SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


DIRECTORS’ REPORT


The directors hereby submi...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


DIRECTORS’ REPORT


OPTIONS GRANTED OVER UNISS...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


DIRECTORS’ REPORT


CONTINGENT AND OTHER LIABI...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


DIRECTORS’ REPORT


DIRECTORS
The directors wh...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


DIRECTORS’ REPORT


DIRECTORS’ INTERESTS (CONT...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


DIRECTORS’ REPORT


AUDITORS
The auditors, Mes...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P




STATEMENT BY DIRECTORS

We, Sia Kwee Mow @ S...
REPORT OF THE AUDITORS TO THE MEMBERS OF
SBC CORPORATION BERHAD
(Incorporated In Malaysia)
Company No : 199310 - P



We h...
REPORT OF THE AUDITORS TO THE MEMBERS OF
SBC CORPORATION BERHAD (CONT’D)
(Incorporated in Malaysia)
Company No : 199310 - ...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


BALANCE SHEETS AT 31 MARCH 2007
              ...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


BALANCE SHEETS AT 31 MARCH 2007 (CONT’D)


   ...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


INCOME STATEMENTS
FOR THE FINANCIAL YEAR ENDED...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANC...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


CASH FLOW STATEMENTS
FOR THE FINANCIAL YEAR EN...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


CASH FLOW STATEMENTS
FOR THE FINANCIAL YEAR EN...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


CASH FLOW STATEMENTS
FOR THE FINANCIAL YEAR EN...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC CORPORATION BERHAD
(Incorporated in Malaysia)
Company No : 199310 - P


NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIA...
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
SBC Corporation Berhad: Annual Audited Accounts 2007
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SBC Corporation Berhad: Annual Audited Accounts 2007

  1. 1. SBC 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 2007. 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 (Loss)/Profit after taxation for the financial year (3,009,272) 676,891 DIVIDENDS Since the end of the previous financial year, the Company paid 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 27% tax on the ordinary shares amounting to RM601,776 to be approved by the shareholders at the forthcoming Annual General Meeting. RESERVES AND PROVISIONS All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements. 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. Page 1
  2. 2. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT 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 all known bad debts had been written off 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 further 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. 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. Page 2
  3. 3. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT CONTINGENT AND OTHER LIABILITIES The contingent liability of the Company is disclosed in Note 46 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 3
  4. 4. SBC 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 DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID AHMAD FIZAL BIN OTHMAN Pursuant to Section 129 of the Companies Act, 1965, Sia Kwee Mow @ Sia Hok Chai, Dato’ Lim Phaik Gan and Mun Chong Shing @ Mun Chong Tian 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, Ahmad Fizal bin Othman retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself 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 in the Company during the financial year are as follows:- NUMBER OF ORDINARY SHARES OF RM1 EACH AT AT 1.4.2006 BOUGHT SOLD 31.3.2007 DIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 1,480,800 - - 1,480,800 SIA TEONG HENG 2,517,992 2,260,000 (100,000) 4,677,992 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 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. Page 4
  5. 5. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT DIRECTORS’ INTERESTS (CONT’D) 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 45 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. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR The significant events during the financial year of the Company are disclosed in Note 51 to the financial statements. Page 5
  6. 6. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT AUDITORS The auditors, Messrs. Horwath, have expressed their willingness to continue in office. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 30 JULY 2007 Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian Page 6
  7. 7. SBC 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, state that, in the opinion of the directors, the financial statements set out on pages 10 to 72 are drawn up in accordance with applicable MASB approved accounting standards in Malaysia for Entities Other Than Private Entities 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 2007 and of their results and cash flows for the financial year ended on that date. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 30 JULY 2007 Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian STATUTORY DECLARATION 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 10 to 72 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 30 July 2007 Lee Yan Yaw Before me Datin Hajah Raihela Wanchik (W275) Commissioner for Oaths Page 7
  8. 8. REPORT OF THE AUDITORS TO THE MEMBERS OF SBC CORPORATION BERHAD (Incorporated In Malaysia) Company No : 199310 - P We have audited the financial statements set out on pages 10 to 72. 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 MASB approved accounting standards in Malaysia for Entities Other Than Private Entities 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 2007 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 8
  9. 9. REPORT OF THE AUDITORS TO THE MEMBERS OF SBC CORPORATION BERHAD (CONT’D) (Incorporated in Malaysia) 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 Lee Kok Wai Firm No: AF 1018 Approval No: 2760/06/08 (J) Chartered Accountants Partner Kuala Lumpur 30 July 2007 Page 9
  10. 10. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P BALANCE SHEETS AT 31 MARCH 2007 THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated) NON-CURRENT ASSETS Investment in subsidiaries 6 - - 210,990,785 211,064,785 Interest in associates 7 112,085,613 111,816,402 2,400,000 2,400,000 Investment in joint venture 8 - - 1,801,128 712,500 Property, plant and equipment 9 8,549,543 8,242,610 2,657 7,552 Investment properties 10 3,122,452 6,867,925 - - Land held for property development 11 87,700,188 87,090,675 - - Other assets 12 220,300 86,300 - - Goodwill on consolidation 13 27,499,451 27,317,640 - - 239,177,547 241,421,552 215,194,570 214,184,837 CURRENT ASSETS Inventories 14 726,148 1,283,422 - - Property development costs 15 59,707,257 55,130,848 - - Receivables 16 59,332,215 42,574,730 479,393 226,427 Amount owing by contract customers 17 2,616,779 3,114,994 - - Amount owing by subsidiaries 18 - - 58,919,707 65,774,637 Amount owing by associates 19 5,390,600 5,399,534 2,500 11,434 Amount owing by joint venture 20 280,727 - 561,454 - Tax recoverable 21 1,367,292 1,551,225 3,451,474 3,206,127 Short-term deposits with licensed banks 22 3,334,226 1,364,225 1,239,225 1,239,225 Cash and bank balances 23 13,918,913 9,205,230 12,077,309 8,150,432 146,674,157 119,624,208 76,731,062 78,608,282 TOTAL ASSETS 385,851,704 361,045,760 291,925,632 292,793,119 The annexed notes form an integral part of these financial statements. Page 10
  11. 11. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P BALANCE SHEETS AT 31 MARCH 2007 (CONT’D) THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated) EQUITY AND LIABILITIES EQUITY Share capital 24 82,435,000 82,435,000 82,435,000 82,435,000 Reserves 25 130,690,786 134,293,585 133,735,893 133,652,529 TOTAL EQUITY 213,125,786 216,728,585 216,170,893 216,087,529 NON-CURRENT LIABILITIES ABBA Bonds 26 - 43,978,499 - 43,978,499 Long-term borrowings 27 33,939,069 30,629,180 - - Deferred taxation 29 966,746 966,746 - - 34,905,815 75,574,425 - 43,978,499 CURRENT LIABILITIES Amount owing to contract customers 17 2,850,429 1,540,444 - - Payables 30 42,512,894 32,241,497 371,667 244,765 Amount owing to subsidiaries 18 - - 12,375,674 18,082,756 Amount owing to associates 19 3,378 16,711 - - Amount owing to a director 31 1,867,680 1,867,680 1,867,680 1,867,680 Short-term borrowings 32 14,874,442 15,941,779 5,000,000 5,000,000 ABBA Bonds 26 48,683,146 2,478,450 48,683,146 2,478,450 Bank overdrafts 33 27,028,134 14,656,189 7,456,572 5,053,440 137,820,103 68,742,750 75,754,739 32,727,091 TOTAL LIABILITIES 172,725,918 144,317,175 75,754,739 76,705,590 TOTAL EQUITY AND LIABILITIES 385,851,704 361,045,760 291,925,632 292,793,119 NET ASSETS PER ORDINARY SHARE (RM) 34 2.59 2.63 The annexed notes form an integral part of these financial statements. Page 11
  12. 12. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P INCOME STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated) REVENUE 35 77,102,946 69,926,734 8,338,611 7,641,913 COST OF SALES 36 (60,499,310) (56,847,233) - - GROSS PROFIT 16,603,636 13,079,501 8,338,611 7,641,913 OTHER INCOME 1,324,144 1,751,359 203,976 - ADMINISTRATIVE EXPENSES (8,315,933) (7,142,456) (1,282,327) (1,154,115) OTHER EXPENSES (5,382,766) (1,262,033) (407,665) (289,792) FINANCE COSTS (6,705,397) (5,160,442) (5,868,501) (5,697,750) SHARE OF PROFITS OF ASSOCIATES 269,211 103,008 - - (LOSS)/PROFIT BEFORE TAXATION 37 (2,207,105) 1,368,937 984,094 500,256 INCOME TAX EXPENSE 38 (802,167) (321,740) (307,203) (350,436) (LOSS)/PROFIT AFTER TAXATION (3,009,272) 1,047,197 676,891 149,820 ATTRIBUTABLE TO:- Equity holders of the Company (3,009,272) 1,047,197 676,891 149,820 (Loss)/Earnings per share - basic 39 (3.7) sen 1.3 sen - diluted 39 N/A N/A Dividend per ordinary share - final 40 1 sen 1 sen The annexed notes form an integral part of these financial statements. Page 12
  13. 13. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 SHARE SHARE RETAINED CAPITAL CAPITAL PREMIUM PROFITS RESERVE TOTAL NOTE RM RM RM RM RM THE GROUP Balance at 1.4.2005 - as previously reported 82,435,000 111,412,895 24,959,499 1,199,999 220,007,393 - prior year adjustments 49 - - (3,732,478) - (3,732,478) - as restated 82,435,000 111,412,895 21,227,021 1,199,999 216,274,915 Loss after taxation for the financial year - - 1,047,197 - 1,047,197 Dividend 40 - - (593,527) - (593,527) Balance at 31.3.2006/ 1.4.2006 82,435,000 111,412,895 21,680,691 1,199,999 216,728,585 Loss after taxation for the financial year - - (3,009,272) - (3,009,272) Dividend 40 - - (593,527) - (593,527) Balance at 31.3.2007 82,435,000 111,412,895 18,077,892 1,199,999 213,125,786 THE COMPANY Balance at 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 40 - - (593,527) - (593,527) Balance at 31.3.2006/1.4.2006 82,435,000 111,412,895 22,239,634 - 216,087,529 Profit after taxation for the financial year - - 676,891 - 676,891 Dividend 40 - - (593,527) - (593,527) Balance at 31.3.2007 82,435,000 111,412,895 22,322,998 - 216,170,893 The annexed notes form an integral part of these financial statements. Page 13
  14. 14. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated) CASH FLOWS (FOR)/ FROM OPERATING ACTIVITIES (Loss)/Profit before taxation (2,207,105) 1,368,937 984,094 500,256 Adjustments for:- Amortisation of bonds expenses 277,770 279,708 277,770 279,708 Bad debts written off 697,574 - - - Depreciation of property, plant and equipment 580,160 424,695 4,895 10,084 Interest expense/ finance charges 6,564,396 5,058,620 5,817,195 5,671,876 Impairment loss on interest in an associate - 549,434 - - Impairment loss on investment properties 2,074,556 - - - Impairment loss on land held for property development 1,858,834 - - - Investment in subsidiaries written off - - 125,000 - Loss/(Gain) on disposal of investment properties 413,987 (812,642) - - Waiver of debts (211,269) (448,845) (203,976) - Dividend income - - (5,000,000) (5,000,000) Gain on disposal of property, plant and equipment (155,791) (132,283) - - Interest income (513,693) (261,016) (768,966) (1,214,091) Share of profits in associates (269,211) (103,008) - - Operating profit before working capital changes 9,110,208 5,923,600 1,236,012 247,833 Decrease in inventories 557,274 3,076,070 - - (Increase)/Decrease in property development costs (4,273,713) 6,171,242 - - Increase in receivables (17,243,790) (13,785,219) (252,966) (83,350) Increase/(Decrease) in payables 10,272,117 2,695,419 126,902 (11,362) Net decrease/(increase) in amount owing by contract customers 1,808,200 (613,115) - - CASH FROM OPERATIONS 230,296 3,467,997 1,109,548 153,121 Interest paid (2,077,587) (571,134) (1,330,386) (1,184,390) Net tax (paid)/refunded (618,234) 4,734,735 797,450 6,441,353 NET CASH (FOR)/FROM OPERATING ACTIVITIES CARRIED FORWARD (2,465,525) 7,631,598 577,012 5,410,084 The annexed notes form an integral part of these financial statements. Page 14
  15. 15. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 (CONT’D) THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated) NET CASH (FOR)/FROM OPERATING ACTIVITIES BROUGHT FORWARD (2,465,525) 7,631,598 577,012 5,410,084 CASH FLOWS (FOR)/FROM INVESTIING ACTIVITIES Acquisition of joint venture - - (1,088,628) (712,500) Additional investment in subsidiaries (181,811) - - - Repayment from/ (Advances to) subsidiaries - - 7,254,414 (3,466,050) Interest received 513,693 261,016 369,482 204,859 Dividends received from subsidiaries - - 3,650,000 3,600,000 Advances to joint venture (280,727) - (561,454) - Incidental cost for investment properties (117,070) Payment for land held for development (2,468,347) (466,545) - - Purchase of property, plant and equipment 41 (1,204,262) (194,106) - - Purchase of investment in subsidiaries - - (51,000) - Proceeds from disposal of property, plant and equipment 170,264 132,370 - - Proceeds from disposal of investment properties 1,374,000 4,211,187 - - Investment in club membership (134,000) - - - Placement of cash in sinking fund account (3,877,963) (4,097,229) (3,877,963) (4,097,229) Repayment from associates 8,934 - 8,934 - NET CASH (FOR)/FROM INVESTING ACTIVITIES (6,197,289) (153,307) 5,703,785 (4,470,920) BALANCE CARRIED FORWARD (8,662,814) 7,478,291 6,280,797 939,164 The annexed notes form an integral part of these financial statements. Page 15
  16. 16. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 (CONT’D) THE GROUP THE COMPANY 2007 2006 2007 2006 Note RM RM RM RM (Restated) BALANCE BROUGHT FORWARD (8,662,814) 7,478,291 6,280,797 939,164 CASH FLOWS FOR FINANCING ACTIVITIES Payment of bonds expenses (59,932) (61,872) (59,932) (61,872) Repayment of bonds 26 (2,478,450) (2,478,450) (2,478,450) (2,478,450) Net repayment by associates (13,333) (530,875) - - (Repayment to)/Advances from subsidiaries - - (5,503,106) 2,927,198 Dividend paid to shareholders of the company (593,527) (593,527) (593,527) (593,527) Repayment of revolving credit (1,050,000) (1,600,000) - - Drawdown of term loans 6,400,068 3,600,000 - - Repayment of term loans (3,007,129) (2,077,764) - - Repayment of hire purchase obligations (101,107) (72,630) - - NET CASH FOR FINANCING ACTIVITIES (903,410) (3,815,118) (8,635,015) (206,651) NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (9,566,224) 3,663,173 (2,354,218) 732,513 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR (12,209,846) (15,873,019) (3,786,895) (4,519,408) CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 42 (21,776,070) (12,209,846) (6,141,113) (3,786,895) The annexed notes form an integral part of these financial statements. Page 16
  17. 17. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 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 30 July 2007. 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 market, credit, liquidity and cash flow risks. The policies in respect of the major areas of treasury activity are as follows:- (a) Market Risk (i) 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. Page 17
  18. 18. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 3. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D) (a) Market Risk (Cont’d) (ii) 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. (iii) Price 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. (b) 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. (c) 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. Page 18
  19. 19. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 4. BASIS OF PREPARATION The financial statements of the Group and of the Company 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 MASB approved accounting standards in Malaysia for Entities Other Than Private Entities and the provisions of the Companies Act, 1965. In the current financial year, the Company has adopted all the new and revised Financial Reporting Standards (“FRS”) issued by the Malaysian Accounting Standards Board which are relevant to its operations and effective for financial periods beginning on or after 1 January 2006. The adoption of these new and revised FRS does not have any material effects on the financial statements of the Company. The following FRS have been issued and are effective for financial periods beginning on or after 1 October 2006 and will be effective for the Group’s and the Company’s financial statements for the financial year ending 31 March 2008:- FRS 117 Leases FRS 124 Related Party Disclosures The following revised FRS have been issued and are effective for financial periods beginning on or after 1 July 2007 and will be effective for the Group’s and the Company’s financial statements for the financial year ending 31 March 2009:- FRS 107 Cash Flow Statements FRS 111 Construction Contracts FRS 112 Income Taxes FRS 118 Revenue FRS 121 The Effects of Changes in Foreign Exchange Rates FRS 134 Interim Financial Reporting FRS 137 Provisions, Contingent Liabilities and Contingent Assets FRS 139 - Financial Instruments: Recognition and Measurement has been issued and the effective date has yet to be determined by the MASB. This new standard establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The Group and the Company will apply this standard when it becomes effective. Page 19
  20. 20. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (a) Critical Accounting Estimates And Judgements Estimates and judgements are continually evaluated by the directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:- (i) Depreciation of Property, Plant and Equipment The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial and production factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions. The Group anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. (ii) Income Taxes There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made. (iii) Impairment of Assets When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the Group is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows. Page 20
  21. 21. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (a) Critical Accounting Estimates And Judgements (Cont’d) (iv) Property Development The Group recognises property development revenue and expenses in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that the property development costs incurred for work performed to date bear to the estimated total property development costs. Significant judgement is required in determining the stage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the development projects. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists. (v) Construction Contracts Construction contracts accounting requires reliable estimation of the costs to complete the contract and reliable estimation of the stage of completion. (i) Contract Revenue Construction contracts accounting requires that variation claims and incentive payments only be recognised as contract revenue to the extent that it is probable that they will be accepted by the customers. As the approval process often takes some time, a judgement is required to be made of its probability and revenue recognised accordingly. (ii) Contract Costs Using experience gained on each particular contract and taking into account the expectations of the time and materials required to complete the contract, management estimates the profitability of the contract on an individual basis at any particular time. Page 21
  22. 22. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (a) Critical Accounting Estimates And Judgements (Cont’d) (vi) Allowance for Doubtful Debts of Receivables The Group makes allowance for doubtful debts based on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management analyses historical bad debt, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the allowance for doubtful debts of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables. (b) 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 an 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. Page 22
  23. 23. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (c) Functional and Foreign Currency (i) Functional and Presentation Currency The functional currency of the Group is measured using the currency of the primary economic environment in which the Group operates. The consolidated financial statements are presented in Ringgit Malaysia (“RM”) which is the parent’s functional and presentation currency. (ii) Transactions and Balances Transactions in foreign currency are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the balance sheet date are translated at the rates ruling as of that date. Non- monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are taken to the income statement. (iii) Foreign Operations The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:- (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet; (ii) income and expense for the income statement are translated at the average exchange rates for the year; and (iii) all resulting exchange differences are recognised as a separate component of equity, as a foreign currency translation reserve. On disposal, accumulated translation differences are recognised in the consolidated income statements as part of the gain or loss on sale. Page 23
  24. 24. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (d) Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries made up to 31 March 2007. 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 purchase method. Under the purchase method, 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 values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. 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. (e) Goodwill On Consolidation Goodwill on consolidation represents the excess of the fair value of the purchase consideration over the Group's share of the fair values of the identifiable net assets of the subsidiaries at the date of acquisition. Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually. The impairment value of goodwill is recognised immediately in the consolidated income statement. An impairment loss recognised for goodwill is not reversed in a subsequent period. If, after reassessments, the Group's interest in the fair values of the identifiable net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised immediately in the consolidated income statement. Page 24
  25. 25. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (f) Investments (i) Investments in Subsidiaries, Associates and Joint Ventures Investments in subsidiaries, associates and joint ventures are 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. On the disposal of the investments in subsidiaries, associates and joint ventures, the difference between the net disposal proceeds and the carrying amount of the investments is taken to the income statement. (ii) Investments in Club Membership The investment in club membership is stated at cost and is reviewed for impairment at the end of the financial year if events or changes in circumstances indicate that its carrying value may not be recovered. (g) Associates An associate is an entity in which the Company has a long-term equity interest and where it exercises significant influence over the financial and operating policies. The investments in associates in the consolidated financial statements are accounted for under the equity method, based on the financial statements of the associates made up to 31 March 2007. The Company's share of the post acquisition profits of the associates is included in the consolidated income statement and the Company's interest in associates is stated at cost plus the Company's share of the post- acquisition retained profits and reserves. Unrealised gains on transactions between the Company and the associates are eliminated to the extent of the Company's interest in the associate. Unrealised losses are eliminated unless cost cannot be recovered. Page 25
  26. 26. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (h) 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 of the Group's interest in the venture. (i) 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. Depreciation is calculated under the straight-line method to write off the cost of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:- Building Remaining useful life of 20 years 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% The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is included in the income statement in the year the asset is derecognised. (j) Land Held for Property Development Land held for property development is carried at cost less any accumulated impairment losses. Where land held for property development had previously been recorded at a revalued amount, the revalued amount is retained as its surrogate cost. Page 26
  27. 27. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (j) Land Held for Property Development (Cont’d) Land held for property development is classified as non-current asset where no development activities are carried out or where development activities are not expected to be completed within the normal operating cycle. Costs associated with the acquisition of land include the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. Pre-acquisition costs are charged to the income statement as incurred unless such costs are directly identifiable to the consequent property development activity. Land held for property development is transferred to current asset when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle. (k) Impairment of Assets The carrying values 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. The recoverable amount of the assets is the higher of the assets' net selling price and their value-in-use, which is measured by reference to discounted future cash flow. 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. Page 27
  28. 28. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (l) Assets under Hire Purchase Property, plant and equipment acquired under hire purchase are capitalised in the financial statements and are depreciated in accordance with the policy set out in Note 5(i) 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. (m) Investment Properties Investment properties are property held either to earn rental income or for capital appreciation or for both. Investment properties are stated at cost less accumulated depreciation and impairment losses, if any, consistent with the accounting policy for property, plant and equipment as stated in the financial statements. Investment properties are derecognised when they have either been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal. On the derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount is charged to the income statement. (n) 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. Page 28
  29. 29. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (o) 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. (p) 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. (q) 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. Page 29
  30. 30. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (r) 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. (s) 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. (t) 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. (u) 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. Capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted. All other borrowing costs are charged to the income statement as an expense in the period in which they are incurred. (v) 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. Page 30
  31. 31. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (w) Income Taxes Income taxes on the profit or loss for the financial 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 all material 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 excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities over the business combination costs 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 future 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 to 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 excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities over the business combination costs. 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 future taxable profits will be available to allow all or part of the deferred tax assets to be utilised. Page 31
  32. 32. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (x) Equity Instruments Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds. Dividends on ordinary shares are recognised as liabilities when approved for appropriation. (y) Employee Benefits (i) Short-term Benefits Wages, salaries, paid annual leave, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur. (ii) Defined Contribution Plans The Group’s contributions to a defined contribution plan 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 plan. A foreign subsidiary of the Group makes contributions to its respective country’s pension schemes. Such contributions are recognised as an expense in the income statement as incurred. (z) Contingent Liabilities and Contingent Assets A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably. A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision. Page 32
  33. 33. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (z) Contingent Liabilities and Contingent Assets (Cont’d) A contingent asset is a probable asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Company. (aa) Revenue 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 Sale of Goods Sales are recognised upon delivery of goods and customers’ acceptance, and where applicable, net of returns and trade discounts. Page 33
  34. 34. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (aa) Revenue 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. (ab) 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 34
  35. 35. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 6. INVESTMENT IN SUBSIDIARIES THE COMPANY 2007 2006 RM RM Unquoted shares, at cost 210,990,785 211,064,785 Details of the subsidiaries, which are all incorporated in Malaysia, are as follows:- Name of Company Effective Equity Interest Principal 2007 2006 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 Under members’ JV Sdn. Bhd. voluntary liquidation. Siah Brothers Enterprise - 100 Under members’ Sdn. Bhd. * voluntary liquidation. 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 Under members’ Sdn. Bhd. * voluntary liquidation. Tiara Development - 100 Under members’ Sdn. Bhd. * voluntary liquidation. SBC Homes Sdn. Bhd.* - 100 Under members’ Voluntary liquidation. Mixwell (Malaysia) 100 100 Property development. Sdn. Bhd. Page 35
  36. 36. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 6. INVESTMENT IN SUBSIDIARIES (CONT’D) Name of Company Effective Equity Interest Principal 2007 2006 Activities % % Winsome Ventures - 100 Under members’ Sdn. Bhd. voluntary liquidation. 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 Under members’ Management Sdn. Bhd.* voluntary liquidation. 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 Under members’ voluntary liquidation. Masahmura Sdn. Bhd.* 100 51 Manufacturing of material handling equipment and metal frames. Masahmura Sales & 100 51 Trading of light Service Sdn. Bhd. industrial handling equipment and metal frames. Kiara Amalan Sdn. Bhd.* 51 - Dormant. * Not audited by Messrs. Horwath. Page 36
  37. 37. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 7. INTEREST IN ASSOCIATES THE GROUP THE COMPANY 2007 2006 2007 2006 RM RM RM RM Unquoted shares, at cost 2,720,001 3,600,001 2,400,000 2,400,000 Impairment loss - (880,000) - - 2,720,001 2,720,001 2,400,000 2,400,000 Unquoted shares, at group cost 91,618,314 91,618,314 - - Share of post acquisition reserves 17,747,298 17,478,087 - - 112,085,613 111,816,402 2,400,000 2,400,000 THE GROUP 2007 2006 RM RM The interest in associates comprises:- Group’s share of net tangible assets - at cost 66,069,643 65,800,432 - at fair value 45,952,003 45,952,003 Group’s share of intangible assets 63,967 63,967 112,085,613 111,816,402 Details of the associates, which are all incorporated in Malaysia, are as follows:- Effective Equity Principal Name of Company Interest Activities 2007 2006 % % Ligamas Sdn. Bhd.# 50.0 50.0 Property development. Varich Industries 50.0 50.0 Dormant. Sdn. Bhd.* Paling Industries Sdn. Bhd.# 40.0 40.0 Manufacturing of plastic building materials. Page 37
  38. 38. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 7. INTEREST IN ASSOCIATES (CONT’D) Details of the associates, which are all incorporated in Malaysia, are as follows:- Effective Equity Principal Name of Company Interest Activities 2007 2006 % % Pasti Bumi Sdn. Bhd.* ## 19.6 19.6 Sales of plastic building materials. 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 Under members’ Sdn. Bhd.*### voluntary liquidation. * 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 2007. ## Held by Paling Industries Sdn. Bhd. ### Held by South-East Best Sdn. Bhd. The summarised financial information of the associates are as follows:- THE GROUP 2007 2006 RM RM Assets and liabilities Total assets 149,845,853 143,650,486 Total liabilities 16,653,116 10,429,579 Results Revenue 54,261,998 44,690,040 Profit for the year 299,072 47,200 Page 38
  39. 39. SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 8. INVESTMENT IN JOINT VENTURE THE COMPANY 2007 2006 RM RM Unquoted shares, at cost 1,801,128 712,500 Details of the joint venture, which is incorporated in Thailand, are as follows:- Name of Company Effective Equity Interest Principal 2007 2006 Activities % % Tri-Development Co., Ltd 50 50 Property development. The share of results of the joint venture is based on the unaudited financial statements made up to 31 March 2007. The Group’s aggregate share of the current assets, non-current assets, current liabilities, non-current liabilities, income and expenses of the joint venture is as follows:- 2007 2006 RM RM Assets and liabilities Non-current assets 591,715 - Current assets 9,220,742 805,280 Total assets 9,812,457 805,280 Non-current liabilities - Current liabilities (4,256,916) (93,595) Total liabilities (4,256,916) (93,595) Results Revenue 17,761,423 - Other income 62,923 - Expenses, including finance costs and taxation (13,993,150) (143) Page 39

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