst & Young for re-appointment as auditors at the Annual General Meeting of the Company.7 AUDITORSThe auditors, Ernst & Young, have expressed their willingness to accept re-appointment.On behalf of the BoardMICHAEL WONG PAKSHONGChairmanSingapore7 February 2005TAN BENG LEEDirectorGREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 49

STATEMENTBY DIRECTORSPURSUANT TO SECTION 201(15)We, Michael Wong Pakshong and Tan Beng Lee, being two of the Directors of Great Eastern Holdings Limited (the “Company”), do hereby statethat, in the opinion of the Directors:(i)(ii)the accompanying balance sheets, profit and loss statements, statements of changes in equity, consolidated statement of cash flow, lifeassurance revenue statement, general insurance revenue statement, and the notes thereto, set out on pages 52 to 99, are drawn up soas to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2004, and of the results of thebusiness and changes in equity of the Company and the Group, the Group’s cash flows and results of the Group’s insurance operations, forthe financial year ended on 31 December 2004; andat the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when theyfall due.On behalf of the BoardMICHAEL WONG PAKSHONGChairmanTAN BENG LEEDirectorSingapore7 February 200550 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

AUDITORS’ REPORTTO THE MEMBERS OF GREAT EASTERN HOLDINGS LIMITEDWe have audited the accompanying financial statements of Great Eastern Holdings Limited and of the Group set out on pages 52 to 99. Thesefinancial statements comprise the balance sheets of the Group and of the Company as at 31 December 2004, the profit and loss statements andthe statements of changes in equity of the Group and of the Company and the statement of cash flows, the life assurance revenue statement andgeneral insurance revenue statement of the Group for the year then ended, and notes thereto. These financial statements are the responsibility ofthe Company’s Directors. Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the Directors, as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.In our opinion,(a)(b)the accompanying financial statements are properly drawn up in accordance with the provisions of the Companies Act (“the Act”) andSingapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at31 December 2004, the results and changes in equity of the Group and of the Company and the cash flows and results of the insuranceoperations of the Group for the financial year ended on that date; andthe accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore ofwhich we are the auditors have been properly kept in accordance with the provisions of the Act.ERNST & YOUNGCertified Public AccountantsSingapore7 February 2005GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 51

PROFIT & LOSSSTATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBERGROUPCOMPANYin Singapore Dollars (millions) Notes 2004 2003 2004 2003Turnover 7,878.0 6,052.4 – –Gross Premiums 5,374.9 5,055.9 – –Life assurance profit from:Participating Fund 106.3 84.8 – –Non-participating Fund 227.1 164.1 – –Investment-linked Fund 49.5 31.8 – –Profit from life assurance 382.9 280.7 – –Profit from general insurance 32.8 25.2 – –Profit from insurance operations 415.7 305.9 – –Dividend from subsidiary companies – – 272.5 284.4Investment income, net 4 50.1 46.8 0.1 1.0Interest income 9.2 5.5 2.7 1.2Gain/(loss) on sale of investments and changes in fair value 5 34.4 15.7 – (2.3)Increase in provision for impairment of assets 6 – (0.6) – –Exchange differences 0.1 24.3 – 0.1Profit from investments 93.8 91.7 275.3 284.4Fees and other income 39.4 28.3 – 0.3Profit before expenses 548.9 425.9 275.3 284.7less:Management and other expenses 21.3 12.7 5.5 2.7Depreciation and amortisation 21, 22 0.6 0.2 – –Expenses 21.9 12.9 5.5 2.7Profit before income tax 8 527.0 413.0 269.8 282.0less: Income tax 9 120.2 97.8 54.8 77.8Profit after income tax 406.8 315.2 215.0 204.2less: Minority interests 4.8 3.0 – –PROFIT ATTRIBUTABLE TO SHAREHOLDERS 402.0 312.2 215.0 204.2Basic earnings per share (in Singapore dollars) 10 $ 0.85 $ 0.66Diluted earnings per share (in Singapore dollars) 10 $ 0.85 $ 0.66The accompanying significant accounting policies and explanatory notes on pages 60 to 99 form an integral part of the financial statements.52 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

BALANCESHEETSAS AT 31 DECEMBERGROUPCOMPANYShareholders’Lifeand General Assurance Shareholders’in Singapore Dollars (millions) Notes Total Insurance Funds Fund Fund2004 2003 2004 2003 2004 2003 2004 2003Share capitalAuthorised 11 1,000.0 1,000.0 1,000.0 1,000.0 – – 1,000.0 1,000.0Issued and fully paid 11 236.7 235.7 236.7 235.7 – – 236.7 235.7Share premium 10.7 0.8 10.7 0.8 – – 10.7 0.8ReservesMerger reserve 164.9 141.9 164.9 141.9 – – 620.0 620.0Translation reserve (14.6) (8.7) (14.6) (8.7) – – – –Fair value reserve 94.3 110.2 94.3 110.2 – – – –Accumulated profit 1,832.7 1,544.1 1,832.7 1,544.1 – – 991.7 890.1SHAREHOLDERS’ FUND 2,324.7 2,024.0 2,324.7 2,024.0 – – 1,859.1 1,746.6LIFE ASSURANCE FUND 12 30,804.8 27,556.1 – – 30,804.8 27,556.1 – –GENERAL INSURANCE FUND 13 135.1 144.8 135.1 144.8 – – – –MINORITY INTERESTS 11.8 9.0 11.8 9.0 – – – –LIABILITIESIncome tax 232.1 115.2 95.2 134.3 136.9 (19.1) (0.5) (0.7)Other creditors and interfund balances 14 968.2 835.2 106.3 119.6 861.9 715.6 2.3 1.2Unexpired risk reserve 15 34.8 38.8 34.8 38.8 – – – –Policy benefits 1,207.3 1,093.9 – – 1,207.3 1,093.9 – –Claims admitted or intimated 130.8 120.0 – – 130.8 120.0 – –Agents’ retirement benefits 7 139.6 136.1 – – 139.6 136.1 – –Deferred tax 9 267.4 278.6 45.0 65.4 222.4 213.2 (0.1) (0.1)Total Liabilities and Shareholders’ Fund 36,256.6 32,351.7 2,752.9 2,535.9 33,503.7 29,815.8 1,860.8 1,747.0ASSETSCash and bank balances 657.4 393.0 73.2 97.9 584.2 295.1 2.7 3.6Cash on deposit 4,212.4 3,747.0 826.7 672.5 3,385.7 3,074.5 271.7 367.4Other debtors and interfund balances 16 976.4 829.9 516.2 467.9 460.2 362.0 0.3 0.2Outstanding premiums 153.0 155.4 15.3 11.7 137.7 143.7 – –Properties held for sale 17 82.1 195.6 – – 82.1 195.6 – –Investments 18 28,698.6 25,544.4 1,293.0 1,267.7 27,405.6 24,276.7 2.0 2.0Associated companies 19 150.5 147.9 24.1 14.5 126.4 133.4 – –Subsidiary companies 20 – – – – – – 1,584.1 1,373.7Intangible assets 21 32.9 – – – 32.9 – – –Property, plant and equipment 22 1,293.3 1,338.5 4.4 3.7 1,288.9 1,334.8 – 0.1Total Assets 36,256.6 32,351.7 2,752.9 2,535.9 33,503.7 29,815.8 1,860.8 1,747.0The accompanying significant accounting policies and explanatory notes on pages 60 to 99 form an integral part of the financial statements.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 53

STATEMENTS OFCHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBERShare Share Merger Translation Fair Value Accumulatedin Singapore Dollars (millions) Notes Capital Premium Reserve Reserve Reserve Profit TOTALBalance at 1 January 2003 235.7 – 141.9 (6.5) (50.2) 1,309.1 1,630.0Exchange differences arising ontranslation of overseas entities – – – (2.2) – – (2.2)Net profit for the year – – – – – 312.2 312.2Current year movements in Fair Value Reserve:Fair value changes on remeasuringavailable-for-sale investments – – – – 207.5 – 207.5Fair value changes transferred to Profitand Loss Statement during the year 5 – – – – (0.4) – (0.4)Deferred tax on fair value changes – – – – (46.7) – (46.7)Dividends paid for the year:Final dividend for the previous year(net of 22% Singapore Tax) 27 – – – – – (55.1) (55.1)Interim dividend paid(net of 22% Singapore Tax) 27 – – – – – (22.1) (22.1)Issue of shares arising from exercise of share options 11 * 0.8 – – – – 0.8Balance at 31 December 2003 235.7 0.8 141.9 (8.7) 110.2 1,544.1 2,024.0Exchange differences arisingon translation of overseas entities – – – (5.9) – – (5.9)Net profit for the year – – – – – 402.0 402.0Current year movements in Fair Value Reserve:Fair value changes on remeasuringavailable-for-sale investments – – – – 14.7 – 14.7Fair value changes transferred to Profitand Loss Statement during the year 5 – – – – (42.2) – (42.2)Deferred tax on fair value changes – – – – 29.9 – 29.9Deferred tax – effect of change in tax rate – – – – 4.7 – 4.7Transfer from Fair Value Reserve to Merger Reserve – – 23.0 – (23.0) – –Dividends paid for the year:Final dividend for the previous year(net of 20% Singapore Tax) 27 – – – – – (67.9) (67.9)First interim dividend paid(net of 20% Singapore Tax) 27 – – – – – (26.5) (26.5)Special interim dividend paid(net of 20% Singapore Tax) 27 – – – – – (19.0) (19.0)Issue of shares arising from exerciseof share options 11 1.0 9.9 – – – – 10.9Balance at 31 December 2004 236.7 10.7 164.9 (14.6) 94.3 1,832.7 2,324.7GROUP* amount is less than S$0.1 millionThe accompanying significant accounting policies and explanatory notes on pages 60 to 99 form an integral part of the financial statements.54 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

STATEMENTS OFCHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBERCOMPANYShare Share Merger Fair Value Accumulatedin Singapore Dollars (millions) Notes Capital Premium Reserve Reserve Profit TOTALBalance at 1 January 2003 235.7 – 620.0 (7.5) 763.1 1,611.3Net profit for the year – – – – 204.2 204.2Current year movements in Fair Value Reserve:Fair value changes on remeasuringavailable-for-sale investments – – – (8.5) – (8.5)Fair value changes transferred to Profitand Loss Statement during the year 5 – – – 18.1 – 18.1Deferred tax on fair value changes – – – (2.1) – (2.1)Dividends paid for the year:Final dividend for the previous year(net of 22% Singapore Tax) 27 – – – – (55.1) (55.1)Interim dividend paid (net of 22% Singapore Tax) 27 – – – – (22.1) (22.1)Issue of shares arising from exercise of share options 11 * 0.8 – – – 0.8Balance at 31 December 2003 235.7 0.8 620.0 – 890.1 1,746.6Net profit for the year – – – – 215.0 215.0Dividends paid for the year:Final dividend for the previous year(net of 20% Singapore Tax) 27 – – – – (67.9) (67.9)First interim dividend paid(net of 20% Singapore Tax) 27 – – – – (26.5) (26.5)Special interim dividend paid(net of 20% Singapore Tax) 27 – – – – (19.0) (19.0)Issue of shares arising from exerciseof share options 11 1.0 9.9 – – – 10.9Balance at 31 December 2004 236.7 10.7 620.0 – 991.7 1,859.1* amount is less than S$0.1 millionThe accompanying significant accounting policies and explanatory notes on pages 60 to 99 form an integral part of the financial statements.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 55

CONSOLIDATED STATEMENTOF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBERin Singapore Dollars (millions) Notes 2004 2003CASH FLOWS FROM OPERATING ACTIVITIESProfit before income tax 527.0 413.0Excess of income over expenses before income tax from life assurancerevenue statement 4,126.4 3,079.4Excess of income over expenses before income tax from general insurancerevenue statement 28.7 26.4Adjustments for non-cash items:Surplus transferred from life assurance fund but not yet withdrawn (382.9) (280.7)Profit transferred from general insurance fund but not yet withdrawn (32.8) (25.2)Share of results of associated companies (29.2) (0.7)Amortisation of difference in purchase consideration over nominal value ofgovernment securities, loan stocks and bonds 4 31.4 (3.9)Gain on sale of investments and changes in fair value 5 (1,160.2) (154.0)Loss on sale of properties held for sale 5 11.1 –Increase in/(write-back of) provision for impairment of assets 6 7.4 (6.8)Agents’ retirement benefits 7 13.6 14.7Loss/(gain) on disposal of property, plant and equipment 8 2.4 (2.6)Increase in reserves during the year 13 1.1 2.6Depreciation and amortisation 21, 22 31.8 26.6Exchange difference 30.2 (56.9)3,206.0 3,031.9Changes in working capital:Outstanding premiums 2.4 4.8Other debtors (146.5) (152.8)Claims admitted or intimated 10.8 23.7Policy benefits 113.4 93.2Unexpired risk reserve 15 4.3 5.0Other creditors 133.0 38.4Cash generated from operations 3,323.4 3,044.2Income tax paid (130.5) (156.0)Agents’ retirement benefits paid 7 (4.4) (4.3)Net cash flows from operating activities 3,188.5 2,883.9The accompanying significant accounting policies and explanatory notes on pages 60 to 99 form an integral part of the financial statements.56 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

CONSOLIDATED STATEMENTOF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBERin Singapore Dollars (millions) Notes 2004 2003CASH FLOWS FROM INVESTING ACTIVITIESProceeds from sale of investments 11,197.4 10,365.0Purchase of investments (13,243.8) (12,183.9)Proceeds from sale of properties held for sale 5 110.0 –Capital injection in associated company 19 – (4.9)Repayment of loan by associated company 19 14.1 59.6Dividends from associated company 6.7 0.3Proceeds from sale of property, plant and equipment 86.5 2.7Purchase of property, plant and equipment 22 (126.9) (92.2)Net cash flows used in investing activities (1,956.0) (1,853.4)CASH FLOWS FROM FINANCING ACTIVITIESDividends paid 27 (113.4) (77.2)Dividends paid to minority shareholder of a subsidiary (2.0) (4.0)Issue of shares arising from exercise of share options 10.9 0.8Net cash flows used in financing activities (104.5) (80.4)Net effect of translation reserve adjustment (398.2) (175.4)Net increase in cash and cash equivalents 729.8 774.7Cash and cash equivalents at the beginning of the year 4,140.0 3,365.3Cash and cash equivalents at the end of the year 4,869.8 4,140.0Cash and cash equivalents consist of cash, bank balances and cash on deposit.The accompanying significant accounting policies and explanatory notes on pages 60 to 99 form an integral part of the financial statements.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 57

LIFE ASSURANCEREVENUE STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBERGROUPin Singapore Dollars (millions) Notes 2004 2003IncomeGross PremiumsAnnual 2,944.6 2,881.3Single 2,286.5 2,025.25,231.1 4,906.5less: Reassurances 55.9 123.9Premiums less reassurances 5,175.2 4,782.6Investment income, net 4 1,010.8 858.6Interest income 201.7 187.0Rental income, net 25.4 20.8Gain on sale of investments and changes in fair value 5 1,119.1 136.2Loss on sale of properties held for sale 5 (11.1) –(Increase in) / write-back of provision for impairment of assets 6 (7.4) 7.4Exchange differences 8.5 83.4Total Income 7,522.2 6,076.0less: ExpensesClaims, surrenders and annuities less recoveries 2,829.8 2,457.6Commissions and agency expenses 411.0 361.4Management expenses 140.1 138.5Agents’ retirement benefits 7 13.6 14.7Depreciation and amortisation 21, 22 30.5 25.1Total Expenses 3,425.0 2,997.3Excess of income over expenses from operations 4,097.2 3,078.7Share of results of associated companies 29.2 0.7Excess of income over expenses before income tax 8 4,126.4 3,079.4less: Income tax 9 140.6 32.7Excess of income over expenses after income tax 3,985.8 3,046.7less: Amount transferred to Life Assurance Fund 12 3,602.9 2,766.0Profit from life assurance transferred to profit and loss statement 382.9 280.7The accompanying significant accounting policies and explanatory notes on pages 60 to 99 form an integral part of the financial statements.58 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

GENERAL INSURANCEREVENUE STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBERGROUPin Singapore Dollars (millions) Notes 2004 2003IncomeGross premiums 143.8 149.4less: Reinsurances 67.8 64.7Premiums less reinsurances 76.0 84.7less: Increase in unexpired risk reserve during the year 15 4.3 5.2Net earned premiums 71.7 79.5less: ExpensesClaims and increase in loss reserves 39.4 40.3Commissions and agency expenses 3.4 3.2Management expenses 19.7 19.9Depreciation and amortisation 21, 22 0.7 1.3Total expenses 63.2 64.7Net underwriting profit 8.5 14.8Investment income, net 4 11.9 7.9Interest income 1.2 1.4Gain on sale of investments and changes in fair value 5 6.7 2.1Exchange differences 0.4 0.2Profit from investments 20.2 11.6Excess of income over expenses before income tax 8 28.7 26.4Add: Decrease/(increase) in reserves during the year 13 4.1 (1.2)Profit before income tax from general insurance transferred to profit and loss statement 32.8 25.2The accompanying significant accounting policies and explanatory notes on pages 60 to 99 form an integral part of the financial statements.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 59

NOTES TO THEFINANCIAL STATEMENTS1 GENERALGreat Eastern Holdings Limited (the “Company” or “GEH”) is a limited liability company incorporated in the Republic of Singapore. Thenotes refer to the Company and the Group unless otherwise stated. The registered office of the Company is located at 1 Pickering Street,#16-01, Great Eastern Centre, Singapore 048659.The principal activity of the Company is that of a financial holding company. The principal activities of the subsidiaries and secondtier subsidiaries within the Group are stated in Note 3. There have been no significant changes in the nature of these activities during thefinancial year.On 24 February 2004, Oversea-Chinese Banking Corporation Limited (“OCBC Bank”), a substantial shareholder having an effective interestthen of 48.9% of the issued and paid up capital of the Company, announced that it would make a voluntary unconditional offer (the“Offer”) to acquire all the ordinary shares it did not already own in GEH, upon fulfillment of certain conditions. The consideration would bebased on a share exchange ratio of 0.976 new ordinary shares of OCBC Bank at S$1.00 each (which on issue would be converted into OCBCBank stock units) for each ordinary share of 50 cents each in the capital of GEH. Following the Offer made by OCBC Bank on 17 May 2004,the Board of Directors of GEH issued a Circular to shareholders dated 27 May 2004 in relation to the Offer. As at the close of the Offer on30 June 2004, OCBC Bank has an effective shareholding of 81.1% in GEH and became GEH’s holding and ultimate holding company.On 24 February 2004, the Company announced that it had entered into a conditional agreement with OCBC Bank to dispose of 80,192,220stock units in OCBC Bank, representing approximately 6.26% in OCBC Bank (the “Disposal”) held by three of its principal insurancesubsidiaries (primarily in their Life Insurance funds), through a selective capital reduction (“SCR”) exercise to be undertaken by OCBC Bank.OCBC Bank would make a cash payment of S$12.3639 for each of the OCBC Bank stock unit, amounting in total to approximately S$991.5million. The Disposal was approved by the shareholders of the Company at the Extraordinary General Meeting held on 22 April 2004. TheDisposal was completed on 28 May 2004.The cash payment received from OCBC Bank, of S$12.3639 for each OCBC Bank stock unit cancelled pursuant to the SCR, totalled S$991.5million, of which about S$126.0 million was received in the form of a deemed Singapore tax exempt dividend. The portion of the profit onthe Disposal attributable to the insurance funds and the portion attributable to the shareholders were included in the Revenue Statementsof the insurance funds and the Profit and Loss Statements respectively. These were shown as “gain/(loss) on sale of investments” and“changes in fair value” as applicable, or in respect of the tax exempt dividend received, as “investment income”.2 SIGNIFICANT ACCOUNTING POLICIES2.1 Basis of AccountingThe financial statements are prepared in accordance with the Singapore Financial Reporting Standards (FRS) as required by theCompanies Act, Chapter 50.The financial statements are prepared under the historical cost convention, except for certain land and buildings that are carried atrevalued amounts in the Life Assurance Funds and the remeasurement at fair value of derivative instruments, held-for-trading andavailable-for-sale financial assets prescribed by FRS 39.FRS 39 on Financial Instruments – Recognition and Measurement, has been adopted since 1 January 2002 before its effective date of1 January 2005.The accounting policies have been consistently applied by the Company and the Group and are consistent with those used in theprevious financial year.The financial statements are presented in Singapore Dollars (SGD or S$).60 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTS2.2 ConsolidationThe consolidated financial statements comprise the financial statements of the Company and all its subsidiaries and second-tiersubsidiaries. Subsidiaries are companies in which the Group has a long term equity interest and where it has effective control over thefinancial and operating policies so as to obtain benefits therefrom.The financial year of the Company and all its subsidiary companies and second-tier subsidiary companies ends on 31 December andthe consolidated financial statements incorporate the financial statements of the Company and all its subsidiary companies andsecond-tier subsidiary companies for the year ended 31 December, after the elimination of all material intercompany transactions. Thefinancial statements of subsidiary companies and second-tier subsidiary companies are prepared on the basis of accounting policiesconsistently applied to all transactions and accounting events. A list of the Company’s subsidiary companies and second-tier subsidiarycompanies is shown in Note 3.Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results ofsubsidiaries acquired or disposed off during the year are included in the consolidated Profit and Loss Statement from the effective dateof acquisition or up to the effective date of disposal, as appropriate. The assets and liabilities of a subsidiary are measured at their fairvalues at the date of acquisition and these values are reflected in the consolidated balance sheet.Intragroup transactions, balances and resultant unrealised gains are eliminated on consolidation. The consolidated financial statementsreflect external transactions only. Unrealised losses are eliminated on consolidation unless costs cannot be recovered.Minority interests are measured according to its share of the post acquisition fair values of the identifiable assets and liabilities of thesubsidiary companies.2.3 GoodwillThe difference between the consideration paid over the fair values of the Group’s share of the net assets of businesses acquired atthe date of acquisition is included in the consolidated balance sheet as goodwill or negative goodwill arising on consolidation. Goodwillis amortised on a straight line basis over the estimated useful economic life. The amortisation of goodwill is reported in the Profit andLoss Statement, except for goodwill arising on the acquisition of The Overseas Assurance Corporation Limited, which was written offagainst the merger reserve arising from the same transaction. Goodwill is stated at cost less accumulated amortisation and anyimpairment losses.2.4 Premiums and CommissionsLife Assurance BusinessPremiums from policyholders are recognised on their respective due dates. Premiums not received on due date are recognised as revenuein the Life Assurance Revenue Statement with the corresponding outstanding premiums reported in the balance sheet. The commissionexpense arising from these outstanding premiums are accrued in the same reporting period.Premiums due after but received before the end of the financial year are recorded as advance premiums and this item is included as othercreditors in the balance sheet. The commissions arising from these advance premiums, if any, are not accrued in the financial statementsuntil the premiums are due and recognised as revenue in the Revenue Statement.General Insurance BusinessPremiums from the general insurance business are recognised as revenue in the General Insurance Revenue Statement uponcommencement of insurance cover. Premium pertaining to periods outside of the financial reporting period are adjusted through themovement in unexpired risk reserves. The commission expense is accrued in full upon the risk underwritten as reflected in the gross ornet (see note 2.28) premium recognised.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 61

NOTES TO THEFINANCIAL STATEMENTS2.5 Investment Income, Interest Income and Rental IncomeDividend income, other than from the Company’s subsidiaries, is recognised when the shareholders’ right to receive the payment isestablished. This is shown as investment income. Dividend income from the Company’s subsidiaries is recognised when the dividend isdeclared payable.Interest income is accrued on a day to day basis. Interest on loans is recognised on an accrual basis except where a loan is considerednon-performing, i.e. where interest is not serviced. Recognition of interest on non-performing loans is suspended, after which interestis recognised when it is received.Rental income is recognised on a monthly accrual basis or other frequency depending on the tenancy contract. Where a default inpayment of rent has occurred and should the outstanding rent be in excess of the rental deposit, recognition of rental income issuspended. After which, rental income is recognised when it is received.2.6 Gain/Loss on Sale of Investments and Changes in Fair ValueSales of investments are recognised on the respective trade dates i.e., the date the subsidiaries within the Group commits to sellthe asset.For held-for-trading investments, gain or loss on sale of investment is determined by the difference between the sale proceeds and thefair value approximating at the time of sale. The investments are measured/valued at each calendar month and the changes in fair valueare reported in the respective Profit and Loss or Revenue Statements.For available-for-sale investments, gain or loss on sale of investment is determined by the difference between the sale proceeds andthe average carrying cost or amortised cost. The investments are measured/valued at each calendar month and the changes in fair valueof these investments are reported in the Statement of Changes in Equity or Insurance Funds. At the time of disposal, the cumulative fairvalue changes in respect of these investments previously recognised in the Statement of Changes in Equity or Insurance Funds aretransferred to the respective Profit and Loss or Revenue Statements.2.7 Provision for Impairment of AssetsThe carrying value of unquoted equity, secured and unsecured loans and property, plant and equipment are reviewed regularly forimpairment provision. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Therecoverable amount is the higher of the net realisable value and the value in use, which is measured by reference to discounted cashflows. Recoverable amounts are estimated for individual assets, or, if not possible, for the cash generating unit.In accordance with FRS 36, an impairment provision is charged to the Profit and Loss or Revenue Statements immediately. Subsequentincrease in the recoverable amount of an asset is treated as reversal of the previous impairment provision and is recognised to the extentof the carrying amount of the asset that would have been determined (net of depreciation and amortisation) had no impairmentprovision been made. The reversal is recognised in the Profit and Loss or Revenue Statements, immediately, unless the asset is carriedat revalued amount.2.8 Fees and Other IncomeManagement and advisory fee income is recognised when it is due under the respective contracts.2.9 ProvisionsProvisions are recognised when the Group has an obligation, either legal or constructive, where it is probable that an outflow ofresources will be required to settle the obligation which can be reliably estimated. Provisions are reviewed at each balance sheet date andadjusted to reflect the current best estimate.62 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTS2.10 Employee BenefitsDefined contribution plans under statutory regulationsThe Company and its subsidiary companies incorporated in Singapore are required to make contributions on the basis of its employees’wages in accordance with the Central Provident Fund Act (“CPF”). Similarly, subsidiary companies incorporated in Malaysia are requiredto make contributions on the basis of its employees’ wages in accordance with the Employee Provident Fund Act (“EPF”). Both CPFand EPF contributions are recognised as staff costs in the periods that correspond with the employment.Employee Leave EntitlementsAn employee’s entitlement to annual leave and long-service leave is accrued based on the estimated liability on balance sheet date.Share optionsThe Company has in place an Executives’ Share Option Scheme for the granting of options to senior executives. There is no charge toProfit and Loss or Revenue Statements upon the grant of options. This treatment is in accordance with FRS 19 as the exercise priceequals the average of the last dealt prices of the Company’s shares on the Singapore Exchange Securities Trading Limited for the fiveconsecutive market days (on which there was trading of the shares) immediately preceding the Offering Date of the options. When theoptions are exercised, the proceeds received, net of any transaction costs, are credited to share capital and share premium, respectively.2.11 LeasesOperating LeasesLeases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased item are classified asoperating leases. Operating lease payments are recognised as an expense in the Profit and Loss or Revenue Statements on a straightline basis over the lease term.2.12 Income TaxCurrent tax is calculated by reference to the income tax payable in the countries in which the Group carries on insurance business, basedon the profit or actuarial surplus arising in the year and on the income from investments and profit on sale of investments for the year, asapplicable, together with tax deducted at source from dividends and interest received from countries in which the Group does not operate.Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the taxbases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measuredusing the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoveredor settled based on tax rates (and applicable tax laws and jurisdictions) that have been enacted or substantively enacted at the balancesheet date.Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiary andassociated companies; except where the timing of reversal of the temporary difference can be controlled by the Group and it isprobable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductibletemporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profitwill be available against which the deductible temporary differences, carry-forward of unused tax assets and unused tax losses canbe utilised.At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. TheGroup recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit willallow the deferred tax asset to be recovered. Conversely, the Group reduces the carrying amount of a deferred tax asset to the extentthat it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset tobe utilised.Current tax and deferred tax are charged or credited to the Statement of Changes in Equity, or Life Assurance or GeneralInsurance Funds if the tax relates to items that are credited or charged, in the same or different period, to the Statement ofChanges in Equity, or Life Assurance or General Insurance Funds.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 63

NOTES TO THEFINANCIAL STATEMENTS2.13 Property, Plant and EquipmentProperty, plant and equipment are stated at cost or valuation, less accumulated depreciation and any impairment in value. The initialcost of property, plant and equipment comprises its purchase price, including non-refundable taxes and any costs to enhance theworking condition of the asset for its intended use. Expenditure incurred after the property, plant and equipment have been put intooperation, such as repairs and maintenance and overhaul costs, is charged to the Profit and Loss or Revenue Statements in the period inwhich the costs are incurred. Where the expenditure has resulted in an increase in the future economic benefits expected to be obtainedfrom the use of an item of property, plant and equipment beyond its originally assessed standard of performance, the expenditure iscapitalised as an additional cost of property, plant and equipment. The carrying amounts are reviewed at each balance sheet dateto assess the recoverable amount. When the carrying values exceed the recoverable amount, the cost or valuation of the assets arewritten down as an impairment provision on property, plant and equipment.Depreciation for property, plant and equipment is calculated on a straight line basis over their estimated useful lives. No depreciationis provided for freehold land, 999-year leasehold land and capital works in progress. The annual depreciation rates are:Leasehold landTerm of lease (no depreciation for 999-year leasehold land)Building 2%Office furniture, fittings and equipment 10% to 25%Motor vehicles 20%Computer equipment 20% to 33 1 /3%The estimates for useful life and depreciation method are reviewed annually to assess that the method and period of depreciation remainrelevant and are consistent with the expected economic benefits derived from these assets.Included in the Life Assurance Fund’s freehold land, leasehold land and buildings are properties occupied for own use in the operationsof the Group as well as the Group’s investment properties.Investment properties are properties that are held on a long-term basis for their investment potential and income. The properties arecarried at either acquisition cost, acquisition cum development cost or revalued amounts, less impairment provision. The revaluationswere done in 1996, based on independent valuation and the subsidiary company is exempted from regular revaluation under FRS 16.The surplus arising was credited to the Life Assurance Revenue Statement.The land and building associated with investment properties are depreciated in accordance with the above policy.2.14 Intangible AssetsSoftware development costs are capitalised and recognised as an intangible asset when it is established that the costs will generateeconomic benefits beyond one year and are associated with identifiable software products controlled by the Group. Softwaredevelopment costs are amortised, from the date of system commissioning, on a straight-line basis over its useful economic life of 10years. The carrying amount is assessed for impairment on an annual basis.64 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTS2.15 InvestmentsInvestments are recognised on trade dates, i.e., the date on which a commitment was made to purchase the investment. Investmentsare initially carried at cost, being the fair value of the consideration paid, including acquisition costs associated with the investments.In accordance with FRS 39, investments classified as “held-for-trading” or “available-for-sale” are measured at fair value. Held-fortradinginvestments are measured/valued at each calendar month and the changes in fair value are reported in the respective Profit andLoss or Revenue Statements. Available-for-sale investments are measured/valued at each calendar month and the changes in fair valueof these investments are reported in the Statement of Changes in Equity or Insurance Funds. At the time of disposal, the cumulative fairvalue changes in respect of these investments previously recognised in the Statement of Changes in Equity or Insurance Funds aretransferred to the respective Profit and Loss or Revenue Statements.Fair value for quoted investments is based on open market valuation, consistently applied over time within each individual portfolio. TheCompany and the Group adopt bid price valuation for all quoted investments except for quoted equity investments. For equity investmentstraded on exchange, fair value is based on the last traded price on the respective exchange. Foreign currency denominated investmentsare translated to home currency at the last traded foreign exchange rate for each reporting period.Unquoted equities are measured at cost after ascertaining that there is no market mechanism to determine the fair value nor comparableinstrument with readily available and objective fair value, for each of the security.For other unquoted investments, where there are no active markets, fair value is determined by computing the average of two or moreprices quoted by the intermediaries or brokers.For fixed income investments, namely government securities, loan stocks and bonds, the difference between purchase consideration andnominal value is amortised over the remaining tenure of the security at the security’s effective interest rate. The amortisation is chargedto the respective Profit and Loss or Revenue Statements.2.16 Loans OriginatedPolicy loans are loans that policyholders borrowed from the life assurance subsidiary companies within the Group. These loans arecollaterised against the policies that policyholders have with the life assurance subsidiary companies. Policy loans are carried at unpaidprincipal balances, which approximate fair value.Included in policy loans are premium loans, which are carried at balances that are outstanding at the reporting date.Secured and unsecured loans are carried at amortised cost, less provision for impairment or uncollectability. Amortised cost is theunpaid principal balance adjusted for amortisation of the difference between the original loan and the maturity amount. Amortisationis computed on the basis of effective interest rate.2.17 Derivative Financial InstrumentsAll derivatives, including embedded derivatives are classified as “held-for-trading”. They are initially recognised at amounts paid orreceived, as appropriate. These are then remeasured at fair value and the resultant fair value changes are taken to the Profit and Lossor Revenue Statements, as the case may be. Fair value of derivatives is determined by using the average of two or three indicativebid prices obtained from the intermediaries or brokers.The Group uses derivative financial instruments such as interest rate swaps and foreign exchange contracts to hedge its risks associatedprimarily with interest rate and foreign currency fluctuations. Details of the Group’s financial risk exposures are set out in Note 26.The Group does not adopt hedge accounting.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 65

NOTES TO THEFINANCIAL STATEMENTS2.18 Subsidiary CompaniesA subsidiary is a company in which the Group, directly or indirectly, holds more than 50% of the issued share capital, or controls morethan half the voting rights, or controls the appointment of directors to the board.In the Company’s separate financial statements, investments in subsidiary companies are accounted for at cost, less provision for impairment.2.19 Associated CompaniesAssociated companies are companies in which the Group has a long-term equity interest of between 20% and 50% and over whosefinancial and operating policy decisions the Group exercises significant influence. The Group’s investments in associated companies areaccounted for using the equity method. The Group’s investments in associated companies include goodwill (net of accumulated amortisation)on acquisition, which is treated in accordance with the goodwill stated in Significant Accounting Policies Note 2.3 above.2.20 Properties held for saleProperties held for sale are stated at the lower of cost and estimated net realisable value, net of progress billings. Cost of properties forsale include interest and other related expenditure which are capitalised as and when activities that are necessary to get the assets readyfor their intended use are in progress. Net realisable value represents the estimated selling price less costs to be incurred inselling the property.2.21 Outstanding PremiumsOutstanding premiums are carried at cost, which approximate fair value.Premiums of life assurance business which remained outstanding beyond the contractual date would automatically trigger premiumloans which are taken against the cash value standing to the credit of the policy. Where the cash value is insufficient to activate apremium loan, the policy lapses and the contract between the life assurance subsidiary company and the policyholder is deemedcancelled without further liabilities accruing from either party.Outstanding premiums of general insurance business which are outstanding for 90 days would lead to termination of cover and theentire amount would be written off to General Insurance Revenue Statement in the year in which the 90-day credit expires.2.22 Other DebtorsOther debtors are stated at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debtsis made when collection of the full amount is no longer probable. Bad debts are written-off as and when incurred. Both bad anddoubtful debt provisions are accounted for in the Profit and Loss or Revenue Statements, as the case may be.2.23 Cash and Cash EquivalentsCash and cash equivalents comprise cash and bank balances and cash on deposit, which are carried at cost.2.24 Life Assurance BusinessProfits from the non-linked life assurance business are allocated from the surplus determined from the result of the annual actuarialvaluation (which also determines the liabilities relating to policyholders’ benefits of the life assurance business). The amount of thedistributable surplus allocated to shareholders is approved by the Directors in accordance with the Insurance Regulations and theArticles of Association of the respective subsidiaries.The whole of the valuation surplus or deficit in respect of the unit-linked business, as determined by the Appointed Actuary, istransferred to the Profit and Loss Statement of the subsidiaries.2.25 Agents’ Retirement BenefitsProvision for agents’ retirement benefits is calculated in accordance with the terms and conditions in the respective Life Assurance SalesRepresentative’s Agreements.66 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTS2.26 Claims Admitted or IntimatedFull provision is made for the estimated cost of all life assurance claims notified but not settled at balance sheet date. Provision is madefor claims incurred but not reported for all classes of general insurance business written, using a mathematical method of estimation.2.27 Policy BenefitsPolicy benefits are recognised in the accounts when policyholder exercises the option to deposit the survival benefits with the lifeassurance subsidiary companies when the benefit falls due. Policy benefits are interest bearing at rates as determined by the lifeassurance subsidiary companies from time to time.2.28 Unexpired Risk ReserveThe Unexpired Risk Reserve (“URR”) represent the portion of the net premiums of general insurance policies written that relate to theunexpired periods of the policies at the end of the financial period.In determining the URR at balance sheet date, the method that most accurately reflects the actual unearned premium is used. URR iscomputed using the 1 /24th method reduced by the corresponding percentage of accounted gross direct business, commissions andagency related expenses not exceeding limits specified by regulators in the respective jurisdictions in which the Group operates.2.29 Other CreditorsOther creditors are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received.2.30 Foreign Currency Conversion and TranslationForeign currency transactionsForeign currency transactions are recorded in the local currency of the respective companies within the Group at exchange ratesprevailing at transaction dates. Foreign currency monetary assets and liabilities are converted at the approximate rates ruling at thebalance sheet date. All gains or losses on exchange are included in the respective Profit and Loss or Revenue Statements.Foreign entitiesOn consolidation of subsidiary companies, revenue statement items of foreign entities are translated into Singapore dollars at averageexchange rates ruling during the year and assets and liabilities of foreign entities are translated into Singapore dollars at approximateexchange rates at the balance sheet date. All exchange differences arising therefrom are reported directly to the translation reservesas a separate component in the Statement of Changes in Equity, Life Assurance Fund or General Insurance Fund respectively.2.31 Segment InformationThe Group’s primary reporting format is its geographical segments and its secondary reporting format is its business segments.2.32 Related Party TransactionsReceivables from related parties are recognised and carried at cost less impairment losses on any uncollectible amounts. Payables torelated parties are carried at cost.2.33 TurnoverTurnover for the Group is derived from the summation of components as follows: (i) Gross investment income, Interest income, Gain/(loss) on sale of investments (excluding fair value changes on held-for-trading investments) and Fees and other income from the Profitand Loss Statement; (ii) Gross premiums, Gross investment income, Interest income, Rental income and Gain/(loss) on sale of investments(excluding fair value changes on held-for-trading investments) from the Life Assurance Revenue Statement and (iii) Gross premiums,Gross investment income, Interest income and Gain/(loss) on sale of investments (excluding fair value changes on held-for-tradinginvestments) from the General Insurance Revenue Statement.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 67

NOTES TO THEFINANCIAL STATEMENTS3 SUBSIDIARY AND ASSOCIATED COMPANIESCountry of Principal Effective interestIncorporation Activities Cost held by GEH2004 2003 2004 2003S$ ‘000 S$ ‘000 % %(i) SUBSIDIARY COMPANIESHeld by the CompanyThe Great Eastern Life Assurance Company Limited Singapore Life assurance 97,176 97,176 100 100The Overseas Assurance Corporation Limited Singapore Composite insurance 774,668 774,668 100 100Straits Lion Asset Management Limited Singapore Asset management 2,400 2,400 80 80Great Eastern International Private Limited Singapore Investment holding 10 10 100 100The Great Eastern Trust Private Limited Singapore Investment holding 10 10 100 100Island Securities Private Limited Singapore Dormant 10 10 100 100874,274 874,274Held through subsidiariesAlpha Financial Advisers Private Limited Singapore Financial Advisory – – 93.2 93.2(3.1)Fairfield Straits Lion Asset Management Limited Singapore Asset management – – 52.0 –(3.2)GEL Capital (Malaysia) Berhad Malaysia Investment holding – – 100 100(3.2)Great Eastern Life Assurance (Malaysia) Berhad Malaysia Life assurance – – 100 100(3.2)Straits Lion Management (Malaysia) Sendirian Berhad Malaysia Dormant – – 90.2 90.2(3.2)The Great Eastern General Insurance CompanySendirian Berhad Malaysia Dormant – – 100 100(3.2)Overseas Assurance Corporation (Holdings) Berhad Malaysia Investment holding – – 100 100(3.2)Overseas Assurance Corporation (Malaysia) Berhad Malaysia General insurance – – 100 100(3.3)P.T. Asuransi Jiwa Asih Great Eastern Indonesia Life assurance – – 87.9 87.9(ii) ASSOCIATED COMPANIESHeld through subsidiaries(3.3) & (3.4)Pasir Ris Properties Private Limited Singapore Investment holding 9,870 9,870 35 35Straits Eastern Square Private Limited Singapore Property developmentand investment 16,170 16,170 49 4926,040 26,040(3.1)On 18 March 2004, Fairfield Straits Lion Asset Management Limited (“FSL”) was incorporated with an authorised capital of S$5 million and an issued paid up capital of S$150,000.Straits Lion Asset Management Limited has an interest in FSL of 65%. The effective interest held by GEH as a Group is 52%.(3.2)Audited by associated firms of Ernst & Young, Singapore.(3.3)Audited by other firms.(a) P.T. Asuransi Jiwa Asih Great Eastern – by Hans Tuanakotta & Mustofa; and(b) Pasir Ris Properties Private Limited – by PricewaterhouseCoopers.(3.4)On 14 September 2004, Pasir Ris Properties Private Limited sold its only asset, the Whitesands Shopping Mall located at Pasir Ris Central to Arima Investment Private Limited for a cashconsideration of S$160,888,888. As the Group’s 35% investment in Pasir Ris Properties Private Limited is held by the life assurance fund of The Great Eastern Life Assurance CompanyLimited, the impact of the sale is reflected in the increase in share of results from associated companies as shown in the Life Assurance Revenue Statement.68 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTSGROUPCOMPANYShareholders’Lifeand General Assurancein Singapore Dollars (millions) Total Insurance Funds FundNotes 2004 2003 2004 2003 2004 2003 2004 20034 INVESTMENT INCOME4.1 Profit and Loss StatementsQuoted equity shares of corporations 37.6 28.8 37.6 28.8 – – – 1.1Unquoted equity shares of corporations 0.6 5.6 0.6 5.6 – – – –Other quoted investments 11.1 12.8 11.1 12.8 – – 0.1 –Other unquoted investments 4.8 3.8 4.8 3.8 – – – –Amortisation of difference in purchaseconsideration over nominal value ofgovernment securities, loan stocksand bonds (1.4) (1.8) (1.4) (1.8) – – – –52.7 49.2 52.7 49.2 – – 0.1 1.1Less: Investment related expenses (2.6) (2.4) (2.6) (2.4) – – – (0.1)50.1 46.8 50.1 46.8 – – 0.1 1.04.2 Life Assurance Revenue StatementQuoted equity shares of corporations 438.7 309.1 – – 438.7 309.1 – –Unquoted equity shares of corporations 6.0 25.6 – – 6.0 25.6 – –Other quoted investments 475.1 400.0 – – 475.1 400.0 – –Other unquoted investments 174.6 146.0 – – 174.6 146.0 – –Amortisation of difference in purchaseconsideration over nominal value ofgovernment securities, loan stocksand bonds (29.4) 6.0 – – (29.4) 6.0 – –1,065.0 886.7 – – 1,065.0 886.7 – –Less: Investment related expenses (54.2) (28.1) – – (54.2) (28.1) – –1,010.8 858.6 – – 1,010.8 858.6 – –4.3 General Insurance Revenue StatementQuoted equity shares of corporations 7.3 3.2 7.3 3.2 – – – –Unquoted equity shares of corporations – – – – – – – –Other quoted investments 2.9 2.6 2.9 2.6 – – – –Other unquoted investments 2.5 2.6 2.5 2.6 – – – –Amortisation of difference in purchaseconsideration over nominal value ofgovernment securities, loan stocksand bonds (0.6) (0.3) (0.6) (0.3) – – – –12.1 8.1 12.1 8.1 – – – –Less: Investment related expenses (0.2) (0.2) (0.2) (0.2) – – – –11.9 7.9 11.9 7.9 – – – –GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 69

NOTES TO THEFINANCIAL STATEMENTSGROUPCOMPANYShareholders’Lifeand General Assurancein Singapore Dollars (millions) Total Insurance Funds FundNotes 2004 2003 2004 2003 2004 2003 2004 20035 GAIN/(LOSS) ON SALE OF INVESTMENTSAND CHANGES IN FAIR VALUE5.1 Profit and Loss StatementsRealised gains/(losses) from saleof investments (7.0) 11.4 (7.0) 11.4 – – – 15.4Amount transferred from Fair Value Reserveon sale of investments 42.2 0.4 42.2 0.4 – – – (18.1)Changes in fair value on held-for-tradinginvestments (0.8) 3.9 (0.8) 3.9 – – – 0.434.4 15.7 34.4 15.7 – – – (2.3)5.2 LIFE ASSURANCE REVENUE STATEMENT(a) Realised losses from sale of investments 70.8 (138.6) – – 70.8 (138.6) – –Amount transferred from/(to) Fair ValueReserve on sale of investments 12 995.3 (65.7) – – 995.3 (65.7) – –Changes in fair value on held-for-tradinginvestments 53.0 340.5 – – 53.0 340.5 – –1,119.1 136.2 – – 1,119.1 136.2 – –(b) Proceeds from sale of properties held for sale 110.0 – – – 110.0 – – –Cost of sales 17 (121.1) – – – (121.1) – – –Loss on sale of properties held for sale (11.1) – – – (11.1) – – –5.3 General Insurance Revenue StatementRealised gains from sale of investments 3.4 1.5 3.4 1.5 – – – –Amount transferred from Fair ValueReserve on sale of investments 13 2.8 0.5 2.8 0.5 – – – –Changes in fair value on held-for-tradinginvestments 0.5 0.1 0.5 0.1 – – – –6.7 2.1 6.7 2.1 – – – –70 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTSGROUPCOMPANYShareholders’Lifeand General Assurancein Singapore Dollars (millions) Total Insurance Funds FundNotes 2004 2003 2004 2003 2004 2003 2004 20036 PROVISIONS6.1 Provision for impairment ofsecured loansBalance at the beginning of the year 9.4 8.0 – – 9.4 8.0 – –Increase in provision for the year 0.9 1.4 – – 0.9 1.4 – –Balance at the end of the year 18 10.3 9.4 – – 10.3 9.4 – –6.2 Provision for impairment of loans toassociated companyBalance at the beginning of the year – 66.1 – – – 66.1 – –Reclassification to share of lossesof associated company – (24.5) – – – (24.5) – –Write-back of provisionduring the year – (41.6) – – – (41.6) – –Balance at the end of the year – – – – – – – –6.3 Provision for impairment in investmentin unquoted equityBalance at the beginning of the year 1.2 0.6 0.7 0.1 0.5 0.5 – –Increase in provision for the year – 0.6 – 0.6 – – – –Balance at the end of the year 18 1.2 1.2 0.7 0.7 0.5 0.5 – –6.4 Provision for foreseeable losses onproperties held for saleBalance at the beginning of the year – – – – – – – –Increase in provision for the year 2.7 – – – 2.7 – – –Balance at the end of the year 17 2.7 – – – 2.7 – – –6.5 Provision for impairment ofProperty, Plant and EquipmentBalance at the beginning of the year 82.4 49.6 – – 82.4 49.6 – –Translation reserve adjustment (0.9) – – – (0.9) – – –Increase in provision for the year 22 3.8 32.8 – – 3.8 32.8 – –Balance at the end of the year 85.3 82.4 – – 85.3 82.4 – –Increase in/(write-back) of Provision forImpairment of Assets for the year 7.4 (6.8) – 0.6 7.4 (7.4) – –GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 71

NOTES TO THEFINANCIAL STATEMENTSGROUPCOMPANYShareholders’Lifeand General Assurancein Singapore Dollars (millions) Total Insurance Funds FundNotes 2004 2003 2004 2003 2004 2003 2004 20037 AGENTS’ RETIREMENT BENEFITSBalance at the beginning of the year 136.1 128.5 – – 136.1 128.5 – –Translation reserve adjustment (5.7) (2.8) – – (5.7) (2.8) – –Increase in provision for the year 13.6 14.7 – – 13.6 14.7 – –Paid during the year (4.4) (4.3) – – (4.4) (4.3) – –Balance at the end of the year 139.6 136.1 – – 139.6 136.1 – –8 PROFIT BEFORE INCOME TAX AND EXCESS OFINCOME OVER EXPENSES BEFORE INCOMETAX ARE STATED AFTER DEDUCTING/(CREDITING) THE FOLLOWING:Directors’ remunerationDirectors of the Company 8.1 2.1 2.0 0.4 0.5 1.7 1.5 0.3 0.3Directors of subsidiaries 1.5 1.1 0.9 0.8 0.6 0.3 – –Fees paid to a director of the Company forprofessional services rendered – 0.3 – 0.1 – 0.2 – 0.1Auditors’ remunerationAudit fees paid to auditors of the Company 1.0 0.6 0.4 0.3 0.6 0.3 0.2 0.2Audit fees paid to other auditors 0.2 0.3 0.2 0.2 – 0.1 – –Other fees paid to auditors of the Company 0.4 0.7 0.1 0.2 0.3 0.5 – –Other fees paid to other auditors 0.3 0.7 – – 0.3 0.7 – –Staff costs and related expensesSalaries, wages, bonuses and other costs 98.7 85.2 17.4 14.6 81.3 70.6 – –Central Provident Fund / EmployeeProvident Fund 10.6 9.9 1.6 0.9 9.0 9.0 – –Management fees paid to subsidiaries 29.8 25.3 2.5 2.3 27.3 23.0 – –Rental expense 13.2 12.9 1.7 1.4 11.5 11.5 – –Loss/(gain) on disposal of property, plantand equipment 2.4 (2.6) – (2.6) 2.4 – – –8.1 Directors’ remuneration bandsThe number of Directors of the Companyduring the financial year (including twowho had resigned during the year) inremuneration bands are as follows:S$1,250,000 to S$1,499,999 1 –S$750,000 to S$999,999 – 1S$500,000 to S$749,999 – 1Below S$250,000 8 88.2 Total number of employees as at 31 December 2004 for the Group was 2,304 (2003: 2,316).9 1072 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTSGROUPCOMPANYShareholders’Lifeand General Assurancein Singapore Dollars (millions) Total Insurance Funds FundNotes 2004 2003 2004 2003 2004 2003 2004 20039 INCOME TAXMajor components of income tax expense forthe year ended 31 December are:Current:Singapore 148.4 (8.2) 64.6 49.0 83.8 (57.2) 54.8 78.2Foreign 137.8 101.2 62.3 45.6 75.5 55.6 – –286.2 93.0 126.9 94.6 159.3 (1.6) 54.8 78.2Deferred:Singapore 8.6 40.5 (8.0) 1.8 16.6 38.7 – (0.4)Foreign (1.0) (5.7) – (1.1) (1.0) (4.6) – –7.6 34.8 (8.0) 0.7 15.6 34.1 – (0.4)Under/(over)provision in respect of previous years (38.8) 2.5 1.3 2.5 (40.1) – – –Share of taxation of associated companies 5.8 0.2 – – 5.8 0.2 – –Total tax charge for the year 260.8 130.5 120.2 97.8 140.6 32.7 54.8 77.8Effective tax rate 22.8% 23.7% 3.4% 1.1% 20.3% 27.6%Reconciliation of taxes:Profit before income tax 527.0 413.0 – – 269.8 282.0Excess of income over expenses before income tax – – 4,126.4 3,079.4 – –Singapore statutory tax rate 20.0% 22.0% 10.0% 10.0% 20.0% 22.0%Tax calculated at Singapore statutory tax rate 105.4 90.9 412.6 307.9 54.0 62.0Adjustments:Effect of higher tax rate from other jurisdictionsand regulations 13.2 9.5 67.0 95.7 – –Tax on surplus transferred to Shareholders’ Fund – – (36.1) (29.7) – –Tax effect of increase in actuarial valuation – – (251.1) (309.8) – –Foreign tax paid not recoverable 1.0 0.8 16.4 14.9 – 15.9Permanent differences 1.7 0.5 90.8 80.0 0.8 –Tax exempt income (0.2) – (136.3) (125.8) – –Deferred tax assets not recognised – (1.5) – – – –Restatement of gain on sale of properties – – 14.6 – – –Tax rate change (0.4) – (0.3) – – –Under/(over)provision in respect of previous years 1.3 (2.5) (40.1) – – –Others (1.8) 0.1 3.1 (0.5) – (0.1)120.2 97.8 140.6 32.7 54.8 77.8GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 73

NOTES TO THEFINANCIAL STATEMENTSGROUPCOMPANYShareholders’Lifeand General Assurancein Singapore Dollars (millions) Total Insurance Funds FundNotes 2004 2003 2004 2003 2004 2003 2004 20039 INCOME TAX (CONTINUED)Deferred TaxBalance at the beginning of the year 278.6 2.7 65.4 14.1 213.2 (11.4) (0.1) (1.8)Translation reserve adjustments (2.2) (2.0) 0.2 (1.1) (2.4) (0.9) – –Deferred tax charge taken to Profit and Loss orRevenue Statements:Other temporary differences 4.6 27.3 (8.3) (1.1) 12.9 28.4 – (0.4)Fair value changes 3.0 7.5 0.3 1.8 2.7 5.7 – –Deferred tax on fair value changes on availablefor-saleinvestments 12, 13 (7.9) 243.1 (7.6) 51.7 (0.3) 191.4 – 2.1Effect of change in tax rate 12, 13 (8.7) – (5.0) – (3.7) – – –Balance at the end of the year 267.4 278.6 45.0 65.4 222.4 213.2 (0.1) (0.1)Deferred taxes at 31 December related tothe following:Deferred tax liabilities:Differences in depreciation 8.1 8.6 0.3 0.1 7.8 8.5 – –Accrued investment income 12.2 10.7 0.7 0.6 11.5 10.1 – –Unrealised exchange gain – 0.6 – 0.4 – 0.2 – –Fair value gains on investments 258.6 282.8 45.3 65.9 213.3 216.9 – –Unremitted profits of overseas entities – 2.0 – 2.0 – – – –Net accretion on fixed income investments 1.3 3.3 – – 1.3 3.3 – –Deferred tax liabilities 280.2 308.0 46.3 69.0 233.9 239.0 – –Deferred tax assets:Unrealised exchange loss 0.9 – – – 0.9 – – –Fair value loss on investments 3.4 7.3 1.2 1.2 2.2 6.1 0.1 0.1Other accruals and provisions 8.5 10.0 0.1 2.4 8.4 7.6 – –Unutilised tax losses carried forward – 12.1 – – – 12.1 – –Deferred tax assets 12.8 29.4 1.3 3.6 11.5 25.8 0.1 0.1Net deferred tax liabilities/(assets) 267.4 278.6 45.0 65.4 222.4 213.2 (0.1) (0.1)74 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTS10 EARNINGS PER SHAREBasic earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted averagenumber of ordinary shares outstanding during the year.Diluted earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted averagenumber of ordinary shares outstanding during the year (adjusted for the effects of dilutive options).The following reflects the profit for the year attributable to ordinary shareholders and the weighted average number of shares outstandingduring the year, used in the computation of basic and diluted earnings per share for the years ended 31 December:GROUP2004 2003Profit attributable to ordinary shareholders for basic and dilutedearnings per share (in millions of Singapore Dollars) 402.0 312.2Weighted average number of ordinary shares on issue applicable to basicearnings per share (in millions) 472.5 471.4Effect of dilutive securities:Great Eastern Holdings Executives’ Share Option Scheme (in millions) – 0.8Adjusted weighted average number of ordinary shares applicable to dilutedearnings per share (in millions) 472.5 472.2Basic earnings per share (in Singapore Dollars) $ 0.85 $ 0.66Diluted earnings per share (in Singapore Dollars) $ 0.85 $ 0.66There have been no transactions involving ordinary shares since the reporting date and before the completion of these financial statements.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 75

NOTES TO THEFINANCIAL STATEMENTSin Singapore Dollars (millions) GROUP COMPANY11 SHARE CAPITALAuthorised2004 2003 2004 20032,000,000,000 ordinary shares of 50 cents each 1,000.0 1,000.0 1,000.0 1,000.0Issued and fully paid471,458,769 (2003: 471,290,369) ordinary shares of 50 centseach at the beginning of the year 235.7 235.7 235.7 235.7Issued and fully paid during the year:1,860,300 (2003: 168,400) ordinary shares of 50 centseach issued arising from the exercise of share options pursuant toGreat Eastern Holdings Executives’ Share Option Scheme 1.0 * 1.0 *473,319,069 (2003: 471,458,769) ordinary shares of 50 centseach at the end of the year 236.7 235.7 236.7 235.7* Amount is less than S$0.1 millionThe issue of additional shares during the year resulted in a share premium of S$9.9 million (2003: S$0.8 million).The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote pershare without restriction.Details of the Great Eastern Holdings Executives’ Share Option Scheme are disclosed in the Directors’ Report under the heading “Share Options”and in Note 23.76 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTSGROUPShareholders’Lifeand GeneralAssurancein Singapore Dollars (millions) Total Insurance Funds FundNotes 2004 2003 2004 2003 2004 200312 LIFE ASSURANCE FUNDBalance at the beginning of the year 27,556.1 23,347.7 – – 27,556.1 23,347.7Translation reserve adjustment (390.7) (174.3) – – (390.7) (174.3)Fair value reserve movement 25.9 1,616.7 – – 25.9 1,616.7Amount transferred from Life AssuranceRevenue Statement 3,602.9 2,766.0 – – 3,602.9 2,766.0Transfer of business from GeneralInsurance Fund 13,15 10.6 – – – 10.6 –Balance at the end of the year 30,804.8 27,556.1 – – 30,804.8 27,556.1Two of the Group’s subsidiary companies were issued a protective tax assessment by the Inland Revenue Authority of Singapore (“IRAS”)in respect of Year of Assessment (“YA”) 1998, as it would become time barred after 31 December 2004. The protective tax assessmenthad disallowed the deduction of the cost of bonus for income tax computation, whereas the deduction was granted in previous years. In theevent that the cost of bonus is not allowed as an expense for tax purpose, the subsidiary companies would be liable for additional taxpayment of approximately $283.5 million, from the open years of assessment from 1998 to 2005. These tax charges would be borne out ofSingapore Life Assurance Fund, and not Shareholders’ Fund.The Directors of the subsidiary companies have considered the matter and since it is still in discussion with IRAS, are of the view that it ispremature to make any provision at this juncture.Fair Value Reserve MovementBalance at the beginning of the year 1,865.1 255.8 – – 1,865.1 255.8Translation reserve adjustment (23.1) (7.4) – – (23.1) (7.4)Fair value changes on remeasuringavailable-for-sale investments 1,017.2 1,742.4 – – 1,017.2 1,742.4Transfer of fair value reserve (to)/from Life AssuranceRevenue Statement upon disposal 5 (995.3) 65.7 – – (995.3) 65.7Deferred tax on fair value changes 9 0.3 (191.4) – – 0.3 (191.4)Deferred tax – effect of change in tax rate 9 3.7 – – – 3.7 –Balance at the end of the year 1,867.9 1,865.1 – – 1,867.9 1,865.1Translation Reserve MovementBalance at the beginning of the year (898.8) (724.5) – – (898.8) (724.5)Translation reserve adjustment (390.7) (174.3) – – (390.7) (174.3)Balance at the end of the year (1,289.5) (898.8) – – (1,289.5) (898.8)GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 77

NOTES TO THEFINANCIAL STATEMENTSGROUPShareholders’Lifeand GeneralAssurancein Singapore Dollars (millions) Total Insurance Funds FundNotes 2004 2003 2004 2003 2004 200313 GENERAL INSURANCE FUNDBalance at the beginning of the year 144.8 123.6 144.8 123.6 – –Translation reserve adjustment (2.0) 1.8 (2.0) 1.8 – –Fair value reserve movement (1.7) 15.9 (1.7) 15.9 – –Increase in reserve during the year 1.1 2.6 1.1 2.6 – –Amount transferred (to)/from General InsuranceRevenue Statement (4.1) 1.2 (4.1) 1.2 – –Disposal of portfolio – (0.3) – (0.3) – –Transfer of business to Life Assurance Fund 12 (3.0) – (3.0) – – –Balance at the end of the year 135.1 144.8 135.1 144.8 – –Fair Value Reserve MovementBalance at the beginning of the year 32.6 17.0 32.6 17.0 – –Translation reserve adjustment (0.5) (0.3) (0.5) (0.3) – –Fair value changes on remeasuringavailable-for-sale investments 0.1 21.4 0.1 21.4 – –Transfer of fair value reserve to General InsuranceRevenue Statement upon disposal 5 (2.8) (0.5) (2.8) (0.5) – –Deferred tax on fair value changes 0.7 (5.0) 0.7 (5.0) – –Deferred tax – effect of change in tax rate 0.3 – 0.3 – – –Balance at the end of the year 30.4 32.6 30.4 32.6 – –Translation Reserve MovementBalance at the beginning of the year 1.6 (0.2) 1.6 (0.2) – –Translation reserve adjustment (2.0) 1.8 (2.0) 1.8 – –Balance at the end of the year (0.4) 1.6 (0.4) 1.6 – –78 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTSGROUPShareholders’Lifeand GeneralAssurancein Singapore Dollars (millions) Total Insurance Funds FundNotes 2004 2003 2004 2003 2004 200314 OTHER CREDITORS AND INTERFUND BALANCESOther creditors comprised accrued expenses, agents’ commission payable, premiums in suspense and investment creditors.15 UNEXPIRED RISK RESERVEBalance at the beginning of the year 38.8 34.1 38.8 34.1 – –Translation reserve adjustment (0.7) (0.3) (0.7) (0.3) – –Increase during the year 4.3 5.2 4.3 5.2 – –Transfer of business to Life Assurance Fund 12 (7.6) – (7.6) – – –Disposal of portfolio – (0.2) – (0.2) – –Balance at the end of the year 34.8 38.8 34.8 38.8 – –16 OTHER DEBTORS AND INTERFUND BALANCESOther debtors comprised accrued interest receivable, deposits collected, prepayments, sundry debtors and investment debtors.17 PROPERTIES HELD FOR SALEBalance at the beginning of the year 195.6 – – – 195.6 –Additions 4.6 – – – 4.6 –Disposals 5 (121.1) – – – (121.1) –Adjustment from property, plant and equipment 22 5.7 195.6 – – 5.7 195.6Balance at the end of the year 84.8 195.6 – – 84.8 195.6Less: Provision for foreseeable losses 6 2.7 – – – 2.7 –Balance at the end of the year 82.1 195.6 – – 82.1 195.6GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 79

NOTES TO THEFINANCIAL STATEMENTSin Singapore Dollars (millions) GROUP COMPANYNotes 2004 2003 2004 200318 INVESTMENTSTOTALAvailable-for-sale investments(i)Quoted government securities, loan stocksand bonds 11,609.3 8,029.9 2.0 2.0(ii) Quoted equity in corporations 7,310.5 8,660.0 – –(iii) Unquoted equity in corporations, at cost 60.0 41.5 – –(iv) Other unquoted investments 3,946.1 3,891.1 – –(v) Collective investment schemes 697.5 204.7 – –23,623.4 20,827.2 2.0 2.0less: Provision for impairment of unquoted equity 6 1.2 1.2 – –23,622.2 20,826.0 2.0 2.0Held-for-trading investments(i)Unit-linked fund investments:Quoted government securities, loan stocksand bonds 487.6 426.3 – –Quoted equity in corporations 1,418.1 981.4 – –Other unquoted investments 16.9 11.3 – –Collective investment schemes 123.5 420.7 – –(ii) Derivatives (7.8) (21.4) – –(iii) Embedded derivatives 431.2 201.7 – –2,469.5 2,020.0 – –Loans originated(i) Policy loans 1,880.9 1,837.2 – –(ii) Secured loans 735.9 870.0 – –(iii) Unsecured loans 0.4 0.6 – –2,617.2 2,707.8 – –less: Provision for impairment of secured loans 6 10.3 9.4 – –2,606.9 2,698.4 – –Total Investments 28,698.6 25,544.4 2.0 2.080 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTSin Singapore Dollars (millions) GROUP COMPANYNotes 2004 2003 2004 200318 INVESTMENTS (CONTINUED)SHAREHOLDERS’ AND GENERAL INSURANCE FUNDSAvailable-for-sale investments(i) Quoted government securities, loan stocks and bonds 440.0 364.7 2.0 2.0(ii) Quoted equity in corporations 488.7 708.0 – –(iii) Unquoted equity in corporations, at cost 1.1 3.0 – –(iv) Other unquoted investments 202.1 143.5 – –(v) Collective investment schemes 141.4 24.2 – –1,273.3 1,243.4 2.0 2.0less: Provision for impairment of unquoted equity 6 0.7 0.7 – –1,272.6 1,242.7 2.0 2.0Held-for-trading investments(i) Derivatives 0.2 1.7 – –(ii) Embedded derivatives 17.8 18.0 – –18.0 19.7 – –Loans originated(i) Secured loans 2.4 5.1 – –(ii) Unsecured loans – 0.2 – –2.4 5.3 – –Total Investments held by Shareholders’ and GeneralInsurance Funds 1,293.0 1,267.7 2.0 2.0GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 81

NOTES TO THEFINANCIAL STATEMENTSin Singapore Dollars (millions) GROUP COMPANYNotes 2004 2003 2004 200318 INVESTMENTS (CONTINUED)LIFE ASSURANCE FUNDAvailable-for-sale investments(i) Quoted government securities, loan stocks and bonds 11,169.3 7,665.2 – –(ii) Quoted equity in corporations 6,821.8 7,952.0 – –(iii) Unquoted equity in corporations, at cost 58.9 38.5 – –(iv) Other unquoted investments 3,744.0 3,747.6 – –(v) Collective investment schemes 556.1 180.5 – –22,350.1 19,583.8 – –less: Provision for impairment of unquoted equity 6 0.5 0.5 – –22,349.6 19,583.3 – –Held-for-trading investments(i)Unit-linked fund investments:Quoted government securities, loan stocksand bonds 487.6 426.3 – –Quoted equity in corporations 1,418.1 981.4 – –Other unquoted investments 16.9 11.3 – –Collective investment schemes 123.5 420.7 – –(ii) Derivatives (8.0) (23.1) – –(iii) Embedded derivatives 413.4 183.7 – –2,451.5 2,000.3 – –Loans originated(i) Policy loans 1,880.9 1,837.2 – –(ii) Secured loans 733.5 864.9 – –(iii) Unsecured loans 0.4 0.4 – –2,614.8 2,702.5 – –less: Provision for impairment of secured loans 6 10.3 9.4 – –2,604.5 2,693.1 – –Total Investments held by Life Assurance Fund 27,405.6 24,276.7 – –82 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTSGROUPCOMPANYShareholders’Lifeand General Assurancein Singapore Dollars (millions) Total Insurance Funds FundNotes 2004 2003 2004 2003 2004 2003 2004 200319 ASSOCIATED COMPANIESInvestment in associated companies, at cost 3 26.0 26.0 – – 26.0 26.0 – –Share of post-acquisition results (7.6) (24.3) – – (7.6) (24.3) – –Carrying amount 18.4 1.7 – – 18.4 1.7 – –(19.1)Loan to associated company – secured 108.0 120.0 – – 108.0 120.0 – –(19.2)Loans to associated companies – unsecured 24.1 26.2 24.1 14.5 – 11.7 – –150.5 147.9 24.1 14.5 126.4 133.4 – –(19.1)The secured loan to associated company is secured on land and building located at 3 Pickering Street, repayable in 2006 and bears interest at swap offer rate plus 0.75% perannum. Total interest charged for the year amounted to S$2.6m (2003: S$3.0m).(19.2)The unsecured loans to associated companies have no fixed terms of repayment. The unsecured loan of S$24.1m (2003: S$14.5m) in the Shareholders’ Fund bears interest atswap offer rate plus 0.75% per annum. The unsecured loan of S$11.7m in the Life Assurance Fund which was non-interest bearing, was repaid during the year. Total interestcharged for the year amounted to S$0.3m (2003: S$0.1m).20 SUBSIDIARY COMPANIESInvestment in subsidiary companies, at cost 3 874.3 874.3Distribution from pre-acquisition reserve (81.0) (81.0)(20.1)Amounts due from subsidiary companies 713.8 453.4(20.2)Loans to subsidiary companies 77.0 127.01,584.1 1,373.7(20.1)The amounts due from subsidiary companies are unsecured, interest-free and have no fixed terms of repayment.(20.2)Loans to subsidiary companies are unsecured, interest-free and repayable within 1 year.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 83

NOTES TO THEFINANCIAL STATEMENTSGROUPShareholders’Lifeand General Assurancein Singapore Dollars (millions) Notes Total Insurance Funds Fund21 INTANGIBLE ASSETSSoftware development costsCost at 1 January 2004 – – –Reclassification from property, plantand equipment 22 36.6 – 36.6Cost at 31 December 2004 36.6 – 36.6Accumulated Amortisation at 1 January 2004 – – –Amortisation charge for the year (3.7) – (3.7)Accumulated Amortisation,at 31 December 2004 (3.7) – (3.7)Amortisation charge for 2003 – – –Net Book ValueNet Book Value, at 31 December 2004 32.9 – 32.9Net Book Value, at 31 December 2003 – – –The remaining amortisation period is as follows:Software development cost – 8 to 9 years.Amortisation of intangible assets is included in the line ‘depreciation and amortisation expenses’ in the Revenue Statements.84 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTSGROUPCapitalFreehold Leasehold Works In Investment Computer Otherin Singapore Dollars (millions) Notes Land Land Progress Buildings Properties Equipment Assets Total22 PROPERTY, PLANT AND EQUIPMENTTOTALAt 1 January 2004Cost 63.2 33.7 16.6 601.5 219.5 160.3 36.4 1,131.2Valuation – – – – 430.3 – – 430.3Cost and Valuation,at 1 January 2004 63.2 33.7 16.6 601.5 649.8 160.3 36.4 1,561.5Additions – – 4.2 0.6 79.2 39.9 3.0 126.9Disposals/assetswritten off – Cost – – – – (32.5) (5.1) (1.4) (39.0)Disposals/assetswritten off – Valuation – – – – (56.1) – – (56.1)Reclassification – Cost – 1.4 (14.5) 9.5 – – 3.6 –Adjustment to propertiesheld for sale 17 – – – – (5.7) – – (5.7)Reclassification tointangible assets 21 – – – – – (36.6) – (36.6)Translation reserveadjustment (0.4) (0.1) (0.7) (6.4) (1.4) (3.1) (0.5) (12.6)Cost and Valuation,at 31 December 2004 62.8 35.0 5.6 605.2 633.3 155.4 41.1 1,538.4Cost 62.8 35.0 5.6 605.2 259.1 155.4 41.1 1,164.2Valuation – – – – 374.2 – – 374.2Cost and Valuation,at 31 December 2004 62.8 35.0 5.6 605.2 633.3 155.4 41.1 1,538.4Accumulated DepreciationAt 1 January 2004 (12.5) (1.2) – (72.7) (34.2) (81.0) (21.4) (223.0)Depreciation chargefor the year – – – (7.7) (3.3) (13.3) (3.8) (28.1)Provision for impairment 6 – – – – (3.8) – – (3.8)Disposals/assetswritten off – Cost – – – – – 4.8 1.4 6.2Translation reserveadjustment 0.6 – – – 0.4 2.1 0.5 3.6Accumulated Depreciation,at 31 December 2004 (11.9) (1.2) – (80.4) (40.9) (87.4) (23.3) (245.1)Depreciation charge for 2003 – – – (10.9) – (11.8) (3.9) (26.6)Net Book ValueNet Book Value,at 31 December 2004 50.9 33.8 5.6 524.8 592.4 68.0 17.8 1,293.3Net Book Value,at 31 December 2003 50.7 32.5 16.6 528.8 615.6 79.3 15.0 1,338.5GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 85

NOTES TO THEFINANCIAL STATEMENTSGROUPCapitalFreehold Leasehold Works In Investment Computer Otherin Singapore Dollars (millions) Notes Land Land Progress Buildings Properties Equipment Assets Total22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)SHAREHOLDERS’ AND GENERAL INSURANCE FUNDSAt 1 January 2004Cost – – – 0.8 – 11.1 1.8 13.7Valuation – – – – – – – –Cost and Valuation,at 1 January 2004 – – – 0.8 – 11.1 1.8 13.7Additions – – – – – 1.2 0.8 2.0Disposals/assetswritten off – Cost – – – – – (0.4) – (0.4)Translation reserveadjustment – – – – – (0.1) (0.1) (0.2)Cost and Valuation,at 31 December 2004 – – – 0.8 – 11.8 2.5 15.1Cost – – – 0.8 – 11.8 2.5 15.1Valuation – – – – – – – –Cost and Valuation,at 31 December 2004 – – – 0.8 – 11.8 2.5 15.1Accumulated DepreciationAt 1 January 2004 – – – (0.1) – (8.8) (1.1) (10.0)Depreciation chargefor the year – – – – – (1.0) (0.3) (1.3)Disposals/assetswritten off – Cost – – – – – 0.6 – 0.6Accumulated Depreciation,at 31 December 2004 – – – (0.1) – (9.2) (1.4) (10.7)Depreciation charge for 2003 – – – – – (1.2) (0.3) (1.5)Net Book ValueNet Book Value,at 31 December 2004 – – – 0.7 – 2.6 1.1 4.4Net Book Value,at 31 December 2003 – – – 0.7 – 2.3 0.7 3.786 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTSGROUPCapitalFreehold Leasehold Works In Investment Computer Otherin Singapore Dollars (millions) Notes Land Land Progress Buildings Properties Equipment Assets Total22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)LIFE ASSURANCE FUNDAt 1 January 2004Cost 63.2 33.7 16.6 600.7 219.5 149.2 34.6 1,117.5Valuation – – – – 430.3 – – 430.3Cost and Valuation,at 1 January 2004 63.2 33.7 16.6 600.7 649.8 149.2 34.6 1,547.8Additions – – 4.2 0.6 79.2 38.7 2.2 124.9Disposals/assetswritten off – Cost – – – – (32.5) (4.7) (1.4) (38.6)Disposals/assetswritten off – Valuation – – – – (56.1) – – (56.1)Reclassification – Cost – 1.4 (14.5) 9.5 – – 3.6 –Adjustment to propertiesheld for sale 17 – – – – (5.7) – – (5.7)Reclassification tointangible assets 21 – – – – – (36.6) – (36.6)Translation reserveadjustment (0.4) (0.1) (0.7) (6.4) (1.4) (3.0) (0.4) (12.4)Cost and Valuation,at 31 December 2004 62.8 35.0 5.6 604.4 633.3 143.6 38.6 1,523.3Cost 62.8 35.0 5.6 604.4 259.1 143.6 38.6 1,149.1Valuation – – – – 374.2 – – 374.2Cost and Valuation,at 31 December 2004 62.8 35.0 5.6 604.4 633.3 143.6 38.6 1,523.3GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 87

NOTES TO THEFINANCIAL STATEMENTSGROUPCapitalFreehold Leasehold Works In Investment Computer Otherin Singapore Dollars (millions) Notes Land Land Progress Buildings Properties Equipment Assets Total22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)Accumulated DepreciationAt 1 January 2004 (12.5) (1.2) – (72.6) (34.2) (72.2) (20.3) (213.0)Depreciation chargefor the year – – – (7.7) (3.3) (12.3) (3.5) (26.8)Provision for impairment 6 – – – – (3.8) – – (3.8)Disposals/assetswritten off – Cost – – – – – 4.2 1.4 5.6Translation reserveadjustment 0.6 – – – 0.4 2.1 0.5 3.6Accumulated Depreciation,at 31 December 2004 (11.9) (1.2) – (80.3) (40.9) (78.2) (21.9) (234.4)Depreciation charge for 2003 – – – (10.9) – (10.6) (3.6) (25.1)Net Book ValueNet Book Value,at 31 December 2004 50.9 33.8 5.6 524.1 592.4 65.4 16.7 1,288.9Net Book Value,at 31 December 2003 50.7 32.5 16.6 528.1 615.6 77.0 14.3 1,334.8During the year, the Group provided for additional impairment losses of S$3.8 million on certain properties based on their recoverableamounts, which were charged to the Life Assurance Revenue Statement. The recoverable amounts were determined based on independentvaluations of the assets as at 31 December 2004.As at year end, the Company’s net book value of fixed assets was nil (2003: S$0.1 million).88 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTS23 GREAT EASTERN HOLDINGS EXECUTIVES’ SHARE OPTION SCHEMEThe Great Eastern Holdings Executives’ Share Option Scheme (“Option Scheme”) is administered by the Company’s Remuneration Committee.The Company had granted Options to senior executives within the Group and to the Executive Directors since 1999 pursuant to the OptionScheme, at the offering/exercise price equal to the average of the last dealt prices of the Company’s shares on the Singapore ExchangeSecurities Trading Limited for the five consecutive market days (on which there was trading of the shares) immediately preceding theOffering Date of the options.In accordance with the regulations of the Option Scheme, the Option Period for options granted in 1999, 2000 and 2001 commenced 36months from the Offering Date and would expire at the end of 117 months from the Offering Date. During the first, second and third yearof the Option Period, not more than 25%, 50% and 75% respectively of the number of shares comprised in each option offered may beexercised. The Option Period for options granted in 2002 and 2003 commenced after the first anniversary of the Offering Date and wouldexpire on the tenth anniversary of such Offering Date. During the first and second year of the Option Period, not more that 33% and 66%respectively of the number of shares comprised in each option offered may be exercised. These Option Periods were effective up to the dateimmediately preceding the voluntary unconditional offer (the “Offer”) made by OCBC Bank. (Please refer also to Note 1).Commencing from the date of the Offer made by OCBC Bank under the terms and conditions set out in its offer document dated 17 May2004 (“Offer Document”), all outstanding unexercised share options became exercisable within a period of six months from that date,pursuant to the regulations of the Option Scheme. Thereafter any options remaining unexercised would lapse. In connection with theOffer, OCBC Bank made an Options Proposal, under the terms set out in the Offer Document, to the holders of the outstanding options(“GEH Optionholders”) to opt to receive new OCBC Bank shares, thereby waiving their rights to exercise those outstanding options, whicheffectively would be cancelled thereafter.Accordingly, as summarised in the table below, the outstanding options as at 17 May 2004 were either exercised by the GEH Optionholdersor were cancelled upon their acceptance of the Options Proposal, save for a small number of options which lapsed thereafter under theregulations of the Option Scheme. No share options were granted in 2004 and there were no outstanding options as at 31 December 2004.There is no charge to the profit and loss account for employee stock option granted under the Option Scheme, and the dilutive effect ofoutstanding options is reflected as additional share dilution in the computation of earnings per share.Information with respect to the number of options granted previously under the Option Scheme is as follows:WeightedWeightedAverageAverageOutstanding Offering / Outstanding Offering /options Exercise Price options Exercise Price2004 31.12.04 2003 31.12.03At beginning of year 6,312,750 $8.52 5,125,000 $8.25Granted during the year – – 1,588,450 $9.06Lapsed during the year (185,100) $10.05 (232,300) $8.63Exercised during the year (1,860,300) $5.86 (168,400) $5.10Cancelled arising from acceptance of Options Proposal (4,267,350) $9.62 – –Outstanding at end of year – – 6,312,750 $8.52Exercisable at end of year – – 1,038,803 $8.43GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 89

NOTES TO THEFINANCIAL STATEMENTSGROUPShareholders’Lifeand General Assurancein Singapore Dollars (millions) Total Insurance Funds FundCOMPANY24 COMMITMENTS24.1 Capital commitmentsCommitments for capital expenditure not provided for in the financial statements :Notes 2004 2003 2004 2003 2004 2003 2004 2003Authorised and contracted for:– properties under construction 101.6 81.1 – – 101.6 81.1 – –– other commitments 118.5 7.7 – – 118.5 7.7 – –Authorised but not contracted for 51.0 42.1 0.7 – 50.3 42.1 – –271.1 130.9 0.7 – 270.4 130.9 – –24.2 Operating lease commitmentsThe Group has entered into commercial property leases on its investment property portfolio. These non-cancellable leases haveremaining non-cancellable lease terms of between 1 and 5 years. All leases include a clause to enable upward revision of the rentalcharge on an annual basis based on prevailing market conditions.Future minimum lease payments receivable under non-cancellable operating leases are as follows as of 31 December:Within one year 7.6 16.6 – – 7.6 16.6 – –After one year but not more than five years 39.3 14.0 – – 39.3 14.0 – –46.9 30.6 – – 46.9 30.6 – –The Group has entered into operating lease agreements for computer equipments. These non-cancellable leases have remainingnon-cancellable lease terms of between 1 and 4 years. Operating lease payments recognised in the consolidated profit and lossaccount during the year amounted to S$1.6 million (2003: S$2.2 million).Future minimum lease payments payable under non-cancellable operating leases contracted for as at 31 December but notrecognised as liabilities, are payable as follows:Within one year 1.2 1.5 0.1 0.1 1.1 1.4 – –After one year but not more than five years 1.3 1.1 0.1 0.1 1.2 1.0 – –2.5 2.6 0.2 0.2 2.3 2.4 – –90 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTSGROUPin Singapore Dollars (millions) Singapore Malaysia Other ASEAN Eliminations Consolidated2004 2003 2004 2003 2004 2003 2004 2003 2004 200325 SEGMENTAL INFORMATION(1) By Geographical Segments(a) Life Assurance FundPremium income (net) 3,510.6 3,185.5 1,646.8 1,579.6 17.8 17.5 – – 5,175.2 4,782.6Investment, interest andrental income 1,430.9 710.8 912.8 570.9 10.7 4.3 – – 2,354.4 1,286.0(Increase in)/write-backof provision forimpairment of assets (7.4) 19.4 – (12.0) – – – – (7.4) 7.4Total income 4,934.1 3,915.7 2,559.6 2,138.5 28.5 21.8 – – 7,522.2 6,076.0Claims, surrendersand annuities 2,043.9 1,733.1 774.1 709.7 11.8 14.8 – – 2,829.8 2,457.6Depreciation andamortisation 21.1 17.7 9.3 7.3 0.1 0.1 – – 30.5 25.1Commissions andexpenses 212.6 187.3 348.1 323.9 4.0 3.4 – – 564.7 514.6Income tax 90.1 (18.3) 49.8 51.0 0.7 – – – 140.6 32.7Total expenses 2,367.7 1,919.8 1,181.3 1,091.9 16.6 18.3 – – 3,565.6 3,030.0Share of results ofassociated companies 29.2 0.7 – – – – – – 29.2 0.7Excess of incomeover expenses 2,595.6 1,996.6 1,378.3 1,046.6 11.9 3.5 – – 3,985.8 3,046.7Total assets employed 22,071.3 19,395.4 11,240.6 10,239.1 191.8 181.3 – – 33,503.7 29,815.8Capital expenditure 44.2 74.8 80.7 16.7 – – – – 124.9 91.5Property, plantand equipment 1,012.8 1,103.8 275.8 230.8 0.3 0.2 – – 1,288.9 1,334.8Intangible assets 14.2 – 18.7 – – – – – 32.9 –Investments: 17,236.9 15,470.0 10,022.7 8,680.4 146.0 126.3 – – 27,405.6 24,276.7i. Government securities,loan stocks and bonds 9,775.1 7,829.7 5,571.2 3,980.1 71.5 40.6 – – 15,417.8 11,850.4ii. Quoted equity incorporations 5,114.7 5,501.2 3,075.6 3,367.5 49.6 64.7 – – 8,239.9 8,933.4iii. Unquoted equityin corporations 684.3 610.2 47.4 26.5 6.3 2.5 – – 738.0 639.2iv. Derivatives andembedded derivatives 396.7 129.6 7.7 30.0 1.0 1.0 – – 405.4 160.6v. Policy loans 845.4 811.1 1,017.9 1,008.6 17.6 17.5 – – 1,880.9 1,837.2vi. Unsecured loans 0.3 0.3 0.1 0.1 – – – – 0.4 0.4vii. Secured loans 420.4 587.9 302.8 267.6 – – – – 723.2 855.5Cash and bank balances 3,201.1 2,174.4 727.1 1,144.5 41.7 50.7 – – 3,969.9 3,369.6GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 91

NOTES TO THEFINANCIAL STATEMENTSGROUPin Singapore Dollars (millions) Singapore Malaysia Other ASEAN Eliminations Consolidated2004 2003 2004 2003 2004 2003 2004 2003 2004 200325 SEGMENTAL INFORMATION (CONTINUED)(1) By Geographical Segments (continued)(b) General Insurance FundPremium income (net) 41.1 51.1 34.7 33.4 0.2 0.2 – – 76.0 84.7Increase in unexpired riskreserve during the year (2.9) (3.3) (1.4) (1.9) – – – – (4.3) (5.2)Claims and increasein loss reserve (20.4) (22.4) (18.9) (17.8) (0.1) (0.1) – – (39.4) (40.3)Depreciation andamortisation (0.4) (1.0) (0.3) (0.3) – – – – (0.7) (1.3)Commissions andexpenses (13.0) (13.2) (10.0) (9.5) (0.1) (0.4) – – (23.1) (23.1)Net underwritingprofit/(loss) 4.4 11.2 4.1 3.9 – (0.3) – – 8.5 14.8Investment andinterest income 11.6 5.2 8.4 6.4 0.2 – – – 20.2 11.6Total assets employed 141.0 177.4 119.1 122.0 0.9 5.1 – – 261.0 304.5Capital expenditure – – 0.5 0.4 – – – – 0.5 0.4(c)Shareholders’ FundProfit/(loss) frominsurance operations 209.2 150.5 209.2 155.4 (2.7) – – – 415.7 305.9Profit from investments 247.4 198.2 8.3 6.8 0.8 – (162.7) (113.3) 93.8 91.7Fees and other income 39.2 28.3 0.2 – – – – – 39.4 28.3Profit before expenses 495.8 377.0 217.7 162.2 (1.9) – (162.7) (113.3) 548.9 425.9Depreciation & amortisation 0.6 0.2 – – – – – – 0.6 0.2Profit/(loss) attributableto shareholders 365.3 290.9 155.7 106.0 (1.9) (0.1) (117.1) (84.6) 402.0 312.2Total assets employed 2,249.1 2,021.8 306.6 271.9 2.5 6.6 (66.3) (68.9) 2,491.9 2,231.4Capital expenditure 1.5 0.3 – – – – – – 1.5 0.392 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTSGROUPLife Assurance Fund Life Assurance Fundin Singapore Dollars (millions) (Non-Linked) (Linked) Eliminations Consolidated2004 2003 2004 2003 2004 2003 2004 200325 SEGMENTAL INFORMATION (CONTINUED)(2) By Business SegmentsPremium income (net) 4,443.5 4,163.6 731.7 619.0 – – 5,175.2 4,782.6Investment, interest andrental income 2,215.6 882.6 138.8 403.4 – – 2,354.4 1,286.0(Increase in)/write-back of provisionfor impairment of assets (7.4) 7.4 – – – – (7.4) 7.4Total income 6,651.7 5,053.6 870.5 1,022.4 – – 7,522.2 6,076.0Claims, surrenders and annuities 2,337.5 2,075.8 492.3 381.8 – – 2,829.8 2,457.6Depreciation & amortisation 29.6 25.0 0.9 0.1 – – 30.5 25.1Commissions and expenses 456.9 436.6 107.8 78.0 – – 564.7 514.6Income tax 135.9 28.8 4.7 3.9 – – 140.6 32.7Total expenses 2,959.9 2,566.2 605.7 463.8 – – 3,565.6 3,030.0Share of results ofassociated companies 29.2 0.7 – – – – 29.2 0.7Excess of income over expenses 3,721.0 2,488.1 264.8 558.6 – – 3,985.8 3,046.7Total assets employed 31,354.4 27,760.1 2,149.3 2,055.7 – – 33,503.7 29,815.8Capital expenditure 124.9 91.5 – – – – 124.9 91.526 ENTERPRISE RISK GOVERNANCE AND MANAGEMENT OBJECTIVES AND POLICIESThe risk management policies described are generally adopted by the Company and all its operating subsidiaries within the Group. However, certaindeviations and modifications exist to comply with specific regulations of the respective country jurisdiction in which the subsidiary operates.Insurers are required to comply with the Insurance Act and Regulations, in Singapore and Malaysia, as applicable, including guidelines oninvestment limits. The responsibility for the formulation, establishment and approval of the investment policy rests with the respectiveBoard of Directors (”Board”). The Board exercises oversight on investments to safeguard the interests of policyholders and shareholders.The Risk Committee (“RiC”) (separate for Singapore and Malaysia) was constituted to provide oversight on the risk management initiativesand the development of a risk management framework. Detailed risk management activities are undertaken by the following ManagementCommittees comprising the Chief Executive Officer and key Senior Management Executives:– Asset Liability Committee (“ALC”)– Credit Risk Committee (“CRC”)– Senior Management Team (“SMT”)The ALC oversees the formulation and execution of investment strategy, asset mix and pricing/re-pricing of products to determine theappropriate asset/liability match. Pricing risk pertains to the risk of insurance premium rates being insufficient to meet the obligations of thepolicy benefits and the general cost of carrying on the insurance business. Such a situation can arise when there is an adverse change inthe expected long-term investment return, and/or mortality and/or morbidity experience; and/or an exacerbated increase in operating costs.Generally, products are developed and priced after considerable market research to provide latitude in asset allocation.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 93

NOTES TO THEFINANCIAL STATEMENTS26 ENTERPRISE RISK GOVERNANCE AND MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)The CRC monitors credit risk management activities across all categories of investments according to prescribed credit policy guidelines andauthorised limits. The CRC has the authority to approve loans and credit transactions up to S$200 million (for Malaysia the amount variesdepending on instrument types and rating). Transactions greater than the above limit require the approval of the RiC.A substantial portion of the Group’s life assurance funds is participating in nature. In the event of volatile investment climate and/or unusualclaims experience, the insurer has the option of revising the bonus and dividends payable to policyholders.Dynamic Solvency Testing (“DST”) is performed annually by the Appointed Actuary (“AA”), for endorsement by the Board. The purpose of theDST is to test the solvency of the life fund under various scenarios according to prescribed statutory valuation basis, simulating drastic changesin major parameters such as new business volume, interest rate environment, expense patterns, mortality/morbidity patterns and lapse rates.Gross Premium Valuation (“GPV”) is also carried out annually by the AA. GPV assesses the adequacy of the projected inflows of premiumsand investment income vis a vis the long term benefits due to policyholders including but not limited to reversionary bonuses, terminal(or maturity) bonuses and guaranteed returns (for non-participating products/policy benefits) for the in-force block of business. GPV issubmitted to the respective Boards for approval and it provides the basis for the annual declaration of bonus to policyholders for vesting tothe respective insurance policies and declaration of profits to shareholders through the profit and loss statement.For investment-linked funds, the risk exposure for the Group is limited only to the underwriting aspect as all investment risks are borne bythe policyholder.Investment limits monitoring is in place at various levels to ensure that all investment activities are aligned with the Group risk managementprinciples and philosophies. Compliance with established financial risk limits forms an integral part of the risk governance and financialreporting framework.Risks inherent in the insurance business include but are not limited to the following:Insurance risk. The principal activities of the Group are the provision of financial advisory services coupled with insurance protection againstrisks such as mortality, morbidity (health, disability, critical illness, personal accident), and property and casualty. The SMT reviews trendsand claims experience for these risks along with the lapse and surrender experience to ensure that appropriate policy, guidelines and limitsare put in place to manage them. For example, as part of the reinsurance policy, retention limits of $300,000 for mortality and $150,000for critical illness are set for each individual life policy. The reinsurance management strategy and policy, being a key risk management toolto manage insurance risk, is reviewed by the RiC on an annual basis.Market risk. The Group is exposed to market risk in the investments of the Shareholders’ Fund as well as in the mismatch risk betweenthe asset and liability of the Insurance Funds. The ALC actively manages market risk through setting the investment policy and assetallocation, approving portfolio construction and risk measurement methodologies, approving hedging and alternative risk transfer strategies.Management of market risks resulting from changes in interest rates and currency exchange rates; volatility in equity price; as well as otherrisks like credit and liquidity risks are briefly described as follows:Interest rate risk (including asset liability mismatch). Investments in fixed income instruments in the Shareholders’ Fund exposethe Group to interest rate risk. Thus, Shareholders’ Fund will incur an economic loss when interest rates rise. On the other hand,the Life Assurance Fund will incur an economic loss when interest rates drop since the duration of policyholders’ liabilities aregenerally longer than the duration of the fixed income assets.Foreign currency risk. Investments denominated in foreign currencies are limited to 30% of Singapore Non-linked Life AssuranceFund portfolios as prescribed by insurance regulations. There are no foreign currency limits for Investment Linked Life AssuranceFund portfolios. The 30% limit is applied also to investments in fixed income portfolios of the Shareholders’ and General InsuranceFunds as an internally prescribed limit. Currency risk derived from investments in foreign equities are not hedged. Hedging throughcurrency forwards and swaps is typically used for fixed income portfolio.Due to capital controls, the Insurance and Shareholders’ Funds in Malaysia are predominantly held in Malaysian Ringgit.94 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTS26 ENTERPRISE RISK GOVERNANCE AND MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)The Group is also exposed to foreign exchange movement on its net investment in its foreign subsidiaries. The major item for theGroup is in respect of its Malaysian subsidiary companies where the Malaysian Ringgit has been pegged to the US Dollar @ 1 USDto 3.8 Malaysian Ringgit since September 1997. The Group does not hedge against this exposure. Total assets in the Shareholders’Funds in foreign subsidiaries as at 31 December 2004, under this unhedged category, approximated S$309.1 million (2003:S$278.5 million), translated at the respective year-end currency exchange rates.The tables below show the foreign exchange position of the Group by major currencies:GROUPSGD RM USD Others Totalin Singapore Dollars (millions) equivalent as at 31 December 2004:Quoted equity 1,728.0 3,013.7 412.3 2,156.5 7,310.5Unquoted equity 17.8 39.4 1.1 0.5 58.8Quoted government securities, loan stocks and bonds 7,104.8 2,812.2 1,039.7 652.6 11,609.3Other unquoted investments 913.7 2,828.6 86.2 117.6 3,946.1Collective investment schemes 71.3 8.1 600.0 18.1 697.5Unit linked – bonds 56.9 17.0 98.3 332.3 504.5Unit linked – equities 140.3 135.9 429.8 712.1 1,418.1Unit linked – collective investment schemes 103.2 – 20.3 – 123.5Derivatives 916.9 (4.7) (761.5) (158.5) (7.8)Embedded derivatives 289.9 27.1 112.0 2.2 431.2Secured loans, net of provision for impairment 420.4 305.2 – – 725.6Unsecured loans 0.3 0.1 – – 0.4Policy loans 842.3 1,018.0 3.1 17.5 1,880.912,605.8 10,200.6 2,041.3 3,850.9 28,698.6Cash on deposit 3,079.3 788.3 116.3 228.5 4,212.4Total 15,685.1 10,988.9 2,157.6 4,079.4 32,911.0in Singapore Dollars (millions) equivalent as at 31 December 2003:Quoted equity 2,003.8 3,706.6 505.4 2,444.2 8,660.0Unquoted equity 20.4 18.2 1.1 0.6 40.3Quoted government securities, loan stocks and bonds 5,087.0 1,730.2 609.7 603.0 8,029.9Other unquoted investments 1,335.2 2,311.1 166.5 78.3 3,891.1Collective investment schemes 15.5 8.4 180.7 0.1 204.7Unit linked – bonds 51.3 11.5 89.4 285.4 437.6Unit linked – equities 119.2 71.6 218.8 571.8 981.4Unit linked – collective investment schemes 420.3 – 0.4 – 420.7Derivatives 402.0 – (455.4) 32.0 (21.4)Embedded derivatives 90.7 46.3 46.9 17.8 201.7Secured loans, net of provision for impairment 587.9 272.7 – – 860.6Unsecured loans 0.4 0.2 – – 0.6Policy loans 808.4 1,008.7 4.1 16.0 1,837.210,942.1 9,185.5 1,367.6 4,049.2 25,544.4Cash on deposit 2,171.0 1,216.8 188.8 170.4 3,747.0Total 13,113.1 10,402.3 1,556.4 4,219.6 29,291.4GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 95

NOTES TO THEFINANCIAL STATEMENTS26 ENTERPRISE RISK GOVERNANCE AND MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)Equity price risk. Equity price risk is the most volatile of all risk types. A robust monitoring process is in place to activate appropriatehedging and risk transfer strategies to limit the downside risk at certain predetermined levels.In 2004, the Group disposed of 80,192,220 stock units in OCBC Bank through the SCR exercise undertaken by the Bank (forfurther details, please refer to Note 1). A decision was made to reinvest the bulk of the proceeds into fixed income instruments aspart of the asset allocation decision process. As a result, the Group’s exposure to equity price risk declined substantially in 2004.Real Estate price risk. The Group is exposed to real estate price risk through the real estate that it owns in Singapore and Malaysiathrough the Life Assurance Funds. Each acquisition or divestment of real estate is reviewed by ALC and submitted for the decisionof the respective Boards.Commodity risk. The Group does not have a direct or significant exposure to commodity risk.Cash flow and liquidity risk. Cash flow and liquidity risk arises when a company is unable to meet its obligations at reasonablecost when required to do so. This typically happens when the investments in the portfolio is illiquid. Liquidity risk is managed bymonitoring the actual and projected cash inflows and outflows and by ensuring that a reasonable amount of assets are kept inliquid instruments at all times.The following tables show the maturity of the Group’s financial assets by time bands:GROUPUp to 1 year 1 to 5 years > 5 years Totalin Singapore Dollars (millions) equivalent as at 31 December 2004:Quoted government securities, loan stocks and bonds 1,348.5 5,167.9 5,092.9 11,609.3Other unquoted investments 504.5 2,037.8 1,403.8 3,946.1Unit linked bonds 48.0 214.9 241.6 504.5Derivatives (8.8) (13.4) 14.4 (7.8)Embedded derivatives 8.1 196.9 226.2 431.2Secured loans, net of provision for impairment 192.5 299.8 233.3 725.6Unsecured loans – 0.4 – 0.4Cash on deposit 4,141.9 52.3 18.2 4,212.4Total 6,234.7 7,956.6 7,230.4 21,421.7in Singapore Dollars (millions) equivalent as at 31 December 2003:Quoted government securities, loan stocks and bonds 787.8 3,533.4 3,708.7 8,029.9Other unquoted investments 419.5 2,302.7 1,168.9 3,891.1Unit linked bonds 84.2 105.2 248.2 437.6Derivatives 11.8 (6.3) (26.9) (21.4)Embedded derivatives 25.4 74.6 101.7 201.7Secured loans, net of provision for impairment 253.2 383.1 224.3 860.6Unsecured loans – 0.6 – 0.6Cash on deposit 3,631.0 97.0 19.0 3,747.0Total 5,212.9 6,490.3 5,443.9 17,147.196 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTS26 ENTERPRISE RISK GOVERNANCE AND MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)Derivative contracts are generally used by the Group for hedging interest rate, currency and equity risk exposures. These contracts aremarked to market at the end of each reporting month. Derivatives at year-end are:GROUPFair value of derivativesNotionalPrincipal Held as Held asAmount assets liabilitiesin Singapore Dollars (millions) equivalent as at 31 December 2004:Foreign exchange: Forwards 1,452.1 9.8 (11.5)Currency Swaps 484.8 3.5 (16.1)OTC Options 0.1 0.1 –Interest rates: Swaps 405.3 46.7 (39.9)OTC Options 1.3 0.2 (1.1)Exchange Traded Futures 707.8 0.4 –Equity: Futures 14.9 0.1 –Total 3,066.3 60.8 (68.6)in Singapore Dollars (millions) equivalent as at 31 December 2003:Foreign exchange: Forwards 1,135.0 14.0 (4.2)Exchange traded futures – 0.5 –Interest rates: Swaps 452.9 2.4 (33.2)OTC Options – – (0.9)Total 1,587.9 16.9 (38.3)Credit risk. The Group is exposed to credit risk through investments in bonds, corporate lending activities, and exposure to counterpartycredit in derivative transactions. For all three types of credit risk exposure, loss may materialise as a result of a credit default. Forinvestments in bonds, loss may also materialise as a result of the widening of credit spread or the downgrade of credit rating. Themaximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. The task ofevaluating and monitoring credit risk is undertaken by the CRC. Internal limits are put in place and monitored to manage the risk.These limits are reviewed on a regular basis by CRC.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 97

NOTES TO THEFINANCIAL STATEMENTS26 ENTERPRISE RISK GOVERNANCE AND MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)The loans in the Group’s portfolio are generally secured by collateral, with a loan to collateral ratio of 90%. The fair value of collaterals,held by the Group as lender, for which it is entitled to sell or pledge in the event of default is as follows:Carrying AmountFair ValueType of Loans Type of Collaterals of Loans of Collateralsin Singapore Dollars (millions) equivalent as at 31 December 2004:Secured Loans Properties 653.4 1,172.8Shares 87.2 167.3Bankers’ Guarantees 84.3 84.3Others 8.7 18.5Policy Loans Cash value of policies 1,880.9 3,752.5Total 2,714.5 5,195.4GROUPin Singapore Dollars (millions) equivalent as at 31 December 2003:Secured Loans Properties 676.2 1,999.3Shares 89.7 150.6Bankers’ Guarantees 84.4 84.4Others 10.3 21.1Policy Loans Cash value of policies 1,837.2 3,572.0Total 2,697.8 5,827.4Concentration risk. An important element of managing both market and credit risks is to actively manage concentration tospecific issuers, counterparties, industry sectors, countries and currencies. Both internal and regulatory limits are put in place andmonitored to manage concentration risk. These limits are reviewed on a regular basis by the ALC and CRC.Fair value of financial assets and liabilitiesThe carrying amounts of the Group’s and the Company’s financial assets and liabilities approximate their fair value, except as disclosed below:GROUPCOMPANYNotes 2004 2003 2004 2003Unquoted equity in corporations, at cost 18 60.0 41.5 – –Loans to associated companies – unsecured 19 24.1 26.2 – –Amounts due from subsidiary companies 20 – – 713.8 453.4It is not practicable to determine the fair values of the above unquoted equity investments in corporations because of the lack of unquotedmarket prices and the asumptions used in valuation models to value these investments cannot be reasonably determined. However, thecashflows from these investments are expected to be in excess of their carrying amounts.It is not practicable to determine the fair values of amounts due from/(to) subsidiary and unsecured loans to associated companies becausethese balances are non-interest bearing and/or have no fixed terms of repayment.98 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTES TO THEFINANCIAL STATEMENTS26 ENTERPRISE RISK GOVERNANCE AND MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)Business and Operational Risk. Based on the Group’s Enterprise Risk Framework, Business and Operational Risks have been grouped intofive main categories:Business risk include failure of business strategy, failure of product design, development and pricing strategy, failure of marketingand communication strategy, and market misconduct.Operational risk – external events include regulatory changes, liability and legal disputes, fraud, business interruption, failure ofoutsourced vendors, and damage to premises and environment.Operational risk – processes include failure of control processes and procedures, expense and cost overrun, and modelling error.Operational risk – systems include project failure, failure of systems availability, capacity and utilisation, failure of systemssecurity, and failure of IT infrastructure.Operational risk – people include lagging customer service quality, lack of core competencies, and lack of succession of key positions.The Senior Management team reviews all business and operational issues regularly, at its monthly meetings. The Internal Audit team reviewsthe systems of internal controls to assess their ongoing relevance and effectiveness, and report at least quarterly to the Audit Committee.27 DIVIDENDSin Singapore Dollars (millions)GROUP AND COMPANY2004 2003Final dividend for previous year of 18 cents per ordinary share of 50 cents each, net ofSingapore income tax at 20% (2003: 15 cents per ordinary share, net of Singaporeincome tax at 22%) 67.9 55.1First interim dividend of 7 cents per ordinary share of 50 cents each, net of Singaporeincome tax at 20% (2003: 6 cents per ordinary share, net of Singaporeincome tax at 22%) 26.5 22.1Special interim dividend of 5 cents per ordinary share of 50 cents each, net ofSingapore income tax at 20% (2003: nil) 19.0 –113.4 77.2The Directors proposed that a final dividend of 20 cents (gross) and a special final dividend of 3 cents (gross), totalling 23 cents (gross) perordinary share of 50 cents each less 20% Singapore income tax, amounting to S$87.1 million (2003: S$67.9 million) net of tax, be paid inrespect of the financial year ended 31 December 2004.28 AUTHORISATION OF FINANCIAL STATEMENTSAt the Board of Directors’ Meeting held on 7 February 2005, the Board authorised these financial statements for issue and that two Directorsof the Board, Mr Michael Wong Pakshong and Mr Tan Beng Lee, sign the Directors’ Report on behalf of the Board.29 COMPARATIVE FIGURESThe comparative figures have been reclassified to provide a proper comparison with the current year’s presentation.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 99

MAJORPROPERTIESSingapore Properties – 100% Held by The Great Eastern Life Assurance Company Limited:Site Area Gross FloorLocation Tenure (sq m) Area (sq m) PurposeGreat Eastern Centre 99 years leasehold 6,600 21,515 Commercial – Offices1 Pickering Street (Commenced date: (strata area)1 September 1997)Haig Court Freehold 20,289 56,809 Residential – 360-unit condominiumNo 152, 156, 158 & 160Haig RoadOrchard Emerald Freehold 1,547 6,363 Commercial – Retail & Offices202 & 218 Orchard RoadGE @ Changi Freehold 3,503 10,891 Commercial – Offices200 Changi Road Undergoing major refurbishment worksEstimated Completion: October 2005Great Eastern House 999 years leasehold 730 3,334 Commercial – Offices49 Beach Road (Expiry date:29 January 2834)Holland GEMS Freehold 8,685 13,895 Residential – 64-unit condominium1, 3 & 5 Taman NakhodaGallop Court Freehold 8,225 5,565 Residential – 25-unit condominium6, 6A, 6B Gallop RoadGallop Gardens Freehold 12,636 4,805 Residential – Good Class Bungalows1, 1A, 1B, 1C, 3, 3A, 3B, 3C Completed: September 2004Tyersall RoadNewton GEMSResidential – 190-unit condominium50, 52 & 54 Newton Road Freehold 2,809 }Lot 660 TS 28, Newton Road } 27,294and Lot 56 TS 28, Lincoln Road 999 years leasehold 6,945 }(Expiry date:12 February 2884)100 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

MAJORPROPERTIESMalaysia Properties – 100% Held by Great Eastern Life Assurance (Malaysia) Berhad:Site Area Gross FloorLocation Tenure (sq m) Area (sq m) PurposeMenara Great Eastern Life Freehold 25,572 89,556 Commercial – Retail and OfficesLots 102 & 103Kuala Lumpur, Federal Territory40, 44, 50 & 68 Freehold 2,880 11,285 Commercial – OfficesJln Ampang Kuala Lumpur,Federal TerritoryLot 104 Jln Ampang Hilir Freehold 10,889 1,522 Commercial and ResidentialKuala Lumpur, Federal TerritoryMenara Aik Hua Freehold 2,447 10,797 Commercial – Retail & OfficesJln Changkat Raja ChulanKuala Lumpur,Federal TerritoryHouses at Port Dickson Freehold 30,898 5,361 Residential– Suara Ombak,Shell Garden andShell Drive, Negeri SembilanWisma Great Eastern Life 99 years leasehold 718 8,853 Commercial – OfficesJalan Gaya, Kota Kinabalu,(Expiry date:Sabah 31 December 2093)25, Lebuh Light, Freehold 5,038 12,005 Commercial – Office Block DevelopmentPenang23 & 25,Persiaran Greentown 5 99 years leasehold 334 1,301 Commercial – 4-storey Retail & OfficesIpoh, Perak(Expiry date:21 November 2094)No. 103, 105, 107 & 109 Freehold 980 4,011 Commercial – 5-storey Retail & OfficesJalan Yam Tuan, SerembanNegeri SembilanLot Q169 – Q173 Plz Mahkota 99 years leasehold 124 710 Commercial – 4-storey Retail & OfficesMelaka(Expiry date:8 July 2101)No. 8 & 10, Jalan Tiara 2A 99 years leasehold 451 1,710 Commercial – 2 units of 5- &Bandar Baru Klang4-storey OfficesLot No 1260 & 1261 99 years leasehold 307 933 Commercial – 2 units of 4-storey Shop(Sub-Lot 30 & 31)OfficesMiri Concession Land District(MCLD), Malay Street25 Jalan Dato Lim Hoe Lek 99 years leasehold 508 1,448 Commercial – 3-storey OfficesKuantanMenara Weld, PT50 Freehold 6,405 38,076 Commercial – 30-storey building with aSeksyen 57, Kuala Lumpur4 level basement, 5 levels of shopping& 26 floor of officeGREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 101

SHAREHOLDINGSTATISTICSAS AT 15 FEBRUARY 2005Authorised Share Capital:Issued and Fully Paid-up Capital:Class of Shares:Voting Rights:Distribution of ShareholdingsS$1,000,000,000S$236,659,534.50 (473,319,069 shares of 50 cents each)Ordinary shares of 50 cents eachThe Articles of Association provide for:(a) on a show of hands: 1 vote(b) on a poll: 1 vote for each ordinary share heldNo. ofNo. ofSize of Holdings Shareholders % Shares %1 – 999 50 4.50 13,058 0.001,000 – 10,000 755 67.96 2,253,815 0.4810,001 – 1,000,000 290 26.10 27,518,524 5.811,000,001 and above 16 1.44 443,533,672 93.71Total 1,111 100.00 473,319,069 100.00Twenty Largest Shareholders(according to the Register of Members)Shareholders (Members) No. of Shares %1. Oversea-Chinese Bank Nominees Private Limited 374,596,490 79.142. HSBC (Singapore) Nominees Private Limited 12,429,400 2.633. DBS Nominees (Private) Limited 11,329,914 2.394. Eastern Realty Company Limited 9,425,619 1.995. Citibank Nominees Singapore Private Limited 6,318,037 1.336. Raffles Nominees (Private) Limited 4,978,641 1.057. Wong Peng Onn 4,752,000 1.008. Wong Hong Sun 3,060,000 0.659. Kuchai Development Berhad 3,032,000 0.6410. Wong Peng Yan Benjamin 2,876,617 0.6111. Wong Hong Yen 2,738,528 0.5812. United Overseas Bank Nominees (Private) Limited 2,438,506 0.5213. Sungei Bagan Rubber Company (Malaya) Berhad 1,733,120 0.3714. Liu Nee Wong Yuling Joyce 1,580,000 0.3315. Shaw Vee Meng 1,208,000 0.2616. Shaw Vee Foong 1,036,800 0.2217. Oh Chin Kiat & Company Private Limited (in members’ voluntary liquidation) 945,216 0.2018. Lee Joo Har 829,508 0.1819. Wong Pui Ying 825,367 0.1720. The Bank Of East Asia (Nominees) Private Limited 806,640 0.17Total 446,940,403 94.43102 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

SHAREHOLDINGSTATISTICSAS AT 15 FEBRUARY 2005Substantial shareholder (according to the Register of Substantial Shareholders) as at 15 February 2005Shareholdingsheld by theShareholdingsShareholdings substantial in which theregistered in shareholder substantialthe name of registered shareholder has Total Percentagesubstantial in the name of deemed No. of of totalshareholder nominees interests shares held issued sharesOversea-Chinese BankingCorporation Limited (“OCBC Bank”) NIL 373,360,850 10,059,219 (1) 383,420,069 81.01(1)OCBC Bank has a deemed interest in 9,425,619 shares held by Eastern Realty Company Limited and 633,600 shares held by Singapore Building Corporation LimitedBased on information available to the Company as at 15 February 2005, the percentage of shareholding of the Company held in the hands of thepublic is more than 10 percent; therefore, Rule 723 of the Listing Manual of Singapore Exchange Securities Trading Limited has been complied with.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 103

MANAGEMENTTEAMSINGAPOREThe Great Eastern LifeAssurance Company LimitedTan Beng LeeDirector & Chief Executive OfficerTan Hock LyeManaging Director, OperationsTan Ching GueiManaging Director, Investment ManagementLoh Sook Mee (Mrs)Managing Director,Finance and Corporate AffairsChiang Boon KongManaging Director,Strategic Resource ManagementTan Tiam ChaiManaging Director, China OperationsWinson Siu Chun WaiAppointed ActuaryElizabeth Teoh Pek Har (Mrs)Company SecretaryMark Lim Kian WeiHead, Customer AcquisitionNg Koh WeeHead, ITHo Kiam KhiawHead, MarketingBoon-Gek Mudeliar (Mrs)Head, Corporate CommunicationsStraits Lion Asset Management LtdDaniel Chan Choong SengDirector & Chief Executive OfficerPeter Michael HengDirector & Chief Investment OfficerVictoria Tse Miu HaDirector, Financial Control & AdministrationThe Overseas AssuranceCorporation LimitedTan Beng LeePrincipal OfficerTan Jiak HiangHead, Bancassurance & General InsuranceMALAYSIAGreat EasternLife Assurance (M) BerhadAlex Foong Soo HahDirector & Chief Executive OfficerManaging Director, Customer ManagementKoh Yaw HuiHead, Customer Acquisition(Agency Management)Bruce Lee Yee LamHead, Finance & Corporate AffairsTeh Loo HaiHead, Customer ManagementChan Choong ThoChief Investment OfficerSophia Ch’ng Sok HeangAppointed ActuaryPuan Raja Mazlena Raja AzizCompany SecretaryMichelle Tan Yee MingRegional Internal AuditorYong Chee KeongHead, Customer Acquisition(Bancassurance)Overseas AssuranceCorporation (M) BerhadWong Ah KowManaging Director & Chief Executive OfficerManaging Director, General InsuranceLiew Kim LoyExecutive Vice President, OperationsCheam Tat HoiSenior Vice President,Finance & AdministrationINDONESIAPT Asuransi Jiwa AsihGreat EasternWong Keng ChunPresident Director104 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

GROUPNETWORKGREAT EASTERN HOLDINGS LIMITEDGreat Eastern Centre1 Pickering Street #13-01Singapore 048659Tel: (65) 6248 2000Fax: (65) 6532 2214e-mail: wecare@lifeisgreat.com.sgwebsite: www.lifeisgreat.com.sgTHE GREAT EASTERN LIFEASSURANCE COMPANY LIMITEDHead OfficeGreat Eastern Centre1 Pickering Street #13-01Singapore 048659Tel: (65) 6248 2000Fax: (65) 6532 2214e-mail: wecare@lifeisgreat.com.sgwebsite: www.lifeisgreat.com.sgAgent Service Centres3 Pickering Street, Nankin Row #02-44Singapore 048660Great Eastern House49 Beach Road #01-01Singapore 189685Tel: (65) 6333 1631Fax: (65) 6333 1630Brunei Branch OfficeSuite 1, 2nd Floor Badiah ComplexJalan TutongBandar Seri Begawan BA2111Negara Brunei DarussalamTel: (673) (2) 2243 792Fax: (673) (2) 2225 724e-mail: gelife@brunet.bnShanghai Representative OfficeRoom 1506 Tomson Commercial Building710 Dong Fang RoadPu Dong, Shanghai 200122People’s Republic of ChinaTel: (86) (21) 5830 1297Fax: (86) (21) 5830 1293e-mail: sro@lifeisgreat.com.cnwebsite: www.lifeisgreat.com.cnVietnam Representative OfficeSuite 406, Hanoi Tower49 Hai Ba Trung Street, Hoan Kiem DistrictHanoi, VietnamTel: (84) (4) 9 363 900Fax: (84) (4) 9 363 902website: www.lifeisgreat.com.vnTHE OVERSEAS ASSURANCECORPORATION LIMITEDHead OfficeGreat Eastern Centre1 Pickering Street #13-01Singapore 048659Tel: (65) 6248 2000Fax: (65) 6532 2214e-mail: general@oac.com.sgwebsite: www.lifeisgreat.com.sgGREAT EASTERN LIFEASSURANCE (MALAYSIA) BERHADHead OfficeMenara Great Eastern303 Jalan Ampang50450 Kuala LumpurTel: (60) (3) 4259 8888Fax: (60) (3) 4259 8000e-mail: wecare@lifeisgreat.com.mywebsite: www.lifeisgreat.com.myBranch OfficesAlor Star66 & 68 Jalan Teluk Wan Jah05200 Alor Star, KedahTel: (60) (4) 731 9877Fax: (60) (4) 731 9878Batu Pahat109 Jalan Rahmat83000 Batu Pahat, JohorTel: (60) (7) 432 5562Fax: (60) (7) 432 5560Bintulu200, 1st Floor, Taman Sri Dagang97000 Bintulu, SarawakTel: (60) (86) 336 676Fax: (60) (86) 332 601Ipoh23 & 25 Persiaran Greentown 5Pusat Perdagangan Greentown30450 Ipoh, PerakTel: (60) (5) 254 2027Fax: (60) (5) 255 5578Johor Bahru10th Floor, Menara Pelangi,Jalan Kuning, Taman Pelangi80400 Johor Bahru, JohorTel: (60) (7) 334 1022Fax: (60) (7) 334 9122KlangNo 8 & 10 Jalan Tiara 2ABandar Baru Klang41150 Klang, SelangorTel: (60) (3) 3343 6688Fax: (60) (3) 3341 3398Kluang1 Jalan Yayasan (1st & 2nd Floor)86000 Kluang, JohorTel: (60) (7) 772 3529Fax: (60) (7) 772 3449GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 105

GROUPNETWORKKota BharuLot 496-498 Wakaf SikuJalan Sultan Yahya Petra15200 Kota Bharu, KelantanTel: (60) (9) 748 2332Fax: (60) (9) 744 9701Kota KinabaluWisma Great EasternLevel 4 & 5No. 65 Jalan GayaP.O.Box 1088888809 Kota Kinabalu, SabahTel: (60) (88) 252 033Fax: (60) (88) 210 437Kuala Terengganu2nd Floor, 6FBangunan Persatuan Hin AnnJalan Air Jernih20300 Kuala TerengganuTel: (60) (9) 622 4959Fax: (60) (9) 626 5195KuantanB16 & B18, Lorong Tun Ismail Satu25000 Kuantan, PahangTel: (60) (9) 515 7666Fax: (60) (9) 515 8477KuchingLots 181 & 182Jalan Song Thian Cheok93100 Kuching, SarawakTel: (60) (82) 412 736Fax: (60) (82) 256 210LabuanU0370, 1st FloorJalan Anggerik87007 Wilayah Persekutuan LabuanTel: (60) (87) 410 089Fax: (60) (87) 410 097Lahad DatuGround & 1st FloorMDLD 0819, Jalan Teratai91100 Lahad Datu, SabahTel: (60) (89) 884 136Fax: (60) (89) 884 226LimbangLot 1406, 1st FloorJalan Buangsiol98700 Limbang, SarawakTel: (60) (85) 214 058Fax: (60) (85) 214 057Melaka23 Jalan PM15Plaza Mahkota,75000 MelakaTel: (60) (6) 282 4577Fax: (60) (6) 283 4579MiriLots 1260 & 1261Block 10, M.C.L.D, Jalan Melayu98000 Miri, SarawakTel: (60) (85) 413 299Fax: (60) (85) 417 518Penang28 Penang Street10200 PenangTel: (60) (4) 262 2141Fax: (60) (4) 262 2140Sandakan1st Floor, Standard Chartered Bank BuildingJalan Pelabuhan, Mail Bag Service 3890009 Sandakan, SabahTel: (60) (89) 213 484Fax: (60) (89) 271 343SarikeiLot 1438, Block 361st Floor, Jalan Masjid96100 Sarikei, SarawakTel: (60) (84) 653 885Fax: (60) (84) 653 884Seremban101 & 103 Jalan Yam Tuan70000 Seremban, Negeri SembilanTel: (60) (6) 763 6120Fax: (60) (6) 763 1480Sibu3, 5 & 7 Jalan Keranji96000 Sibu, SarawakTel: (60) (84) 312 829Fax: (60) (84) 333 925Taiping60 Jalan Barrack34000 TaipingPerakTel: (60) (5) 805 1021Fax: (60) (5) 805 1023Tawau1st Floor, Wisma Great EasternJalan Billian, P.O.Box 77391008 Tawau, SabahTel: (60) (89) 771 322Fax: (60) (89) 762 341106 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

GROUPNETWORKOVERSEAS ASSURANCECORPORATION (MALAYSIA) BERHADHead OfficeMenara Great EasternLevel 18303 Jalan Ampang50450 Kuala LumpurTel: (60) (3) 4259 7888Fax: (60) (3) 4813 2737e-mail: enquiry@oac.com.mywebsite: www.oac.com.myBranch OfficesAlor Star2nd Floor, OCBC Building380 Jalan Raja05000 Alor StarTel: (60) (4) 734 6515Fax: (60) (4) 734 6516Ipoh26A, 26B & 26CPersiaran Greentown 6Greentown Business Centre30450 IpohTel: (60) (5) 253 6649Fax: (60) (5) 255 3066Johor BahruSuite 13A-1 Level 13AMenara PelangiJalan Kuning, Taman Pelangi80400 Johor BahruTel: (60) (7) 334 8988Fax: (60) (7) 334 8977Klang3rd Floor, No. 10 Jalan Tiara 2ABandar Baru Klang41150 KlangTel: (60) (3) 3345 1027Fax: (60) (3) 3345 1029Kota Bharu2nd Floor, Bangunan AAC2002-A Jalan Sultan Yahya Petra15150 Kota BharuTel: (60) (9) 748 2698Fax: (60) (9) 744 8533Kota KinabaluSuite 6.3, Level 6Wisma Great Eastern LifeNo. 65 Jalan Gaya88000 Kota Kinabalu, SabahTel: (60) (88) 235 636Fax: (60) (88) 248 879KuantanB-26, 1st FloorLorong Tun Ismail 125000 KuantanTel: (60) (9) 516 2849Fax: (60) (9) 516 2848KuchingUnit 06-01ALevel 6, Gate WayNo. 9, Jalan Bukit Mata93100 KuchingTel: (60) (82) 420 197Fax: (60) (82) 248 072Melaka2.23, Jalan PM15Plaza Mahkota75000 MelakaTel: (60) (6) 284 3297Fax (60) (6) 283 5478Penang3rd Floor, OCBC Building36 Lebuh Pantai10300 PenangTel: (60) (4) 261 9361Fax: (60) (4) 261 9058Seremban103-2 Jalan Yam Tuan70000 SerembanTel: (60) (6) 764 9082Fax: (60) (6) 761 6178PT ASURANSI JIWA ASIHGREAT EASTERNHead OfficePlaza Centris, 12th A FloorJl. HR. Rasuna Said Kav. B-5South Jakarta 12910Tel: (62) (21) 526 9133Fax: (62) (21) 526 9128e-mail: customer@lifeisgreat.co.idwebsite: www.lifeisgreat.co.idSales OutletsJakarta Kelapa GadingJl. Mandiri Raya Tengah Blok. M – VI A No.9Kelapa gadingJakarta Utara – 14240Tel: (62) (21) 452 9559, 452 0780Fax: (62) (21) 452 9743e-mail: gelkgd@lifeisgreat.co.idJakarta HarmoniKomp. Harmoni Plaza Blok A/20Jl. Suryopranoto No.2Jakarta - 10130Tel: (62) (21) 6386 2830, 6386 2918,6386 2829Fax: (62) (21) 6386 2909e-mail: gelhrm@lifeisgreat.co.idGREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 107

GROUPNETWORKMakassarKomplek Pelita Marga MasBlok C No. 8 Jl. G. LatimojongMakassar – 90153South SulawesiTel: (62) (411) 319 658Fax: (62) (411) 319 836e-mail: gelmks@lifeisgreat.co.idBandungJl. Cikawao No. 51 DKelurahan PaledangBandung – 40261West JavaTel: (62) (22) 421 1028Fax: (62) (22) 421 8441e-mail: gelbdg@lifeisgreat.co.idPalembangJl. Lingkaran No. 21/604Palembang - 30124South SumateraTel: (62) (711) 355 692 / 375 883Fax: (62) (711) 372 809e-mail: gelplb@lifeisgreat.co.idSurabayaPertokoan Graha Kencana Blok CJl. Panglima Sudirman No. 99Surabaya - 60271East JavaTel: (62) (31) 547 3035Fax: (62) (31) 547 3212e-mail: gelsby@lifeisgreat.co.idJambiJl. Sultan Agung No. 11 A RT. 5/RW. 2Kel. Beringin – Kec. Pasar JambiJambi – 32121Tel: (62) (741) 23719Fax: (62) (741) 23719e-mail: geljmb@lifeisgreat.co.idSurakartaJl. Dr. Soepomo No.29Solo – 59139Central JavaTel: (62) (271) 714 563Fax: (62) (271) 714 563e-mail: gelsolo@lifeisgreat.co.idBatamKomplek Regency Park Blok II No. 17Pelita BatamKepulauan RiauTel: (62) (778) 453 774, 455 391Fax: (62) (778) 455 390e-mail: gelbtm@lifeisgreat.co.idSemarangKomp. Ruko Gayam Sari No. 15Jl. Brigjend SudiartoCentral JavaTel: (62) (24) 671 4416Fax: (62) (24) 670 8162e-mail: gelsmg@lifeisgreat.co.idBalikpapanKomp. Balikpapan Permai Blok H-1 No. 9Jl. Jend. SudirmanKalimantan TimurEast KalimantanTel: (62) (542) 414 539Fax: (62) (542) 414 539e-mail: gelblp@lifeisgreat.co.idMedanJl. Brigjend Katamso 37 CAur - MedanNorth SumateraTel: (62) (61) 451 5285Fax: (62) (61) 452 0988e-mail: gelmdn@lifeisgreat.co.idSTRAITS LION ASSETMANAGEMENT LTD9 Battery Road #08-03/12Straits Trading BuildingSingapore 049910Tel: (65) 6438 6636Fax: (65) 6438 6122108 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTICE OF ANNUAL GENERAL MEETINGGREAT EASTERN HOLDINGS LIMITED(COMPANY REGISTRATION NO. 199903008M)(INCORPORATED IN THE REPUBLIC OF SINGAPORE)NOTICE IS HEREBY GIVEN that the Sixth Annual General Meeting of the Members of Great Eastern Holdings Limited will be held at 1 PickeringStreet #13-01, Great Eastern Centre, Singapore 048659 on Tuesday, 29 March 2005 at 12 noon for the following purposes:As Ordinary Business1 To receive and adopt the Directors’ Report and audited Financial Statements for the financial year ended 31 December 2004.2 To approve a final dividend of 20 cents (gross) and a special final dividend of 3 cents (gross) per ordinary share of 50 cents each, less Singaporeincome tax at 20%, in respect of the financial year ended 31 December 2004 as recommended by the Directors.3 (a) To re-appoint pursuant to Section 153(6) of the Companies Act, Chapter 50 the following Directors, who retire under Section 153 of thesaid Act, to hold office from the date of this Annual General Meeting until the next Annual General Meeting:(i) Mr Michael Wong Pakshong(ii) Mr Lee Seng Wee(iii) Mr Shaw Vee MengNote: Mr Michael Wong Pakshong, upon his re-appointment as a Director, will remain as a member of the Audit Committee and is considered an independent member of theAudit Committee.(b) To re-elect the following Directors retiring by rotation under Article 91 of the Company’s Articles of Association and who being eligible,offer themselves for re-election:(i) Mr Tan Beng Lee(ii) Professor Neo Boon SiongNote: Professor Neo Boon Siong, upon his re-election as a Director, will remain as a member of the Audit Committee and is considered an independent member of theAudit Committee.(c) To re-elect the following Directors retiring under Article 97 of the Company’s Articles of Association and who being eligible, offerthemselves for re-election:(i) Dr Cheong Choong Kong(ii) Mr David Philbrick Conner(iii) Mr Tan Yam PinNote: Mr Tan Yam Pin, upon his re-election as a Director, will remain as a member of the Audit Committee and is considered an independent member of the Audit Committee.4 To approve Directors’ fees of S$634,000 for the financial year ended 31 December 2004 (2003: S$635,000).5 To re-appoint auditors and authorise the Directors to fix their remuneration.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 109

NOTICE OF ANNUAL GENERAL MEETINGGREAT EASTERN HOLDINGS LIMITED(COMPANY REGISTRATION NO. 199903008M)(INCORPORATED IN THE REPUBLIC OF SINGAPORE)As Special Business6 To consider and, if thought fit, to pass the following Ordinary Resolution to empower the Directors to issue shares in the Company up to thelimits specified therein from the date of this Annual General Meeting up to the next Annual General Meeting:Mandate to issue sharesThat pursuant to Section 161 of the Companies Act, Chapter 50 and the Listing Manual of the Singapore Exchange Securities Trading Limited(“SGX-ST”), authority be and is hereby given to the Directors of the Company to:(a) (i) issue shares in the capital of the Company (“shares”) whether by way of rights, bonus or otherwise; and/or(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, includingbut not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertibleinto shares,at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolutediscretion deem fit; and(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of anyInstrument made or granted by the Directors while this Resolution was in force,provided that:(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance ofInstruments made or granted pursuant to this Resolution) does not exceed 50% of the issued share capital of the Company(as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than ona pro rata basis to shareholders of the Company (including shares to be issued in pursuance of Instruments made or grantedpursuant to this Resolution) does not exceed 20% of the issued share capital of the Company (as calculated in accordance withsub-paragraph (2) below);(2) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate numberof shares that may be issued under sub-paragraph (1) above, the percentage of issued share capital shall be based on the issuedshare capital of the Company at the time this Resolution is passed, after adjusting for:(i) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards whichare outstanding or subsisting at the time this Resolution is passed; and(ii) any subsequent consolidation or subdivision of shares;(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of theSGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for thetime being of the Company; and(4) (unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in forceuntil the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting ofthe Company is required by law to be held, whichever is the earlier.110 GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004

NOTICE OF ANNUAL GENERAL MEETINGGREAT EASTERN HOLDINGS LIMITED(COMPANY REGISTRATION NO. 199903008M)(INCORPORATED IN THE REPUBLIC OF SINGAPORE)7 To consider and, if thought fit, to pass the following Ordinary Resolution to empower the Directors to grant options under the Great EasternHoldings Executives’ Share Option Scheme and to allot and issue shares pursuant to the exercise of the options thereunder, provided that theaggregate number of shares to be issued does not exceed 10% of the issued share capital of the Company:Mandate to grant share options and to issue shares arisingThat the Directors of the Company be and are hereby authorised to offer and grant options in accordance with the provisions of the GreatEastern Holdings Executives’ Share Option Scheme (the “Scheme”) and to allot and issue from time to time such number of shares in thecapital of the Company as may be required to be issued pursuant to the exercise of the options under the Scheme, provided that the aggregatenominal amount of shares over which the Directors may grant options on any date, when added to the nominal amount of shares issued andissuable in respect of all options granted under the Scheme, shall not exceed 10% of the issued share capital of the Company on the daypreceding that date.8 To transact any other ordinary business.By Order of the BoardELIZABETH TEOHSecretarySingapore11 March 2005Note: A member of the Company entitled to attend and vote at the abovementioned Meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy need not be a memberof the Company. The instrument appointing a proxy must be deposited at the Company’s Registered Office at 1 Pickering Street #16-01, Great Eastern Centre, Singapore 048659 not less than48 hours before the time fixed for holding the Meeting.GREAT EASTERN HOLDINGS LIMITED ANNUAL REPORT 2004 111

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IMPORTANT:1. For investors who have used their CPF monies to buy GreatEastern Holdings Limited shares, this Annual Report is sentsolely FOR INFORMATION ONLY.2. This Proxy Form is not valid for use by CPF investors and shallbe ineffective for all intents and purposes if used or purportedto be used by them.PROXY FORMGREAT EASTERN HOLDINGS LIMITED(COMPANY REGISTRATION NO. 199903008M)(INCORPORATED IN THE REPUBLIC OF SINGAPORE)I/We,ofbeing a member/members of Great Eastern Holdings Limited, hereby appoint the Chairman of the Meeting, orNRIC/PassportProportion ofName Address Number Shareholdings (%)and/or (delete as appropriate)as my/our proxy/proxies to attend and vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held at1 Pickering Street #13-01, Great Eastern Centre, Singapore 048659, on Tuesday, 29 March 2005 at 12 noon and at any adjournment thereof.I/We have indicated with an “X” in the appropriate box against such item how I/we wish my/our proxy/proxies to vote. If no specific direction asto voting is given, or in the event of any item arising not summarised below, my/our proxy/proxies may vote or abstain at the discretion of my/ourproxy/proxies.NO. RESOLUTIONS FOR AGAINSTAs Ordinary Business1 Adoption of Directors’ Report and 2004 audited Financial Statements2 Approval of a final dividend of 20 cents (gross)and a special final dividend of 3 cents (gross) per share3 (a) Re-appointment of Directors under Section 153(6) of the Companies Act, Chapter 50:(i) Mr Michael Wong Pakshong(ii) Mr Lee Seng Wee(iii) Mr Shaw Vee Meng(b) Re-election of Directors retiring by rotation:(i) Mr Tan Beng Lee(ii) Professor Neo Boon Siong(c) Re-election of Directors retiring under Article 97:(i) Dr Cheong Choong Kong(ii) Mr David Philbrick Conner(iii) Mr Tan Yam Pin4 Approval of Directors’ fees of S$634,000 in respect of financial year 20045 Appointment of auditors and to authorise Directors to fix their remunerationAs Special Business6 Authority for Directors to issue shares pursuant to Section 161 of theCompanies Act, Chapter 507 Authority for Directors to grant share options and to allot and issue sharespursuant to the Share Option SchemeDated this day of 2005Signature(s) of Member(s) or Common SealImportant: *Please read the notes set out overleaf.Total Number of Shares in: No. of Shares (Note 1)*Depository RegisterRegister of MembersTOTAL#

Notes To Proxy Form:1. (a) A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attendand vote on his behalf. Such proxy need not be a member of the Company.(b) Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the meeting.Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person.2. The instrument appointing a proxy or proxies must be deposited at the Company’s registered office at 1 Pickering Street #16-01, Great EasternCentre, Singapore 048659, not less than 48 hours before the time fixed for holding the Annual General Meeting.3. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed asa percentage of the whole) to be represented by each proxy.4. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined inSection 130A of the Companies Act, Chapter 50), you should insert that number of shares. If you have shares registered in your name in theRegister of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register andshares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name inthe Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxyor proxies shall be deemed to relate to all the shares held by you.5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where theinstrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of a directoror an officer or attorney duly authorised.6. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter of power of attorney or aduly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which theinstrument may be treated as invalid.7. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as itsrepresentative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50.8. The Company shall be entitled to reject that instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible orwhere the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointinga proxy or proxies. In addition, in the case of shares entered in the Depository Register, the Company may reject any instrument appointing aproxy or proxies lodged if the member, being the appointor, is not shown to have shares entered against his name in the Depository Registeras at 48 hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited tothe Company.

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An Epigram Design and Production

GREAT EASTERN CENTRE1 Pickering Street #13-01 Singapore 048659Telephone : (65) 6248 2000Facsimile : (65) 6532 2214E-mail : wecare@Lifeisgreat.com.sgWebsite : www.Lifeisgreat.com.sg