SBC Corporation Berhad: Annual Audited Accounts 2004

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SBC Corporation Berhad: Annual Audited Accounts 2004

  1. 1. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P FINANCIAL REPORT for the financial year ended 31 March 2004 CONTENTS Page Directors’ Report....................................................................................................... 1 Statement by Directors ............................................................................................. 8 Statutory Declaration ................................................................................................ 8 Auditors’ Report ........................................................................................................ 9 Balance Sheets......................................................................................................... 11 Income Statements................................................................................................... 13 Statements of Changes in Equity............................................................................. 14 Cash Flow Statements ............................................................................................. 16 Notes to the Financial Statements ........................................................................... 19
  2. 2. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P 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 2004. PRINCIPAL ACTIVITIES The Company is principally engaged in the business 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. CHANGE OF NAME On 21 October 2003, the Company changed its name from Siah Brothers Corporation Berhad to SBC Corporation Berhad. RESULTS THE GROUP THE COMPANY RM RM Profit/(Loss) after taxation for the financial year 2,072,995 (352,434) DIVIDENDS Since the end of the previous financial year, the Company paid a dividend of 5.5% per Irredeemable Convertible Cumulative Preference Share (“ICCPS”) less 28% tax amounting to RM270,587 in respect of the previous financial year, in accordance with the terms of issue of the ICCPS and a first and final dividend of 1% per ordinary share less 28% tax amounting to RM544,330 in respect of the previous financial year. For the current financial year, (a) the directors have declared the payment of a dividend of 5.5% per ICCPS less 28% tax amounting to RM270,587, in accordance with the terms of issue of the ICCPS; and (b) the directors recommend the payment of first and final dividend of 1% per ordinary share less 28% tax amounting to RM593,532. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year except as disclosed in the financial statements. Page 1
  3. 3. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT ISSUES OF SHARES AND DEBENTURES During the financial year, (a) there were no changes in the authorised and issued and paid-up capital of the Company; and (b) there were no issues of debentures by the Company. EMPLOYEE SHARE OPTION SCHEME (“ESOS”) Pursuant to the ESOS which was implemented on 14 July 2000, the movement in the options to subscribe for new shares of RM1 each in the Company at an exercise price of RM1.40 per share is as follows:- NUMBER OF ORDINARY SHARES OF RM1 EACH UNDER OPTION At 1 April 2003 1,664,000 Lapsed during the financial year due to: - exercised during the financial year - - staff resignation (174,000) At 31 March 2004 1,490,000 The salient features of the ESOS are as follows:- (i) eligible employees are employees who have served in the employment of any company within the Group for at least one year of continuous service; (ii) the total number of new ordinary shares to be offered under the ESOS shall not exceed 10% of the total issued and paid-up ordinary share capital of the Company at any point of time during the existence of the ESOS which shall be in force for a period of 5 years from the date of offer; (iii) the possible allocation for any single eligible employee during the existence of the ESOS shall not be less than 1,000 or more than 450,000 shares subject to the maximum allowable allocation according to their respective categories; (iv) the subscription price was based on the weighted average market price of the shares as shown in the Daily Official List of the Bursa Malaysia Securities Berhad for the 5 market days prior to the date of offer with an allowance for a discount of not more than 10% therefrom or at par value, whichever is higher; and Page 2
  4. 4. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT EMPLOYEE SHARE OPTION SCHEME (“ESOS”) (CONT’D) (v) the shares to be allotted upon any exercise of an option will, upon allotment, rank pari passu in all respects with the existing issued and paid-up ordinary shares of 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, other than the existing options under the ESOS and Transferable Subscription Rights (“TSRs”). The Company issued a total of 17,076,200 TSRs, the expiry date of which had been extended to 20 February 2004. The TSRs entitle the holders thereof the right to subscribe for new ordinary shares of RM1 each on the basis of 1 new ordinary share of RM1 each for every TSR held at a pre-determined subscription price of RM3.50 per share. During the financial year, none of the subscription rights under the TSRs were exercised and the TSRs expired on 20 February 2004. 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. Page 3
  5. 5. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT 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 liabilities of the Company are disclosed in Note 43 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. Page 4
  6. 6. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT 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’ LIM PHAIK GAN DATO’ DR. NORRAESAH BT HAJI MOHAMAD DATUK SIM PENG CHOON (RESIGNED ON 19.8.2003) ABDUL RAHMAN BIN A. SHUKOR (ALTERNATE TO DATUK SIM PENG CHOON; CEASED ON 19.8.2003) DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID (APPOINTED ON 10.10.2003) AHMAD FIZAL BIN OTHMAN (APPOINTED ON 24.2.2004) 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 re-appointment 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 retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election. Pursuant to Article 84 of the Articles of Association of the Company, Dato’ Zainol Abidin Bin Haji A. Hamid and Ahmad Fizal Bin Othman retire at the forthcoming Annual General Meeting and 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, TSRs and options under the ESOS in the Company during the financial year are as follows:- NUMBER OF ORDINARY SHARES OF RM1 EACH AT AT 1.4.2003 BOUGHT SOLD 31.3.2004 DIRECT INTERESTS SIA KWEE MOW @ SIA HOCK CHAI 1,480,800 - - 1,480,800 SIA TEONG HENG 334,992 993,000 - 1,327,992 MUN CHONG SHING @ MUN CHONG TIAN 21,782 - - 21,782 DATO’ LIM PHAIK GAN 11,000 - (11,000) - INDIRECT INTERESTS SIA KWEE MOW @ SIA HOCK CHAI 19,498,523 - - 19,498,523 SIA TEONG HENG 19,498,523 - - 19,498,523 Page 5
  7. 7. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT DIRECTORS’ INTERESTS (CONT’D) TSRs AT AT 1.4.2003 BOUGHT EXPIRED 31.3.2004 DIRECT INTERESTS SIA KWEE MOW @ SIA HOCK CHAI 3,078,500 - (3,078,500) - DATO’ DR. NORRAESAH BT HAJI MOHAMAD 4,000 - (4,000) - MUN CHONG SHING @ MUN CHONG TIAN 12,500 - (12,500) - INDIRECT INTERESTS SIA KWEE MOW @ SIA HOCK CHAI 1,746,780 - (1,746,780) - SIA TEONG HENG 1,746,780 - (1,746,780) - NUMBER OF ORDINARY SHARES OF RM1 EACH UNDER OPTION AT AT 1.4.2003 GRANTED EXERCISED 31.3.2004 DIRECT INTERESTS SIA KWEE MOW @ SIA HOCK 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 interests, 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 interests in shares, TSRs or options under the ESOS 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 42 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 of the acquisition of shares in or debentures of the Company or any other body corporate except for the share options granted pursuant to the ESOS. Page 6
  8. 8. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE The significant event subsequent to the balance sheet date involving the Group and the Company is disclosed in Note 45 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 2004 Page 7
  9. 9. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P 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 (formerly known as Siah Brothers Corporation Berhad), state that, in the opinion of the directors, the financial statements set out on pages 11 to 69 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 2004 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 2004 STATUTORY DECLARATION I, Ng Kee Chye, I/C No. 640324-06-5691, being the officer primarily responsible for the financial management of SBC Corporation Berhad (formerly known as Siah Brothers Corporation Berhad), do solemnly and sincerely declare that the financial statements set out on pages 11 to 69 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 Ng Kee Chye, I/C No. 640324-06-5691, at Kuala Lumpur in the Federal Territory on this 20 July 2004 Ng Kee Chye Before me, HARON HASHIM (W128) Commissioner for Oaths Kuala Lumpur 20 July 2004 Page 8
  10. 10. REPORT OF THE AUDITORS TO THE MEMBERS OF SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) Company No : 199310 - P We have audited the financial statements set out on pages 11 to 69. The preparation of the financial statements is the responsibility of the Company’s directors. Our responsibility is to express an opinion on the financial statements based on our audit. 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 2004 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. Page 9
  11. 11. REPORT OF THE AUDITORS TO THE MEMBERS OF SBC CORPORATION BERHAD (CONT’D) (Formerly known as Siah Brothers Corporation Berhad) Company No : 199310 - P 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 Onn Kien Hoe Firm No: AF 1018 Approval No: 1772/11/04 (J/PH) Chartered Accountants Partner Kuala Lumpur 20 July 2004 Page 10
  12. 12. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P BALANCE SHEETS AT 31 MARCH 2004 THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM ASSETS Investment in subsidiaries 6 - - 211,064,785 211,064,785 Interest in associates 7 112,064,656 110,700,175 2,400,000 2,400,000 Property, plant and equipment 8 36,246,114 35,812,639 35,428 53,152 Investment properties 9 41,391,466 41,774,547 - - Other assets 10 247,107 382,107 - - Goodwill on consolidation 11 27,317,640 27,271,844 - - 217,266,983 215,941,312 213,500,213 213,517,937 CURRENT ASSETS Inventories 12 8,604,731 14,109,911 - - Property development in progress 13 50,449,300 54,738,163 - - Receivables 14 66,593,226 68,079,974 209,050 123,962 Amount owing by contract customers 15 4,775,992 685,256 - - Amounts owing by subsidiaries 16 - - 55,919,091 52,644,365 Amount owing by associates 17 5,533,926 5,525,184 11,434 11,434 Tax recoverable 18 8,331,990 5,350,142 11,823,151 11,265,166 Short term deposits with licensed banks 19 1,407,125 1,422,125 1,239,225 1,239,225 Cash and bank balances 20 3,474,278 6,084,094 2,012,100 5,201,131 149,170,568 155,994,849 71,214,051 70,485,283 LESS: CURRENT LIABILITIES Amount owing to contract customers 15 1,601,053 4,769,567 - - Payables 21 28,718,800 26,618,315 230,925 331,492 Amounts owing to subsidiaries 16 - - 12,563,323 12,635,183 Amounts owing to associates 17 78,236 65,500 - - Amounts owing to directors 22 2,450,481 2,450,481 1,967,680 1,967,680 Dividend payable 270,587 270,587 270,587 270,587 Short term borrowings 23 39,941,312 47,707,856 11,580,169 11,413,736 ABBA Bonds 24 2,478,450 2,478,450 2,478,450 2,478,450 75,538,919 84,360,756 29,091,134 29,097,128 NET CURRENT ASSETS 73,631,649 71,634,093 42,122,917 41,388,155 290,898,632 287,575,405 255,623,130 254,906,092 The annexed notes form an integral part of these financial statements. Page 11
  13. 13. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P BALANCE SHEETS AT 31 MARCH 2004 (CONT’D) THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM FINANCED BY:- Share capital 25 82,435,000 82,435,000 82,435,000 82,435,000 Reserves 26 135,939,954 134,681,876 133,476,597 134,643,948 Shareholders’ equity 218,374,954 217,116,876 215,911,597 217,078,948 ABBA Bonds 24 39,711,533 37,827,144 39,711,533 37,827,144 Deferred liabilities 27 32,812,145 32,631,385 - - 290,898,632 287,575,405 255,623,130 254,906,092 NET TANGIBLE ASSETS PER ORDINARY SHARE(RM) 31 244 sen 242 sen The annexed notes form an integral part of these financial statements. Page 12
  14. 14. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P INCOME STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM TURNOVER 32 86,316,639 69,828,919 7,220,737 8,982,613 COST OF SALES 33 (68,900,779) (48,699,540) - - GROSS PROFIT 17,415,860 21,129,379 7,220,737 8,982,613 OTHER OPERATING INCOME 3,911,925 3,097,647 - - ADMINISTRATIVE EXPENSES (7,420,741) (6,793,398) (891,180) (1,069,681) OTHER OPERATING EXPENSES (3,270,390) (9,417,624) (326,746) (156,715) PROFIT FROM OPERATIONS 10,636,654 8,016,004 6,002,811 7,756,217 FINANCE COSTS (7,263,617) (6,793,334) (5,533,390) (4,464,721) SHARE OF PROFIT OF ASSOCIATES 3,623,112 3,926,816 - - PROFIT BEFORE TAXATION 34 6,996,149 5,149,486 469,421 3,291,496 TAXATION 35 (4,923,154) (3,138,593) (821,855) (913,324) PROFIT/(LOSS) AFTER TAXATION 2,072,995 2,010,893 (352,434) 2,378,172 Earnings per share - basic 36 2.4 sen 2.4 sen - diluted 36 N/A N/A Dividend per ordinary share - final 37 - 1 sen The annexed notes form an integral part of these financial statements. Page 13
  15. 15. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 SHARE SHARE APPLICATION SHARE RETAINED CAPITAL NOTE CAPITAL ACCOUNT PREMIUM PROFITS RESERVE TOTAL RM RM RM RM RM RM THE GROUP Balance at 1.4.2002 57,301,943 115,600,000 20,995,752 20,328,676 1,199,999 215,426,370 Issuance of shares 25,133,057 - - - - 25,133,057 Reversal of share application account - (115,600,000) - - - (115,600,000) Share premium arising from issuance of shares - - 90,471,143 - - 90,471,143 Expenses incurred on conversion of ICULS - - (54,000) - - (54,000) Profit after taxation for the financial year - - - 2,010,893 - 2,010,893 Dividends 37 - - - (270,587) - (270,587) Balance at 31.3.2003/1.4.2003 82,435,000 - 111,412,895 22,068,982 1,199,999 217,116,876 Profit after taxation for the financial year - - - 2,072,995 - 2,072,995 Dividends 37 - - - (814,917) - (814,917) Balance at 31.3.2004 82,435,000 - 111,412,895 23,327,060 1,199,999 218,374,954 The annexed notes form an integral part of these financial statements. Page 14
  16. 16. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 (CONT’D) SHARE SHARE APPLICATION SHARE RETAINED CAPITAL NOTE CAPITAL ACCOUNT PREMIUM PROFITS RESERVE TOTAL RM RM RM RM RM RM THE COMPANY Balance at 1.4.2002 57,301,943 115,600,000 20,995,752 21,123,468 - 215,021,163 Issuance of shares 25,133,057 - - - - 25,133,057 Reversal of share application account - (115,600,000) - - - (115,600,000) Share premium arising from issuance of shares - - 90,471,143 - - 90,471,143 Expenses incurred on conversion of ICULS - - (54,000) - - (54,000) Profit after taxation for the financial year - - - 2,378,172 - 2,378,172 Dividends 37 - - - (270,587) - (270,587) Balance at 31.3.2003/1.4.2003 82,435,000 - 111,412,895 23,231,053 - 217,078,948 Loss after taxation for the financial year - - - (352,434) - (352,434) Dividends 37 - - - (814,917) - (814,917) Balance at 31.3.2004 82,435,000 - 111,412,895 22,063,702 - 215,911,597 The retained profits of the Group are attributable to/(absorbed by):- 2004 2003 RM RM The Company 22,063,702 23,231,053 Subsidiaries (15,582,983) (16,643,931) Associates 16,846,341 15,481,860 23,327,060 22,068,982 The annexed notes form an integral part of these financial statements. Page 15
  17. 17. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM CASH FLOWS FROM/ (FOR) OPERATING ACTIVITIES Profit before taxation 6,996,149 5,149,486 469,421 3,291,496 Adjustments for:- Allowance for doubtful debts 828,553 8,625,447 - - Amortisation of bonds expenses 303,272 134,364 303,272 134,364 Bad debts written off - 110,965 - - Depreciation and amortisation of property, plant and equipment 446,060 406,603 23,474 22,351 Interest expense / finance charges 7,110,435 6,407,721 5,506,995 4,442,243 Loss on disposal of investment properties 1,557,400 150,154 - - Plant and equipment written off 13,663 - - - Other investment written off 135,000 - - - Dividend income - - (4,928,000) (8,090,000) Gain on disposal of property, plant and equipment (313,882) (7,302) - - Interest income (107,322) (110,604) (612,688) (622,613) Writeback of diminution in value of inventory - (6,527) - - Writeback of allowance for doubtful debts - (1,988,813) - - Share of profit in associates (3,623,112) (3,926,816) - - Operating profit/(loss) before working capital changes 13,346,216 14,944,678 762,474 (822,159) Decrease in inventories 5,505,180 10,089,220 - - Decrease/(Increase) in property development-in-progress 4,712,161 (15,568,195) - - Decrease/(Increase) in trade and other receivables 658,195 11,175,302 (85,088) 6,277,255 Increase/(Decrease) in trade and other payables 1,707,814 (8,910,013) (100,567) 86,070 (Decrease)/Increase in amount owing to contract customers (7,259,250) 2,287,849 - - CASH FROM OPERATIONS 18,670,316 14,018,841 576,819 5,541,166 Interest paid (3,402,444) (4,702,299) (1,375,706) (1,880,098) Taxes paid (6,780,583) (3,377,151) - - NET CASH FROM/(FOR) OPERATING ACTIVITIES CARRIED FORWARD 8,487,289 5,939,391 (798,887) 3,661,068 The annexed notes form an integral part of these financial statements. Page 16
  18. 18. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 (CONT’D) THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM NET CASH FROM/ (FOR) OPERATING ACTIVITIES BROUGHT FORWARD 8,487,289 5,939,391 (798,887) 3,661,068 CASH FLOWS FROM/ (FOR) INVESTIING ACTIVITIES Interest received 107,322 641,078 612,688 622,613 Dividends received from subsidiaries - - 2,304,000 3,816,000 Dividends received from associates 1,526,883 2,116,800 1,244,160 2,008,800 Net cash outflow on acquisition of subsidiary 38 - (34,835,444) - (35,000,000) Expenses incurred on acquisition of subsidiary - - - (654,225) Purchase of property, plant and equipment (924,876) (201,665) (5,750) - Purchase of investment properties (3,110,115) (3,438,068) - - Hotel development expenditure - (386,797) - - Proceeds from disposal of property, plant and equipment 345,560 149,222 - - Proceeds from disposal of investment properties 1,910,000 952,000 - - Incidental expenses on investment properties (20,000) (42,589) - - Withdrawal/(Placement) of cash in sinking fund account 3,188,398 (5,198,398) 3,188,398 (5,198,398) NET CASH FROM/(FOR) INVESTING ACTIVITIES 3,023,172 (40,243,861) 7,343,496 (34,405,210) The annexed notes form an integral part of these financial statements. Page 17
  19. 19. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 (CONT’D) THE GROUP THE COMPANY 2004 2003 2004 2003 Note RM RM RM RM CASH FLOWS (FOR)/FROM FINANCING ACTIVITIES Payment of bonds expenses (71,722) - (71,722) - Proceeds from issuance of shares - 4,200 - 4,200 Proceeds from bonds 24 - 38,848,310 - 38,848,310 Repayment of bonds 24 (2,478,450) (1,239,225) (2,478,450) (1,239,225) Net repayment by/ (Advances to) associates 3,994 (42,209) - 40,449 Net advances to subsidiaries - - (3,346,586) (14,433,234) Dividend paid to shareholders of the Company (544,330) - (544,330) - Payment of expenses on conversion of ICULS - (54,000) - (54,000) Dividend paid to holders of ICCPS (270,587) (270,587) (270,587) (270,587) Repayment of revolving credit (500,000) (3,280,000) - (680,000) Repayment of loans (6,460,269) (4,103,454) - - Repayment to hire purchase payables (87,784) (87,784) - - NET CASH (FOR)/FROM FINANCING ACTIVITIES (10,409,148) 29,775,251 (6,711,675) 22,215,913 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,101,313 (4,529,219) (167,066) (8,528,229) CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR (18,870,095) (14,340,876) (5,171,778) 3,356,451 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 39 (17,768,782) (18,870,095) (5,338,844) (5,171,778) The annexed notes form an integral part of these financial statements. Page 18
  20. 20. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 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 in 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 2004. 2. PRINCIPAL ACTIVITIES The Company is principally engaged in the business 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 currency, interest rate, market, credit, liquidity and cash flow risks. The Group operates within defined guidelines that are approved by the Board and the policies in respect of the major areas of treasury activity are as follows: (a) Currency Risk The Group does not have material foreign currency transactions, assets or liabilities and hence is not exposed to any significant or material currency risks. (b) Interest Rate Risk The Group obtains financing through bank borrowings and hire purchase. Its policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure. Surplus funds are placed with reputable financial institutions at the most favourable interest rates. Page 19
  21. 21. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 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 cash deposits and 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 except for the amount owing by a major customer which constitutes approximately 61% of trade receivables. The details pertaining to the aforesaid amount are set out in Note 14 to the financial statements. The Group manages its exposure to credit risk by investing its cash assets safely and profitably, and 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. MASB 32 - Property Development Activities has been adopted in the financial statements of the Group prior to its effective date. Page 20
  22. 22. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 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 2004. A subsidiary is defined as a company in which the parent company holds directly or indirectly more than 50% of the equity share capital and has the power to exercise control over its financial and operating policies. All subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed off 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. Page 21
  23. 23. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 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. Investments 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 investment in associates is carried in the balance sheet at an amount that reflects its share of the assets of the associates and includes goodwill (net of accumulated amortisation) on acquisition. At the date of acquisition, the fair value 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 investment 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) Property, Plant and Equipment Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation or amortisation. Freehold land is stated at cost and is not depreciated. Leasehold land having an unexpired term of more than fifty years is not amortised. The non-amortisation of the long term leasehold land has no material effect on the financial statements. Depreciation and amortisation 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:- Sales office 20% Plant and machinery, construction machinery and equipment 5% - 20% Formwork, scaffoldings and containers 10% - 25% Office renovation, office equipment, computers, furniture and fittings, tools and fittings 5% - 20% Motor vehicles 20% Page 22
  24. 24. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (e) Impairment of Assets The carrying amounts of assets, other than those to which MASB Standard 23 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. (f) Investments 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. (g) Investment Properties Investments properties consist of investments in land and buildings that are not substantially occupied for use by, or in the operations, of the Company/Group. Page 23
  25. 25. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (g) Investment Properties (Cont’d) Investments properties are treated as long term investment. 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 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. (h) 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 comprise 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. (i) 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. Page 24
  26. 26. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (i) Property Development Costs (Cont’d) 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 immediately, including costs to be incurred over the defects liability period. The financial effects on the change in accounting policy with respect to the treatment of property development costs is considered not material. (j) 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 provision for foreseeable losses, if any. Cost includes direct materials, labour and applicable overheads. (k) 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. (l) Payables Trade and other payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. Page 25
  27. 27. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (m) 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. (n) 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. (o) 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. Previously, deferred taxation was provided using the liability method on all material timing differences except where no liability was expected to arise in the foreseeable future. Deferred tax benefit was only recognised when there was reasonable expectation of realisation in the foreseeable future. During the financial year, the accounting policy for deferred taxation has been changed to comply with MASB 25 - Income Taxes. Deferred taxation is now 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. Page 26
  28. 28. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (o) Taxation (Cont’d) 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. The financial effect on the change in accounting policy with respect to the treatment of deferred taxation is considered not material. (p) 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. (q) 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(d) 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. Page 27
  29. 29. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (r) Equity Instruments Ordinary shares and convertible preference shares are classified as equity. (s) Dividends Dividends on equity are recognised as liabilities when declared and approved. (t) 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. (u) Financial Instruments Financial instruments are recognised in the balance sheet when 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 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. Page 28
  30. 30. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (v) 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. Foreseeable losses, if any, are recognised immediately in the income statement. Foreseeable losses, if any, are provided for in full as and when it can be reasonably ascertained that the development will result in a loss. (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. Page 29
  31. 31. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (v) 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. (w) 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. Page 30
  32. 32. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 6. INVESTMENT IN SUBSIDIARIES THE COMPANY 2004 2003 RM RM Unquoted shares, at cost At 1 April 2003/2002 211,064,785 167,370,110 Additions during the financial year - 43,694,675 At 31 March 211,064,785 211,064,785 Details of the subsidiaries, which are all incorporated in Malaysia, are as follows:- Name of Company Effective Equity Interest Principal 2004 2003 Activities % % Syarikat Siah Brothers 100 100 General building Trading Sdn. Bhd. contractor and investment holding Syarikat Siah Brothers 100 100 Building and civil Construction Sdn. Bhd. engineering works Lifeplus - Siah Brothers Trading 100 100 Project management JV Sdn. Bhd. and its related technical services Siah Brothers Enterprise 100 100 Building contractor Sdn. Bhd. * Siah Brothers Land 100 100 Investment holding Sdn. Bhd. Seri Ampangan Realty 100 100 Property development Sdn. Bhd. Sinaran Naga Sdn. Bhd. 100 100 Property development Siah Brothers Development 100 100 Proposed property Sdn. Bhd. * development Tiara Development 100 100 Proposed property Sdn. Bhd.* development SBC Homes Sdn. Bhd.* 100 100 Proposed property development Page 31
  33. 33. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 6. INVESTMENT IN SUBSIDIARIES (CONT’D) Name of Company Effective Equity Interest Principal 2004 2003 Activities % % Mixwell (Malaysia) 100 100 Project management Sdn. Bhd. and property development Winsome Ventures 100 100 Proposed property Sdn. Bhd. management Siah Brothers Properties 100 100 Investment holding Sdn. Bhd.* Aureate Construction 100 100 Property investment Sdn. Bhd.* SBC Leisure Sdn. Bhd.* 100 100 Property development SBC Towers Sdn. Bhd.* 100 100 Property development Siah Brothers Project 100 100 Provision of Management Sdn. Bhd.* management services Siah Brothers Industries 100 100 Investment holding Sdn. Bhd. * South-East Best 100 100 Property development Sdn. Bhd. Gracemart Resources 100 100 Property development Sdn. Bhd. Sutrati Development Sdn. Bhd. 100 100 Dormant Masahmura Sdn. Bhd.* 51 51 Manufacturing of material handling equipment and metal frames Masahmura Sales & 51 51 Trading of light Service Sdn. Bhd. industrial handling equipment and metal frames * Not audited by Horwath Page 32
  34. 34. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 7. INTEREST IN ASSOCIATES THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Unquoted shares, at cost 3,600,001 3,600,001 2,400,000 2,400,000 Unquoted shares, at Group cost 91,618,314 91,618,314 - - Share of post acquisition reserves 16,846,341 15,481,860 - - 112,064,656 110,700,175 2,400,000 2,400,000 THE GROUP 2004 2003 RM RM The interest in associates comprises:- Group’s share of net tangible assets - at cost 66,048,686 64,684,205 - at fair value 45,952,003 45,952,003 Group’s share of intangible assets 63,967 63,967 112,064,656 110,700,175 Details of the associates, which are all incorporated in Malaysia, are as follows:- Effective Equity Principal Name of Company Interest Activities 2004 2003 % % Ligamas Sdn. Bhd.# 50.0 50.0 Property development Varich Industries 50.0 50.0 Proposed quarrying Sdn. Bhd.* Paling Industries Sdn. Bhd.# 40.0 40.0 Manufacturing of plastic building materials Page 33
  35. 35. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 7. INTEREST IN ASSOCIATES (CONT’D) Effective Equity Principal Name of Company Interest Activities 2004 2003 % % Liga Canggih Sdn. Bhd.*## 40.0 40.0 Dormant Sri Berjaya Development 33.3 33.3 Investment and Sdn. Bhd.* development of landed properties Sri Rawang Properties 22.2 22.2 Investment in properties Sdn. Bhd.* and rubber estates Sam & Lau Plantation 50.0 50.0 Tree plantation and Sdn. Bhd.*### 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 2004. ## Held by Paling Industries Sdn. Bhd. ### Held by South-East Best Sdn. Bhd. (“SEB”) Page 34
  36. 36. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 8. PROPERTY, PLANT AND EQUIPMENT AT WRITTEN DEPRECIATION AT 1.4.2003 ADDITIONS DISPOSALS OFF CHARGE 31.3.2004 RM RM RM RM RM RM THE GROUP NET BOOK VALUE Freehold land 4,738,833 - - (11,000) - 4,727,833 Land and hotel development expenditure 29,876,765 147,589 - - - 30,024,354 Sales office - 148,676 - - (29,883) 118,793 Plant and machinery, construction machinery and equipment 63,352 1,700 (1) - (14,109) 50,942 Formwork, scaffoldings and containers 10,462 - - - (4,014) 6,448 Office renovation, office equipment, computers, furniture and fittings, tools and fittings 838,577 536,911 (31,676) (2,663) (273,882) 1,067,267 Motor vehicles 284,650 90,000 (1) - (124,172) 250,477 Total 35,812,639 924,876 (31,678) (13,663) (446,060) 36,246,114 ACCUMULATED AT COST DEPRECIATION NET BOOK VALUE RM RM RM AT 31.3.2004 Freehold land 4,727,833 - 4,727,833 Land and hotel development expenditure 30,024,354 - 30,024,354 Sales office 148,676 (29,883) 118,793 Plant and machinery, construction machinery and equipment 4,343,457 (4,292,515) 50,942 Formwork, scaffoldings and containers 4,316,916 (4,310,468) 6,448 Office renovation, office equipment, computers, furniture and fittings, tools and fittings 4,633,477 (3,566,210) 1,067,267 Motor vehicles 2,005,751 (1,755,274) 250,477 50,200,464 (13,954,350) 36,246,114 AT 31.3.2003 Freehold land 4,738,833 - 4,738,833 Land and hotel development expenditure 29,876,765 - 29,876,765 Plant and machinery, construction machinery and equipment 4,374,257 (4,310,905) 63,352 Formwork, scaffoldings and containers 4,316,916 (4,306,454) 10,462 Office renovation, office equipment, computers furniture and fittings, tools and fittings 4,161,954 (3,323,377) 838,577 Motor vehicles 1,946,651 (1,662,001) 284,650 49,415,376 (13,602,737) 35,812,639 Page 35
  37. 37. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 8. PROPERTY, PLANT AND EQUIPMENT (CONT’D) Land and hotel development expenditure consists of:- 2004 2003 RM RM Long leasehold land, at cost 27,691,066 27,691,066 Hotel development expenditure 2,333,288 2,185,699 30,024,354 29,876,765 AT DEPRECIATION AT 1.4.2003 ADDITIONS CHARGE 31.3.2004 RM RM RM RM THE COMPANY NET BOOK VALUE Office equipment, computers, furniture and fittings 53,151 5,750 (23,474) 35,427 Motor vehicles 1 - - 1 53,152 5,750 (23,474) 35,428 AT ACCUMULATED NET BOOK COST DEPRECIATION VALUE RM RM RM AT 31.3.2004 Office equipment, computers, furniture and fittings 376,551 (341,124) 35,427 Motor vehicles 376,950 (376,949) 1 753,501 (718,073) 35,428 AT 31.3.2003 Office equipment, computers, furniture and fittings 370,801 (317,650) 53,151 Motor vehicles 376,950 (376,949) 1 747,751 (694,599) 53,152 The motor vehicles of the Group acquired under hire purchase terms were carried at net book value of RM125,997 (2003 - RM231,384) at the balance sheet date. Page 36
  38. 38. SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 8. PROPERTY, PLANT AND EQUIPMENT (CONT’D) The carrying value of certain property, plant and equipment charged to financial institutions to secure banking facilities granted to the Group are as follows:- THE GROUP 2004 2003 RM RM Sales office 118,793 - Furniture and fittings 137,332 107,183 Office and other equipment 102,092 4,951 Land and hotel development expenditure 30,024,354 29,876,765 Office renovation 5,664 9,976 30,388,235 29,998,875 9. INVESTMENT PROPERTIES THE GROUP 2004 2003 RM RM Leasehold land, at cost 19,778,424 19,778,424 Expenditure on land 4,500,413 4,202,191 24,278,837 23,980,615 Freehold land and buildings, at cost 15,213,507 15,812,472 Leasehold land and buildings, at cost 5,366,522 3,041,025 20,580,029 18,853,497 Disposed during the financial year (3,467,400) (1,059,565) 17,112,629 17,793,932 41,391,466 41,774,547 Certain investment properties are charged to financial institutions for banking facilities granted to the company. Page 37

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