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    Annual Report 2006 2700kb Annual Report 2006 2700kb Document Transcript

    • CORE PURPOSE • To build upon our construction heritage to design and deliver exciting, unique and valuable solutions for buildings and communities. CORE VALUES • Equipping our people to anticipate and respond to the needs of our customers and stakeholders. • Adherence to industry’s highest ethics. • Use of designs and processes that promote standards.
    • 2 | NOTICE OF ANNUAL GENERAL MEETING | 3 | NOTICE OF DIVIDEND PAYMENT | 3 | STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING | 4 | CORPORATE INFORMATION | 6 | DIRECTORS’ PROFILES | 12 | GROUP FINANCIAL HIGHLIGHTS | 14 | CORPORATE STRUCTURE | 15 | STATEMENT OF DIRECTORS’ RESPONSIBILITIES | CONTENTS 16 | EXECUTIVE CHAIRMAN’S STATEMENT | 20 | PENYATA PENGERUSI EKSEKUTIF | 24 | STATEMENT OF CORPORATE GOVERNANCE | 33 | STATEMENT ON INTERNAL CONTROL | 35 | AUDIT COMMITTEE REPORT | 41 | FINANCIAL STATEMENTS | 106 | GROUP PROPERTIES | 110 | SHAREHOLDERS’ INFORMATION | PROXY FORM
    • 2 | S B C C O R P O RATION BERHAD | NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Sixteenth Annual General Meeting of SBC Corporation Berhad will be held at the Ground Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpur on Thursday, 28 September 2006 at 11.00 a.m. to transact the following business: AGENDA 1. To receive and adopt the Directors’ Report and the Audited Financial Statements for the year (RESOLUTION 1) ended 31 March 2006 together with the Auditors’ Report thereon. 2. To declare a first and final dividend of 1% less 28% income tax for the year ended 31 March (RESOLUTION 2) 2006. 3. To approve the payment of Directors’ fees. (RESOLUTION 3) 4. To re-appoint the following Directors pursuant to Section 129(6) of the Companies Act, 1965: (a) YBhg. Dato’ Lim Phaik Gan (RESOLUTION 4) (b) Mr Sia Kwee Mow @ Sia Hok Chai (RESOLUTION 5) 5. To re-elect the following Directors retiring by rotation pursuant to Article 77 of the Articles of Association of the Company: (a) YBhg. Dato’ Zainol Abidin Bin Haji A. Hamid (RESOLUTION 6) (b) Mr Sia Teong Heng (RESOLUTION 7) 6. To re-appoint Messrs. Horwath as Auditors of the Company and to authorise the Directors to (RESOLUTION 8) fix their remuneration. 7. As Special Business, to consider and, if thought fit, to pass the following Ordinary Resolution: (RESOLUTION 9) AUTHORITY TO DIRECTORS TO ALLOT AND ISSUE SHARES “THAT subject always to the Companies Act, 1965, the Articles of Association of the Company and the approval from the Bursa Malaysia Securities Berhad and other governmental/regulatory bodies, where such approval shall be necessary, the Directors be and are hereby authorised pursuant to Section 132D of the Companies Act, 1965, to allot and issue shares in the Company, at any time and upon such terms and conditions and for such purposes as they may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per cent (10%) of the issued capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company. ” 8. To consider any other business for which due notice shall have been given.
    • NOTIC E OF DIVIDEND PAYMENT | SBC CORPORATION BERH A D | 3 NOTICE IS HEREBY GIVEN that subject to the approval of the shareholders at the Sixteenth Annual General Meeting of the Company, the first and final dividend of 1% less 28% income tax for the year ended 31 March 2006 will be paid on 31 October 2006 to Depositors registered in the Record of Depositors on 17 October 2006. A Depositor shall qualify for entitlement only in respect of: a) shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 17 October 2006 in respect of ordinary transfers; and b) shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad. By Order of the Board CHONG FOOK SIN KAN CHEE JING Company Secretaries Kuala Lumpur 5 September 2006 NOTES: 1) Proxy: A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote instead of him. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. To be valid, the proxy form duly completed must be deposited at the Registered Office of the Company not less than forty-eight (48) hours before the time for holding the meeting. If the appointor is a corporation, this form must be executed under its common seal or under the hand of its attorney. 2) Resolution 9: The Company is actively pursuing business opportunities in prospective areas so as to broaden the operating base and earnings potential of the Company. Such expansion plans may require the issue of new shares not exceeding 10 per cent (10%) of the Company’s issued share capital. With the passing of the resolution by the shareholders of the Company at the forthcoming Annual General Meeting, the Directors would avoid delay and cost of convening further general meetings to approve the issue of shares for such purposes. STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING pursuant to Paragraph 8.28 (2) of the Listing Requirements of Bursa Malaysia Securities Berhad (1) The following are the Directors standing for re-appointment or re-election at the Sixteenth Annual General Meeting: (a) Re-appointment of the following Directors pursuant to Section 129(6) of the Companies Act, 1965: (i) YBhg. Dato’ Lim Phaik Gan (ii) Mr Sia Kwee Mow @ Sia Hok Chai (b) Re-election of the following Directors pursuant to Article 77 of the Articles of Association of the Company: (i) YBhg. Dato’ Zainol Abidin Bin Haji A. Hamid (ii) Mr Sia Teong Heng (2) There were four (4) Directors’ Meetings held during the financial year ended 31 March 2006. Details of attendance of the Directors are set out in the Statement of Corporate Governance appearing on page 25 of this Annual Report. (3) The Sixteenth Annual General Meeting will be held at the Ground Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpur on Thursday, 28 September 2006 at 11.00 a.m. (4) The profile of Directors standing for re-appointment or re-election as mentioned in paragraph 1 above at the Sixteenth Annual General Meeting are set out in page 6 to 11 of this Annual Report.
    • 4 | S B C C O R P O RATION BERHAD | CORPORATE INFORMATION as at 8 August 2006 | BOARD OF DIRECTORS | Sia Kwee Mow @ Sia Hok Chai JMN, FFB, FCIOB, FAIB Executive Chairman Sia Teong Heng | REMUNERATION COMMITTEE | B.Sc. (Eng), M.Sc. Managing Director Dato’ Zainol Abidin Bin Haji A. Hamid LLB (Hons) Mun Chong Shing @ Mun Chong Tian Chairman & Non-Executive Director Non-Executive Director Dato’ Lim Phaik Gan Dato’ Zainol Abidin Bin Haji A. Hamid DPMP, DMPN, M.A.(Law), FCI, ARB LLB (Hons) Independent Non-Executive Director Non-Executive Director Dato’ Dr. Norraesah Bt. Haji Mohamad Dato’ Lim Phaik Gan DSPN, PhD., B.Sc.(Econ) DPMP, DMPN, M.A.(Law), FCI, ARB Independent Non-Executive Director Independent Non-Executive Director Sia Teong Heng Dato’ Dr. Norraesah Bt. Haji Mohamad B.Sc. (Eng), M.Sc. DSPN, PhD., B.Sc.(Econ) Managing Director Independent Non-Executive Director Ahmad Fizal Bin Othman | NOMINATION COMMITTEE | B.Acc & Fin. (Hons) Independent Non-Executive Director Dato’ Lim Phaik Gan DPMP, DMPN, M.A.(Law), FCI, ARB Chairperson & Independent Non-Executive Director Dato’ Dr. Norraesah Bt. Haji Mohamad DSPN, PhD., B.Sc.(Econ) Independent Non-Executive Director Ahmad Fizal Bin Othman B.Acc & Fin. (Hons) Independent Non-Executive Director Mun Chong Shing @ Mun Chong Tian Non-Executive Director | AUDIT COMMITTEE | | EXECUTIVE MANAGEMENT | Dato’ Dr. Norraesah Bt. Haji Mohamad Sia Teong Heng DSPN, PhD., B.Sc.(Econ) B.Sc. (Eng), M.Sc. Chairperson & Chairman & Managing Director Independent Non-Executive Director Sia Teong Leng Dato’ Lim Phaik Gan B.A. (Hons) (Law & Econs), M.B.A. DPMP, DMPN, M.A.(Law), FCI, ARB Corporate Director Independent Non-Executive Director Teh Kai Chua Ahmad Fizal Bin Othman B.Sc. (Eng) B.Acc & Fin. (Hons) General Manager - Technical Independent Non-Executive Director Sia Teong Heng B.Sc. (Eng), M.Sc. Managing Director
    • | SBC CORPORATION BERH A D | 5 | SOLICITORS | Cheang & Ariff 39 Court 39, Jalan Yap Kwan Seng 50450 Kuala Lumpur Lim & Yeoh 145-M Jalan Maharajalela 50150 Kuala Lumpur Lee, Perara & Tan 55, Jalan Thambapillai Off Jalan Tun Sambanthan | PRINCIPAL BANKERS | Brickfields, 50470 Kuala Lumpur Alliance Bank Malaysia Berhad Foong & Partners Suite 21-08, Level 21 Bangkok Bank Berhad Plaza 138, 138, Jalan Ampang Bumiputra-Commerce Bank Berhad 50450 Kuala Lumpur Malayan Banking Berhad OCBC Bank (Malaysia) Berhad | AUDITORS | United Overseas Bank (Malaysia) Berhad Utama Merchant Bank Berhad Horwath Chartered Accountants Level 16 Tower C, Megan Avenue II | REGISTERED OFFICE | 12 Jalan Yap Kwan Seng 50450 Kuala Lumpur Wisma Siah Brothers 74A Jalan Pahang | COMPANY SECRETARIES | 53000 Kuala Lumpur Tel: 03-4041 8118 Fax: 03-4043 5281 Chong Fook Sin ATII, MCCS, AFA | REGISTRARS | Kan Chee Jing ACIS Tacs Corporate Services Sdn. Bhd. Unit No. 203, 2nd Floor, Block C Damansara Intan No. 1, Jalan SS 20/27 47400 Petaling Jaya Tel: 03-7118 2688 Fax: 03-7118 2693 | STOCK EXCHANGE LISTING | Main Board of Bursa Malaysia Securities Berhad
    • 6 | S B C C O R P O RATION BERHAD | DIRECTORS’ PROFILES as at 31 July 2006 | SIA KWEE MOW @ SIA HOK CHAI | Sia Kwee Mow @ Sia Hok Chai, a Malaysian, aged 73, is the Executive Chairman of SBC Corporation Berhad (“SBC”). He has been a Director of SBC since its incorporation on 14 June 1990. He has over 52 years of experience in building and civil engineering contracting and not less than 34 years of experience in plastic engineering since the incorporation of Paling Industries Sdn. Bhd. in 1971. He was actively involved in Master Builders Association Malaysia (“MBAM”) and had served in various capacities including the post of President (1988 to 1994). He was elected as the 29th President (1994 to 1996) of the International Federation of Asian and Western Pacific Contractors’ Associations (“IFAWPCA”) during which he led the IFAWPCA delegation to a meeting between the World Bank and International Contractors Association held at Washington D.C. in November, 1996. In recognition of his vast experience and knowledge in construction and his contribution to the building construction industry, he was awarded or conferred the following: • Johan Mangku Negara by DYMM Yang DiPertuan Agong in 2001 • Honorary Life President by MBAM in 2001 • Fellowship of the Faculty of Building, United Kingdom in 1981 • Fellowship of the Chartered Institute of Building, United Kingdom as a Chartered Builder in 1979 • Fellowship of the Australian Institute of Building by the Australian Royal Charter of Building in 1982 He was also a previous President of both the Selangor Builders Association and Selangor Chinese Plumbing and Sanitary Association. He also sits on the board of several private limited companies in Malaysia, including several subsidiaries of SBC. His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 1,480,800 (a) 19,498,523 (b) (a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares). By virtue of his interests in SBC, he is deemed to have interests in the securities of SBC’s subsidiaries to the extent of SBC’s interest in accordance with Section 6A of the Companies Act, 1965. He is the father of Sia Teong Heng, the Managing Director and a major shareholder of SBC. He does not have any conflict of interest with SBC except for those transactions disclosed in Note 43 to the financial statements. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year.
    • | SBC CORPORATION BERH A D |  | SIA TEONG HENG | Sia Teong Heng, a Malaysian, aged 43, is the Managing Director of SBC Corporation Berhad (“SBC”). He was appointed as a Director of SBC on 5 February 1991. He is a member of the Audit Committee and the Remuneration Committee of SBC. He graduated in 1985 with a degree in Bachelor of Science in Civil Engineering from Loughborough University, United Kingdom ("UK") and a Master degree in Management Science from Imperial College, University of London, UK in 1986. His career began in investment banking in 1987 with Morgan Grenfell (Asia) Ltd., Singapore. He joined SBC in 1991. He was a past board member of the Entrepreneurs Organisation and a recent member of the Young President's Organisation. Presently, he also sits on the boards of several subsidiaries of SBC. His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 2,517,992 (a) 19,498,523 (b) (a) 2,274,000 shares are held in bare trust by Amsec Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares). By virtue of his interests in SBC, he is deemed to have interests in the securities of SBC’s subsidiaries to the extent of SBC’s interest in accordance with Section 6A of the Companies Act, 1965. He is a son of Sia Kwee Mow @ Sia Hok Chai, the Executive Chairman and a major shareholder of SBC. He does not have any conflict of interest with SBC except for those transactions disclosed in Note 43 to the financial statements. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year.
    • 8 | S B C C O R P O RATION BERHAD | | MUN CHONG SHING @ MUN CHONG TIAN | Mun Chong Shing @ Mun Chong Tian, a Malaysian, aged 69, was appointed as an Executive Director of SBC Corporation Berhad ("SBC") on 1 April 1996 when he was employed as General Manager of Paling Industries Sdn. Bhd. (“Paling”) from 1987 and appointed as a Director in 1991 and remained in both positions until his retirement on 31 December 2001. On 31 December 2001, he was redesignated as a Non-Executive Director of SBC. He is a member of the Nomination Committee of SBC. He has received training in Sales Management conducted by the National Productive Centre and the Malaysian Institute of Management and a General Management Programme at the National Productivity Board, Singapore. Prior to his involvement with Paling, he was employed as General Manager in Hume Industries (M) Bhd. where he has had extensive exposure to industrial engineering and management. His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 21,782 - He does not hold any securities, direct or indirect, in any of SBC’s subsidiaries. He is a brother-in-law to Sia Kwee Mow @ Sia Hok Chai and an uncle to Sia Teong Heng, both are Directors and major shareholders of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year.
    • | SBC CORPORATION BERH A D |  | DATO’ LIM PHAIK GAN | Dato’ Lim Phaik Gan, a Malaysian, aged 86, was appointed as an Independent Non-Executive Director of SBC Corporation Berhad ("SBC") on 5 February 1991. She is the Senior Independent Non-Executive Director, the Chairperson of the Nomination Committee and a member of the Audit Committee and the Remuneration Committee of SBC. She is an advocate and solicitor and was called to the Bar of England and the Bar of Malaysia. She obtained a Master of Arts degree in Law from the University of Cambridge, United Kingdom and was in active practice at the Bar of Malaysia from 1954 to 1971 and from 1980 until today. Since 1955, she has had a distinguished career in both the private and public sectors. In 1970, she was a member of the National Economic Consultative Council established when Parliament was suspended as a result of riots in 1969. From 1971 to 1980, she served as ambassador and Deputy Permanent Representative of Malaysia to the United Nations, and successively as the Malaysian Ambassador to Yugoslavia, Austria, Belgium and the European Economic Community. She was Malaysia's Permanent Representative to the United Nations Industrial and Development Organisation and International Atomic Energy Agency in Vienna, and served as chairman in various committees. After her retirement from the Malaysian Foreign Service in 1980, she was appointed by the Government as Director of the Kuala Lumpur Regional Centre for Arbitration, an international organisation involved in the conduct and administration of international commercial arbitration for the settlement of disputes arising out of international commercial contracts and joint ventures, in which capacity she served from 1982 to 2000. She is currently a member of the Board of Trustees of the Institute of Strategic and International Studies. She does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. She has no family relationship with any Director and/or major shareholder of SBC. She does not have any conflict of interest with SBC. She has not been convicted of any offence within the past 10 years. She attended all the four Board Meetings held during the last financial year.
    • 1 0 | S B C C O R P O RATION BERHAD | | DATO’ DR. NORRAESAH BT. HAJI MOHAMAD | Dato’ Dr. Norraesah Bt. Haji Mohamad, a Malaysian, aged 58, was appointed as an Independent Non-Executive Director of SBC Corporation Berhad ("SBC") on 8 July 1991. She is the Chairperson of the Audit Committee and a member of the Nomination Committee and the Remuneration Committee of SBC. She holds a Doctorate Degree in Economics Science (International Economics and Finance) which she obtained in 1986 from University of Paris 1, Pantheon Sorbonne, France. She has over 34 years of working experience in banking, consultancy and international trade and commerce. She worked with the International Trade Division of the Ministry of Trade and Industry (now known as the Ministry of International Trade and Industry) from 1972 to 1985 and was later transferred to the Finance Division of the Ministry of Finance holding the post of Principal Assistant Secretary dealing with privatisation and debt management. In 1988, she joined ESSO Production Malaysia, Inc. as Communications Manager and subsequently, in 1990, took the position of Managing Director with a consultant firm providing financial advisory services. From 1991 to 1998 she was appointed as the Chief Representative of Credit Lyonnais Bank in Malaysia. She sits on the board of KESM Industries Berhad, Malaysian Oxygen Berhad, Protasco Berhad, Ya Horng Electronic (M) Berhad, Adventa Berhad and several private limited companies. She was awarded the distinction of Darjah Setia Pangkuan Negeri on 13 July 2002 by Tuan Yang Terutama Yang di-Pertua Negeri Pulau Pinang on His Excellency’s 64th Birthday. She does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. She has no family relationship with any Director and/or major shareholder of SBC. She does not have any conflict of interest with SBC. She has not been convicted of any offence within the past 10 years. She attended three of the four Board Meetings held during the last financial year.
    • | SBC CORPORATION BERH A D | 1 1 | DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID | Dato’ Zainol Abidin Bin Haji A. Hamid, a Malaysian, aged 64, was appointed as a Non-Executive Director of SBC Corporation Berhad ("SBC") on 10 October 2003, representing the interest of Permodalan Nasional Berhad. He is the Chairman of the Remuneration Committee of SBC. He graduated with LLB (Hons) from the University of London in 1995. He joined the Kedah State Government in 1966 as a civil servant. From 1973 to 1981, he was the District Officer for Sik, then Padang Terap and finally Kubang Pasu. He was General Manager and Director of Kedah Cement Sdn Bhd from 1981 to 1996 and Managing Director of Kedah Cement Marketing Sdn Bhd from 1990 to 1996. He sits on the Board of Paragon Union Berhad. He does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. He has no family relationship with any Director and/or major shareholder of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year. | AHMAD FIZAL BIN OTHMAN | Ahmad Fizal Bin Othman, a Malaysian, aged 43, was appointed as an Independent Non-Executive Director of SBC Corporation Berhad ("SBC") on 24 February 2004. He is a member of the Audit Committee and the Nomination Committee of SBC. He graduated with a Bachelor in Accounting and Finance (Hons) from the Middlesex University, London. He is a well-rounded and experienced businessman and involved in a multitude of industries. Currently, he immerses himself in retail, multimedia and technology. He does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. He has no family relationship with any Director and/or major shareholder of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year.
    • 1 2 | S B C C O R P O RATION BERHAD | GROUP FINANCIAL HIGHLIGHTS for the financial year ended 31 March 2006 2006 2005 2004 2003 2002 (Restated) RM’000 RM’000 RM’000 RM’000 RM’000 RESULTS Revenue 69,927 66,867 86,317 69,829 81,645 Profit before taxation 1,533 3,321 6,996 5,149 1,618 Profit after taxation but before minority interest 1,047 2,250 2,073 2,011 1,174 Profit attributable to shareholders 1,047 2,250 2,073 2,011 1,174 ASSET EMPLOYED Property, plant and equipment 34,771 35,452 36,246 35,813 7,047 Investments and other assets 183,065 192,257 153,703 152,856 141,705 Net current assets 50,881 37,243 73,632 71,634 56,867 Goodwill and deferred expenditure 27,318 27,318 27,318 27,272 10,246 296,035 292,270 290,899 287,575 215,865 FINANCED BY Share capital 82,435 82,435 82,435 82,435 57,302 Share application account - - - - 115,600 Reserves 138,026 137,572 135,940 134,682 42,524 ABBA bonds 43,978 41,752 39,712 37,827 - Deferred liabilities 31,596 30,511 32,812 32,631 439 296,035 292,270 290,899 287,575 215,865 SELECTED RATIOS Net earnings per share (sen) 1.3 2.7 2.4 2.4 1.8 Net assets per share (sen) 267 267 265 263 376 Gross dividend (%) 1.0 1.0 1.0 1.0 -
    • | SBC CORPORATION BERH A D | 1 3 PROFIT BEFORE TAXATION (RM‘000) 2006 2005 2004 2003 2002 0 1,000 2,000 3,000 4,000 5,000 6,000 ,000 8,000 REVENUE (RM‘000) 2006 2005 2004 2003 2002 0 20,000 40,000 60,000 80,000 10,0000 ASSETS EMPL OYED (RM‘000) 2006 2005 2004 2003 2002 0 50,000 100,000 150,000 200,000 250,000 300,000 SHAREHOLDERS’ FUND (RM‘000) 2006 2005 2004 2003 2002 0 50,000 100,000 150,000 200,000 250,000
    • 1 4 | S B C C O R P O RATION BERHAD | CORPORATE STRUCTURE as at 8 August 2006 | RESIDENTIAL PROPERTY DEVELOPMENT | 100% | Seri Ampangan Realty Sdn Bhd 100% | Sinaran Naga Sdn Bhd 100% | Mixwell (Malaysia) Sdn Bhd 100% | South-East Best Sdn Bhd | INVESTMENT HOLDING | 100% | Gracemart Resources Sdn Bhd 100% | Aureate Construction Sdn Bhd 100% | Siah Brothers Land Sdn Bhd 100% | Sutrati Development Sdn Bhd 100% | Siah Brothers Properties Sdn Bhd 100% | Siah Brothers Development Sdn Bhd 100% | Siah Brothers Industries Sdn Bhd 100% | Tiara Development Sdn Bhd 100% | SBC Homes Sdn Bhd 100% | Winsome Ventures Sdn Bhd | BUILD / CONSTRUCTION | 100% | SBC Leisure Sdn Bhd 100% | SBC Towers Sdn Bhd 100% | Syarikat Siah Brothers Trading Sdn Bhd 100% | Siah Brothers Project Management Sdn Bhd 100% | Syarikat Siah Brothers Construction Sdn Bhd 33.3% | Sri Berjaya Development Sdn Bhd 100% | Siah Brothers Enterprise Sdn Bhd 22.2% | Sri Rawang Properties Sdn Bhd 100% | Lifeplus - Siah Brothers Trading JV Sdn Bhd | STRATEGIC INVESTMENT | 51% | Masahmura Sdn Bhd 51% | Masahmura Sales & Service Sdn Bhd 50% | Ligamas Sdn Bhd 50% | Tri-Development Co., Ltd 50% | Varich Industries Sdn Bhd 50% | Sam & Lau Plantation Sdn Bhd 40% | Paling Industries Sdn Bhd 40% | Liga Canggih Sdn Bhd 19.6% | Pasti Bumi Sdn Bhd
    • STATEMENT OF DIRECTORS’ RESPONSIBILITIES | SBC CORPORATION BERH A D | 1 5 in respect of the preparation of the financial statements The Directors are responsible for ensuring that the financial statements of the Group are drawn up in accordance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and the Company as of 31 March 2006 and of the results and cash flows of the Group and Company for the financial year ended on that date. In preparing the financial statements, the Directors have: (a) adopted suitable accounting policies and applied them consistently; (b) made judgements and estimates that are prudent and reasonable; (c) ensured the adoption of applicable approved accounting standards; and (d) used the going concern basis for the preparation of the financial statements. The Directors are responsible for ensuring proper accounting records are kept which disclose with reasonable accuracy at any time the financial position of the Group and the Company and are kept in accordance with the Companies Act, 1965. The Directors are also responsible for taking such steps as are reasonably open to them to safeguard the Group’s assets and to prevent and detect fraud and other irregularities.
    • PJX, PETALING JAYA 1 6 | S B C C O R P O RATION BERHAD | SIGNAL HILL PARK @ THE PEAK KOTA DAMANSARA, PETALING JAYA SURIA SETAPAK, KUALA LUMPUR SERI MAHKOTA AMAN, KUANTAN
    • EXECUTIVE CHAIRMAN’S STATEMENT | SBC CORPORATION BERH A D | 1 7 On behalf of the Board of Directors of SBC Corporation Berhad, I have the pleasure of presenting to you the Annual Report and the Audited Financial Statements of the Group and the Company for the financial year ended 31 March 2006. FINANCIAL REVIEW The Group revenue improved 5% to RM69.93 million compared with RM66.87 million a year ago with the operational profits similar to the previous year’s level; RM6.43 million against RM6.71 million recorded for the last financial year. Consolidated post tax profit result was however lower PJX, PETALING JAYA by RM1.20 million, primarily on account of associates’ lower performance at RM0.27 million. OPERATION REVIEW The building and residential market experienced a comparatively higher degree of volatility compared to the previous year, on account of inflationary pressures. The Group’s strategy of maintaining (project) locational diversity did provide a buttress, resulting in an even performance for the year. Meanwhile SBC shall continue to use its building technology and market knowledge, to rollout more designs and products that are continuously desired by the market place. The group handed over double storey terraces at both Suria Pendamar, Klang and Seri Mahkota Aman, Kuantan and on its way to complete Signal Hill’s semi detached park homes in Kota Kinabalu. Meanwhile works were on schedule for Ministry of Finance, Sabah’s new Land and Survey headquarters, The Cube@Metropolitan Park commercial units in Kuala Lumpur and the fourth phase of Bandar Utama, Ligamas in north of Selangor. During the year, the Group’s activities were located at “Seri Mahkota Aman” in East Coast of Malaysia, “Signal Hill” in Kota Kinabalu, “Bandar Utama Batang Kali” in north of Selangor and “Metropolitan Park” park edge mixed development in north Kuala Lumpur. Looking ahead, two new projects will be added into the current list, worth RM250 million, consisting of a 34-storey office tower in Petaling Jaya, Selangor and a multi-use transit complex in Serdang, Selangor, both of which were signed during the year and now awaiting planning approval. During the year, our overseas unit, secured an industrial building system (IBS) contract with the Thailand government for a RM96 million “Eua Arthorn” program in Bangkok city.
    • THE CUBE, KUALA LUMPUR 1 8 | S B C C O R P O RATION BERHAD | METROPOLITAN PARK, KUALA LUMPUR BANDAR LIGAMAS SURIA PENDAMAR, KLANG PALING’S PRODUCTS
    • | SBC CORPORATION BERH A D | 1 9 Paling Industries Sdn Bhd, our manufacturing associate, operating under a series of price increases of its raw material, oil-based PVC resins, reported a low result. Export earnings as a percentage of turnover however continued to improve, rising to 30%, primarily to its principal markets of Australia, Hong Kong, Pakistan, Ghana and England. ECONOMIC AND BUSINESS OUTLOOK In the short term, we expect operating conditions to continue challenging our project management and building BANDAR UTAMA BATANG KALI design skills to deliver the best possible building solution to our consumers and partners alike. The Group remain upbeat about the longer term prospects, where both within Malaysia as well as regionally, SBC is well positioned to take advantage of improving living standards and demographics favorable towards better infrastructure. DIVIDEND The Board has recommended the payment of a first and final dividend of 1% per ordinary share less 28% tax for the financial year ended 31 March 2006 subject to the shareholders’ approval at the forthcoming Annual General Meeting of the Company. APPRECIATION AND ACKNOWLEDGEMENT On behalf of the Board of Directors, I would like to thank our valued shareholders, business partners, bankers and government for their continued support. I would also like to add our appreciation to our customers and supporters of SBC’s products and services, all of whom have place much trust with us, as custodian to their home and property investments. Lastly, I would like to thank the SBC management team for going the extra mile. Thank you. Sia Kwee Mow @ Sia Hok Chai JMN,FFB,FCIOB,FAIB Executive Chairman 8 August 2006
    • PJX, PETALING JAYA 2 0 | S B C C O R P O RATION BERHAD | SIGNAL HILL PARK @ THE PEAK KOTA DAMANSARA, PETALING JAYA SURIA SETAPAK, KUALA LUMPUR SERI MAHKOTA AMAN, KUANTAN
    • PENYATA PENGERUSI EKSEKUTIF | SBC CORPORATION BERH A D | 2 1 Bagi pihak Lembaga Pengarah, saya dengan bangganya membentangkan Laporan Tahunan berserta Penyata Kewangan Kumpulan dan Syarikat bagi tahun kewangan berakhir 31 Mac 2006. ULASAN KEWANGAN Perolehan Kumpulan telah mencapai RM69.93 juta dengan peningkatan sebanyak 5% berbanding dengan RM66.87 juta pada tahun lepas, manakala keuntungan operasi berada di tahap yang sama iaitu RM6.43 juta berbanding RM6.71 juta bagi tahun kewangan lepas. Bagaimanapun, keuntungan Kumpulan selepas cukai telah merosot sebanyak RM1.20 juta, khususnya berpunca daripada pencapaian yang rendah oleh rakan niaga pada RM0.27 juta. ULASAN OPERASI Pasaran pembangunan dan perumahan mengalami kadar PJX, PETALING JAYA pertukaran yang agak tinggi berbanding tahun lepas berpunca daripada asakan dan tekanan inflasi. Bagaimanapun, strategi Kumpulan dalam memperluas dan mempelbagaikan lokasi projek telah menyeimbangkan pencapaian prestasi tahun ini. Di samping itu, SBC akan terus menggunakan kemahiran teknologi pembinaan dan ilmu pengetahuan pasaran untuk menghasilkan lebih banyak rekabentuk baru dan produk yang baik untuk memenuhi permintaan pasaran yang selanjutnya. Kumpulan telah menyiapserahkan rumah berteres dua tingkat di Suria Pendamar, Kelang dan Seri Mahkota Aman, Kuantan, dan dalam usahanya untuk menyempurnakan projek pembinaan rumah kembar bertaman Signall Hill di Kota Kinabalu. Sementara itu, kerja- kerja pembinaan ibu pejabat baru Tanah dan Ukur di Sabah untuk Kementerian Kewangan, unit-unit komersial di The Cube@Metropolitan Park di Kuala Lumpur dan projek fasa keempat Bandar Utama, Ligamas, di utara Selangor sedang berjalan dengan lancar dalam jangkamasa yang ditetapkan. Dalam tahun kewangan ini, aktiviti-aktiviti Kumpulan telah tertumpu di “Seri Mahkota Aman” di bahagian pantai timur Malaysia, “Signal Hill” di Kota Kinabalu, “Bandar Utama Batang Kali” di bahagian utara negeri Selangor dan “Taman Metropolitan” di utara Bandaraya Kuala Lumpur. Menuju ke hadapan, Kumpulan akan melaksanakan dua projek baru bernilai RM250 juta yang melibatkan pembinaan bangunan pejabat setinggi 34 tingkat di Bandaraya Petaling Jaya dan juga sebuah kompleks transit pelbagaigunaan di Serdang, Selangor. Cadangan pembinaan kedua-dua projek ini telah diperakui dalam tahun kewangan ini dan kini hanya menunggu pengesahan perancangan. Dalam tahun kewangan ini juga, unit pelaburan luar negeri kami telah berjaya mendapatkan kontrak daripada kerajaan Thailand bagi projek pembinaan program “Eua Arthorn” di Bandaraya Bangkok dengan penggunaan sistem IBS. Projek ini bernilai sebanyak RM96 juta.
    • THE CUBE, KUALA LUMPUR 2 2 | S B C C O R P O RATION BERHAD | TAMAN METROPOLITAN, KUALA LUMPUR BANDAR LIGAMAS SURIA PENDAMAR, KELANG PRODUK PALING
    • | SBC CORPORATION BERH A D | 2 3 Syarikat perkilangan bersekutu kami, Paling Industries Sdn Bhd, telah menunjukkan prestasi yang rendah berpunca daripada asakan kenaikan harga bahan-bahan mentah dan damar PVC beralas minyak. Bagaimanapun, pendapatan daripada aktiviti ekspot telah berjaya menunjukkan pencapaian yang semakin baik dengan kenaikan sebanyak 30%, khususnya berpunca daripada pasaran utamanya di Australia, Hong Kong, Pakistan, Ghana dan England. ULASAN EKONOMI DAN PERNIAGAAN Dalam masa yang singkat, kami berharap keadaan operasi akan BANDAR UTAMA BATANG KALI terus memberi cabaran yang positif terhadap pengurusan projek dan skil rekabentuk pembinaan dalam usaha menghasilkan prestasi yang terbaik dalam aspek penyelesaian pembangunan kepada para pelanggan dan rakan bersekutu. Keupayaan SBC sebagai operator yang kukuh dan stabil dalam sektor pembinaan dari segi peningkatan taraf hidup dan demografi memberi peluang yang cerah terhadap pembangunan infrastruktur. DIVIDEN Lembaga Pengarah dengan sukacitanya mencadangkan pembayaran dividen pertama dan akhir sebanyak 1% sesaham tolak cukai 28% untuk tahun kewangan berakhir 31 Mac 2006. Pembayaran dividen ini akan diumumkan tertakluk kepada persetujuan para pemegang saham pada Mesyuarat Agung Tahunan akan datang. PENGHARGAAN DAN PENGAKUAN Bagi pihak Lembaga Pengarah, saya ingin mengucapkan ribuan terima kasih kepada para pemegang saham, rakan-rakan perkongsian dan perniagaan, ahli-ahli bank dan pihak kerajaan atas sokongan mereka yang berterusan. Saya juga ingin merakamkan rasa penghargaan kami terhadap para pelanggan dan penyokong SBC yang selama ini telah memberikan kepercayaan yang ikhlas dan sepenuhnya kepada Kumpulan dalam aspek pelaburan hartanah dan perumahan. Akhirnya, saya ingin berterima kasih kepada pihak pengurusan dan kakitangan Kumpulan ini yang telah menyumbangkan usaha dan sokongan yang tidak ternilai di sepanjang tahun ini. Sekian, terima kasih. Sia Kwee Mow @ Sia Hok Chai JMN,FFB,FCIOB,FAIB Pengarah Eksekutif 8 Ogos 2006
    • 2 4 | S B C C O R P O RATION BERHAD | STATEMENT OF CORPORATE GOVERNANCE as at 8 August 2006 The Board of Directors of SBC Corporation Berhad remains firmly committed towards ensuring the highest standard of corporate governance is maintained throughout the Company and its subsidiaries (“the Group”). Hence, the Board is fully dedicated to continuously evaluating the Group’s corporate governance practices and procedures with a view to ensure the principles and best practices in corporate governance as promulgated by the Malaysian Code on Corporate Governance (“the Code”) is applied and adhered to in the best interests of the stakeholders. This disclosure statement sets out the manner in which the Group has applied and complied with the Principles of the Code and the extent of compliance with Best Practices as set out in Part 1 and 2 of the Code. BOARD OF DIRECTORS Composition and Balance The Board as at the date of this statement has 7 members, comprising 3 Independent Non-Executive Directors, 2 Non- Executive Directors and 2 Executive Directors which satisfies Bursa Malaysia Securities Berhad (“Bursa Securities”) Listing Requirements of having at least 2 Directors or 1/3 of the Board whichever is higher, who are Independent Directors. The Directors have a wide range of experience and skills and are from diverse backgrounds relevant to managing and directing the Group’s operations. The Executive Directors are responsible for implementing policies of the Board, overseeing the Group’s operations and developing the Group’s business strategies. The role of the Independent Non-Executive Directors is to provide objective and independent judgement to the decision making of the Board and as such, provide an effective check and balance to the Board’s decision making process. The Board is satisfied that the current Board composition fairly reflects the investment of minority shareholders in the Company and represents the needed mix of skills and experience required to discharge the Board’s duties and responsibilities. Furthermore, no individual Director or group of Directors can dominate the Board’s decision making process. The profiles of the members of the Board are set out in this Annual Report under the section named Directors' Profiles. Duties and Responsibilities The Board recognises its key role in charting the strategic direction, development and control of the Group and has adopted the specific responsibilities that are listed in the Code, which facilitates the discharge of the Board’s stewardship responsibilities. The roles of the Chairman and Managing Director are clearly distinct to ensure that there is a balance of power and authority. The Chairman is primarily responsible for the orderly conduct and working of the Board whilst the Managing Director is responsible for the day-to-day running of the business and implementation of Board policies and decisions adopted by the Board. Dato’ Lim Phaik Gan is the Senior Independent Non-Executive Director to whom concerns may be conveyed.
    • | SBC CORPORATION BERH A D | 2 5 Board Meetings The Board meets on a scheduled basis once every quarter with additional meetings held as and when urgent issues and important decisions are required to be taken between the scheduled meetings. During the financial year ended 31 March 2006, the Board met 4 times where it deliberated on and considered matters relating to the Group’s financial performance, significant investments, corporate development, strategic issues and business plan. Details of each Director’s attendance of Board meetings are set out as follows: No. of meetings held during the financial year ended No. of meetings Name of Director 31 March 2006 attended Sia Kwee Mow @ Sia Hok Chai (Executive Chariman) 4 4 Sia Teong Heng (Managing Director) 4 4 Mun Chong Shing @ Mun Chong Tian (Non-Executive Director) 4 4 Dato’ Zainol Abidin Bin Haji A. Hamid (Non-Executive Director) 4 4 Dato’ Lim Phaik Gan (Independent Non-Executive Director) 4 4 Dato’ Dr. Norraesah Bt. Haji Mohamad (Independent Non-Executive Director) 4 3 Ahmad Fizal Bin Othman (Independent Non-Executive Director) 4 4 The Board members have unrestricted and timely access to all information necessary for the discharge of their responsibilities. All Directors are provided with all relevant information and reports on financial, operational, corporate, regulatory, business development by way of Board papers or upon specific request for informed decision making and effective discharge of their duties. These documents are comprehensive and include qualitative and quantitative information to enable the Board members to make informed decisions. Notice of Board Meetings and board papers are provided to Directors in advance so that meaningful deliberation and sound decisions can be made at Board meetings. All proceedings of the Board meetings are minuted by the Company Secretary. There is a formal schedule of matters reserved specifically for Board’s decisions. These include approval of key policies, significant acquisitions and disposals of assets, significant investments and approval of budgets and corporate plans. To assist in the discharge of their responsibilities and duties, all Directors have access to the advice and services of the Company Secretary. If required, the Directors may engage independent professionals at the Group’s expense, in the furtherance of their duties.
    • 2 6 | S B C C O R P O RATION BERHAD | BOARD OF DIRECTORS (CONT'D) Re-election and Re-appointment of Directors In accordance with the Company’s Articles of Association, one third of the Directors shall retire by rotation from office and be eligible for re-election at the annual general meeting and all Directors appointed by the Board are subject to re-election by shareholders at the first opportunity after their appointment. Furthermore, each Director shall retire from office at least once in every three years. Directors who are of or over the age of seventy years shall also retire from office and be eligible for re-appointment at the annual general meeting pursuant to Section 129 (6) of the Companies Act, 1965. Directors’ Training All members of the Board have attended the Mandatory Accreditation Programme. Pursuant to Paragraph 15.09 of the Bursa Securities Listing Requirements, the Board is responsible to identify the training needs of its Directors which will aid them in the discharge of their duties on a continuous basis. The Board noted that the Nomination Committee is satisfied that the Board comprises qualified people with professional background, expertise in various fields and practical experience. Nevertheless, the Board encourages its Directors to go for training on their own initiative from time to time in order to keep them abreast of the latest developments in the market-place as well as the current changes in the laws, regulations and accounting standards. For new Directors, a familiarisation program will be conducted for them. This includes a presentation of the Group’s operations by senior management and visits to the existing project sites. Board Committees The Board has delegated certain of its responsibilities to the three Committees, namely the Audit, the Nomination and the Remuneration Committees with clearly defined terms of reference in assisting the Board to discharge its duties and responsibilities effectively. AUDIT COMMITTEE The report of the Audit Committee is set out on pages 35 to 40 of this annual report.
    • | SBC CORPORATION BERH A D | 2 7 NOMINATION COMMITTEE (“NC”) The NC has held one meeting during the financial year ended 31 March 2006. The attendance of the members of the NC at the meeting is as follows: No. of meetings held during the financial year ended No. of meetings Name of members 31 March 2006 attended Dato’ Lim Phaik Gan – Chairperson (Independent Non-Executive Director) 1 1 Dato’ Dr. Norraesah Bt. Haji Mohamad (Independent Non-Executive Director) 1 1 Ahmad Fizal Bin Othman (Independent Non-Executive Director) 1 1 Mun Chong Shing @ Mun Chong Tian (Non-Executive Director) 1 1 The terms of reference of the NC are as follows: (a) Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist exclusively of non-executive Directors, with a minimum of 3, a majority of whom are independent. The members of the Committee shall elect the Chairman from among their number who shall be an independent director. In order to form a quorum in respect of a meeting of the Committee, the members present must be wholly or a majority of whom must be independent directors. (b) Frequency of meetings Meetings shall be held not less than once a year. The Company Secretary shall be the Secretary of the Committee. (c) Authority The Committee is to recommend new nominees for the Board and the board committees and to assess Directors on an on-going basis. The actual decision as to who shall be nominated should be the responsibility of the full Board after considering the recommendations of the Committee.
    • 2 8 | S B C C O R P O RATION BERHAD | NOMINATION COMMITTEE (“NC”) (CONT'D) (d) Duties The duties of the Committee shall be: (i) to recommend to the Board, candidates for all directorships and in doing so, preference shall be given to shareholders or existing Board members and candidates proposed by the Chief Executive Officer and, within the bounds of practicability, by any other senior executive or any director or shareholder may also be considered. (ii) to recommend to the Board, directors to fill the seats on board committees. (iii) to review annually, on behalf of the Board, the required mix of skills, experience and other qualities, including core competencies, which non-executive directors should bring to the Board. (iv) to carry out annually, on behalf of the Board, the assessment of the effectiveness of the Board as a whole, the board committees and the contribution of each director. (e) Reporting procedures The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. At the meeting of the NC during the financial year ended 31 March 2006, the following matters were considered and resolved: (a) re-appointment and re-election of Directors at the Sixteenth Annual General Meeting; (b) mix of skills, experience and qualities of all Directors; and (c) the effectiveness of the Board and the contribution from each Board member. REMUNERATION COMMITTEE (“RC”) The members of the RC at the date of this report and their attendance at the meeting convened during the financial year ended 31 March 2006 are as follows: No. of meetings held during the financial year ended No. of meetings Name of members 31 March 2006 attended Dato’ Zainol Abidin Bin Haji A. Hamid - Chairman (Non-Executive Director) 1 1 Dato’ Lim Phaik Gan (Independent Non-Executive Director) 1 1 Dato’ Dr. Norraesah Bt. Haji Mohamad (Independent Non-Executive Director) 1 1 Sia Teong Heng (Managing Director) 1 1
    • | SBC CORPORATION BERH A D | 2 9 The terms of reference of the RC are as follows: (a) Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of at least 3 directors, wholly or a majority of whom are non-executive directors. The members of the Committee shall elect the Chairman from among their number who shall be a non-executive director. In order to form a quorum in respect of a meeting of the Committee, the members present must be wholly or a majority of whom must be non-executive directors. (b) Frequency of meetings Meetings shall be held not less than once a year. The Company Secretary shall be the Secretary of the Committee. (c) Authority The Committee is authorized to draw from outside advice as and when necessary in forming its recommendation to the Board on the remuneration of the executive directors in all its forms. Executive directors should play no part in decisions on their own remuneration and should abstain from discussion of their own remuneration. The determination of the remuneration packages of the non-executive directors, including non-executive chairman, should be a matter for the Board as a whole. The individuals concerned should abstain from discussion of their own remuneration. (d) Duties The duty of the Committee is to recommend to the Board the structure and level of remuneration of executive directors. (e) Reporting procedures The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. During the financial year ended 31 March 2006, the RC met once to consider the remuneration of the Executive Chairman and Managing Director for 2006.
    • 3 0 | S B C C O R P O RATION BERHAD | DIRECTORS’ REMUNERATION The details of the remuneration of each Director during the financial year ended 31 March 2006 are as follows: (a) Total Remuneration Basic Benefits- Attendance Salary Bonuses Fees in-kind Fee Total RM RM RM RM RM RM Executive Sia Kwee Mow @ Sia Hok Chai 510,720 78,400 - 16,925 - 606,045 Sia Teong Heng 443,520 67,200 - - - 510,720 Non-Executive Mun Chong Shing @ Mun Chong Tian - - 18,000 - 1,500 19,500 Dato’ Zainol Abidin Bin Haji A. Hamid - - 19,000 - 1,500 20,500 Dato’ Lim Phaik Gan - - 19,000 - 3,000 22,000 Dato’ Dr. Norraesah Bt. Haji Mohamad - - 19,000 - 2,400 21,400 Ahmad Fizal Bin Othman - - 18,000 - 2,700 20,700 Total 954,240 145,600 93,000 16,925 11,100 1,220,865 (b) Directors’ remuneration by bands Executive Non-Executive Total RM1 to RM50,000 - 5 5 RM50,001 to RM100,000 - - - RM100,001 to RM150,000 - - - RM150,001 to RM200,000 - - - RM200,001 to RM250,000 - - - RM250,001 to RM300,000 - - - RM300,001 to RM350,000 - - - RM350,001 to RM400,000 - - - RM400,001 to RM450,000 - - - RM450,001 to RM500,000 - - - RM500,001 to RM550,000 1 - 1 RM550,001 to RM600,000 - - - RM600,001 to RM650,000 1 - 1 Total 2 5 7
    • | SBC CORPORATION BERH A D | 3 1 ACCOUNTABILITY AND AUDIT Financial Reporting The Board aims to convey a balanced and understandable assessment of the Group’s financial position and prospects through the quarterly results and annual reports/financial statements to the Company’s shareholders and regulators. The Responsibility Statement by the Directors pursuant to Bursa Securities Listing Requirements is set out on page 15. Internal Control The Board acknowledges its responsibility for maintaining a sound internal controls system, which provides reasonable assurance in ensuring the effectiveness and efficiency of operations and the safeguard of assets and interest in compliance with laws and regulations as well as with internal financial administration procedures and guidelines. The Group’s Statement on Internal Control is set out on pages 33 to 34. Relationship with Auditors The Board maintains a close and transparent professional relationship with the Group’s internal and external auditors through the Audit Committee. In the course of audit of the Group’s operations, the internal and external auditors have highlighted all important matters to the Audit Committee. The Audit Committee will then bring up the matters for the Board’s attention if it is necessary. The Group does not paid any amount of non-audit fees to the external auditors for the financial year ended 31 March 2006. Relationship with Shareholders and Investors The primary tools of communication with the shareholders of the Company are through the annual report, announcements through Bursa Securities and circulars. All queries from shareholders and members of public received through phone calls or letters are handled by the Executive Directors, Group Financial Controller and Company Secretary. At the annual general meeting and extraordinary general meeting, the Chairman gives shareholders ample opportunity to participate through questions on the prospects, performance of the Group and other matters of concern to them with the Board.
    • 3 2 | S B C C O R P O RATION BERHAD | ADDITIONAL COMPLIANCE INFORMATION In conformance with the requirements of Bursa Securities, the following compliance information is provided: 1. Revaluation Policy on Landed Properties The Group’s landed properties are stated at cost. There is no policy of regular revaluation of its landed properties as at the end of the financial year ended 31 March 2006. 2. Materials Contracts There were no material contracts entered into by the Company and its’ subsidiaries which involved the directors’ and substantial shareholders’ interests subsisting at the end of the financial year ended 31 March 2006 or entered into since the end of the previous financial year. 3. Utilisation of Proceeds There were no proceeds raised from any proposals by the Company during the financial year. 4. Share Buy-backs There were no share buy-backs by the Company during the financial year. 5. Options, Warrants or Convertible Securities There were no options, warrants or convertible securities issued by the Company during the financial year. 6. American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) During the financial year, the Company did not sponsor any ADR or GDR programme. 7. Sanctions and / or Penalties There were no sanctions and / or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year. 8. Variation in Results There was no material variation between the results for the financial year and the unaudited results previously announced. 9. Profit Guarantee There was no profit guarantee given by the Company in respect of the financial year.
    • STATEMENT ON INTERNAL CONTROL | SBC CORPORATION BERH A D | 3 3 INTRODUCTION This Statement on Internal Control is made pursuant to paragraph 15.27 (b) of the Bursa Malaysia Securities Berhad Listing Requirements. The Board of Directors (“the Board”) of SBC Corporation Berhad is pleased to present below the Group’s Statement on Internal Control for the financial year ended 31 March 2006, prepared in accordance with the Statement on Internal Control: Guidance for Directors of Public Listed Companies. BOARD RESPONSIBILITY The Board affirms its responsibility in maintaining a sound system of internal controls to safeguard shareholders’ investments and the Group assets. A sound system of internal control is designed to identify and manage risks facing the Group in pursuit of its business objectives. However, due to inherent limitations to any systems of internal control, such a system can only provide reasonable and not absolute assurance against material misstatements or losses. The Audit Committee has been delegated, in accordance with its terms of reference, for reviewing the adequacy and the integrity of the company internal control systems and management information systems, including compliance with applicable laws, regulations, rules, directives and guidelines. RISK MANAGEMENT FRAMEWORK Risk management is seen as an integral part of the Group’s business operations by the Board. The Group has in place an ongoing process for identifying, evaluating and managing the significant risks faced by the Group, throughout the financial year under review. Senior management will assess and appraise the cost and benefits, impact on the Group, review the financial implications before any investment or significant expenditure is made. This ongoing process is undertaken for all the major subsidiaries of the Group and the processes, findings, and actions taken by the Management are all reviewed regularly by the Board. INTERNAL CONTROL As the Board has entrusted the Audit Committee with the responsibility of reviewing the adequacy and integrity of the internal control system, the Audit Committee assesses the adequacy and integrity of the system of internal control through independent reviews on reports received from management, external auditors and the outsourced internal audit function. As part of the process, the external auditors provide assurance in the form of their annual statutory audit of the Group’s financial statements. Areas of improvement identified by external auditors during the course of the statutory audit are brought to the attention of the Audit Committee through management letters or are articulated at Audit Committee meetings. The Group’s internal audit function was outsourced to external consultant in the third quarter of 2005. During the financial year under review, the internal audit function conducted internal audit visits on certain key business activities in accordance with the internal audit plan approved by the Audit Committee for the purposes of assessing the adequacy and effectiveness of the internal control systems within these business entities. The results of the audits and recommendations for improvement co-developed with Management were presented at the quarterly Audit Committee Meeting.
    • 3 4 | S B C C O R P O RATION BERHAD | OTHER KEY FEATURES OF INTERNAL CONTROL SYSTEM The Group has put in place the following key elements of internal control: • Organizational Structure An organization structure with clearly defined delegation of responsibilities to the Board Committees, the Management and operating units of the Group. The clearly defined authority limits have been established for all aspects of the businesses and are subject to periodic review for their continued relevance. • Financial Performance Review Annual financial and operational forecast are prepared by the Management and approved by the Executive Directors. The monitoring of actual performance against budgeted is performed on a timely basis. When significant variances are identified, further investigation will be performed and follow-up management actions will be taken where necessary. • Operational Review Project coordination and management meetings were conducted on a periodical basis. Relevant progress and performance reports are presented to the Executive Directors for review and discussion. The matters that are discussed are as follows: - Feedback on the progress of development projects undertaken by the individual subsidiary and highlights on the shortcomings or problems together with proposed corrective actions; - Progress on billings, collections and loan documentation processes; and - Financing and cash flow performance. In addition, Senior Management staff attend site meetings on a periodic basis as part of their close monitoring of status of the individual projects. CONCLUSION Based on the assessment of internal controls within the Group, the Board is pleased to disclose that the Group’s internal control systems are adequate and there were no internal control weaknesses which have resulted in any material losses that would require separate disclosure in the Annual Report. However, the Board will ensure that the internal control system of the Group will continuously be improved to meet the changing and challenging business and operating environments. This Statement on Internal Control is made in accordance with a resolution passed by the Board of Directors on 8 August 2006.
    • AUDIT COMMITTEE REPORT | SBC CORPORATION BERH A D | 3 5 The Board of SBC Corporation Berhad is pleased to present the Audit Committee Report for the financial year ended 31 March 2006. COMPOSITION AND MEETINGS The Audit Committee comprises four members, three of whom are Independent Non-Executive Directors and one is the Managing Director. The name of the members and their attendance at meetings held during the financial year are as follows: No. of meetings held during the financial year ended No. of meetings Name of members 31 March 2006 attended Dato’ Dr. Norraesah Bt. Haji Mohamad - Chairperson (Independent Non-Executive Director) 4 3 Dato’ Lim Phaik Gan (Independent Non-Executive Director) 4 4 Ahmad Fizal Bin Othman (Independent Non-Executive Director) 4 4 Sia Teong Heng (Managing Director) 4 4 The Audit Committee normally meets four times a year with additional meetings convened between scheduled meetings, if necessary, to deliberate on urgent and significant matters. The Group Financial Controller and the representatives of the outsourced Internal Auditors and the External Auditors attended the meetings at the invitation of the Audit Committee, where considered necessary. The Company Secretary is responsible for distributing the notice of the meetings and relevant papers to the Audit Committee members prior to their meetings and recording the proceedings of the meetings thereat. INTERNAL AUDIT FUNCTION The Company has outsourced internal audit function to Audex Governance Sdn Bhd during the financial year. The principal role of the Internal Auditor is to undertake independent, regular and systematic review of the Group’s systems of internal control so as to provide reasonable assurance that such systems continue to operate efficiently and effectively. It is the responsibility of the Internal Auditor to provide the Audit Committee with independent and objective reports on the state of internal control of various operating units within the Group and the extent of compliance of the units with Group’s established policies and procedures as well as relevant statutory requirements.
    • 3 6 | S B C C O R P O RATION BERHAD | SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE In line with the terms of reference of the Audit Committee, the following activities were carried out by the Audit Committee during the financial year ended 31 March 2006: a) Discussed and reviewed the Audit Planning Memorandum which cover the external auditor’s plan, scope and nature of work. b) Reviewed the Audit Review Memorandum in relation to their findings and accounting issues arising from the audit of the Group’s annual financial results. c) Reviewed the unaudited quarterly report on the consolidated results of the Group for the quarters ended 31 March 2005, 30 June 2005, 30 September 2005 and 31 December 2005. d) Assessed the Group’s financial performance. e) Reviewed related party transactions and conflicts of interest situation that may arise within the Group. f) Reviewed and approved the internal audit plan and the internal audit reports and followed up on the remedial actions implemented by the Management in respect of the internal control weaknesses identified. g) Reviewed the Group’s risk management policy and framework. h) Reviewed the Group’s compliance with the applicable approved accounting standards issued by the Malaysian Accounting Standards Board and other relevant legal and regulatory requirements. SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION During the financial year ended 31 March 2006, the Internal Auditor has: a) Presented a risk-based annual audit plan and risk assessment policy for the Audit Committee’s review and approval; b) Performed company-wide operation and special audits giving due attention to high and medium risk area of concerns; c) Followed up on the status of rectification with regards to significant issues and kept the Audit Committee abreast of the current status; and d) Furnished internal audit reports to the Audit Committee on quarterly basis as an updates of the internal audit activities. In accordance with the approved audit plan for 2005/2006, the areas reviewed by the internal audit function were as follows: a) Management and operational review of companies within the Group; b) Procurement of services; c) Pre-development processes;
    • | SBC CORPORATION BERH A D | 3 7 SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION (CONT'D) d) Sales administration processes; e) Monitoring of the progress of construction; f) Handover procedures and complaint management; g) Billings and collection procedures; h) Related party transactions; i) Property management; and j) Update of the risk profile. A number of minor internal control weaknesses were identified during the year, all of which have been addressed by the Management. None of the weaknesses has resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report. The annual internal audit plan for 2006/2007 was presented to the Audit Committee for review and approval subsequent to the financial year ended 31 March 2006. The activities of the internal audit function cover the following areas: a) Management and operational review of companies within the Group; b) Projects status and cost monitoring; c) Manage contractor performance; d) Progress claims processing e) Manage the issuance of work orders and variation orders f) Review of relevant policies and procedures; g) Post construction service and maintenance; h) Project performance reviews and evaluation; i) Related party transactions; j) Property management; and k) Update of the risk profile. The above reviews cover all the offices and project sites which are located in Kuala Lumpur, Klang, Kuantan and Kota Kinabalu.
    • 3 8 | S B C C O R P O RATION BERHAD | TERMS OF REFERENCE OF THE AUDIT COMMITTEE Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of at least 3 directors, a majority of whom are independent. At least one member of the Committee must be: (i) a member of the Malaysian Institute of Accountants (“MIA”); or (ii) if he is not a member of the MIA, he must have at least 3 years working experience and • he must have passed the examinations specified in Part I of the 1st Schedule to the Accountant Act, 1967; or • he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule to the Accountants Act, 1967. The members of the Committee shall elect a Chairman from amongst their number who shall be an independent director. In order to form a quorum in respect of a meeting of the Committee, the majority of the members present must be independent directors. Attendance At Meeting The Group Financial Controller and the representatives of the outsourced internal auditors and the external auditors shall normally attend meetings. Other directors and employees of the Company may attend meetings at the Committee’s invitation. However, at least once a year the Committee shall meet with the external auditors without any executive director present. The Company Secretary shall be the secretary of the Committee. Frequency Of Meetings Meetings shall be held not less than four times a year. The external auditors may request a meeting if they consider that one is necessary. Authority The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all the employees are directed to cooperate with any request made by the Committee. The Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of an outsider with relevant experience and expertise, if it considers this necessary.
    • | SBC CORPORATION BERH A D | 3 9 TERMS OF REFERENCE OF THE AUDIT COMMITTEE (CONT'D) Duties The duties of the Audit Committee shall be: (1) to consider the appointment of the external auditors, the audit fees and any questions of nomination, resignation or dismissal. (2) to discuss with the external auditors before the audit commences the nature and scope of the audit and ensure co-ordination where more than one audit firm is involved. (3) to discuss with the external auditors the evaluation of the system of internal controls, audit report and ensure assistance given by the employees to the external auditors. (4) To review the quarterly and year-end financial statements before submission to the Board, focusing particularly on: • any changes or implementation of changes in accounting policies and practices; • major judgement areas; • significant adjustments arising from the audit; • significant and unusual events; • the going concern assumption; • compliance with accounting standards; and • compliance with stock exchange and legal requirements. (5) to discuss problems and reservations arising from the interim and final audits and any matters the external auditor may wish to discuss in the absence of management, where necessary. (6) to review the external auditors’ management letter and management’s response. (7) to do the following where an internal audit function exists: • review the adequacy of the scope, functions and resources of the internal audit function and that it has the necessary authority to carry out its work. • review the internal audit programme and processes and results of the internal audit programme, processes and investigation and where necessary, ensure that appropriate action is taken on the recommendations of the internal audit function. • review any appraisal or assessment of the performance of the members of the internal audit function. • approve the appointment or termination of senior staff members of the internal audit function. • inform itself of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.
    • 4 0 | S B C C O R P O RATION BERHAD | TERMS OF REFERENCE OF THE AUDIT COMMITTEE (CONT'D) Duties (Cont'd) (8) to consider any related party transactions and conflict of interest situations that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity. (9) to consider the findings of internal investigations and management’s response and ensure co-ordination between internal and external auditors. (10) to consider other topics, as defined by the Board. Reporting The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.
    • 42 | DIRECTORS’ REPORT | 48 | STATEMENT BY DIRECTORS | 48 | STATUTORY DECLARATION | 49 | REPORT TO THE AUDITORS | 50 | BALANCE SHEETS | 52 | INCOME STATEMENTS | 53 | STATEMENTS OF CHANGES IN EQUITY | 54 | CASH FLOW STATEMENTS | 57 | NOTES TO THE FINANCIAL STATEMENTS | FINANCIAL STATEMENTS
    • 4 2 | S B C C O R P O RATION BERHAD | DIRECTORS’ REPORT The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 March 2006. PRINCIPAL ACTIVITIES The Company is principally engaged in the businesses of investment holding and the provision of management and administrative services to the subsidiaries. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS THE GROUP THE COMPANY RM RM Profit after taxation for the financial year 1,047,197 149,820 DIVIDENDS Since the end of the previous financial year, the Company paid the following dividends: (a) a dividend of 5.5% less 28% tax on the Irredeemable Convertible Cumulative Preference Shares (“ICCPS”) amounting to RM24,463 in respect of the previous financial year, in accordance with the terms of issue of the ICCPS; and (b) a first and final dividend of 1% less 28% tax on the ordinary shares amounting to RM593,527 in respect of the previous financial year. For the current financial year, the directors recommend the payment of a first and final dividend of 1% less 28% tax on the ordinary shares amounting to RM593,527. RESERVES AND PROVISIONS All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements.
    • | SBC CORPORATION BERH A D | 4 3 ISSUES OF SHARES AND DEBENTURES During the financial year, (a) there were no changes in the authorised and issued and paid-up share capital of the Company; and (b) there were no issues of debentures by the Company. OPTIONS GRANTED OVER UNISSUED SHARES During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company. BAD AND DOUBTFUL DEBTS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satisfied themselves that there are no known bad debts and that adequate allowance had been made for doubtful debts. At the date of this report, the directors are not aware of any circumstances that would require the writing off of bad debts, or additional allowance for doubtful debts in the financial statements of the Group and of the Company. CURRENT ASSETS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their values as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise. At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
    • 4 4 | S B C C O R P O RATION BERHAD | VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES The contingent liability of the Company is disclosed in Note 44 to the financial statements. At the date of this report, there does not exist: (a) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; or (b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year. No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. ITEMS OF AN UNUSUAL NATURE The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year.
    • | SBC CORPORATION BERH A D | 4 5 DIRECTORS The directors who served since the date of the last report are as follows: SIA KWEE MOW @ SIA HOK CHAI SIA TEONG HENG MUN CHONG SHING @ MUN CHONG TIAN DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID DATO’ LIM PHAIK GAN DATO’ DR. NORRAESAH BT HAJI MOHAMAD AHMAD FIZAL BIN OTHMAN Pursuant to Section 129 of the Companies Act, 1965, Sia Kwee Mow @ Sia Hok Chai and Dato’ Lim Phaik Gan retire at the forthcoming Annual General Meeting and offer themselves for reappointment under the provisions of Section 129(6) of the said Act to hold office until the next Annual General Meeting of the Company. Pursuant to Article 77 of the Articles of Association of the Company, Sia Teong Heng and Dato’ Zainol Abidin Bin Haji A. Hamid retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election. DIRECTORS’ INTERESTS According to the register of directors’ shareholdings, the interests of directors holding office at the end of the financial year in shares and options under the Employee Share Option Scheme in the Company during the financial year are as follows: NUMBER OF ORDINARY SHARES OF RM1 EACH AT AT 1.4.2005 BOUGHT SOLD 31.3.2006 DIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 1,480,800 - - 1,480,800 SIA TEONG HENG 2,517,992 - - 2,517,992 MUN CHONG SHING @ MUN CHONG TIAN 21,782 - - 21,782 INDIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 19,498,523 - - 19,498,523 SIA TEONG HENG 19,498,523 - - 19,498,523
    • 4 6 | S B C C O R P O RATION BERHAD | DIRECTORS’ INTERESTS (CONT'D) NUMBER OF ORDINARY SHARES OF RM1 EACH UNDER OPTION AT AT 1.4.2005 GRANTED EXPIRED 31.3.2006 DIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 450,000 - (450,000) - SIA TEONG HENG 350,000 - (350,000) - By virtue of their interests in the Company, Sia Kwee Mow @ Sia Hok Chai and Sia Teong Heng are deemed to have interests in the shares in the subsidiaries to the extent of the Company’s interest, in accordance with Section 6A of the Companies Act, 1965. None of the other directors holding office at the end of the financial year had any interest in shares of the Company or its related corporations during the financial year. DIRECTORS’ BENEFITS Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors as shown in the financial statements, or the fixed salary of a full-time employee of the Company) by reason of 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 with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain directors have substantial financial interests as disclosed in Note 43 to the financial statements. Neither during nor at the end of the financial year was the Company or its subsidiaries a party to any arrangements whose object is to enable the directors to acquire benefits by means for the acquisition of shares in or debentures of the Company or any other body corporate. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR The significant event during the financial year of the Company is disclosed in Note 49 to the financial statements.
    • | SBC CORPORATION BERH A D | 4 7 SIGNIFICANT EVENT SUBSEQUENT TO BALANCE SHEET DATE The significant event subsequent to the balance sheet date of the Company is disclosed in Note 50 to the financial statements. AUDITORS The auditors, Messrs. Horwath, have expressed their willingness to continue in office. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian Kuala Lumpur 20 July 2006
    • 4 8 | S B C C O R P O RATION BERHAD | STATEMENT BY DIRECTORS We, Sia Kwee Mow @ Sia Hok Chai and Mun Chong Shing @ Mun Chong Tian, being two of the directors of SBC Corporation Berhad, state that, in the opinion of the directors, the financial statements set out on pages 50 to 105 are drawn up in accordance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 March 2006 and of their results and cash flows for the financial year ended on that date. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian Kuala Lumpur 20 July 2006 S TAT U TO RY D E CLARATION I, Lee Yan Yaw, I/C No. 710315-10-5509, being the officer primarily responsible for the financial management of SBC Corporation Berhad, do solemnly and sincerely declare that the financial statements set out on pages 50 to 105 are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by Lee Yan Yaw, I/C No. 710315-10-5509, at Kuala Lumpur in the Federal Territory on this 20 July 2006 Lee Yan Yaw Before me Datin Hajah Raihela Wanchik (W275) Commissioner for Oaths Kuala Lumpur 20 July 2006
    • R E P O RT OF THE AUDITORS to the members of SBC Corporation Berhad | SBC CORPORATION BERH A D | 4 9 We have audited the financial statements set out on pages 50 to 105. The preparation of the financial statements is the responsibility of the Company’s directors. It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report. We conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. Our audit included examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. Our audit also included an assessment of the accounting principles used and significant estimates made by the directors as well as evaluating the overall adequacy of the presentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion. In our opinion, (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of: (i) the state of affairs of the Group and of the Company at 31 March 2006 and their results and cash flows for the financial year ended on that date; and (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company; and (b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and by the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act. We have considered the financial statements and the auditors’ reports thereon of the subsidiaries for which we have not acted as auditors, as indicated in Note 6 to the financial statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comments made under Section 174(3) of the said Act. Horwath Mok Yuen Lok Firm No: AF 1018 Approval No: 1408/11/07 (J/PH) Chartered Accountants Partner Kuala Lumpur 20 July 2006
    • 5 0 | S B C C O R P O RATION BERHAD | BALANCE SHEETS at 31 March 2006 THE GROUP THE COMPANY 2006 2005 2006 2005 NOTE RM RM RM RM NON-CURRENT ASSETS Investment in subsidiaries 6 - - 211,064,785 211,064,785 Interest in associates 7 111,816,402 112,262,828 2,400,000 2,400,000 Investment in joint venture 8 - - 712,500 - Property, plant and equipment 9 34,771,188 35,452,368 7,552 17,636 Investment properties 10 71,162,500 79,718,099 - - Other assets 11 86,300 276,107 - - Goodwill on consolidation 12 27,317,640 27,317,640 - - 245,154,030 255,027,042 214,184,837 213,482,421 CURRENT ASSETS Inventories 13 1,283,422 4,359,492 - - Property development costs 14 55,130,848 54,745,687 - - Receivables 15 42,574,730 28,150,859 226,427 143,077 Amount owing by contract customers 16 3,114,994 969,629 - - Amount owing by subsidiaries 17 - - 65,774,637 61,299,355 Amount owing by associates 18 5,399,534 5,399,534 11,434 11,434 Tax recoverable 19 1,551,225 6,607,700 3,206,127 8,597,916 Short term deposits with licensed banks 20 1,364,225 1,364,225 1,239,225 1,239,225 Cash and bank balances 21 9,205,230 5,612,658 8,150,432 4,027,843 119,624,208 107,209,784 78,608,282 75,318,850 The annexed notes form an integral part of these financial statements.
    • | SBC CORPORATION BERH A D | 5 1 THE GROUP THE COMPANY 2006 2005 2006 2005 NOTE RM RM RM RM CURRENT LIABILITIES Amount owing to contract customers 16 1,540,444 8,194 - - Payables 22 32,241,497 29,491,952 244,765 256,127 Amount owing to subsidiaries 17 - - 18,082,756 15,155,558 Amount owing to associates 18 16,711 547,586 - - Amount owing to a director 23 1,867,680 1,867,680 1,867,680 1,867,680 Short term borrowings 24 15,941,779 16,749,403 5,000,000 5,000,000 ABBA Bonds 25 2,478,450 2,478,450 2,478,450 2,478,450 Bank overdrafts 26 14,656,189 18,824,019 5,053,440 5,760,593 68,742,750 69,967,284 32,727,091 30,518,408 NET CURRENT ASSETS 50,881,458 37,242,500 45,881,191 44,800,442 296,035,488 292,269,542 260,066,028 258,282,863 FINANCED BY: Share capital 27 82,435,000 82,435,000 82,435,000 82,435,000 Reserves 28 138,026,063 137,572,393 133,652,529 134,096,236 Shareholders’ equity 220,461,063 220,007,393 216,087,529 216,531,236 ABBA Bonds 25 43,978,499 41,751,627 43,978,499 41,751,627 Non-current liabilities 29 30,629,180 29,543,776 - - Deferred taxation 31 966,746 966,746 - - 296,035,488 292,269,542 260,066,028 258,282,863 NET ASSETS PER ORDINARY SHARE (RM) 32 2.67 2.67 The annexed notes form an integral part of these financial statements.
    • 5 2 | S B C C O R P O RATION BERHAD | INCOME STATEMENTS for the financial year ended 31 March 2006 THE GROUP THE COMPANY 2006 2005 2006 2005 NOTE RM RM RM RM REVENUE 33 69,926,734 66,867,133 7,641,913 8,905,128 COST OF SALES 34 (56,847,233) (52,428,581) - - GROSS PROFIT 13,079,501 14,438,552 7,641,913 8,905,128 OTHER OPERATING INCOME 1,751,359 1,026,365 - 50,850 ADMINISTRATIVE EXPENSES (7,142,456) (7,541,549) (1,154,115) (1,200,429) OTHER OPERATING EXPENSES (1,262,033) (1,215,804) (289,792) (293,501) PROFIT FROM OPERATIONS 6,426,371 6,707,564 6,198,006 7,462,048 FINANCE COSTS (5,160,442) (4,953,038) (5,697,750) (5,602,597) SHARE OF PROFITS OF ASSOCIATES 266,591 1,566,728 - - PROFIT BEFORE TAXATION 35 1,532,520 3,321,254 500,256 1,859,451 TAXATION 36 (485,323) (1,070,825) (350,436) (621,822) PROFIT AFTER TAXATION 1,047,197 2,250,429 149,820 1,237,629 Earnings per share - basic 37 1.3 sen 2.7 sen - diluted 37 N/A N/A Dividend per ordinary share - final 38 1 sen 1 sen The annexed notes form an integral part of these financial statements.
    • STATEMENTS OF CHANGES IN EQUITY | SBC CORPORATION BERH A D | 5 3 for the financial year ended 31 March 2006 SHARE SHARE RETAINED CAPITAL CAPITAL PREMIUM PROFITS RESERVE TOTAL NOTE RM RM RM RM RM THE GROUP Balance at 1.4.2004 82,435,000 111,412,895 23,327,060 1,199,999 218,374,954 Profit after taxation for the financial year - - 2,250,429 - 2,250,429 Dividends 38 - - (617,990) - (617,990) Balance at 31.3.2005/1.4.2005 82,435,000 111,412,895 24,959,499 1,199,999 220,007,393 Profit after taxation for the financial year - - 1,047,197 - 1,047,197 Dividend 38 - - (593,527) - (593,527) Balance at 31.3.2006 82,435,000 111,412,895 25,413,169 1,199,999 220,461,063 THE COMPANY Balance at 1.4.2004 82,435,000 111,412,895 22,063,702 - 215,911,597 Profit after taxation for the financial year - - 1,237,629 - 1,237,629 Dividends 38 - - (617,990) - (617,990) Balance at 31.3.2005/1.4.2005 82,435,000 111,412,895 22,683,341 - 216,531,236 Profit after taxation for the financial year - - 149,820 - 149,820 Dividend 38 - - (593,527) - (593,527) Balance at 31.3.2006 82,435,000 111,412,895 22,239,634 - 216,087,529 The annexed notes form an integral part of these financial statements.
    • 5 4 | S B C C O R P O RATION BERHAD | CASH FLOW STATEMENTS for the financial year ended 31 March 2006 THE GROUP THE COMPANY 2006 2005 2006 2005 NOTE RM RM RM RM CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 1,532,520 3,321,254 500,256 1,859,451 Adjustments for: Amortisation of bonds expenses 279,708 275,709 279,708 275,709 Depreciation of property, plant and equipment 424,695 459,128 10,084 17,792 Interest expense/finance charges 5,058,620 4,844,740 5,671,876 5,583,651 Impairment loss on interest in an associate 549,434 330,565 - - Other investment written off - 45,000 - - Dividend income - - (5,000,000) (5,404,800) (Gain)/Loss on disposal of property, plant and equipment (132,283) 19,177 - - Gain on disposal of investment properties (812,642) (15,082) - - Interest income (261,016) (203,425) (204,859) (1,389,168) Write-back of allowance for doubtful debts - (7,506) - - Share of profits in associates (266,591) (1,566,728) - - Operating profit before working capital changes 6,372,445 7,502,832 1,257,065 942,635 Decrease in inventories 3,076,070 4,245,239 - - Decrease/(Increase) in property development costs 6,171,242 (3,028,141) - - (Increase)/Decrease in receivables (14,234,064) 547,631 (83,350) 65,973 Increase/(Decrease) in payables 2,695,419 1,291,820 (11,362) 25,202 Net (increase)/decrease in amount owing by contract customers (613,115) 2,213,504 - - CASH FROM OPERATIONS CARRIED FORWARD 3,467,997 12,772,885 1,162,353 1,033,810 The annexed notes form an integral part of these financial statements.
    • | SBC CORPORATION BERH A D | 5 5 THE GROUP THE COMPANY 2006 2005 2006 2005 NOTE RM RM RM RM CASH FROM OPERATIONS BROUGHT FORWARD 3,467,997 12,772,885 1,162,353 1,033,810 Interest paid (571,134) (544,034) (1,184,390) (1,282,945) Tax refunded 4,734,735 1,256,001 6,441,353 4,116,757 NET CASH FROM OPERATING ACTIVITIES 7,631,598 13,484,852 6,419,316 3,867,622 CASH FLOWS FOR INVESTIING ACTIVITIES Acquisition of joint venture - - (712,500) - Advances to subsidiaries - - (4,475,282) (5,380,264) Interest received 261,016 203,425 204,859 1,389,168 Dividends received from subsidiaries - - 3,600,000 3,456,000 Dividends received from associates - 435,456 - 435,456 Purchase of property, plant and equipment 39 (318,295) (408,819) - - Purchase of investment properties - (1,640,541) - - Proceeds from disposal of property, plant and equipment 132,370 7,700 - - Proceeds from disposal of investment properties 4,211,187 556,200 - - Incidental expenses on investment properties (342,356) (424,603) - - Placement of cash in sinking fund account (4,097,229) (2,015,883) (4,097,229) (2,015,883) NET CASH FOR INVESTING ACTIVITIES (153,307) (3,287,065) (5,480,152) (2,115,523) The annexed notes form an integral part of these financial statements.
    • 5 6 | S B C C O R P O RATION BERHAD | THE GROUP THE COMPANY 2006 2005 2006 2005 NOTE RM RM RM RM CASH FLOWS FOR FINANCING ACTIVITIES Payment of bonds expenses (61,872) (57,871) (61,872) (57,871) Repayment of bonds 25 (2,478,450) (2,478,450) (2,478,450) (2,478,450) Repayment to directors - (582,801) - (100,000) Net repayment by associates (530,875) 603,742 - - Advances from subsidiaries - - 2,927,198 2,592,235 Dividend paid to shareholders of the company (593,527) (593,527) (593,527) (593,527) Dividend paid to holders of ICCPS - (295,050) - (295,050) Repayment of revolving credit (1,600,000) (1,350,000) - - Drawdown of term loans 3,600,000 - - - Repayment of term loans (2,077,764) (3,460,283) - - Repayment of hire purchase obligations (72,630) (87,784) - - NET CASH FOR FINANCING ACTIVITIES (3,815,118) (8,302,024) (206,651) (932,663) NET INCREASE IN CASH AND CASH EQUIVALENTS 3,663,173 1,895,763 732,513 819,436 CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR (15,873,019) (17,768,782) (4,519,408) (5,338,844) CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 40 (12,209,846) (15,873,019) (3,786,895) (4,519,408) The annexed notes form an integral part of these financial statements.
    • NOTES TO T HE FINANCIAL STATEMENTS | SBC CORPORATION BERH A D | 5 7 for the financial year ended 31 March 2006 1. GENERAL INFORMATION The Company is a public company limited by shares and is incorporated under the Malaysian Companies Act, 1965. The domicile of the Company is Malaysia. The registered office, which is also the principal place of business, is at Wisma Siah Brothers, 74A, Jalan Pahang, 53000 Kuala Lumpur. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 20 July 2006. 2. PRINCIPAL ACTIVITIES The Company is principally engaged in the businesses of investment holding and the provision of management and administrative services to the subsidiaries. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. 3. FINANCIAL RISK MANAGEMENT POLICIES The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s business whilst managing its foreign currency, interest rate, market, credit, liquidity and cash flow risks. The policies in respect of the major areas of treasury activity are as follows: (a) Foreign Currency Risk The Group is exposed to foreign exchange risk on investments and bank balances that are denominated in foreign currencies. The Group’s foreign currency transactions and balances are substantially denominated in Thai Baht. The Group does not seek to hedge this exposure as the Group is of the opinion that the fluctuations of the Thai Baht do not have a significant impact on the financial statements. (b) Interest Rate Risk The Group obtains financing through bank borrowings and hire purchase facilities. Its policy is to obtain the most favourable interest rates available. Surplus funds are placed with licensed financial institutions at the most favourable interest rates.
    • 5 8 | S B C C O R P O RATION BERHAD | 3. FINANCIAL RISK MANAGEMENT POLICIES (CONT'D) (c) Market Risk The Group’s principal exposure to market risks arises mainly from changes in quoted equity prices. The Group does not use derivative instruments to manage equity risk. (d) Credit Risk The Group’s exposure to credit risks, or the risk of counterparties defaulting, arises mainly from receivables. The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet reduced by the effects of any netting arrangements with counterparties. The Group does not have any major concentration of credit risk related to any individual customer or counterparty. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. (e) Liquidity and Cash Flow Risk The Group’s exposure to liquidity and cashflow risks arises mainly from general funding and business activities. It practises prudent liquidity risk management by maintaining sufficient cash balances and the availability of funding through certain committed credit facilities. 4. BASIS OF ACCOUNTING The financial statements are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965. The MASB standards nomenclature has been changed to Financial Reporting Standards (“FRS”) nomenclature for financial periods beginning on or after 1 January 2005. This change to the new nomenclature did not result in any significant change in the accounting policies adopted by the Group and has no financial effects on the financial statements of the Group and of the Company for the financial year ended 31 March 2006.
    • | SBC CORPORATION BERH A D | 5 9 5. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries made up to 31 March 2006. A subsidiary is defined as an enterprise in which the Company has the power, directly or indirectly, to exercise control over the financial and operating policies so as to obtain benefits from its activities. All subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair value of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group. (b) Goodwill or Negative Goodwill On Consolidation Goodwill represents the excess of the fair value of the purchase consideration over the Group’s share of the fair values of the separable net assets of subsidiaries at the date of acquisition. Negative goodwill represents the excess of the Group’s share of the fair values of the separable net assets of subsidiaries at the date of acquisition over the fair value of the purchase consideration. Goodwill is stated net of negative goodwill. The net carrying amount of goodwill is reviewed annually, and is written down for impairment where it is considered necessary. The impairment value of goodwill is taken to the consolidated income statement.
    • 6 0 | S B C C O R P O RATION BERHAD | 5. SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (c) Associates Associates are enterprises in which the Group exercises significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not control over those policies. Interest in associates are accounted for in the consolidated financial statements by the equity method of accounting. Equity accounting involves recognising in the income statement the Group’s share of the results of the associates for the period. The Group’s interest in associates is carried in the balance sheet at an amount that reflects its share of the assets of the associates and includes goodwill on acquisition. At the date of acquisition, the fair values of the associates’ net assets are determined and these values are reflected in the consolidated financial statements. Equity accounting is discontinued when the carrying amount of the interest in an associate reaches zero, unless the Group has incurred obligations or guaranteed obligations in respect of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of associates to ensure consistency of accounting policies with those of the Group. (d) Investment in Joint Venture A joint venture represents a business arrangement formed under contract with a third party to undertake specific projects. The investment in the joint venture is accounted for using the proportionate consolidation method whereby assets, liabilities and the income statement of the joint venture are consolidated in the Group’s financial statements in the proportion to the Group’s interest in the venture.
    • | SBC CORPORATION BERH A D | 6 1 5. SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (e) Property, Plant and Equipment Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation and impairment loss, if any. Freehold land is stated at cost and is not depreciated. The long term leasehold land has an unexpired term of more than fifty years and is not amortised. The non-amortisation of the long term leasehold land has no material effect on the financial statements. Depreciation is calculated under the straight-line method to write off the cost of the assets over their estimated useful lives. The principal annual rates used for this purpose are: Plant and machinery, construction machinery and equipment, formwork, scaffoldings and containers 5% - 25% Office renovation, office equipment, computers, furniture and fittings, tools and sales office 5% - 20% Motor vehicles 20% (f) Land and Hotel Development Expenditure Land is stated at cost or revalued amount less impairment losses, if any. Development expenditure comprises construction and other related development costs and administrative overheads relating to the property development. Interest costs on borrowings taken to finance the relevant development projects are included in the development expenditure from commencement to the completion of the development projects. (g) Impairment of Assets The carrying amounts of assets, other than those to which FRS 136 - Impairment of Assets does not apply, are reviewed at each balance sheet date for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. An impairment loss is charged to the income statement immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset. In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to the revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement.
    • 6 2 | S B C C O R P O RATION BERHAD | 5. SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (h) Investments The investments in subsidiaries, associates and joint ventures are initially stated at cost in the balance sheet of the Company, and are reviewed for impairment at the end of the financial year if events or changes in circumstances indicate that their carrying values may not be recoverable. (i) Investment Properties Investment properties consist of investments in land and buildings that are not substantially occupied for use by, or in the operations, of the Company/Group. Investment properties are treated as long term investments. They are initially stated at cost and are subject to revaluations which are carried out by an independent valuer on a regular basis. Any revaluation increase is recognised in equity as a revaluation surplus; any decrease is first offset against any unutilised previously recognised revaluation surplus in respect of the same investment property, and the balance is thereafter recognised as an expense. A revaluation increase is recognised as income to the extent that it reverses a revaluation decrease of the same property previously recognised as an expense. On the disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged to the income statement; any amount in revaluation reserve relating to that investment property is transferred to retained earnings. (j) Inventories Inventories are stated at the lower of cost and net realisable value. The unsold completed properties are stated at the lower of cost and net realisable value. For finished goods and work-in-progress, cost includes direct labour and appropriate production overheads. The cost of unsold completed properties comprises the relevant cost of land, development expenditure and related interest cost incurred during the development period. In arriving at net realisable value, due allowance is made for all damaged, obsolete and slow-moving items.
    • | SBC CORPORATION BERH A D | 6 3 5. SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (k) Property Development Costs Property development costs comprise costs associated with the acquisition of land and all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. Property development costs that are not recognised as an expense are recognised as an asset and carried at the lower of cost and net realisable value. When the financial outcome of a development activity can be reliably estimated, the amount of property revenues and expenses recognised in the income statement are determined by reference to the stage of completion of development activity at the balance sheet date. When the financial outcome of a development activity cannot be reliably estimated, the property development revenue is recognised only to the extent of property development costs incurred that will be recoverable. The property development costs on the development units sold are recognised as an expense in the period in which they are incurred. Where it is probable that property development costs will exceed property development revenue, any expected loss is recognised as an expense in the income statement immediately, including costs to be incurred over the defects liability period. (l) Progress Billings/Accrued Billings In respect of progress billings: (i) where revenue recognised in the income statement exceeds the billings to purchasers, the balance is shown as accrued billings under current assets; and (ii) where billings to purchasers exceed the revenue recognised to the income statement, the balance is shown as progress billings under current liabilities.
    • 6 4 | S B C C O R P O RATION BERHAD | 5. SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (m) Amount Owing By/To Contract Customers The amount owing by/to contract customers is stated at cost plus profits attributable to contracts in progress less progress billings and allowance for foreseeable losses, if any. Cost includes direct materials, labour and applicable overheads. (n) Receivables Receivables are carried at anticipated realisable value. Bad debts are written off in the period in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date. (o) Payables Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. (p) Interest-bearing Borrowings Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs. Borrowing costs directly attributable to the acquisition and construction of development properties and property, plant and equipment are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. All other borrowing costs are charged to the income statement as an expense in the period in which they are incurred. (q) Bonds Bonds issued by the Company and the Group are initially recognised based on proceeds received, net of issuance expenses incurred and are adjusted in subsequent years for amortisation of premium and/or accretion of discount to maturity, using the effective yield method. The premium amortised and/or discount accreted is recognised in the income statement over the period of the bonds.
    • | SBC CORPORATION BERH A D | 6 5 5. SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (r) Taxation Taxation for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantially enacted at the balance sheet date. Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax assets to be utilised. (s) Foreign Currencies Transactions in foreign currencies are converted into Ringgit Malaysia at the approximate rates of exchange ruling at the transaction dates. Monetary assets and liabilities in foreign currencies at the balance sheet date are translated at the rates ruling as of that date. All exchange differences are taken to the income statement. The financial statements of the foreign joint venture are translated into Ringgit Malaysia using the closing rate for the balance sheet whilst the average rate is used for the translation of the income statement for consolidation purposes. All exchange differences arising from the retranslation are taken directly to equity as a movement in the foreign exchange fluctuation reserve. On the disposal of the foreign joint venture, such translation differences are recognised in the income statement as part of the gain or loss on disposal.
    • 6 6 | S B C C O R P O RATION BERHAD | 5. SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (t) Assets under Hire Purchase Equipment acquired under hire purchase are capitalised in the financial statements and are depreciated in accordance with the policy set out in Note 5(e) above. Each hire purchase payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Finance charges are allocated to the income statement over the periods of the respective hire purchase agreements. (u) Equity Instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised as liabilities when declared before the balance sheet date. A dividend proposed or declared after the balance sheet date, but before the financial statements are authorised for issue, is not recognised as a liability at the balance sheet date but as an appropriation from retained earnings and treated as a separate component of equity. Upon the approval of the proposed dividend, it will be accounted for as a liability. (v) Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (w) Financial Instruments Financial instruments are recognised in the balance sheet when the Group and the Company has become a party to the contractual provisions of the instruments. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group and the Company has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. Financial instruments recognised in the balance sheet are disclosed in the individual policy statement associated with each item.
    • | SBC CORPORATION BERH A D | 6 7 5. SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (x) Employee Benefits (i) Short-term Benefits Wages, salaries, paid annual leave, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group. (ii) Defined Contribution Plans The Group’s contributions to defined contribution plans are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans. (y) Income Recognition (i) Construction Contracts Revenue on contracts is recognised on the percentage of completion method unless the outcome of the contract cannot be reliably determined, in which case revenue on contracts is only recognised to the extent of contract costs incurred that are recoverable. Foreseeable losses, if any, are provided for in full as and when it can be reasonably ascertained that the contract will result in a loss. The stage of completion is determined based on surveys of work performed. (ii) Property Development Revenue from property development is recognised from the sale of completed and uncompleted development properties. Revenue from the sale of completed properties is recognised when the sale is contracted. Revenue on uncompleted properties contracted for sale is recognised based on the stage of completion method unless the outcome of the development cannot be reliably determined in which case the revenue on the development is only recognised to the extent of development costs incurred that are recoverable. The stage of completion is determined based on the proportion that the development costs incurred for work performed to date bear to the estimated total development costs. (iii) Revenue from Sales of Goods Sales are recognised upon delivery of goods and customers’ acceptance, and where applicable, net of returns and trade discounts.
    • 6 8 | S B C C O R P O RATION BERHAD | 5. SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (y) Income Recognition (Cont’d) (iv) Revenue from Services Revenue is recognised upon rendering of services and when the outcome of the transaction can be estimated reliably. In the event the outcome of the transaction could not be estimated reliably, revenue is recognised to the extent of the expenses incurred that are recoverable. (v) Management Fee and Administrative Charges Management fee and administrative charges are recognised on an accrual basis. (vi) Rental Income Rental income is recognised on an accrual basis. (vii) Dividend Income Dividend income from investments is recognised when the right to receive payment is established. (viii) Interest Income Interest income is recognised on an accrual basis, based on the effective yield on the investment. Interest income on late payment is recognised on a receipt basis. (z) Segmental Information Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of property, plant and equipment (net of accumulated depreciation, where applicable), other investments, inventories, receivables, and cash and bank balances. Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets and liabilities do not include income tax assets and liabilities respectively. Segment revenues, expenses and results include transfers between segments. The prices charged on intersegment transactions are based on normal commercial terms. These transfers are eliminated on consolidation.
    • | SBC CORPORATION BERH A D | 6 9 6. INVESTMENT IN SUBSIDIARIES THE COMPANY 2006 2005 RM RM Unquoted shares, at cost 211,064,785 211,064,785 Details of the subsidiaries, which are all incorporated in Malaysia, are as follows: Effective Equity Interest 2006 2005 Name of Company % % Principal Activities Syarikat Siah Brothers Trading 100 100 General building contractor and Sdn. Bhd. investment holding. Syarikat Siah Brothers Construction 100 100 Building and civil engineering works. Sdn. Bhd. Lifeplus - Siah Brothers Trading JV 100 100 Project management and its related Sdn. Bhd. technical services. Siah Brothers Enterprise Sdn. Bhd.* 100 100 Building contractor. Siah Brothers Land Sdn. Bhd. 100 100 Investment holding. Seri Ampangan Realty Sdn. Bhd. 100 100 Property development. Sinaran Naga Sdn. Bhd. 100 100 Property development. Siah Brothers Development Sdn. Bhd.* 100 100 Proposed property development. Tiara Development Sdn. Bhd.* 100 100 Proposed property development. SBC Homes Sdn. Bhd.* 100 100 Proposed property development.
    • 7 0 | S B C C O R P O RATION BERHAD | 6. INVESTMENT IN SUBSIDIARIES (CONT'D) Effective Equity Interest 2006 2005 Name of Company % % Principal Activities Mixwell (Malaysia) Sdn. Bhd. 100 100 Project management and property development. Winsome Ventures Sdn. Bhd. 100 100 Proposed property management. Siah Brothers Properties Sdn. Bhd.* 100 100 Investment holding. Aureate Construction Sdn. Bhd.* 100 100 Property investment. SBC Leisure Sdn. Bhd.* 100 100 Property development. SBC Towers Sdn. Bhd.* 100 100 Property development. Siah Brothers Project Management 100 100 Provision of management services. Sdn. Bhd.* Siah Brothers Industries Sdn. Bhd.* 100 100 Investment holding. South-East Best Sdn. Bhd. 100 100 Property development. Gracemart Resources Sdn. Bhd. 100 100 Property development. Sutrati Development Sdn. Bhd. 100 100 Dormant. Masahmura Sdn. Bhd.* 51 51 Manufacturing of material handling equipment and metal frames. Masahmura Sales & Service 51 51 Trading of light industrial handling Sdn. Bhd. equipment and metal frames. * Not audited by Messrs. Horwath.
    • | SBC CORPORATION BERH A D | 7 1 7. INTEREST IN ASSOCIATES THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Unquoted shares, at cost 3,600,001 3,600,001 2,400,000 2,400,000 Impairment loss (880,000) (330,566) - - 2,720,001 3,269,435 2,400,000 2,400,000 Unquoted shares, at Group cost 91,618,314 91,618,314 - - Share of post acquisition reserves 17,478,087 17,375,079 - - 111,816,402 112,262,828 2,400,000 2,400,000 THE GROUP 2006 2005 RM RM The interest in associates comprises: Group’s share of net tangible assets - at cost 65,800,432 66,246,858 - at fair value 45,952,003 45,952,003 Group’s share of intangible assets 63,967 63,967 111,816,402 112,262,828 Details of the associates, which are all incorporated in Malaysia, are as follows: Effective Equity Interest 2006 2005 Name of Company % % Principal Activities Ligamas Sdn. Bhd.# 50.0 50.0 Property development. Varich Industries Sdn. Bhd.* 50.0 50.0 Dormant. Paling Industries Sdn. Bhd.# 40.0 40.0 Manufacturing of plastic building materials. Pasti Bumi Sdn. Bhd.* ## 19.6 - Sales of plastic building materials.
    • 7 2 | S B C C O R P O RATION BERHAD | 7. INTEREST IN ASSOCIATES (CONT'D) Effective Equity Interest 2006 2005 Name of Company % % Principal Activities Liga Canggih Sdn. Bhd.*## 40.0 40.0 Dormant. Sri Berjaya Development Sdn. Bhd.* 33.3 33.3 Investment and development of landed properties. Sri Rawang Properties Sdn. Bhd.* 22.2 22.2 Investment in properties and rubber estates. Sam & Lau Plantation Sdn. Bhd.*### 50.0 50.0 Tree plantation and nursery operators. * The results of these associates have not been equity accounted as the amounts involved are insignificant. # The share of results of these associates is based on the latest available unaudited management financial statements made up to 31 March 2006. ## Held by Paling Industries Sdn. Bhd. ### Held by South-East Best Sdn. Bhd. (“SEB”). 8. INVESTMENT IN JOINT VENTURE THE COMPANY 2006 2005 RM RM Unquoted shares, at cost 712,500 - Details of the joint venture, which is incorporated in Thailand, are as follows: Effective Equity Interest 2006 2005 Name of Company % % Principal Activities Tri-Development Co., Ltd 50 - Property development. The share of results of the joint venture is based on the latest available unaudited management financial statements made up to 31 March 2006.
    • | SBC CORPORATION BERH A D | 7 3 9. PROPERTY, PLANT AND EQUIPMENT THE GROUP TRANSFER TO DEPRE- AT DEVELOPMENT CIATION AT 1.4.2005 ADDITIONS DISPOSALS COST CHARGE 31.3.2006 RM RM RM RM RM RM NET BOOK VALUE Freehold land 4,011,273 - - (1,056,993) - 2,954,280 Land and hotel development expenditure 30,143,544 124,190 - - - 30,267,734 Plant and machinery, construction machinery and equipment, formwork, scaffoldings and containers 41,934 3,350 - - (16,556) 28,728 Office renovation, office equipment, computers, furniture and fittings, tools and sales office 1,084,924 134,641 (81) - (269,353) 950,131 Motor vehicles 170,693 538,414 (6) - (138,786) 570,315 Total 35,452,368 800,595 (87) (1,056,993) (424,695) 34,771,188 AT ACCUMULATED NET BOOK COST DEPRECIATION VALUE RM RM RM AT 31.3.2006 Freehold land 2,954,280 - 2,954,280 Land and hotel development expenditure 30,267,734 - 30,267,734 Plant and machinery, construction machinery and equipment, formwork, scaffoldings and containers 8,663,993 (8,635,265) 28,728 Office renovation, office equipment, computers, furniture and fittings, tools and sales office 4,886,531 (3,936,400) 950,131 Motor vehicles 2,145,096 (1,574,781) 570,315 Total 48,917,634 (14,146,446) 34,771,188
    • 7 4 | S B C C O R P O RATION BERHAD | 9. PROPERTY, PLANT AND EQUIPMENT (CONT'D) AT ACCUMULATED NET BOOK COST DEPRECIATION VALUE RM RM RM AT 31.3.2005 Freehold land 4,011,273 - 4,011,273 Land and hotel development expenditure 30,143,544 - 30,143,544 Plant and machinery, construction machinery and equipment, formwork, scaffoldings and containers 8,660,643 (8,618,709) 41,934 Office renovation, office equipment, computers, furniture and fittings, tools and sales office 4,759,653 (3,674,729) 1,084,924 Motor vehicles 2,020,927 (1,850,234) 170,693 Total 49,596,040 (14,143,672) 35,452,368 Land and hotel development expenditure consists of: 2006 2005 RM RM At cost: Long leasehold land 27,691,066 27,691,066 Hotel development expenditure 2,576,668 2,452,478 30,267,734 30,143,544 THE COMPANY AT DEPRECIATION AT 1.4.2005 CHARGE 31.3.2006 RM RM RM NET BOOK VALUE Office equipment, computers, furniture and fittings 17,635 (10,084) 7,551 Motor vehicles 1 - 1 17,636 (10,084) 7,552
    • | SBC CORPORATION BERH A D | 7 5 9. PROPERTY, PLANT AND EQUIPMENT (CONT'D) AT ACCUMULATED NET BOOK COST DEPRECIATION VALUE RM RM RM AT 31.3.2006 Office equipment, computers, furniture and fittings 370,553 (363,002) 7,551 Motor vehicles 376,950 (376,949) 1 747,503 (739,951) 7,552 AT 31.3.2005 Office equipment, computers, furniture and fittings 376,551 (358,916) 17,635 Motor vehicles 376,950 (376,949) 1 753,501 (735,865) 17,636 The motor vehicles of the Group acquired under hire purchase terms were carried at a total net book value of RM449,135 (2005 - RM20,602) at the balance sheet date. 10. INVESTMENT PROPERTIES THE GROUP 2006 2005 RM RM Leasehold land, at cost 20,607,424 20,607,424 Expenditure on land 4,499,249 4,710,272 25,106,673 25,317,696 Freehold land and buildings, at cost 52,501,437 52,810,544 Leasehold land and buildings, at cost 2,498,141 2,803,145 54,999,578 55,613,689 Disposed of during the financial year (3,444,341) (661,600) Transfer to property development costs (Note 14) (5,499,410) (551,686) 46,055,827 54,400,403 71,162,500 79,718,099 Included in investment properties is a leasehold land amounting to RM8,550,889 (2005 - RM8,486,514) which is charged to a financial institution for the issuance of the ABBA Bonds granted to the Company.
    • 7 6 | S B C C O R P O RATION BERHAD | 11. OTHER ASSETS THE GROUP 2006 2005 RM RM Other assets - 189,807 Other investments, at cost Quoted shares in Malaysia 12,300 12,300 Unquoted shares - - Investment in club membership 74,000 74,000 86,300 86,300 86,300 276,107 Market value of quoted shares 8,370 5,400 Other assets are retention monies relating to amounts which are due and receivable after twelve months from the balance sheet date, upon expiry of the warranty period of the relevant contracts. 12. GOODWILL ON CONSOLIDATION THE GROUP 2006 2005 RM RM At 31 March 27,317,640 27,317,640 13. INVENTORIES THE GROUP 2006 2005 RM RM Unsold completed properties, at cost 1,283,422 4,359,492 None of the inventories is carried at net realisable value.
    • | SBC CORPORATION BERH A D | 7 7 14. PROPERTY DEVELOPMENT COSTS THE GROUP 2006 2005 RM RM Balance at beginning of the financial year: - land 31,334,481 30,903,465 - development costs 77,920,310 43,978,441 109,254,791 74,881,906 Costs incurred during the year: - transferred from investment properties (Note 10) 5,499,410 551,686 - transferred from property, plant and equipment 1,056,993 716,560 - land - 151,034 - development costs 43,078,726 41,773,802 158,889,920 118,074,988 Disposal of land during the year - (315,040) 158,889,920 117,759,948 Reversal of development costs of completed projects during the year: - land - (673,224) - development costs - (7,831,933) - (8,505,157) 158,889,920 109,254,791 Cost recognised as an expense in the income statement: - previous year (54,509,104) (24,432,606) - current year (49,249,968) (38,581,655) - adjustment to completed project during the year - 8,505,157 (103,759,072) (54,509,104) 55,130,848 54,745,687 Included in development expenditure is interest expense capitalised during the financial year amounting to RM1,820,090 (2005 - RM1,846,203). Leasehold land of a subsidiary costing RM7,674,555 (2005 - RM7,674,555) is charged to a licensed bank for a term loan facility granted to the subsidiary.
    • 7 8 | S B C C O R P O RATION BERHAD | 14. PROPERTY DEVELOPMENT COSTS (CONT'D) The foreign currency exposure profile of the property development costs is as follows: THE GROUP 2006 2005 RM RM Thai Baht 131,603 - 15. RECEIVABLES THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Trade receivables 46,168,072 35,127,293 - - Retention receivable 2,376,762 1,387,398 - - Total trade receivables 48,544,834 36,514,691 - - Allowance for doubtful debts At 1 April 2005/2004 (13,466,689) (13,474,195) - - Write-back - 7,506 - - At 31 March (13,466,689) (13,466,689) - - Net trade receivables 35,078,145 23,048,002 - - Other receivables, deposits and prepayments 10,996,707 8,602,979 2,579,164 2,495,814 Allowance for doubtful debts (3,500,122) (3,500,122) (2,352,737) (2,352,737) Net other receivables, deposits and prepayments 7,496,585 5,102,857 226,427 143,077 Total receivables 42,574,730 28,150,859 226,427 143,077
    • | SBC CORPORATION BERH A D | 7 9 15. RECEIVABLES (CONT'D) The foreign currency exposure profile of the receivables is as follows: THE GROUP 2006 2005 RM RM Thai Baht 430,725 - Included in trade receivables at the balance sheet date are the following amounts: 2006 2005 RM RM Related party: - Ligamas Sdn. Bhd. 4,923,055* 4,774,941* Sabah State Government 18,054,059 5,997,229 * relates to retention receivable. The amount owing by the Sabah State Government is in respect of the construction of an office building for the Land and Survey Department (Jabatan Tanah dan Ukur) for a value of RM29,069,000. Upon the completion of the office building, the entire trade receivables due from the Sabah State Government will be set off against an equivalent amount owing to the Sabah State Government, the details of which are disclosed in Note 29 to the financial statements. Details of the related party relationship and the nature of the transactions and balances are set out in Note 43 to the financial statements. Included in other receivables is an amount of RM1,070,828 (2005 - RM1,517,957) due from sub-contractors for the purchase of building materials. The amount owing is unsecured, interest-free, and is to be repaid through deductions against future claims for work to be performed by the sub-contractors. Credit terms of trade receivables range from 14 to 90 days.
    • 8 0 | S B C C O R P O RATION BERHAD | 16. AMOUNT OWING BY/(TO) CONTRACT CUSTOMERS THE GROUP 2006 2005 RM RM Amount owing by contract customers Contract costs incurred to date 79,943,257 96,138,039 Attributable profits 6,327,355 19,419,469 86,270,612 115,557,508 Progress billings (83,155,618) (114,587,879) Amount owing by contract customers 3,114,994 969,629 Amount owing to contract customers Contract costs incurred to date 75,241,385 43,414,193 Attributable profits 10,587,249 1,311,336 85,828,634 44,725,529 Progress billings (87,369,078) (44,733,723) Amount owing to contract customers (1,540,444) (8,194) 17. AMOUNT OWING BY/(TO) SUBSIDIARIES THE COMPANY 2006 2005 RM RM Amount owing by: Non-trade - Interest-bearing 12,403,758 7,904,141 - Interest-free 53,370,879 53,395,214 65,774,637 61,299,355 Amount owing to: Non-trade - Interest-free 18,082,756 15,155,558 The above amounts owing are unsecured and not subject to fixed terms of repayment. The interest-bearing amount is subject to interest at 8.5% (2005 - 8.5%) per annum.
    • | SBC CORPORATION BERH A D | 8 1 18. AMOUNT OWING BY/(TO) ASSOCIATES The amounts owing are unsecured, interest-free and not subject to fixed terms of repayment. 19. TAX RECOVERABLE Subject to agreement with the tax authorities, the Company has tax recoverable of RM1,236,606 and RM1,969,521 at the balance sheet date in respect of the financial years ended 31 March 1997 to 31 March 2000 and 31 March 2005 to 31 March 2006 respectively. At the date of this report, the amount is still pending agreement with the tax authorities. 20. SHORT TERM DEPOSITS WITH LICENSED BANKS The weighted average effective interest rates of deposits at the balance sheet date were as follows: THE GROUP THE COMPANY 2006 2005 2006 2005 % % % % Licensed bank 2.81 2.80 2.30 2.77 Deposits of the Group and the Company have an average maturity period of 30 days (2005 - 30 days). The deposits of the Company have been pledged as security for the ABBA Bonds as disclosed in Note 25 to the financial statements.
    • 8 2 | S B C C O R P O RATION BERHAD | 21. CASH AND BANK BALANCES THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Cash and bank balances 1,082,118 1,586,775 27,320 1,960 Sinking fund account (Note 40) 8,123,112 4,025,883 8,123,112 4,025,883 9,205,230 5,612,658 8,150,432 4,027,843 The foreign currency exposure profile of the cash and bank balances is as follows: THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Thai Baht 268,831 - 25,879 - Included in the cash and bank balances of the Group is RM701,950 (2005 - RM1,380,169) maintained under the Housing Development Accounts pursuant to Section 7A of the Housing Development (Control and Licensing) Act, 1966. The sinking fund account is maintained with a financial institution, and forms part of the security for the repayment of the ABBA Bonds.
    • | SBC CORPORATION BERH A D | 8 3 22. PAYABLES THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Trade payables 22,580,762 23,344,850 - - Retention payable 6,641,013 4,267,934 - - Total trade payables 29,221,775 27,612,784 - - Other payables and accruals 2,922,532 1,836,104 244,765 256,127 Hire purchase payables (Note 29a) 97,190 43,064 - - 32,241,497 29,491,952 244,765 256,127 The foreign currency exposure profile of the payables is as follows: THE GROUP 2006 2005 RM RM Thai Baht 93,595 - Credit terms of trade payables range from 30 to 60 days. Included in other payables is an amount owing to a related party of RM169,367 (2005 - RM169,819). The details of the transaction and the balance are disclosed in Note 43 to the financial statements.
    • 8 4 | S B C C O R P O RATION BERHAD | 23. AMOUNT OWING TO A DIRECTOR The above amount owing is unsecured, not subject to fixed terms of repayment and bore interest at 5.5% (2005 - 5.5%) per annum. 24. SHORT TERM BORROWINGS 2006 2005 SECURED UNSECURED TOTAL SECURED UNSECURED TOTAL RM RM RM RM RM RM THE GROUP Term loans (Note 30) 2,597,379 - 2,597,379 1,805,003 - 1,805,003 Revolving credits - 13,344,400 13,344,400 - 14,944,400 14,944,400 2,597,379 13,344,400 15,941,779 1,805,003 14,944,400 16,749,403 THE COMPANY Revolving credits - 5,000,000 5,000,000 - 5,000,000 5,000,000 The weighted average effective interest rates at the balance sheet date for borrowings which bear interest at floating rates, were as follows: THE GROUP THE COMPANY 2006 2005 2006 2005 % % % % Term loans 8.25 7.92 - - Revolving credits 6.25 6.07 7.50 7.65
    • | SBC CORPORATION BERH A D | 8 5 25. ABBA BONDS THE GROUP/THE COMPANY 2006 2005 RM RM Al-Bai Bithaman Ajil Bonds (nominal value) 61,961,250 61,961,250 Less: ABBA Bonds issuance expenses (1,281,283) (1,223,412) Finance charges on bonds issue (21,961,250) (21,961,250) Net proceeds 38,718,717 38,776,588 Additional ABBA Bonds issuance expenses (61,872) (57,871) 38,656,845 38,718,717 Cumulation of amortisation of ABBA Bonds issuance expenses 993,053 713,345 Cumulation of amortisation of finance charges on ABBA Bonds issue 15,481,626 10,994,140 55,131,524 50,426,202 Cumulative repayments: At 1 April (6,196,125) (3,717,675) Repayment made during the year (2,478,450) (2,478,450) At 31 March (8,674,575) (6,196,125) 46,456,949 44,230,077 Analysis of the ABBA Bonds: - Not later than one year 2,478,450 2,478,450 - Later than one year and not later than five years 43,978,499 41,751,627 46,456,949 44,230,077
    • 8 6 | S B C C O R P O RATION BERHAD | 25. ABBA BONDS (CONT'D) On 13 September 2002, the Company issued RM61,961,250 nominal value Al-Bai Bithaman Ajil Bonds (“ABBA Bonds”) comprising RM49,569,000 nominal value Primary Bonds and 10 equal tranches of Secondary Bonds with RM12,392,250 nominal value. The Primary Bonds are redeemable at maturity. Each Primary Bond is supported by 10 Secondary Bonds which are redeemable in semi-annual instalments commencing 6 months from the date of the first issue of the Secondary Bonds. The ABBA Bonds were placed out to a licensed financial institution via a private placement. The tenure of the ABBA Bonds is 5 years from the date of issue. The profit margin on the ABBA Bonds is fixed at 5% per annum, payable in arrears on a semi-annual basis represented by the Secondary Bonds. The ABBA Bonds are issued based on a 10% per annum yield to maturity. The ABBA Bonds are secured in the following manner: (i) by a third party first legal charge over certain properties of a subsidiary; (ii) by a third party first legal charge over all the shares held by a wholly-owned subsidiary in an associate; (iii) by a first party charge over a reserve account which is an Islamic banking account opened for the placement of all monies received from dividends, unappropriated profits and bonus shares accruing to a subsidiary; and (iv) by a first party charge over a sinking fund account and a Mudharabah Account of the Company. 26. BANK OVERDRAFTS THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Bank overdrafts (unsecured) (Note 40) 14,656,189 18,824,019 5,053,440 5,760,593 The weighted average effective interest rates at the balance sheet date for bank overdrafts were as follows: THE GROUP THE COMPANY 2006 2005 2006 2005 % % % % Bank overdrafts 8.64 8.19 8.70 8.22
    • | SBC CORPORATION BERH A D | 8 7 27. SHARE CAPITAL THE COMPANY 2006 2005 2006 2005 NUMBER OF SHARES RM RM AUTHORISED Ordinary shares of RM1 each: At 1 April/31 March 193,167,000 193,167,000 193,167,000 193,167,000 5.5% ICCPS of RM1 each: At 1 April/31 March 6,833,000 6,833,000 6,833,000 6,833,000 Total authorised share capital 200,000,000 200,000,000 200,000,000 200,000,000 ISSUED AND FULLY PAID-UP Ordinary shares of RM1 each: At 1 April 82,435,000 75,602,000 82,435,000 75,602,000 Issuance of new shares arising from conversion of ICCPS - 6,833,000 - 6,833,000 At 31 March 82,435,000 82,435,000 82,435,000 82,435,000 5.5% ICCPS of RM1 each: At 1 April - 6,833,000 - 6,833,000 Conversion into ordinary shares during the year - (6,833,000) - (6,833,000) At 31 March - - - - Total issued and fully paid-up share capital 82,435,000 82,435,000 82,435,000 82,435,000 In the previous financial year, the ICCPS were converted into 6,833,000 ordinary shares of RM1 each of the Company on their maturity date on 4 May 2004.
    • 8 8 | S B C C O R P O RATION BERHAD | 28. RESERVES THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Share premium (Note a) 111,412,895 111,412,895 111,412,895 111,412,895 Capital reserve (Note b) 1,199,999 1,199,999 - - Retained profits (Note c) 25,413,169 24,959,499 22,239,634 22,683,341 138,026,063 137,572,393 133,652,529 134,096,236 (a) The share premium is not available for distribution by way of cash dividends. (b) The capital reserve arose from a bonus issue of ordinary shares on 21 August 1992 by a former subsidiary, and is not available for distribution by way of dividends. (c) Subject to agreement with the tax authorities, at the balance sheet date, the Company has: (i) tax-exempt income of approximately RM233,000 (2005 - RM233,000) available for the purpose of paying tax-exempt dividends; and (ii) tax credits under Section 108 of the Income Tax Act, 1967 to frank the payment of dividends of approximately RM14,457,000 (2005 - RM13,114,000) out of its entire retained profits without incurring any additional tax liabilities.
    • | SBC CORPORATION BERH A D | 8 9 29. NON-CURRENT LIABILITIES THE GROUP 2006 2005 RM RM Term loans (Note 30) 1,200,000 470,140 Hire purchase payables (Note a) 360,180 4,636 Amount owing to the Sabah State Government (Note b) 29,069,000 29,069,000 30,629,180 29,543,776 (a) Hire purchase payables Future minimum hire purchase payments: - repayable not later than one year 113,549 54,458 - repayable later than one year and not later than five years 397,581 5,885 511,130 60,343 Future finance charges (53,760) (12,643) Present value of hire purchase payables 457,370 47,700 Present value of hire purchase payables are payable as follows: Not later than one year (Note 22) 97,190 43,064 Later than one year and not later than five years 360,180 4,636 457,370 47,700 The hire purchase payables at the balance sheet date were subject to interest at rates ranging from 2.28% to 5.35% (2005 - 5.25% to 5.35%) per annum.
    • 9 0 | S B C C O R P O RATION BERHAD | 29. NON-CURRENT LIABILITIES (CONT'D) (b) Amount owing to the Sabah State Government The amount owing arose from the acquisition of a subsidiary, South-East Best Sdn. Bhd. (“SEB”). The amount owing shall be paid in the form of 130 units of properties to be developed and completed within a period of five years from the commencement of their construction as consideration in kind pursuant to a joint venture contract entered into by SEB with the State Government. The contract, dated 5 September 1994, stated that SEB is committed to jointly develop with the Sabah State Government a parcel of state land covering an area of approximately 26 acres into residential apartments, townhouses, condominiums and a hotel. On 16 July 2002, the Sabah State Government agreed to execute the change of their entitlement for the outstanding amount of RM29,069,000. The change of entitlement is in the form of the construction of an office building for the Land and Survey Department (Jabatan Tanah dan Ukur) and part of a building for the Ministry of Finance at a value equivalent to the amount outstanding of RM29,069,000. On 21 October 2002, SEB was requested to prepare the Contract Document and Estimation for the above project. On 17 December 2004, SEB entered into an supplemental agreement with the Sabah State Government to execute a change of the former’s entitlement. The change of entitlement is in the form of the construction by SEB of an office building for the Land and Survey Department (Jabatan Tanah dan Ukur) at a value equivalent to the amount outstanding of RM29,069,000. SEB had commenced the construction work in the previous financial year.
    • | SBC CORPORATION BERH A D | 9 1 30. TERM LOANS THE GROUP 2006 2005 RM RM Current portion: - repayable within one year (Note 24) 2,597,379 1,805,003 Non-current portion: - repayable between two to five years (Note 29) 1,200,000 470,140 3,797,379 2,275,143 Details of the term loans outstanding at the balance sheet date are as follows: THE GROUP 2006 2005 Term loan RM RM 1 197,379 - 2 3,600,000 1,745,143 3 - 530,000 3,797,379 2,275,143 Monthly Number of Instalment Interest Rate Date of Monthly Amount Per Annum Commencement Term loan Instalments RM % of Repayment 1 9 400,000 8.25% October 2006 2 17 141,667 8.25% July 2005 3 15 130,000 to 180,000 8.50% April 2004 The term loans are secured as follows: (a) by way of a first and second legal charge over 3 pieces of converted residential land of a subsidiary; and (b) by the personal guarantee of one of the directors of the Company. The borrowings of the subsidiaries are further secured by corporate guarantees from the Company and South- East Best Sdn. Bhd.
    • 9 2 | S B C C O R P O RATION BERHAD | 31. DEFERRED TAXATION The deferred taxation is in respect of the revaluation surplus on leasehold land of a subsidiary. 32. NET ASSETS PER ORDINARY SHARE The net assets per ordinary share is calculated based on the net assets value of RM220,461,063 (2005 - RM220,007,393) attributable to ordinary shares divided by the number of ordinary shares in issue at the balance sheet date of 82,435,000 (2005 - 82,435,000) shares. 33. REVENUE THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Revenue from construction contracts 9,776,216 15,383,973 - - Proportionate sales value of development properties 59,880,059 51,370,658 - - Rental income 20,000 - - - Dividend income - - 5,000,000 5,404,800 Interest income 204,859 112,502 204,859 112,502 Other interest income - - 1,009,232 1,276,666 Management and administrative charges 45,600 - 1,427,822 2,111,160 69,926,734 66,867,133 7,641,913 8,905,128 34. COST OF SALES THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Construction costs 39,692,674 46,727,012 - - Land and development expenditure 17,028,912 5,081,343 - - Direct costs 79,117 552,048 - - Management and administrative charges 46,530 68,178 - - 56,847,233 52,428,581 - -
    • | SBC CORPORATION BERH A D | 9 3 35. PROFIT BEFORE TAXATION THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Profit before taxation is arrived at after charging/(crediting): Amortisation of bonds expenses 279,708 275,709 279,708 275,709 Auditors’ remuneration - for the financial year 75,400 70,100 13,000 13,000 - (over)/underprovision in the previous financial year (2,300) 29,109 - - Depreciation of property, plant and equipment 424,695 459,128 10,084 17,792 Directors’ benefits-in kind 16,925 16,925 16,925 16,925 Directors’ fees 93,000 93,000 93,000 93,000 Directors’ remuneration 1,110,940 1,339,020 651,292 787,140 Finance charges on bonds 4,487,486 4,300,706 4,487,486 4,300,706 Interest expense - bank borrowings 443,418 290,761 1,081,668 1,179,770 - hire purchase 14,845 126,307 - - - loans 112,871 126,966 102,722 103,175 Impairment loss on interest in associate 549,434 330,566 - - Loss on foreign exchange - realised 137 - - - Rental expense - premises 4,600 15,329 12,000 12,000 - machinery and equipment 9,608 8,315 - - Staff costs 3,817,436 3,748,567 94,232 96,282 Unquoted shares written off - 45,000 - - Bad debts recovered - (50,850) - (50,850) (Gain)/Loss on disposal of property, plant and equipment (132,283) 19,177 - - Gain on disposal of investment properties (812,642) (15,082) - - Gross dividend income - subsidiaries (unquoted) - - (5,000,000) (4,800,000) - associates - - - (604,800) Interest income - licensed financial institutions (225,346) (138,190) (204,859) (112,502) - subsidiaries - - (1,009,232) (1,276,666) - others (35,670) (65,235) - - Rental of premises (223,112) (327,616) - - Waiver of debts (448,845) - - - Writeback of allowance for doubtful debts - (7,506) - -
    • 9 4 | S B C C O R P O RATION BERHAD | 36. TAXATION THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Current 360,056 666,736 316,376 621,822 Share of associates’ taxation 163,583 602,535 - - Real property gains tax 53,156 - - - 576,795 1,269,271 316,376 621,822 (Over)/Underprovision in previous financial years (91,472) (198,446) 34,060 - 485,323 1,070,825 350,436 621,822 Subject to agreement with the tax authorities, the Group has unutilised tax losses and unabsorbed capital allowances of approximately RM3,795,700 (2005 - RM3,838,700) and RM546,000 (2005 - RM481,000) respectively available at the balance sheet date to be carried forward for offset against future taxable business income. No deferred tax assets is recognised on these items. A reconciliation of the income tax expense applicable to the profit before taxation at the statutory tax rate to the income tax expense at the effective tax rate of the Group and of the Company is as follows: THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Profit before taxation 1,532,520 3,321,254 500,256 1,859,451 Tax at statutory tax rate of 28% 429,106 929,951 140,072 520,646 Tax effects of: Non-deductible expenses 392,266 658,281 173,647 97,182 Non-taxable gains (160,836) (2,060) - - Deferred tax assets not recognised during the financial year 116,739 87,733 - - Reversal of deferred tax assets not recognised (96,258) (291,490) - - Utilisation of tax losses brought forward (53,099) (131,070) - - (Over)/Underprovision in previous financial years (91,472) (198,446) 34,060 - Differential in tax rates (62,729) - - - Others 11,606 17,926 2,657 3,994 485,323 1,070,825 350,436 621,822
    • | SBC CORPORATION BERH A D | 9 5 37. EARNINGS PER SHARE Basic earnings per share (“EPS”) is arrived at by dividing the profit after taxation attributable to shareholders after deducting the preference dividend of RM Nil (2005 RM24,463) by the number of ordinary shares in issue at the balance sheet date of 82,435,000 (2005 - weighted average number of ordinary shares in issue at the balance sheet date of 81,798,501). 38. DIVIDENDS THE COMPANY 2006 2005 RM RM Declared - dividend of 5.5% per ICCPS less 28% tax - 24,463 (2005 - 5.5% per ICCPS less 28% tax) Paid - dividend of 1% per ordinary share less 28% tax (2005 - 1% per ordinary share less 28% tax) 593,527 593,527 593,527 617,990 At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 March 2006 of 1 sen per ordinary share of RM1 each less 28% tax (2005 - 1 sen per ordinary share of RM1 each less 28% tax) amounting to RM593,527 (2005 - RM593,527) will be tabled for shareholders’ approval. These financial statements do not reflect this final dividend which will be accrued as a liability only upon approval by shareholders. 39. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT THE GROUP 2006 2005 RM RM Cost of property, plant and equipment purchased 800,595 408,819 Amount financed though hire purchase (482,300) - Cash disbursed for the purchase of property, plant and equipment 318,295 408,819
    • 9 6 | S B C C O R P O RATION BERHAD | 40. CASH AND CASH EQUIVALENTS For the purpose of the cash flow statements, cash and cash equivalents comprise the following: THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Short term deposits (Note 20) 1,364,225 1,364,225 1,239,225 1,239,225 Cash and bank balances (Note 21) 9,205,230 5,612,658 8,150,432 4,027,843 Bank overdrafts (Note 26) (14,656,189) (18,824,019) (5,053,440) (5,760,593) (4,086,734) (11,847,136) 4,336,217 (493,525) Less: Cash placed in sinking fund account (Note 21) (8,123,112) (4,025,883) (8,123,112) (4,025,883) (12,209,846) (15,873,019) (3,786,895) (4,519,408) 41. DIRECTORS’ REMUNERATION The aggregate amount of emoluments received and receivable by the directors of the Company during the financial year are as follows: THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM DIRECTORS’ FEES: 1. Mun Chong Shing @ Mun Chong Tian 18,000 18,000 18,000 18,000 2. Dato’ Zainol Abidin Bin Haji A. Hamid 19,000 19,000 19,000 19,000 3. Dato’ Lim Phaik Gan 19,000 19,000 19,000 19,000 4. Dato’ Dr. Norraesah Bt Haji Mohamad 19,000 19,000 19,000 19,000 5. Ahmad Fizal Bin Othman 18,000 18,000 18,000 18,000 93,000 93,000 93,000 93,000
    • | SBC CORPORATION BERH A D | 9 7 41. DIRECTORS’ REMUNERATION (CONT'D) THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM DIRECTORS’ NON-FEES EMOLUMENTS: 1. Sia Kwee Mow @ Sia Hok Chai 589,120 712,320 589,120 712,320 2. Sia Teong Heng 510,720 613,200 51,072 61,320 3. Mun Chong Shing @ Mun Chong Tian 1,500 2,100 1,500 2,100 4. Dato’ Zainol Abidin Bin Haji A. Hamid 1,500 1,800 1,500 1,800 5. Dato’ Lim Phaik Gan 3,000 2,700 3,000 2,700 6. Dato’ Dr. Norraesah Bt Haji Mohamad 2,400 3,600 2,400 3,600 7. Ahmad Fizal Bin Othman 2,700 3,300 2,700 3,300 1,110,940 1,339,020 651,292 787,140 Apart from the amounts disclosed under directors’ remuneration above, the estimated monetary value of other benefits-in-kind received by the following director during the financial year, otherwise than in cash is as follows: THE GROUP THE COMPANY 2006 2005 2006 2005 RM RM RM RM Sia Kwee Mow @ Sia Hok Chai 16,925 16,925 16,925 16,925 42. RELATED COMPANY TRANSACTIONS THE COMPANY 2006 2005 RM RM Rental paid to a subsidiary 12,000 12,000 Dividend income received/receivable from subsidiaries 5,000,000 4,800,000 Interest received from subsidiaries 1,009,232 1,276,666 Management fee received from subsidiaries 1,427,822 2,111,160
    • 9 8 | S B C C O R P O RATION BERHAD | 43. RELATED PARTY TRANSACTIONS/BALANCES GROUP 2006 2005 NAME OF RELATED PARTY NOTE NATURE OF TRANSACTION RM RM Ligamas Sdn. Bhd. (a) Progress billings received/ receivable 8,033,114 12,591,593 Paling Industries Sdn. Bhd. (a) Purchase of materials 94,783 156,912 Gross dividend income received - 604,800 Smart Home Sdn. Bhd. (b) Debt settlement - 37,828,242 Sia Kwee Mow @ Sia Hok Chai (c) Interest paid/payable 102,722 103,174 RECEIVABLE PAYABLE GROUP GROUP 2006 2005 2006 2005 NAME OF RELATED PARTIES NOTE RM RM RM RM Ligamas Sdn. Bhd. (a) 4,923,055 4,774,941 - - Sia Kwee Mow @ Sia Hok Chai (c) - - 102,722 103,174 Peak Marketing Sdn. Bhd. (d) - - 66,645 66,645 (a) Associates. (b) A company in which Sia Kwee Mow @ Sia Hok Chai, who is a director of the Company, has a direct interest. (c) A director of the Company. (d) A company in which Sia Teong Heng, who is a director of the Company, has a direct interest. In the opinion of the directors, the above transactions have been entered into in the ordinary course of business on terms mutually agreed between the parties.
    • | SBC CORPORATION BERH A D | 9 9 44. CONTINGENT LIABILITY THE COMPANY 2006 2005 RM RM Corporate guarantee (unsecured) given to banks and other licensed financial institutions for credit facilities granted to subsidiaries 24,330,673 27,040,401 45. SEGMENTAL REPORTING THE GROUP 2006 PROPERTY MANUFACTURING CONS- DEVELOP- INVESTMENT AND TRUCTION MENT HOLDING TRADING ELIMINATIONS GROUP RM RM RM RM RM RM REVENUE: External revenue 9,776,216 59,945,659 204,859 - - 69,926,734 Intersegment revenue 34,490,468 - 12,533,054 - (47,023,522) - Total revenue 44,266,684 59,945,659 12,737,913 - (47,023,522) 69,926,734 Results: Segment results 3,287,027 3,259,681 11,648,179 (7,468) (11,761,048) 6,426,371 Finance costs (5,160,442) Share of results of associates - 584,224 - (317,633) - 266,591 Profit from ordinary activities before taxation 1,532,520 Taxation (485,323) Profit from ordinary activities after taxation 1,047,197
    • 1 0 0 | S B C C O R P O RATION BERHAD | 45. SEGMENTAL REPORTING (CONT'D) THE GROUP 2006 PROPERTY MANUFACTURING CONS- DEVELOP- INVESTMENT AND TRUCTION MENT HOLDING TRADING GROUP RM RM RM RM RM Other information Segment assets 19,729,796 310,142,520 23,216,181 10,138,516 363,227,013 Unallocated assets 1,551,225 364,778,238 Segment liabilities 41,026,145 44,646,717 12,183,528 3,836 97,860,226 Unallocated liabilities 46,456,949 144,317,175 Capital expenditure 404,652 395,943 - - 800,595 Depreciation 201,852 212,394 10,449 - 424,695 Amortisation of bonds expenses 279,708 Impairment loss on interest in associate 549,434
    • | SBC CORPORATION BERH A D | 1 0 1 45. SEGMENTAL REPORTING (CONT'D) THE GROUP 2005 PROPERTY MANUFACTURING CONS- DEVELOP- INVESTMENT AND TRUCTION MENT HOLDING TRADING ELIMINATIONS GROUP RM RM RM RM RM RM REVENUE: External revenue 15,383,973 51,370,658 112,502 - - 66,867,133 Intersegment revenue 36,502,043 - 13,835,025 - (50,337,068) - Total revenue 51,886,016 51,370,658 13,947,527 - (50,337,068) 66,867,133 Results: Segment results 3,707,234 3,572,497 12,386,681 7,221 (12,966,069) 6,707,564 Finance costs (4,953,038) Share of results of associates - 2,151,912 - (585,184) - 1,566,728 Profit from ordinary activities before taxation 3,321,254 Taxation (1,070,825) Profit from ordinary activities after taxation 2,250,429
    • 1 0 2 | S B C C O R P O RATION BERHAD | 45. SEGMENTAL REPORTING (CONT'D) THE GROUP 2005 PROPERTY MANUFACTURING CONS- DEVELOP- INVESTMENT AND TRUCTION MENT HOLDING TRADING GROUP RM RM RM RM RM Other information Segment assets 18,159,410 306,751,573 20,261,994 10,456,149 355,629,126 Unallocated assets 6,607,700 362,236,826 Segment liabilities 41,049,469 44,042,754 12,902,797 4,336 97,999,356 Unallocated liabilities 44,230,077 142,229,433 Capital expenditure 79,951 328,868 - - 408,819 Depreciation 156,070 283,387 19,671 - 459,128 Amortisation of bonds expenses 275,709 Impairment loss on interest in associate 330,565 No segmental information is provided on a geographical basis as the Group’s activities are predominantly in Malaysia and the overseas segment does not contribute to more than 10% of the consolidated revenue and assets.
    • | SBC CORPORATION BERH A D | 1 0 3 46. NUMBER OF EMPLOYEES THE GROUP THE COMPANY 2006 2005 2006 2005 Number of employees at the balance sheet date 78 77 9 10 47. FOREIGN EXCHANGE RATE The principal closing foreign exchange rate used (expressed on the basis of one unit of foreign currency to Ringgit Malaysia equivalent) for the translation of the foreign currency balances at the balance sheet date is as follows: 2006 2005 RM RM Thai Baht 0.095 - 48. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES Fair value is defined as the amount at which the financial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation. The following methods and assumptions are used to estimate the fair value of each class of financial instruments: (i) Bank balances and other liquid funds and short term receivables The carrying amounts approximated their fair values due to the relatively short term maturity of these instruments. (ii) Quoted and unquoted investments The fair values of quoted investments are estimated based on quoted market prices for these investments. For unquoted investments, it is not practicable to determine the fair values because of the lack of quoted market prices and the assumptions used in valuation models to value these investments cannot be reasonably determined.
    • 1 0 4 | S B C C O R P O RATION BERHAD | 48. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES (CONT'D) (iii) Short term borrowings and other current liabilities The carrying amounts approximated their fair values because of the short period to maturity of these instruments. (iv) Long term bank loans The carrying amounts approximated their fair values as these instruments bear interest at variable rates. (v) Hire purchase obligations The fair value of hire purchase obligations is determined by discounting the relevant cash flow using current interest rates for similar instruments at the balance sheet date. There is no disclosure of fair value for investments in subsidiaries, associates, joint ventures and borrowings under the basis of Islamic banking principles as these are excluded from FRS 132 - Financial Instruments: Disclosure and Presentation. 49. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR On 8 March 2006, the Company acquired and subscribed for 150,000 ordinary shares of 100 Bahts each, of which 50 Bahts were paid-up for each share, representing 50% of the issued and paid-up ordinary share capital of Tri-Development Co., Ltd. for a total cash consideration of RM712,500. 50. SIGNIFICANT EVENT SUBSEQUENT TO BALANCE SHEET DATE On 5 June 2006, the Company paid the remaining 50 Bahts of each share of the investment in Tri-Development Co., Ltd. as disclosed in Note 49 to the financial statements for a total cash consideration of RM723,750.
    • | SBC CORPORATION BERH A D | 1 0 5 51. COMPARATIVE FIGURES The following comparative figures have been reclassified to conform with the presentation of the current financial year: THE COMPANY AS AS PREVIOUSLY RESTATED REPORTED RM RM Cash Flow Statements (Extract): Advances to subsidiaries (5,380,264) - Advances from/(Repayment to) subsidiaries 2,592,235 (2,788,029) Net cash (for)/from investing activities (2,115,523) 3,264,741 Net cash for financing activities (932,663) (6,312,927)
    • 1 0 6 | S B C C O R P O RATION BERHAD | GROUP PROPERTIES as at 31 March 2006 Location Tenure/ Land/ Net Book Value (Age of (Built-Up) As At Date of building or Area 31. 03. 2006 Acquisition*/ date of expiry) Sq. Ft. RM Description Revaluation 1 422, 422A-C, Freehold 2,102/ 426,750 4-storey 29/03/2000 Jalan Pahang, (31 years) (6,404) shophouse 53000 Kuala Lumpur. for rental 2 74, 74A-E, Freehold 5,513/ 3,739,156 6 I/2-storey 28/03/2000 Wisma Siah Brothers, (26-28 years) (38,238) commercial Jalan Pahang, building for 53000 Kuala Lumpur. office headquarters and for rental 3 No. B4-3, Freehold (1,672) 635,360 Condominium 27/03/2000 Sri Bukit Tunku Condominium, (13 years) unit for sale Lorong Tun Ismail, and for rental 50480 Kuala Lumpur. 4 5 units at Intan Kenny Freehold (9,374) 2,341,288 Condominium 27/03/2000 Condominium, Unit no. (11 years) units for sale 29-2-1, 31-0-2, 31-0-3, and for rental 31-1-1 & 31-1-2 Intan Kenny Condominium, Persiaran Bukit Tunku, 50480 Kuala Lumpur. 5 GM 2414, Lot No. 9332, Freehold 8,902 483,523 Vacant land 28/03/2000 Mukim Batu, Daerah and (10 years) for future Negeri Wilayah Persekutuan. development 6 P.T. 8995, 8997, 9006, 9077, Leasehold 683,762 473,197 Vacant land 28/03/2000 Mukim Batu, Daerah and expiring for future Negeri Wilayah Persekutuan. on development 22/4/2086 7 P.T. 42031, 42042-42048, Freehold 1,420,708 2,514,094 Vacant land 16/12/1993* 42052-42056, for future Mukim Kuala Kuantan, development District of Kuantan, Pahang Darul Makmur.
    • | SBC CORPORATION BERH A D | 1 0 7 Location Tenure/ Land/ Net Book Value (Age of (Built-Up) As At Date of building or Area 31. 03. 2006 Acquisition*/ date of expiry) Sq. Ft. RM Description Revaluation 8 P.T. 42049, Freehold 143,452 339,308 Land currently 16/12/1993* Mukim Kuala Kuantan, under District of Kuantan, development Pahang Darul Makmur. 9 P.T. 42050, Freehold 490,774 1,456,067 Land currently 16/12/1993* Mukim Kuala Kuantan, under District of Kuantan, development Pahang Darul Makmur. 10 P.T. 42029, Freehold 49,052 156,321 Vacant land 30/03/2000 Mukim Kuala Kuantan, for future District of Kuantan, development Pahang Darul Makmur. 11 P.T. 9076 & 9005, Leasehold 519,164 18,150,000 Vacant land 28/03/2000 Mukim Batu, Daerah and expiring on for future Negeri Wilayah Persekutuan. 22/4/2086 development 12 Part of CT No. 10166, Freehold 1,132,637 13,510,000 Vacant land 05/04/1999 * for Lot No. 2398, for future Mukim of Batang Kali, development District of Ulu Selangor, Selangor Darul Ehsan. 13 Lot 2 (TL017546495), Leasehold 232,163 9,942,632 Vacant land 30/04/2002* Signal Hill, Tanjung Lipat, expiring on for future District of Kota Kinabalu, 31/12/2093 development State of Sabah. 14 Lot 3 (TL017546486), Leasehold 195,139 29,500,000 Vacant land 30/04/2002* Signal Hill, Tanjung Lipat, expiring on for future District of Kota Kinabalu, 31/12/2093 development State of Sabah. of hotel 15 Lot 4 (TL017546511), Leasehold 96,263 4,123,169 Land currently 30/04/2002* Signal Hill, Tanjung Lipat, expiring on under District of Kota Kinabalu, 31/12/2093 development State of Sabah.
    • 1 0 8 | S B C C O R P O RATION BERHAD | Location Tenure/ Land/ Net Book Value (Age of (Built-Up) As At Date of building or Area 31. 03. 2006 Acquisition*/ date of expiry) Sq. Ft. RM Description Revaluation 16 CL015162026, Leasehold 104,103 2,687,670 Land currently 30/04/2002* Signal Hill/Likas Bay, expiring on under District of Kota Kinabalu, 16/09/2911 development State of Sabah. 17 CL015162035, Leasehold 85,809 2,223,079 Land currently 30/04/2002* Signal Hill/Likas Bay, expiring on under District of Kota Kinabalu, 16/09/2911 development State of Sabah. 18 CL015162044, Leasehold 104,539 2,763,806 Land currently 30/04/2002* Signal Hill/Likas Bay, expiring on under District of Kota Kinabalu, 16/09/2911 development State of Sabah. 19 H.S.(D) No. 7727, Lot 438, Freehold 48,846 732,690 Vacant land 24/08/1998* Mukim of Serendah, for future Ulu Selangor, development Selangor Darul Ehsan. 20 Part of CT No. 10140, Freehold 1,306,890 11,100,000 Vacant land 16/04/2004* for Lot No. 2396, for future Mukim of Batang Kali, development District of Ulu Selangor, Selangor Darul Ehsan. 21 Part of CT No. 10166, Freehold 1,045,512 11,500,000 Vacant land 16/04/2004* for Lot No. 2398, for future Mukim of Batang Kali, development District of Ulu Selangor, Selangor Darul Ehsan.
    • | SBC CORPORATION BERH A D | 1 0 9 Location Tenure/ Land/ Net Book Value (Age of (Built-Up) As At Date of building or Area 31. 03. 2006 Acquisition*/ date of expiry) Sq. Ft. RM Description Revaluation 22 HS(M) 2220 PT 6726, Freehold 65,746 5,467,000 Land currently 16/04/2004* HS(M) 2221 PT 6727, under HS(M) 2222 PT 6728, development HS(M) 2223 PT 6729, HS(M) 2224 PT 6730, HS(M) 2225 PT 6731, HS(M) 2226 PT 6732, HS(M) 2227 PT 6733, HS(M) 2228 PT 6734, HS(M) 2229 PT 6735, HS(M) 2232 PT 6737, Mukim of Setapak, District of State of Wilayah Persekutuan. 23 Undivided 2,725/4,125 Freehold 169,460 5,932,242 Vacant land 16/04/2004* share in Geran 40871, for future Lot 10244, Mukim of Batu, development District of Gombak, Selangor Darul Ehsan. 24 HS(M) 1622 PT 2186, Leasehold 236,983 829,000 Vacant land 16/04/2004* Pekan Ulu Yam Lama, expiring on for future Mukim of Hulu Yam, 16/05/2055 development District of Hulu Selangor, Selangor Darul Ehsan. 25 GM 1216 Lot No. 1589 Freehold 79,023 3,000,000 Vacant land 16/04/2004* and GM 1217, Lot No. 1590, for future Mukim of Petaling, development District of State of Wilayah Persekutuan.
    • 1 1 0 | S B C C O R P O RATION BERHAD | SHAREHOLDERS’ INFORMATION as as 31 July 2006 Authorised Shares Capital : RM200,000,000 Issued and Fully Paid Up Capital : RM82,435,000 Class of Shares : Ordinary shares of RM1 each fully paid Voting Right : 1 vote per ordinary share DISTRIBUTION SCHEDULE No. of % of % of Shareholding Category Shareholder Shareholder No. of Shares Issued Capital 1 - 99 194 5.37 7,335 0.01 100 - 1,000 1,121 31.05 944,863 1.14 1,001 - 10,000 1,965 54.43 6,831,272 8.29 10,001 - 100,000 289 8.01 7,820,796 9.49 100,001 - 4,121,749 36 1.00 20,172,783 24.47 4,121,750 and above 5 0.14 46,657,951 56.60 Total 3,610 100.00 82,435,000 100.00 THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors) No. of % of Name of Shareholders Shares Held Issued Capital 1. LOM Holdings Sdn Bhd 14,317,500 17.37 2. Mayban Nominees (Tempatan) Sdn. Bhd. 11,750,428 14.25 - Mayban Investment Management Sdn. Bhd. for Malayan Banking Berhad (GRM-230592) 3. Amanah Raya Nominees (Tempatan) Sdn Bhd 8,542,000 10.36 - Skim Amanah Saham Bumiputera 4. Permodalan Nasional Berhad 6,867,000 8.33 5. Evergreen Legacy Sdn Bhd 5,181,023 6.28
    • | SBC CORPORATION BERH A D | 1 1 1 THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors) (Cont'd) No. of % of Name of Shareholders Shares Held Issued Capital 6. Amsec Nominees (Tempatan) Sdn Bhd 2,274,000 2.76 - Pledged Securities Account for Sia Teong Heng 7. DB (Malaysia) Nominee (Asing) Sdn Bhd 2,170,400 2.63 - Deutsche Bank AG Singapore PBD for Penfold Holdings Limited 8. RHB Capital Nominees (Tempatan) Sdn Bhd 1,480,800 1.80 - Pledged Securities Account for Sia Kwee Mow @ Sia Hok Chai (STH 981069) 9. Mun Oi @ Mun Oi Lin 1,473,800 1.79 10. Southwark Limited 1,191,300 1.45 11. Nican Asia Limited 1,106,478 1.34 12. Southwark Limited 1,101,800 1.34 13. HSBC Nominees (Asing) Sdn. Bhd. 1,050,000 1.27 - BNY Brussels for Rathbone Investment Management (CI) Limited 14. Siah Teong Woei 877,711 1.06 15. Chan Wan Moi 822,000 1.00 16. Chay Kwai Gong @ Siah Kwee Swee 752,830 0.91 17. Siah Chong Hock 722,000 0.88 18. Poo Choo @ Ong Poo Choi 539,000 0.65 19. Penfold Holdings Limited 400,000 0.49 20. Siah Chong Ong 355,000 0.43
    • 1 1 2 | S B C C O R P O RATION BERHAD | THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors) (Cont'd) No. of % of Name of Shareholders Shares Held Issued Capital 21. OSK Nominees (Tempatan) Sdn Berhad 348,800 0.42 - Pledged Securities Account For Ng Kok Hin 22. Siah Teong Yin 328,723 0.40 23. United Overseas Nominees (Tempatan) Sdn Bhd 307,723 0.37 - Pledged Securities Account for Siah Teong Chein (KL) 24. ABB Nominee (Tempatan) Sdn. Bhd. 277,000 0.34 - Pledged Securities Account For Siow Sing Heng 25. Sia Tzu Lung 264,592 0.32 26. Wong Chee Choon 213,200 0.26 27. Chew Siew Ying 199,000 0.24 28. Sia Poh Choo @ Sia Swee Choo 179,700 0.22 29. Sia Teong Heng 171,891 0.21 30. Siah Chong Guan 162,400 0.20 TOTAL 65,428,099 79.37 The thirty largest shareholders refer to the thirty securities account holders having the largest number of securities according to the Record of Depositors (without aggregating the securities from different securities accounts belonging to the same depositor).
    • | SBC CORPORATION BERH A D | 1 1 3 DIRECTORS’ SHAREHOLDINGS (As per Register of Directors’ Shareholdings) Direct Interest Indirect Interest Name of Directors Shareholdings % Shareholdings % Sia Kwee Mow @ Sia Hok Chai 1,480,800 (a) 1.80 19,498,523 (b) 23.65 Sia Teong Heng 2,517,992 (c) 3.05 19,498,523 (b) 23.65 Mun Chong Shing @ Mun Chong Tian 21,782 0.03 - - Dato’ Lim Phaik Gan - - - - Dato’ Dr. Norraesah Bt. Haji Mohamad - - - - Dato’ Zainol Abidin Bin Haji A. Hamid - - - - Ahmad Fizal Bin Othman - - - - Notes: (a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares). (c) 2,274,000 shares are held in bare trust by Amsec Nominees (Tempatan) Sdn. Bhd.
    • 1 1 4 | S B C C O R P O RATION BERHAD | SUBSTANTIAL SHAREHOLDERS (excluding bare trustees) (As per Register of Substantial Shareholders) No. of shares held or % of beneficially interested in Issued Capital Name of Substantial Shareholders Direct Indirect Direct Indirect Pemegang Amanah Raya Malaysia 8,542,000 - 10.36 - - Skim Amanah Saham Bumiputera Sia Kwee Mow @ Sia Hok Chai 1,480,800 (a) 19,498,523 (b) 1.80 23.65 Sia Teong Heng 2,517,992 (c) 19,498,523 (b) 3.05 23.65 LOM Holdings Sdn. Bhd. 14,317,500 5,181,023 (d) 17.37 6.28 Evergreen Legacy Sdn. Bhd. 5,181,023 - 6.28 - Malayan Banking Berhad 11,750,428 - 14.25 - Permodalan Nasional Berhad 6,867,000 - 8.33 - Yayasan Pelaburan Bumiputra - 6,867,000 (e) - 8.33 Notes: (a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares) (c) 2,274,000 shares are held in bare trust by Amsec Nominees (Tempatan) Sdn. Bhd. (d) Deemed interest by virtue of its shareholding in Evergreen Legacy Sdn. Bhd. (e) Deemed interest by virtue of its shareholding in Permodalan Nasional Berhad
    • PROxY FORM | SBC CORPORATION BERHAD (199310-P)(Incorporated in Malaysia) | I/We, __________________________________________________________________________________________________ of _____________________________________________________________________________________________________ being a member/ members of the abovenamed Company do hereby appoint _______________________________ __________________________________________________ of __________________________________________________ __________________________________________ or failing whom, _____________________________________________ of _____________________________________________________________________________________________________ as my/our proxy to attend and vote for me/us and on my/our behalf at the Sixteenth Annual General Meeting of the Company to be held at the Ground Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpur on Thursday, 28 September 2006 at 11.00 a.m. and at any adjournment thereof in the manner indicated below: No. Resolution For Against 1. Adoption of Reports and Audited Financial Statements 2. Declaration of a first and final dividend 3. Payment of Directors’ fees 4. Re-appointment of Director : YBhg. Dato’ Lim Phaik Gan 5. Re-appointment of Director : Mr Sia Kwee Mow @ Sia Hok Chai 6. Re-election of Director : YBhg. Dato’ Zainol Abidin Bin Haji A. Hamid 7. Re-election of Director : Mr Sia Teong Heng 8. Re-appointment of Auditors 9. Authority to Directors to allot and issue shares (Please indicate with an ‘X’ in the appropriate box against each resolution how you wish your proxy to vote. If no instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion.) Dated this _____________ day of ______________ , 2006 NOTES: A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote instead of him. To be valid, this form duly completed must be deposited at the Registered Office of the Company not less than forty-eight (48) hours before the time for holding the meeting. Where a member appoints more than one (1) proxy, the appointment _____________________________ shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. Signature of Member(s) If the appointor is a corporation, this form must be executed under its common seal or under the hand of the attorney. Number of Shares held
    • FOLD THIS FLAP FOR SEALING Affix Stamp The Company Secretaries SBC CORPORATION BERHAD (199310-P) Wisma Siah Brothers, 74A, Jalan Pahang, 53000 Kuala Lumpur. THEN FOLD HERE FIRST FOLD HERE