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On behalf of the Board of Directors of RCE ("Board"), Commerce International Merchant Bankers Berhad ("CIMB") is pleased to announce that the Company intends to undertake the Proposals.

2.1 Proposed Disposal

On 24 February 2004, RCE entered into a conditional sale and purchase agreement ("SPA") with Rekaweb for the disposal of its entire 70% equity interest in Pos Ad comprising 10,269,000 Pos Ad Shares ("Sale Shares") for a total cash consideration of RM11,000,000 or at RM1.07 per share.

2.1.1 Sale Consideration
The sale consideration of RM11,000,000 was determined on a willing buyer-willing seller basis after taking into consideration the earnings potential of Pos Ad and the shareholders' deficit of Pos Ad of RM2,382,400 based on its audited financial statements for the year ended 31 March 2003.
The Sale Shares will be disposed of free from all liens, charges, encumbrances and claims from any third party and with all rights, dividends (save and except for dividends declared under paragraph 2.1.2(iii) below), interest, bonus, accretions and accruals attaching thereto, with effect from the date ("Completion Date") falling seven (7) days after all conditions precedent of the SPA are fulfilled ("Completion").
2.1.2 Other Salient Terms of the SPA

The other salient terms of the SPA are as follows:

(i) A sum of RM1,100,000 ("Deposit Sum") shall be paid by Rekaweb upon the execution of the SPA. In the event of a termination of the SPA, the Deposit Sum shall be refunded to Rekaweb free of interest, unless the termination of the SPA is due to a breach by Rekaweb;
(ii) The balance sum of RM9,900,000 shall be paid on or before the Completion Date;

(iii) Rekaweb agrees to a declaration of dividends by Pos Ad in respect of the financial period from 1 September 2003 to 31 January 2004; and

(iv) Rekaweb shall, within one (1) month after the Completion Date, at the cost and expense of Pos Ad, procure the release of all guarantees and indemnities given by RCE as security for the indebtedness of Pos Ad and its subsidiaries. Pending such release, Rekaweb shall indemnify and keep indemnified RCE against all liabilities under such guarantees and indemnities which are attributable to the period after the Completion Date.
2.1.3 Information on Pos Ad

Pos Ad was incorporated in Malaysia under the Companies Act, 1965 on 20 February 1986 as a private limited company under the name Mutiara Perkasa Sdn Bhd. It changed its name to Point-of-Sale Advertising Sdn Bhd on 20 March 1986 and subsequently to Pos Ad Sdn Bhd on 22 March 2002.

The present authorised share capital of Pos Ad is RM25,000,000 comprising 25,000,000 Pos Ad Shares. The issued and paid-up share capital of Pos Ad is RM14,670,000 comprising 14,670,000 Pos Ad Shares.

The principal activity of Pos Ad is to provide advertising media services.

The subsidiaries and associated company of Pos Ad and their respective principal activities as at 31 January 2004 are set out in Table 1.

For the financial year ended 31 March 2003, Pos Ad recorded an audited profit after taxation of RM158,898. As at 31 March 2003, Pos Ad has a shareholders' deficit of RM2,382,400.

There are no liabilities to be assumed by Rekaweb pursuant to the Proposed Disposal other than settlement of the sale consideration of RM11,000,000 and as disclosed in paragraph 2.1.2(iv) above.

The original cost of investment by RCE in Pos Ad was RM4,412,206, which was made in November 1994. After taking into consideration the capitalisation of dividends payable by Pos Ad over the years, RCE's cost of investment in Pos Ad is presently RM14,611,206.
2.1.4 Information on Rekaweb
Rekaweb was incorporated in Malaysia under the Companies Act, 1965 on 18 March 2002 as a private limited company. The principal activity of Rekaweb is that of investment holding.

The present authorised share capital of Rekaweb is RM100,000 comprising 100,000 ordinary shares of RM1.00 each in Rekaweb ("Rekaweb Shares"). The issued and paid-up share capital of Rekaweb is RM2.00 comprising two (2) Rekaweb Shares, each held by Chew Keng Yong and his spouse, Yap Phaik Kwai.

2.1.5 Proposed Utilisation of Proceeds

The cash proceeds from the Proposed Disposal will be utilised for the working capital requirements of RCE and its subsidiaries ("RCE Group" or "Group") and/or to fund future investments to be identified.

2.2 Proposed Share Split
The Proposed Share Split involves the subdivision of every one (1) ordinary share of RM1.00 held in RCE by the shareholders of RCE whose names appear on the Record of Depositors at the close of business on a date to be determined and announced later, into ten (10) new ordinary shares of RM0.10 each in RCE ("RCE Shares").

Pursuant to the Proposed Share Split, the issued and paid-up ordinary share capital of RCE would remain as RM40,151,250 but the number of ordinary shares of RM0.10 each in RCE would increase to 401,512,500.
2.3 Proposed Amendments to M&A

The Proposed Amendments to M&A shall involve amendments to the M&A of RCE to facilitate the subdivision of the par value of the existing ordinary shares of RM1.00 each in RCE to RM0.10 each.
2.4 Inter-conditionality

The Proposed Disposal is not conditional on the Proposed Share Split and Proposed Amendments to M&A and vice versa.

The Proposed Share Split and Proposed Amendments to M&A are inter-conditional.

3.1 Proposed Disposal

The Proposed Disposal will provide the Company with the opportunity to realise its investment in Pos Ad and enable the Group to streamline its business operations. The contributions from Pos Ad to the Group over the past few financial years have been on a declining trend due to increasing operating costs and competition in the advertising industry. Furthermore, the proceeds to be raised from the Proposed Disposal will allow the Group to raise funds for its working capital requirements and/or for future investments.
3.2 Proposed Share Split

While the Proposed Share Split will not have an impact on the theoretical market capitalisation of RCE, it will reduce the theoretical ex-price of the RCE shares to one-tenth of the market price before the Proposed Share Split. In addition, the Proposed Share Split will enable the existing shareholders of RCE to have a larger number of RCE Shares while maintaining their equity interest.

The Proposed Amendments to M&A is to facilitate the Proposed Share Split.

The effects of the Proposals are as follows:
4.1 Issued and Paid-up Share Capital
The Proposed Disposal will not have any effect on the issued and paid-up share capital of RCE as it does not involve the issue of new shares by the Company.

The proforma effect of the Proposed Share Split on the issued and paid-up share capital of RCE is set out in Table 2.

4.2 Net Tangible Assets ("NTA")

The proforma effect of the Proposed Disposal on the NTA of the RCE Group based on its latest audited balance sheet is set out as in Table 3.

The Proposed Share Split will not have any effect on the NTA of the RCE Group. However, as set out in Table 3, the NTA per share of the RCE Group will be reduced correspondingly as a result of the increase in the number of shares of the Company in issue upon completion of the Proposed Share Split.

4.3 Shareholdings of Substantial Shareholders

The Proposed Disposal will not have any effect on the shareholdings of the substantial shareholders of the Company.

The Proposed Share Split will not have any effect on the percentage shareholdings of the substantial shareholders of RCE. However, the number of RCE shares held by each substantial shareholder will increase proportionately as a result of the subdivision of the RCE shares.
4.4 Earnings

The Proposed Disposal is not expected to have any material effect on the earnings of the RCE Group for the financial year ending 31 March 2004 as the Proposed Disposal is expected to be completed in the third quarter of 2004.

However, based on the latest audited financial statements of the RCE Group and Pos Ad as at 31 March 2003, the proforma one-off gain to the RCE Group assuming the completion of the Proposed Disposal on 31 March 2003 is approximately RM2.469 million.

The Proposed Share Split will not have any effect on the earnings of the RCE Group. However, the earnings per share of the RCE Group will be reduced correspondingly as a result of the increase in the number of shares of the Company in issue upon completion of the Proposed Share Split.
The Proposed Amendments to M&A will not have any effects on the issued and paid-up share capital, NTA, shareholdings of substantial shareholders and earnings of the Company.

5.1 Proposed Disposal

The Proposed Disposal is subject to the following being obtained:

(i) the approval of the shareholders of RCE; and
(ii) the approval of the Foreign Investment Committee.

5.2 Proposed Share Split

The Proposed Share Split is subject to the following being obtained:
(i) the approval of the shareholders of RCE; and
(ii) the approval of the Securities Commission ("SC") and Malaysia Securities Exchange Berhad ("MSEB"), for the following:

(a) Proposed Share Split; and

(b) Listing of and quotation for the new RCE Shares to be issued pursuant to the Proposed Share Split on the Second Board of MSEB.

5.3 Proposed Amendments to M&A

The Proposed Amendments to M&A is subject to the approval of the shareholders of RCE.

Chew Keng Yong, a Director of RCE has a 0.01% equity interest in RCE. Chew Keng Yong is also a Director and substantial shareholder of Rekaweb, holding 50% equity interest in Rekaweb directly and an additional 50% equity interest in Rekaweb through his spouse. As such, he is deemed interested in the Proposed Disposal. Accordingly, Chew Keng Yong has abstained and will continue to abstain from all Board deliberations on the Proposed Disposal. Chew Keng Yong will also abstain and undertake to ensure that persons connected with him will abstain from voting in respect of their direct and/or indirect shareholdings in RCE at an extraordinary general meeting to be convened pertaining to the Proposed Disposal.

Save as disclosed above and in so far as the Directors of RCE are aware, none of the other Directors' and/or substantial shareholders of RCE and persons connected to the Directors and/or substantial shareholders of RCE has any interest, direct or indirect, in the Proposals.

The Board is of the opinion that the Proposals are in the best interest of RCE.

Barring any unforeseen circumstances and subject to all the required approvals being obtained, the Proposals are expected to be completed by the third quarter of this year.

The Proposals do not depart from the SC Guidelines.

The applications to the MSEB and SC for the Proposed Share Split is expected to be made within one (1) month from the date of this announcement.

The SPA is available for inspection at the registered office of the Company at 1st Floor, Lot 271, Jalan Dua, Off Jalan Chan Sow Lin, 55200 Kuala Lumpur during normal business hours from Mondays to Fridays (except for public holidays) for a period of three (3) months from the date of this announcement.

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