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  • 1. SIAH BROTHERS CORPORATION BERHAD ...Building Homes... ...Building Communities... ...Building Partnerships... ...Building Value... COVER RATIONALE Signifies that we are in a business that involves people, and how well we do will depend a great deal both on our internal alignment as well as alignment to the high goals that we need to set for ourselves; to stand apart from the competition. ANNUAL REPORT 2003 SIAH BROTHERS CORPORATION BERHAD (199310-P) SIAH BROTHERS CORPORATION BERHAD Wisma Siah Brothers, 74A Jalan Pahang 53000 Kuala Lumpur 199310-P Tel: 03-40418118 Fax: 03-40435281 A n n u a l R e p o r t 2 0 0 3
  • 2. a...InvestmentHolding... ...Investment Holding... ...Turnkey Construction... BATANG KALI ...Planned Communities... Bandar Utama, Batang Kali KOTA KINABALU • The Peak, Signal Hill • Signal Hill Park BATU CAVES Paling’s Products KUALA LUMPUR Taman Mastiara Perlis Kedah Pulau Pinang Kuantan Terengganu KUANTAN Sabah Perak Perkampungan Seri Mahkota Aman Pahang Selangor Negeri Sarawak Sembilan Melaka Johor KLANG Taman Suria Perdamar DAMANSARA Taman Damansara Emas ONGOING PROJECT
  • 3. CORE PURPOSE To continue to be a pioneering building company, committed to advancing Malaysian living standards through the planning, construction and delivery of worthy buildings and vibrant communities. CORE BELIEFS ...an established tradition of conducting our business to the industry’s highest ethics/practices; ...use of designs and processes that advance standards; ...equipping our people in order to provide lasting value to our customers/stakeholders. Corporate Section Contents Notice Of Annual General Meeting 2 Notice of Dividend Payment 3 Statement Accompanying Notice of Annual General Meeting 3 Annexure A - Letter of Nomination of Auditors 4 Corporate Information 5 Directors’ Profile 6 Corporate Structure 13 Group Financial Highlights 14 Statement Of Directors’ Responsibilities 15 Executive Chairman’s Statement 16 Penyata Pengerusi Eksekutif 20 Statement Of Corporate Governance 24 Statement On Internal Control 30 Audit Committee Report 31 Group Properties 78 Shareholders’ Information 80 TSR Holders’ Information 82 Proxy Form Financial Statements 35-77
  • 4. Notice Of Annual General Meeting NOTICE IS HEREBY GIVEN that the Thirteenth Annual General Meeting of Siah Brothers Corporation Berhad will be held at the Penthouse, 5th Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpur on Friday, 26 September 2003 at 11.00 a.m. to transact the following business: AGENDA 1. To receive and adopt the Directors’ Report and the Audited Financial Statements for the year (Resolution 1) ended 31 March 2003 together with the Auditors’ Report thereon. 2. To declare a first and final dividend of 1% less 28% income tax for the year ended (Resolution 2) 31 March 2003. 3. To approve the payment of Directors’ fees. (Resolution 3) 4. To re-appoint the following Directors pursuant to Section 129(6) of the Companies Act, 1965: (a) YBhg. Dato’ Lim Phaik Gan (Resolution 4) (b) Mr. Sia Kwee Mow @ Sia Hok Chai (Resolution 5) 5. To re-elect YBhg. Dato’ Dr. Norraesah Bt. Haji Mohamad as a Director retiring by rotation (Resolution 6) pursuant to Article 77 of the Articles of Association of the Company. 6. To appoint Auditors and to authorise the Directors to fix their remuneration. (Resolution 7) Notice of nomination pursuant to Section 172(11) of the Companies Act, 1965, a copy of which is annexed hereto and marked as “Annexure A”, has been received by the Company from a shareholder, LOM Holdings Sdn. Bhd. for the nomination of M/s. Horwath, who have given their consent to act, as Auditors of the Company and of their intention to propose the following Ordinary Resolution at the meeting: “THAT M/s Horwath be appointed as Auditors of the Company in place of the retiring Auditors, M/s. Horwath Mok & Poon, at a remuneration to be fixed by the Directors and to hold office until the conclusion of the next Annual General Meeting”. 7. As Special Business, to consider and, if thought fit, to pass the following resolutions: (A) ORDINARY RESOLUTION (Resolution 8) AUTHORITY TO DIRECTORS TO ALLOT AND ISSUE SHARES Notice of Annual General Meeting “THAT subject always to the Companies Act, 1965, the Articles of Association of the Company and the approval from the Kuala Lumpur Stock Exchange and other governmental/regulatory bodies, where such approval shall be necessary, the Directors be and are hereby authorised pursuant to Section 132D of the Companies Act, 1965, to allot and issue shares in the Company, at any time and upon such terms and conditions and for such purposes as they may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per cent (10%) of the issued capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.” (B) SPECIAL RESOLUTION (Resolution 9) APPROVAL FOR PROPOSED CHANGE OF NAME OF THE COMPANY “THAT the change of name of the Company from Siah Brothers Corporation Berhad to SBC Corporation Berhad (effective upon the issuance of the Certificate of Incorporation on Change of Name of Company by the Companies Commission of Malaysia) be and is hereby approved and that all references in the Memorandum and Articles of Association of the Company to the name Siah Brothers Corporation Berhad, wherever the same may appear, shall be substituted with the name SBC Corporation Berhad.” 8. To consider any other business for which due notice shall have been given. 2 Annual Report 2003
  • 5. Notice Of Dividend Payment NOTICE IS HEREBY GIVEN that subject to the approval of the shareholders at the Thirteenth Annual General Meeting of the Company, the first and final dividend of 1% less 28% income tax for the year ended 31 March 2003 will be paid on 31 October 2003 to Depositors registered in the Record of Depositors on 17 October 2003. A Depositor shall qualify for entitlement only in respect of: a) shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 17 October 2003 in respect of ordinary transfers; and b) shares bought on the Kuala Lumpur Stock Exchange on a cum entitlement basis according to the Rules of the Kuala Lumpur Stock Exchange. NOTES: 1) Proxy: 2) Resolution 8: By Order of the Board A member entitled to attend and vote at the The Company is actively pursuing business Meeting is entitled to appoint a proxy to attend and opportunities in prospective areas so as to vote instead of him. Where a member appoints broaden the operating base and earnings more than one (1) proxy, the appointment shall be potential of the Company. Such expansion plans invalid unless he specifies the proportions of his may require the issue of new shares not holdings to be represented by each proxy. To be exceeding 10 per cent (10%) of the Company’s CHONG FOOK SIN valid, the proxy form duly completed must be issued share capital. With the passing of the deposited at the Registered Office of the resolution by the shareholders of the Company at KAN CHEE JING Company not less than forty-eight (48) hours the forthcoming Annual General Meeting, the Company Secretaries before the time for holding the meeting. If the Directors would avoid delay and cost of convening appointor is a corporation, this form must be further general meetings to approve the issue of executed under its common seal or under the shares for such purposes. hand of its attorney. Kuala Lumpur 3) Resolution 9: 3 September 2003 The proposed change of name from Siah Brothers Corporation Berhad to SBC Corporation Berhad is to better reflect the corporate identity of the Company. Statement Accompanying Notice of Annual General Meeting Statement Accompanying Notice of Annual General Meeting pursuant to paragraph 8.28 (2) of the Listing Requirements of Kuala Lumpur Stock Exchange (1) The following are the Directors standing for re-appointment and re-election at the Thirteenth Annual General Meeting: (a) Re-appointment of the following Directors pursuant to Section 129(6) of the Companies Act, 1965: (i) YBhg. Dato’ Lim Phaik Gan (ii) Mr. Sia Kwee Mow @ Sia Hok Chai (b) Re-election of YBhg. Dato’ Dr. Norraesah Bt. Haji Mohamad as a Director pursuant to Article 77 of the Articles of Association of the Company. (2) Attendance of Directors at Board Meetings held during the financial year ended 31 March 2003 are as follows: Attendance Percentage of Name of Directors at Meetings Attendance (%) Sia Kwee Mow @ Sia Hok Chai 4/4 100 Sia Teong Heng 4/4 100 Mun Chong Shing @ Mun Chong Tian 3/4 75 Dato’ Lim Phaik Gan 2/4 50 Dato’ Dr. Norraesah Bt. Haji Mohamad 2/4 50 Datuk Sim Peng Choon (Resigned on 19 August 2003) 4/4 100 Abdul Rahman Bin A. Shukor (Alternate to Datuk Sim Peng Choon - ceased on 19 August 2003) 2/4 50 Vincent Koh Kok Kee (Resigned on 31 May 2003) 4/4 100 Tan Sri Dato’ Ir. Muhammad Yusuff Bin Haji 1/1 100 Muhammad Yunus (Resigned on 14 August 2002) (3) The Thirteenth Annual General Meeting will be held at the Penthouse, 5th Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpur on Friday, 26 September 2003 at 11.00 a.m. (4) The profile of Directors standing for re-appointment and re-election as mentioned in paragraph 1 above at the Thirteenth Annual General Meeting are set out in page 6 to 12 of this Annual Report. Siah Brothers Corporation Berhad (199310-P) 3
  • 6. Annexure A Letter of Nomination of Auditors 8 August 2003 The Board of Directors Siah Brothers Corporation Berhad Wisma Siah Brothers, 74A, Jalan Pahang, 53000 Kuala Lumpur. Dear Sirs, NOMINATION OF AUDITORS Pursuant to Section 172(11) of the Companies Act, 1965, we, being a shareholder of the Company, hereby give notice of nomination of M/s. Horwath as Auditors of the Company in place of the retiring Auditors, M/s. Horwath Mok & Poon, and of our intention to propose the following as an ordinary resolution at the forthcoming Annual General Meeting of Siah Brothers Corporation Berhad: “THAT M/s Horwath be appointed as Auditors of the Company in place of the retiring Auditors, M/s. Horwath Mok & Poon, at a remuneration to be fixed by the Directors and to hold office until the conclusion of the next Annual General Meeting.” Yours truly, LOM HOLDINGS SDN. BHD. Notice of Annual General Meeting Sia Kwee Mow @ Sia Hok Chai Director 4 Annual Report 2003
  • 7. Corporate Information as at 8 August 2003 Board Of Directors Sia Kwee Mow @ Sia Hok Chai Sia Teong Heng JMN, FFB, FCIOB, FAIB B.Sc. (Eng), M.Sc. Executive Chairman Managing Director Mun Chong Shing @ Mun Chong Tian Dato’ Lim Phaik Gan Non-Executive Director DPMP, DMPN, M.A. (Law), FCI, ARB Independent Non-Executive Director Datuk Sim Peng Choon PJN Dato’ Dr. Norraesah Bt. Haji Mohamad Non-Executive Director DSPN, PhD., B.Sc. (Econ) Independent Non-Executive Director Abdul Rahman Bin A. Shukor B.Sc (Civil & Environmental Eng.), Executive MBA Non-Executive Director (Alternate to Datuk Sim Peng Choon) Audit Committee Solicitors Dato’ Dr. Norraesah Bt. Haji Mohamad Cheang & Ariff DSPN, PhD., B.Sc. (Econ) 39 Court Chairperson & 39, Jalan Yap Kwan Seng Independent Non-Executive Director 50450 Kuala Lumpur Datuk Sim Peng Choon Lim & Yeoh PJN Non-Executive Director 145-M Jalan Maharajalela 50150 Kuala Lumpur Company Secretaries Lee, Perara & Tan Chong Fook Sin 55, Jalan Thambapillai ATII, MCCS, AFA Off Jalan Tun Sambanthan Brickfields Kan Chee Jing 50470 Kuala Lumpur ACIS Principal Bankers Registered Office Affin Merchant Bank Berhad Wisma Siah Brothers Alliance Bank Malaysia Berhad 74A Jalan Pahang Aseambankers Malaysia Berhad 53000 Kuala Lumpur Bangkok Bank Berhad Tel : 03 - 4041 8118 Bumiputra Commerce Bank Berhad Fax : 03 - 4043 5281 Corporate Information United Overseas Bank (Malaysia) Berhad Utama Merchant Bank Berhad Auditors Horwath Mok & Poon Registrars Chartered Accountants Tacs Corporate Services Sdn. Bhd. Level 16 Tower C Unit No. 203, 2nd Floor Megan Phileo Avenue Block C, Damansara Intan 12 Jalan Yap Kwan Seng No. 1, Jalan SS 20/27 50450 Kuala Lumpur 47400 Petaling Jaya Tel : 03 - 7118 2688 Fax : 03 - 7118 2693 Stock Exchange Listing Main Board Kuala Lumpur Stock Exchange Siah Brothers Corporation Berhad (199310-P) 5
  • 8. Directors’ Profile as at 31 July 2003 SIA KWEE MOW @ SIA HOK CHAI Sia Kwee Mow @ Sia Hok Chai, a Malaysian, aged 70, is the Executive Chairman of Siah Brothers Corporation Berhad (“SBC”). He has been a Director of SBC since its incorporation on 14 June 1990. He has over 49 years of experience in building and civil engineering contracting and not less than 31 years of experience in plastic engineering since the incorporation of Paling Industries Sdn. Bhd. in 1971. He was actively involved in Master Builders Association Malaysia (“MBAM”) and had served in various capacities including the post of President (1988 to 1994). He was elected as the 29th President (1994 to 1996) of the International Federation of Asian and Western Pacific Contractors’ Associations (“IFAWPCA”) during which he led the IFAWPCA delegation to a meeting between the World Bank and International Contractors Association held at Washington D.C. in November 1996. In recognition of his vast experience and knowledge in construction and his contribution to the building construction industry, he was awarded or conferred the following: • Johan Mangku Negara by DYMM Yang DiPertuan Agong in 2001 • Honorary Life President by MBAM in 2001 • Fellowship of the Faculty of Building, United Kingdom in 1981 • Fellowship of the Chartered Institute of Building, United Kingdom as a Chartered Builder in 1979 • Fellowship of the Australian Institute of Building by the Australian Royal Charter of Building in 1982 He was also a previous President of both the Selangor Builders Association and Selangor Chinese Plumbing and Sanitary Association. He also sits on the board of several private limited companies in Malaysia, including several subsidiaries of SBC. His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 1,480,800 (a) 19,498,523 (b) Transferable Subscription Rights (“TSR”) 3,078,500 1,746,780 (c) Employees’ Shares Option Scheme 450,000 - (a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares). (c) Deemed interest by virtue of his shareholding in Evergreen Legacy Sdn. Bhd. (1,696,580 TSR) and Perfect Consistence Sdn. Bhd. (50,200 TSR). By virtue of his interests in SBC, he is deemed to have interests in the securities of SBC’s subsidiaries to the extent of SBC’s interest in accordance with Section 6A of the Companies Act, 1965. He is the father of Sia Teong Heng, the Managing Director and a major shareholder of SBC. Directors’ Profile He does not have any conflict of interest with SBC except for those transactions disclosed in Note 45 to the financial statements. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year. 6 Annual Report 2003
  • 9. SIA TEONG HENG Sia Teong Heng, a Malaysian, aged 40, is the Managing Director of Siah Brothers Corporation Berhad (“SBC”). He was appointed as a Director of SBC on 5 February 1991. On 27 November 2001, he resigned as a member of the Audit Committee of SBC. He is a member of the Remuneration Committee of SBC. He graduated in 1985 with a degree in Bachelor of Science in Civil Engineering from Loughborough University, United Kingdom ("UK") and a Master degree in Management Science from Imperial College, University of London, UK in 1986. His career began in investment banking in 1987 with Morgan Grenfell (Asia) Ltd., Singapore. He joined SBC in 1991. Presently, he also sits on the boards of several subsidiaries of SBC. His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 334,992 19,498,523 (a) Transferable Subscription Rights (“TSR”) - 1,746,780 (b) Employees’ Shares Option Scheme 350,000 - (a) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares). (b) Deemed interest by virtue of his shareholding in Evergreen Legacy Sdn. Bhd. (1,696,580 TSR) and Perfect Consistence Sdn. Bhd. (50,200 TSR). By virtue of his interests in SBC, he is deemed to have interests in the securities of SBC’s subsidiaries to the extent of SBC’s interest in accordance with Section 6A of the Companies Act, 1965. He is a son of Sia Kwee Mow @ Sia Hok Chai, the Executive Chairman and a major shareholder of SBC. He does not have any conflict of interest with SBC except for those transactions disclosed in Note 45 to the financial statements. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year. Directors’ Profile Siah Brothers Corporation Berhad (199310-P) 7
  • 10. MUN CHONG SHING @ MUN CHONG TIAN Mun Chong Shing @ Mun Chong Tian, a Malaysian, aged 66, was appointed as an Executive Director of Siah Brothers Corporation Berhad ("SBC") on 1 April 1996 when he was employed as General Manager of Paling Industries Sdn. Bhd. (“Paling”) from 1987 and appointed as a Director in 1991 and remained in both positions until his retirement on 31 December 2001. On 31 December 2001, he was redesignated as a Non-Executive Director of SBC. He is a member of the Nomination Committee of SBC. He has received training in Sales Management conducted by the National Productive Centre and the Malaysian Institute of Management and a General Management Programme at the National Productivity Board, Singapore. Prior to his involvement with Paling, he was employed as General Manager in Hume Industries (M) Bhd. where he has had extensive exposure to industrial engineering and management. His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 21,782 - Transferable Subscription Rights 12,500 - He does not hold any securities, direct or indirect, in any of SBC’s subsidiaries. He is a brother-in-law to Sia Kwee Mow @ Sia Hok Chai and an uncle to Sia Teong Heng, both are Directors and major shareholders of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended three of the four Board Meetings held during the last financial year. Directors’ Profile 8 Annual Report 2003
  • 11. DATO’ LIM PHAIK GAN Dato' Lim Phaik Gan, a Malaysian, aged 83, was appointed as an Independent Non-Executive Director of Siah Brothers Corporation Berhad ("SBC") on 5 February 1991. She is the Senior Independent Non-Executive Director, the Chairperson of the Nomination Committee and a member of the Remuneration Committee of SBC. She is an advocate and solicitor and was called to the Bar of England and the Bar of Malaysia. She obtained a Master of Arts degree in Law from the University of Cambridge, United Kingdom and was in active practice at the Bar of Malaysia from 1954 to 1971 and from 1980 until today. Since 1955, she has had a distinguished career in both the private and public sectors. In 1970, she was a member of the National Economic Consultative Council established when Parliament was suspended as a result of riots in 1969. From 1971 to 1980, she served as the Deputy Permanent Representative of Malaysia to the United Nations and as the Malaysian Ambassador to Yugoslavia, Austria, Belgium and the European Economic Community. She was Malaysia's Permanent Representative to the United Nations Industrial and Development Organisation and International Atomic Energy Agency in Vienna, and served as chairman in various committees. After her retirement from the Malaysian Foreign Service in 1980, she was appointed by the Government as Director of the Kuala Lumpur Regional Centre for Arbitration, an international organisation involved in the conduct and administration of international commercial arbitration for the settlement of disputes arising out of international commercial contracts and joint ventures, in which capacity she served from 1982 to 2000. She is currently a member of the Board of Trustees of the Institute of Strategic and International Studies. She does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. She has no family relationship with any Director and/or major shareholder of SBC. She does not have any conflict of interest with SBC. She has not been convicted of any offence within the past 10 years. She attended two of the four Board Meetings held during the last financial year. Directors’ Profile Siah Brothers Corporation Berhad (199310-P) 9
  • 12. DATO’ DR. NORRAESAH BT. HAJI MOHAMAD Dato’ Dr. Norraesah bt. Haji Mohamad, a Malaysian, aged 55, was appointed as an Independent Non-Executive Director of Siah Brothers Corporation Berhad ("SBC") on 8 July 1991. She is the Chairperson of the Audit Committee and a member of the Nomination Committee and the Remuneration Committee of SBC. She holds a Doctorate Degree in Economics Science (International Economics and Finance) which she obtained in 1986 from University of Paris 1, Pantheon Sorbonne, France. She has over 30 years of working experience in banking, consultancy and international trade and commerce. She worked with the International Trade Division of the Ministry of Trade and Industry (now known as the Ministry of International Trade and Industry) from 1972 to 1985 and was later transferred to the Finance Division of the Ministry of Finance holding the post of Principal Assistant Secretary dealing with privatisation and debt management. In 1988, she joined ESSO Production Malaysia, Inc. as Communications Manager and subsequently, in 1990, took the position of Managing Director with a consultant firm providing financial advisory services. From 1991 to 1998 she was appointed as the Chief Representative of Credit Lyonnais Bank in Malaysia. She sits on the board of KESM Industries Berhad, Malaysian Oxygen Berhad and several private limited companies. She was awarded the distinction of Darjah Setia Pangkuan Negeri on 13 July 2002 by Tuan Yang Terutama Yang di-Pertua Negeri Pulau Pinang on His Excellency’s 64th Birthday. Her holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Transferable Subscription Rights 4,000 - She does not hold any securities, direct or indirect, in any of SBC’s subsidiaries. She has no family relationship with any Director and/or major shareholder of SBC. She does not have any conflict of interest with SBC. She has not been convicted of any offence within the past 10 years. She attended two of the four Board Meetings held during the last financial year. Directors’ Profile 10 Annual Report 2003
  • 13. DATUK SIM PENG CHOON Datuk Sim Peng Choon, a Malaysian, aged 71, was appointed as a Non-Executive Director of Siah Brothers Corporation Berhad ("SBC") on 14 May 1993, representing the interest of Permodalan Nasional Berhad. He is a member of the Audit Committee and the Remuneration Committee of SBC. He graduated with a Senior Cambridge Certificate from the Anglo Chinese School in Ipoh, Perak Darul Ridzuan in 1951. He started his career in 1951 with Barlow & Co. Ltd., Kuala Lumpur, an agent for consumer goods as their representative. In 1953 to 1956, he joined Allen & Hansbury Ltd., a manufacturer of vitamin products, antibiotics and surgical instruments as a Medical Representative for Singapore. From 1957 to 1963, he was a Director and Manager of H Rogers & Co. Ltd., Kuala Lumpur. In 1964, he established Polychem (M) Sdn. Bhd. He is also currently the Chairman of N.P. King (HK) Ltd., Hong Kong and N.P. King Pte. Ltd., Singapore, both act as agents for manufacturers of hardware and industrial products. He is also active in several social organisations, acting as the Vice-Chairman of Kwan Inn Teng Foundation of Malaysia since 1980 and a Director and the Deputy Treasurer of Tung Shin Hospital, Kuala Lumpur since 1981 and 1986 respectively. He is a life member of Chee Kim Thong Pugilistic & Health Society in 1964. Presently, he sits on the Board of Cabot Malaysia Sdn. Bhd. and SKF Bearing Industries Malaysia Sdn. Bhd. He was awarded the distinction of Panglima Jasa Negara on 2 June 2001 by the Yang Di-Pertuan Agung on His Majesty’s 75th Birthday. His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 10,869 - He does not hold any securities, direct or indirect, in any of SBC’s subsidiaries. He has no family relationship with any Director and/or major shareholder of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year. Directors’ Profile Siah Brothers Corporation Berhad (199310-P) 11
  • 14. ABDUL RAHMAN BIN A. SHUKOR Abdul Rahman bin A. Shukor, a Malaysian, aged 41, was appointed to the Board of Directors of Siah Brothers Corporation Berhad (“SBC”) as a Non-Executive Director alternate to Datuk Sim Peng Choon on 5 February 2001. He graduated in 1985 with a degree in Bachelor of Science in Civil & Environmental Engineering from the University of Wisconsin at Madison, USA. He started his career in 1985 with Machinta Sdn. Bhd. as a Site Engineer, and subsequently joined the Department of Environment (“DOE”) as an Environmental Controller in 1986. Before he left the DOE, he was involved in the Planning Department, specifically on the aspect of Environmental Impact Assessment. In 1992, he joined PNB Equity Resource Corporation Sdn. Bhd., a wholly owned subsidiary company of PNB, as an Assistant Manager in its Venture Capital Business. In 1997, he went to the United States to pursue the Executive Master of Business Administration program from the University of New Haven at Connecticut. At the same time, he has also sat and passed the First and Second of the three levels Examination of the Chartered Financial Analysis ("CFA") Program organised by the Association of Investment Management and Research (“AIMR”), USA. The CFA Program is a distinguished professional chartership for the financial & investment communities in the USA, and have following through the establishment of AIMR charters all around the world. Upon the completion of his studies in 1999, he was assigned as a Manager in the Corporate Services Department of Permodalan Nasional Berhad (“PNB”). Presently, he sits on the Board of GKN Driveshafts (Malaysia) Sdn. Bhd., representing PNB. He does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. He has no family relationship with any Director and/or major shareholder of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended two of the four Board meetings held during the last financial year. Directors’ Profile 12 Annual Report 2003
  • 15. Corporate Structure as at 8 August 2003 SIAH BROTHERS CORPORATION BERHAD INVESTMENT HOLDING l Siah Brothers Land Sdn Bhd 100% l Siah Brothers Properties Sdn Bhd 100% l Siah Brothers Industries Sdn Bhd 100% PROPERTY DEVELOPMENT Seri Ampangan Realty Sdn Bhd 100% l Sinaran Naga Sdn Bhd 100% l Mixwell (Malaysia) Sdn Bhd 100% l South-East Best Sdn Bhd 100% l Gracemart Resources Sdn Bhd 100% l Sutrati Development Sdn Bhd 100% l Siah Brothers Development Sdn Bhd 100% l Tiara Development Sdn Bhd 100% l SBC Homes Sdn Bhd 100% l Winsome Ventures Sdn Bhd 100% l SBC Leisure Sdn Bhd 100% l SBC Towers Sdn Bhd 100% l Siah Brothers Project Management Sdn Bhd 100% l Ligamas Sdn Bhd 50% l Sri Berjaya Development Sdn Bhd 33.3% l CONSTRUCTION l Syarikat Siah Brothers Trading Sdn Bhd 100% l Syarikat Siah Brothers Construction Sdn Bhd 100% l Siah Brothers Enterprise Sdn Bhd 100% l Lifeplus - Siah Brothers Trading JV Sdn Bhd 100% PROPERTY INVESTMENT Aureate Construction Sdn Bhd 100% l Corporate Structure Sri Rawang Properties Sdn Bhd 22.2% l MANUFACTURING & TRADING l Paling Industries Sdn Bhd 40% l Liga Canggih Sdn Bhd 40% l Masahmura Sdn Bhd 51% l Masahmura Sales & Service Sdn Bhd 51% l Varich Industries Sdn Bhd 50% PLANTATION & NURSERY Sam & Lau Plantation Sdn Bhd 50% l Siah Brothers Corporation Berhad (199310-P) 13
  • 16. Group Financial Highlights for the financial year ended 31 March 2003 2003 2002 2001 2000 1999 (Restated) RM’000 RM’000 RM’000 RM’000 RM’000 RESULTS Turnover 69,829 81,645 92,411 114,707 149,669 Profit before taxation 5,149 1,618 1,421 2,555 2,088 Profit after taxation but before minority interests 2,011 1,174 1,071 3,729 3,923 Profit attributable to shareholders 2,011 1,174 1,071 3,729 1,679 ASSETS EMPLOYED Property, plant & equipment 35,813 7,047 7,586 13,090 15,789 Investments and other assets 152,856 141,705 140,323 141,031 165,810 Net current assets 71,634 56,867 58,346 56,393 34,687 Goodwill and deferred expenditure 27,272 10,246 10,246 8,253 8,185 287,575 215,865 216,501 218,767 224,471 FINANCED BY Share capital 82,435 57,302 57,302 57,302 50,469 Share application account - 115,600 - - - Reserves 134,682 42,524 43,087 42,832 40,095 Minority interests - - - - 14,897 Irredeemable Convertible Unsecured Loan Stocks - - 115,600 115,600 115,600 ABBA Bonds 37,827 - - - - Deferred Liabilities 32,631 439 512 3,033 3,410 287,575 215,865 216,501 218,767 224,471 SELECTED RATIOS Net earnings per share (sen) 2.4 1.8 1.6 6.9 3.3 Net tangible assets per share (sen) 242 393 165 169 163 Gross dividend (%) 1.0 - 1.5 1.5 1.0 Profit Before Taxation Assets Employed Turnover Shareholders’ Fund (RM’000) (RM’000) (RM’000) (RM’000) 6 300 200 250 Group Financial Highlights 287,575 5 250 200 217,117 5,149 215,426 150 149,669 224,471 4 200 218,767 216,501 215,865 150 3 150 100 114,707 100 92,411 2,555 2 100 81,645 100,389 100,134 90,564 69,829 2,088 50 50 1,618 1 50 1,421 0 0 0 0 ’03 ’02 ’01 ’00 ’99 ’03 ’02 ’01 ’00 ’99 ’03 ’02 ’01 ’00 ’99 ’03 ’02 ’01 ’00 ’99 14 Annual Report 2003
  • 17. Statement Of Directors’ Responsibilities In Respect Of The Preparation Of The Financial Statements The Directors are responsible for ensuring that the financial statements of the Group are drawn up in accordance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and the Company as of 31 March 2003 and of the results and cash flows of the Group and Company for the financial year ended on that date. In preparing the financial statements, the Directors have: (a) adopted suitable accounting policies and applied them consistently; (b) made judgements and estimates that are prudent and reasonable; (c) ensured the adoption of applicable approved accounting standards; and (d) used the going concern basis for the preparation of the financial statements. The Directors are responsible for ensuring proper accounting records are kept which disclose with reasonable accuracy at any time the financial position of the Group and the Company and are kept in accordance with the Companies Act, 1965. The Directors are also responsible for taking such steps as are reasonably open to them to safeguard the Group’s assets and to prevent and detect fraud and other irregularities. Statement Of Directors’ Responsibilities Siah Brothers Corporation Berhad (199310-P) 15
  • 18. Executive Chairman’s Statement On behalf of the Board of Directors, I am pleased to present the Annual Report and Financial Statements of Siah Brothers Corporation Berhad for the financial year ended 31 March 2003. ECONOMIC AND BUSINESS OUTLOOK FINANCIAL PERFORMANCE The local economy posted a GDP growth of 4.2% for Inspite of the interruption of the industry wide the calendar year 2002 and is expected to post at slowdown in labor activity as cited above, the year least a similar figure in the next 12 months. has been a satisfactory one for the group. Group’s pre-tax profit increased by 218% to RM5.15 million During the first half of last year, the general business bringing the shareholders’ funds total to RM217.12 and consumer sentiment had been distinctly bright million as at 31 March 2003. This somewhat bears prior to the year end interruptions of geopolitical testimony to our efforts to raise the group profitability instability, the 2003 global health epidemic as well as both in terms of top line growth as well as quality of the single domestic issue pertaining to the that growth. displacement of the foreign labor. The latter issue which started to affect the entire industry in the latter quarter of 2002, persisted well into the first quarter of 2003 by which time most of the building activities had once again proven its resilience by readjusting and regaining its ordinary pace. After the slew of negative events, the prospects of the building and housing industry are once again looking up. Most significant were the off budget fiscal measures introduced by the government to promote the housing industry in the form of tax breaks and low mortgage rates. With another round of interest rate cuts instituted again, the general consensus is that there has not been a time in recent history that it has been so affordable to own a new home. This clearly bodes well for our group as most of our activities are either directly or indirectly tied to the outlook of the housing and development industries. Executive Chairman’s Statement The Peak Condominium Signal Hill, Kota Kinabalu 4-Storey Shop Office Suites cum Apartments Taman Mastiara, Kuala Lumpur 16 Annual Report 2003
  • 19. OPERATIONS This year witnessed a concerted thrust towards making the overall operations more efficient; operational processes which support that delivery were significantly ‘retooled’, where a key initiative was the upgrade the framework for operational goals to make it suitable and more focussed. This facilitated better alignment of company goals vis-a-vis peoples’ goals. During the year under review, the following project precincts were delivered/handed over: 1. West Coast: Section 4, Bandar Utama Batang Kali, Selangor and Precinct 4, Mastiara, Kuala Lumpur 2. East Coast: Precinct 3, Perkampungan Seri Mahkota Aman, Kuantan, Pahang Works started on following projects over the similar period: 1. West Coast: Section 1, Taman Suria Pendamar, Klang, Selangor 2. East Coast: Precinct 5, Perkampungan Mahkota Aman, Kuantan, Pahang 3. East Malaysia: Signal Hill Park, Kota Kinabalu, Sabah During the year under review, the following project precincts were delivered/implemented under the turnkey division: 1. Upgrading of Jalan Batu Caves-Simpang Tiga, Batu Caves, Selangor 2. Turnkey construction of high grade homes at Taman Damansara Emas, Kota Damansara, Selangor Our manufacturing associate in Paling Industries Sdn Bhd (“Paling”) in collaboration with Brussels based Etex Group (a world leader in plastic piping systems) entered into its second fiscal year of operations as partnership. For both these fiscal years since 31 March 2001, Paling’s turnover and pre-tax profits posted RM30 million and RM3 million respectively. Through the year, Paling has continue to invest in human resource training as well as tools refinement enabling the raising of productivity levels and production yields. We are already seeing the benefits of technology transfer as well as tools and raw materials being sourced at very competitive rates by leveraging on the bargaining strength of the Etex Group. Moving forward, we expect improvements in the production capability of Paling to continue and we should soon see an increase in export revenue by way of additional product lines and sales to the Etex network internationally. Executive Chairman’s Statement Section 4 Bandar Utama Batang Kali, Selangor Taman Suria Pendamar, Klang Siah Brothers Corporation Berhad (199310-P) 17
  • 20. CORPORATE DEVELOPMENT During the financial year, the Company issued RM61,961,250 nominal value Al-Bai Bithaman Ajil Bonds (“ABBA Bonds”) comprising RM49,569,000 nominal value Primary Bonds and ten (10) equal tranches Secondary Bonds with RM12,392,250 nominal value. The Primary Bonds are redeemable at maturity. Each Primary Bond is supported by ten (10) Secondary Bonds which are redeemable in semi-annual installments commencing six (6) months from the date of first issue of the Secondary Bonds. The ABBA Bonds were placed out to a licensed financial institution via a private placement. The tenure of the ABBA Single Storey Terrace Houses Bonds is five (5) years from the date of issue. Perkampungan Seri Mahkota Aman, Kuantan The profit margin on the ABBA Bonds is at a fixed percentage of 5% per annum, payable in arrears on a semi-annual basis represented by the Secondary Bonds. The ABBA Bonds are issued based on a 10% per annum yield to maturity. BOARDROOM CHANGE At the Boardroom level, you see the departure of Mr Vincent Koh Kok Kee whom I take this opportunity to express our appreciation to him for his invaluable contribution to the Group during his term in office. FUTURE OUTLOOK Shoplots As we continue to garner company wide Perkampungan Seri Mahkota Aman, Kuantan commitment to delivering on the high Executive Chairman’s Statement expectations of the group, we hold the view that, whilst still on the recovery path, the local business sentiment is fast improving. Barring ‘external shocks’, we feel that the environment should stabilize to a point where there should be vast opportunities for us as a turnkey solutions provider to achieving an all round improvement in performance. Road Upgrading Jalan Batu Caves-Simpang Tiga, Batu Caves, Selangor 18 Annual Report 2003
  • 21. DIVIDEND The Board recommends a first and final dividend of 1% per ordinary share less 28% tax for the financial year ended 31 March 2003. Subject to the shareholders’ approval at the forthcoming Annual General Meeting of the Company, the payment of the dividend will be made to the shareholders on a date to be announced later. APPRECIATION Our employees are instrumental to the Group and Turnkey Construction of Double Storey Terrace Houses we would like to thank them for their continued Taman Damansara Emas, Kota Damansara, Selangor hard work and commitment during the past year. The Group continues to approach 2004 with similar confidence and belief in the Group and the ability of its dedicated workforce. As always, we remain grateful to our shareholders, customers, joint venture partners, business associates, bankers and government authorities for their confidence, understanding and support for the Siah Brothers Corporation Group. I am confident that with the continuing support of all parties, the Group will be able to overcome any crisis faced. In all, the Group remains committed to meeting the challenges of the coming year and to constantly aspire to be recognized as a prominent builder of homes and buildings via superior delivery by our people and strong partnership with our clients. Thank you. Paling’s Products Executive Chairman’s Statement Sia Kwee Mow @ Sia Hok Chai JMN, FFB, FCIOB, FAIB Executive Chairman 8 August 2003 Paling’s Products Siah Brothers Corporation Berhad (199310-P) 19
  • 22. Penyata Pengerusi Eksekutif Saya bagi pihak Lembaga Pengarah dengan sukacitanya membentangkan Laporan Tahunan dan Penyata Kewangan Siah Brothers Corporation Berhad bagi tahun kewangan berakhir 31 Mac 2003. TINJAUAN EKONOMI DAN PERNIAGAAN PRESTASI KEWANGAN Ekonomi negara telah mencatatkan Keluaran Dalam Walaupun masalah aktiviti buruh sepertimana yang Negara Kasar (KDNK) sebanyak 4.2% pada telah disebutkan di atas telah menjejaskan keadaan tahun 2002 dan dijangka akan terus mencatatkan industri ini, namun tahun ini Kumpulan telah sekurang-kurangnya angka yang sama dalam membentangkan keputusan yang amat memuaskan. 12 bulan yang akan datang. Keuntungan sebelum cukai Kumpulan telah meningkat sebanyak 218 % kepada RM5.15 juta dan Sentimen konsumer dan perniagaan telah sekaligus menaikkan dana pemegang saham menunjukkan prestasi yang amat baik sebelum kepada RM217.12 juta pada 31 Mac 2003. Prestasi pertengahan tahun kedua iaitu sebelum timbulnya ini telah membuktikan nekad kami untuk ketidakstabilan geopolitik, jangkitan wabak penyakit meningkatkan keuntungan Kumpulan dari segi yang menular seluruh dunia serta isu-isu domestik pertumbuhan perolehan dan kualiti pertumbuhannya. berkaitan dengan kekurangan buruh asing. Isu domestik tersebut telah mulai menjejaskan keadaan seluruh industri ini pada suku akhir tahun 2002 malah berlarutan sehingga suku pertama tahun 2003. Namun pada ketika ini kebanyakan aktiviti dalam sektor pembinaan telah sekali lagi membuktikan daya keteguhan dengan penyesuaian aktiviti kembali ke kedudukan yang asal. Prospek sektor pembinaan dan sektor perumahan telah bertambah baik selepas mengharungi peristiwa-peristiwa negatif tersebut. Isu paling signifikan adalah rangsangan ekonomi melalui penilaian pelepasan belanjawan fiskal yang diperkenalkan oleh pihak kerajaan dalam usaha untuk mempromosikan industri perumahan melalui galakan cukai serta sumber kewangan yang murah. Malahan, kemampuan untuk memiliki rumah baru kini telah menjadi mudah dengan penurunan kadar faedah pinjaman rumah. Keadaan baik yang tidak pernah sesekali berlaku dalam sejarah negara ini telah memberi kesan yang positif kepada Kumpulan memandangkan kebanyakan aktiviti kami adalah berkaitan rapat dengan prospek sektor Penyata Pengerusi Eksekutif pembangunan dan perumahan. Kolam Renang di The Peak Kondominium Signal Hill, Kota Kinabalu Kedai Pejabat Berserta Pangsapuri 4 Tingkat Taman Mastiara, Kuala Lumpur 20 Annual Report 2003
  • 23. OPERASI Tahun ini memperlihatkan hasrat serta kerjasama dari semua pihak untuk menghasilkan mutu operasi yang lebih cekap secara keseluruhan; proses-proses kerja yang menyumbangkan hasil tersebut telah diperbaiki, di mana inisiatif utama adalah peningkatan rangkaian kerja organisasi demi matlamat operasi untuk menjadikannya lebih sesuai dan berfokus. Usaha ini juga telah menyelaraskan tumpuan organisasi dengan matlamat masyarakat umum. Dalam tahun bawah tinjauan, Kumpulan telah berjaya menyiapkan dan menyerahkan projek-projek berikut kepada para pembeli rumah: 1. Pantai Barat: Seksyen 4, Bandar Utama Batang Kali, Selangor dan Precinct 4, Mastiara, Kuala Lumpur 2. Pantai Timur: Precinct 3, Perkampungan Seri Mahkota Aman, Kuantan, Pahang Dalam tahun yang sama, projek-projek berikut telah dimulakan kerja: 1. Pantai Barat: Seksyen 1, Taman Suria Pendamar, Klang, Selangor 2. Pantai Timur: Precinct 5, Perkampungan Mahkota Aman, Kuantan, Pahang 3. Malaysia Timur: Signal Hill Park, Kota Kinabalu, Sabah Dalam tahun bawah tinjauan, projek-projek lingkungan berikut telah disiapkan/dilaksanakan bagi bahagian ‘turnkey’: 1. Menaik-taraf Jalan Batu Caves-Simpang Tiga, Batu Caves, Selangor 2. Pembinaan ‘turnkey’ rumah gred tinggi di Taman Damansara Emas, Kota Damansara, Selangor Usahasama antara syarikat bersekutu, Paling Industries Sdn Bhd (“Paling”) dengan rakan kongsinya, Kumpulan Etex dari Brussels (pengilang terbesar di dunia dalam sistem paip plastik) telah memasuki tahun fiskal yang kedua. Dalam kedua-dua tahun fiskal semenjak 31 Mac 2001, Paling telah meraihkan perolehan sebanyak RM30 juta dan keuntungan sebelum cukai sebanyak RM3 juta. Sepanjang tahun ini, Paling telah terus melabur dalam latihan sumber manusia serta ke atas penyempurnaan peralatan kerja untuk meningkatkan lagi tahap produktiviti dan hasil pengeluaran. Kami telah menikmati kelebihan pemindahan teknologi serta perolehan peralatan dan bahan-bahan mentah pada harga yang kompetitif melalui daya rundingan Kumpulan Etex. Menjangkau masa depan, kami menjangka pertumbuhan yang berterusan dalam pengeluaran Paling dan pendapatan eksport melalui pertambahan jenis produk dan hasil jualan kepada rangkaian sedunia Etex. Penyata Pengerusi Eksekutif Seksyen 4 Bandar Utama Batang Kali, Selangor Taman Suria Pendamar, Klang Siah Brothers Corporation Berhad (199310-P) 21
  • 24. PERKEMBANGAN KORPORAT Dalam tahun kewangan ini, Syarikat telah menerbitkan RM61,961,250 nilai nominal Bon Al-Bai Bithaman Ajil (Bon ABBA) yang terdiri daripada RM49,569,000 nilai nominal Bon Pertama dan sepuluh (10) gugusan sama Bon Kedua pada nilai nominal RM12,392, 250. Bon Pertama boleh ditebus kembali selepas tamat tempoh matang. Setiap Bon Pertama disokong oleh Bon Kedua yang dapat diperolehi semula selepas pembiayaan ansuran tempoh setengah tahun yang bermula enam bulan dari terbitan pertama Bon Kedua. Bon ABBA ditempatkan di sebuah institusi Rumah Teres Satu Tingkat kewangan berlesen menerusi suatu Perkampungan Seri Mahkota Aman, Kuantan penempatan persendirian. Tempoh pemegangan Bon ini adalah lima (5) tahun dari tarikh ia diterbitkan. Keuntungan Bon ABBA telah ditetapkan pada kadar 5% setahun, akan dibayar secara ansuran dalam tempoh setengah tahun yang diwakili oleh Bon Kedua. Bon ABBA diterbitkan pada kadar 10% setahun hingga tempoh matang. PERUBAHAN LEMBAGA PENGARAH Pada peringkat Lembaga Pengarah, saya mengambil kesempatan ini untuk melafazkan penghargaan kami kepada Encik Vincent Koh Kok Kee atas sumbangan beliau kepada Kumpulan ini sepanjang penggal beliau sebagai pengarah Syarikat. Lot Kedai Perkampungan Seri Mahkota Aman, Kuantan TINJAUAN MASA DEPAN Dengan terus melaksanakan tanggungjawab Penyata Pengerusi Eksekutif dan kewajipan semua pihak demi mencapai matlamat Kumpulan ini, kami bersependapat bahawa sentimen perniagaan yang kini masih dalam tahap pemulihan akan bertambah baik. Walaupun terdapat gangguan luaran, kami yakin bahawa keadaan persekitaran akan menjadi lebih stabil hingga ke suatu tahap yang akan mendatangkan peluang kepada kami untuk meningkatkan lagi prestasi Syarikat secara keseluruhannya. Projek Menaik-taraf Jalan Jalan Batu Caves-Simpang Tiga, Batu Caves, Selangor 22 Annual Report 2003
  • 25. DIVIDEN Lembaga Pengarah telah mencadangkan pembayaran dividen tahunan sebanyak 1% sesaham tolak cukai 28% bagi tahun kewangan berakhir 31 Mac 2003, tertakluk kepada persetujuan para pemegang saham pada Mesyuarat Agung Tahunan akan datang. Tarikh pembayaran dividen ini akan diumumkan kelak. PENGHARGAAN Kakitangan kami adalah instrumental kepada Pembinaan Turnkey Rumah Teres Dua Tingkat Kumpulan dan kami ingin melafazkan ucapan Taman Damansara Emas, Kota Damansara, Selangor terima kasih kepada mereka atas usaha berterusan dan amanat kukuh mereka pada tahun yang lalu. Kumpulan ini akan menghadapi tahun 2004 dengan keyakinan dan percaya akan kebolehan para pekerjanya yang berdedikasi. Seperti biasa, kami juga ingin menyatakan penghargaan kami kepada para pemegang saham, rakan-rakan perkongsian, rakan-rakan perniagaan, ahli-ahli bank dan juga pihak berkuasa kerajaan atas keyakinan, persefahaman dan sokongan mereka terhadap Kumpulan Siah Brothers Corporation. Saya yakin dengan adanya sokongan berterusan daripada semua pihak, Kumpulan ini akan berupaya mengatasi sebarang rintangan yang dihadapi. Justeru itu, Kumpulan ini bertekad untuk menghadapi sebarang cabaran pada tahun yang akan datang dan terus bernekad untuk menjadi pembina perumahan dan bangunan yang terulung Produk Keluaran Paling melalui kewibawaan para pekerja kami serta talian usahasama dan hubungan yang rapat dengan para pelanggan kami. Penyata Pengerusi Eksekutif Sekian, terima kasih. Sia Kwee Mow @ Sia Hok Chai JMN, FFB, FCIOB, FAIB Pengerusi Eksekutif 8 Ogos 2003 Produk Keluaran Paling Siah Brothers Corporation Berhad (199310-P) 23
  • 26. Statement Of Corporate Governance as at 8 August 2003 The Board of Directors of Siah Brothers Corporation Berhad appreciates and is committed to the maintenance of high standards of corporate governance by implementing the principles and best practices set out in Part 1 and 2 of the Malaysian Code of Corporate Governance (“Code”). Set out in the ensuing paragraphs are descriptions of how the Group has applied the principles and best practices of the Code during the financial year and the extent of compliance with best practices of the Code. BOARD OF DIRECTORS Composition and Balance As at the date of this statement, the Board consists of 7 members, comprising 2 independent non-executive Directors, 3 non-executive Directors and 2 executive Directors. With this Board composition, the Company complies with paragraph 15.02 of the Listing Requirements of the Kuala Lumpur Stock Exchange where at least 2 Directors or 1/3 of the Board, whichever is higher, are independent Directors. The Board comprises Directors from different professional backgrounds and collectively bring with them depth and diversity in experience and expertise to the Group’s operations. The Executive Directors are responsible for implementing policies of the Board, overseeing the Group’s operations and developing the Group’s business strategies. The role of the Independent Non-Executive Directors is to provide independent view, advice and judgement to ensure a balanced and unbiased decision making process. The Board is of the opinion that its current membership fairly reflects the investment of minority shareholders in the Company and represents the required mix of skills and experience required to discharge the Board’s duties and responsibilities. Furthermore, no individual Director or group of Directors can dominate the Board’s decision making. The profiles of the members of the Board are set out in this Annual Report under the section named Directors’ Profile. Duties and Responsibilities The Board of Siah Brothers Corporation Berhad is primarily responsible for: • Reviewing and adopting a strategic plan for the Group; Statement Of Corporate Governance • Overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed; • Identify principal risk and ensure the implementation of appropriate systems to manage these risks; • Succession planning, including appointing, training, fixing the compensation of and where appropriate, replacing senior management; • Developing and implementing an investor relations program or shareholder communications policy for the Company; • Reviewing the adequacy and the integrity of the Company’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines. The roles of the Managing Director and Chairman are clearly distinct to ensure that there is a balance of power and authority. The Chairman is primarily responsible for the working of the Board, its membership and participation of the members at the Board meetings. The Managing Director is responsible for the daily management of the Group’s business operations and implementation of policies and strategies adopted by the Board. On 27 August 2002, the Board appointed Dato’ Lim Phaik Gan as the Senior Independent Non-Executive Director to whom concerns may be conveyed. Board Meetings Normally, the Board meets at least 4 times in a financial year with additional meetings convened to deliberate on urgent and significant matters where decisions need to be taken between the scheduled Board meetings. During the financial year ended 31 March 2003, the Board met 4 times where it deliberated on and considered matters relating to the Group’s financial performance, significant investments, corporate development, strategic issues and business plan. Details of each Director’s attendance of Board meetings are set out as follows: 24 Annual Report 2003
  • 27. Board Meetings (cont’d) No. of Name of Director Designation meetings attended Sia Kwee Mow @ Sia Hok Chai Executive Chairman 4/4 Sia Teong Heng Managing Director 4/4 Mun Chong Shing @ Mun Chong Tian Non-Executive Director 3/4 Dato’ Lim Phaik Gan Independent Non-Executive Director 2/4 Dato’ Dr. Norraesah Bt. Haji Mohamad Independent Non-Executive Director 2/4 Datuk Sim Peng Choon Non-Executive Director 4/4 Abdul Rahman Bin A. Shukor Non-Executive Director 2/4 (Alternate to Datuk Sim Peng Choon) Vincent Koh Kok Kee Independent Non-Executive Director 4/4 (Resigned on 31 May 2003) Tan Sri Dato’ Ir. Muhammad Yusuff Independent Non-Executive Director 1/1 Bin Haji Muhammad Yunus (Resigned on 14 August 2002) All Directors receive documents on matters requiring their consideration prior to and in advance of each meeting. These documents are comprehensive and include qualitative and quantitative information to enable the Board members to make an informed decision. Senior management is invited to attend these meetings to explain and clarify matters being tabled. All proceedings of the Board meetings are minuted by the Company Secretary. There is a formal schedule of matters reserved specifically for Board’s decisions, these include approval of key policies, significant acquisitions and disposals of assets, significant investments and approval of budgets and corporate plans. To assist in the discharge of their responsibilities and duties, all Directors have access to the advice and services of the Company Secretary. If required, the Directors may engage independent professionals at the Group’s expense, in the furtherance of their duties. Statement Of Corporate Governance Re-election and Re-appointment of Directors In accordance with the Company’s Articles of Association, one third of the Directors shall retire from office and be eligible for re-election at the annual general meeting. Furthermore, each Director shall retire from office at least once in every three years. Directors who are of or over the age of seventy years shall also retire from office and be eligible for re-appointment at the annual general meeting pursuant to Section 129(6) of the Companies Act, 1965. Directors’ Training All members of the Board have attended the Mandatory Accrediation Programme conducted by the Research Institute of Investment Analysis Malaysia. The Board will ensure that all its members attend such training programs as prescribed by the Kuala Lumpur Stock Exchange. For new Directors, a familiarisation program will be conducted for them. This includes a presentation of the Group’s operations by senior management and visits to the existing project sites. Board Committees Apart from the Audit Committee, there are two other committees established by the Board during the financial year ended 31 March 2003 to assist the Board in the execution of their responsibilities. They are the Nomination and Remuneration Committees and all Board committees are provided with written terms of reference. Siah Brothers Corporation Berhad (199310-P) 25
  • 28. AUDIT COMMITTEE The report of the Audit Committee is set out on pages 31 to 34 of this annual report. NOMINATION COMMITTEE The Nomination Committee (“NC”) was established on 27 February 2003. The members of the NC are as follows: Chairperson : Dato’ Lim Phaik Gan (Independent Non-Executive Director) (Appointed on 29 May 2003) Members : Dato’ Dr Norraesah Bt. Haji Mohamad (Independent Non-Executive Director) Mun Chong Shing @ Mun Chong Tian (Non-Executive Director) Vincent Koh Kok Kee (Independent Non-Executive Director) (Resigned on 31 May 2003) Secretaries : Chong Fook Sin Kan Chee Jing The terms of reference of NC are as follows: (1) Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist exclusively of non-executive directors, minimum 3, a majority of whom are independent. The members of the Committee shall elect the Chairman from among their number who shall be an independent director. In order to form a quorum in respect of a meeting of the Committee, the members present must be wholly or a majority of whom must be independent directors. (2) Frequency Of Meetings Meetings shall be held not less than once a year. The Company Secretary shall be the Secretary of the Committee. (3) Authority The Committee is to recommend new nominees for the Board and the board committees and to assess Directors on an on-going basis. The actual decision as to who shall be nominated should be the responsibility of the full Board after considering the recommendations of the Committee. Statement Of Corporate Governance (4) Duties The duties of the Committee shall be: i. to recommend to the Board, candidates for all directorships and in doing so, preference shall be given to shareholders or existing Board members and candidates proposed by the Chief Executive Officer and, within the bounds of practicability, by any other senior executive or any director or shareholder may also be considered. ii. to recommend to the Board, directors to fill the seats on board committees. iii. to review annually, on behalf of the Board, the required mix of skills, experience and other qualities, including core competencies, which non-executive directors should bring to the Board. iv. to carry out annually, on behalf of the Board, the assessment of the effectiveness of the Board as a whole, the board committees and the contribution of each individual director. (5) Reporting Procedures The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. The NC met once on 29 May 2003 subsequent to the financial year, attended by all its members. At that meeting, the Chairperson was elected and the following matters were considered and resolved: (a) re-appointment and re-election of Directors at the Thirteenth Annual General Meeting; (b) mix of skills, experience and qualities of all Directors; and (c) the effectiveness of the Board and the contribution from each Board member. 26 Annual Report 2003
  • 29. REMUNERATION COMMITTEE The Remuneration Committee (“RC”) was established on 27 February 2003 and the members of the RC are as follows: Members : Dato’ Dr Norraesah Bt. Haji Mohamad (Independent Non-Executive Director) Dato’ Lim Phaik Gan (Independent Non-Executive Director) Datuk Sim Peng Choon (Non-Executive Director) Sia Teong Heng (Managing Director) Secretaries : Chong Fook Sing Kan Chee Jing The terms of reference of RC are as follows: (1) Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of at least 3 directors, wholly or a majority of whom are non-executive directors. The members of the Committee shall elect the Chairman from among their number who shall be a non-executive director. In order to form a quorum in respect of a meeting of the Committee, the members present must be wholly or a majority of whom must be non-executive directors. (2) Frequency Of Meetings Meetings shall be held not less than once a year. The Company Secretary shall be the Secretary of the Committee. (3) Authority The Committee is authorised to draw from outside advice as and when necessary in forming its recommendation to the Board on the remuneration of the executive directors in all its forms. Executive directors should play no part in decisions on their own remuneration and should abstain from discussion of their own remuneration. Note: The determination of the remuneration packages of non-executive directors, including non-executive Statement Of Corporate Governance chairman, should be a matter for the Board as a whole. The individuals concerned should abstain from discussion of their own remuneration. (4) Duties The duty of the Committee is to recommend to the Board the structure and level of remuneration of executive directors. (5) Reporting Procedures The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. The RC has yet to meet as the review of remuneration of the Directors is expected to be conducted towards the end of the current financial year. Siah Brothers Corporation Berhad (199310-P) 27
  • 30. DIRECTORS’ REMUNERATION The details of the remuneration of each Director during the financial year ended 31 March 2003 are as follows: (a) Total Remuneration Basic Benefits- Attendance Salary Bonuses Fees in-kind Fee Total RM RM RM RM RM RM Executive Sia Kwee Mow @ Sia Hok Chai 396,000 90,000 - 16,925 - 502,925 Sia Teong Heng 210,000 45,000 - - - 255,000 Non-Executive Mun Chong Shing @ Mun Chong Tian - - 12,000 - 1,200 13,200 Dato’ Lim Phaik Gan - - 12,000 - 1,200 13,200 Dato’ Dr. Norraesah Bt. Haji Mohamad - - 13,000 - 2,400 15,400 Datuk Sim Peng Choon - - 12,000 - 3,000 15,000 Abdul Rahman Bin A. Shukor (Alternate to Datuk Sim Peng Choon) - - - - - - Vincent Koh Kok Kee (Resigned on 31 May 2003) - - 12,000 - 3,000 15,000 Tan Sri Dato’ Ir. Muhammad Yusuff Bin Haji Muhammad Yunus (Resigned on 14 August 2002) - - 6,000 - 600 6,600 Total 606,000 135,000 67,000 16,925 11,400 836,325 Statement Of Corporate Governance (b) Directors’ remuneration by bands Executive Non-Executive Total Nil - 1 1 RM1 to RM50,000 - 6 6 RM50,001 to RM100,000 - - - RM100,001 to RM150,000 - - - RM150,001 to RM200,000 - - - RM200,001 to RM250,000 - - - RM250,001 to RM300,000 1 - 1 RM300,001 to RM350,000 - - - RM350,001 to RM400,000 - - - RM400,001 to RM450,000 - - - RM451,000 to RM500,000 - - - RM500,001 to RM550,000 1 - 1 Total 2 7 9 28 Annual Report 2003
  • 31. ACCOUNTABILITY AND AUDIT Financial Reporting The Board is responsible for presenting a balanced and meaningful assessment of the Group’s financial performance and prospects primarily through the annual report/financial statements and quarterly announcements of the Group’s results. The Responsibility Statement by the Directors pursuant to the Kuala Lumpur Stock Exchange Listing Requirements is set out on page 15. Internal Control The Group’s Statement on Internal Control is set out on pages 30. Relationship with Auditors The role of the Audit Committee in relation to the external auditors is explained in the Audit Committee Report. The Group has paid RM78,000 of non-audit fees to the external auditors for the financial year ended 31 March 2003. Relationship with Shareholders and Investors The primary tools of communication with the shareholders of the Company are through the annual report, announcements through Kuala Lumpur Stock Exchange and circulars. All queries from shareholders and members of public received through phone calls or letters are handled by the Executive Directors, Group Financial Controller and Company Secretary. At the annual general meeting and extraordinary general meeting, the Chairman gives shareholders ample opportunity to participate through questions on the prospects, performance of the Group and other matters of concern to them with the Board. ADDITIONAL COMPLIANCE INFORMATION In conformance with the requirements of the KLSE, the following compliance information is provided: Material Contracts involving Directors’ and Substantial Shareholders’ Interest Syarikat Siah Brothers Construction Sdn Bhd (“SSBC”), a wholly owned subsidiary of Siah Brothers Corporation Berhad (“SBCB”), had on 14 February 2003 entered into a Sale and Purchase Agreement for the sale of one Statement Of Corporate Governance condominium unit identified as Parcel B4-3 measuring approximately an area of 1,641 sq. ft. bearing postal address at B3-4, Sri Bukit Tunku Condominium, Lorong Tun Ismail, 50480, Kuala Lumpur together with an accessory parcel distinguished as No. 88, Building No. Block B (Water Terrace) erected on that piece of land held under GRN 29401 (formerly CT 8161 and CT 8163) Lot No. 358 (formerly Lot Nos. 64 and 66) in Section 71, Mukim of Kuala Lumpur to Ms Sia Poh Eng for a total cash consideration of RM550,000. The purchaser is a daughter of Mr Sia Kwee Mow @ Sia Hok Chai, the Executive Chairman of SBCB. She is a sister of Mr Sia Teong Heng, the Managing Director of SBCB and Mr Sia Teong Leng, a director in a few subsidiaries of SBCB. Mr Sia Kwee Mow @ Sia Hok Chai and Mr Sia Teong Heng are also Directors of SSBC. The purchaser, Mr Sia Kwee Mow @ Sia Hok Chai, Mr Sia Teong Heng and Mr Sia Teong Leng are shareholders of LOM Holdings Sdn Bhd ("LOM") which is a substantial shareholder of SBCB. LOM's wholly-owned subsidiary, Evergreen Legacy Sdn Bhd ("Evergreen") is also a substantial shareholder of SBCB. Mr Sia Kwee Mow @ Sia Hok Chai and Mr Sia Teong Heng are also directors of LOM and Evergreen and substantial shareholders of SBCB. Revaluation Policy on Landed Properties The Group’s landed properties are stated at cost. There is no policy of regular revaluation of its landed properties as at the end of the financial year ended 31 March 2003. Status of utilization of Proceeds raised from Al-Bai Bithaman Ajil Bonds On 13 September 2002, Siah Brothers Corporation Berhad issued RM61,961,250 nominal value Al-Bai Bithaman Ajil Bonds (“ABBA Bonds”) comprising RM49,569,000 nominal value Primary ABBA Bonds and RM12,392,250 nominal value Secondary ABBA Bonds. Since the issue of the ABBA Bonds, the proceeds have been utilized to repay bank borrowings, to bridge the financing requirements of the on-going projects, working capital as well as for expenses relating to the issue of ABBA Bonds. Siah Brothers Corporation Berhad (199310-P) 29
  • 32. Statement On Internal Control Introduction The Malaysian Code on Corporate Governance requires the Board to maintain a sound system of internal control to safeguard shareholders’ investment and the Group’s assets. The Board is pleased to include a statement on the state of the Group’s internal controls in accordance with the paragraph 15.27 (b) of the KLSE Listing Requirements and as guided by the KLSE’s Statement on Internal Control: Guidance for Directors of Public Listed Companies (“the Guidance”). Board Responsibility The Board affirms its responsibilities for the Group’s systems of internal controls and risk management, and for reviewing the adequacy and integrity of the internal control system. However, due to limitations that are inherent in any system of internal control, the system is designed to manage rather than eliminate the risk that may impede the achievement of the Group’s business objectives. As such, the Group’s internal control system can only provide reasonable and not absolute assurance against material misstatement or loss. The Board has outsourced its internal audit function to external consultants to assist in the review of the adequacy and integrity of the Group’s system of internal controls and the development/update of the key risk profile of the Group. The activities of the Internal Audit function are summarised in the Audit Committee Report. Risk Management Framework During the financial year, the Board and Senior Management have considered the key risks in their review of strategic and business plans of the Group. In addition, on a day to day basis, the Heads of Department and key staff are responsible for managing the risks of their department. Significant risks identified and the corresponding internal controls implemented are discussed at the daily/weekly/monthly meetings attended by senior management and key staff. Management with the assistance of external consultants updated the key risk profile of the Group in the last quarter of the financial year ended 31 March 2003. The updated key risk profile, which includes details of risks faced by the Group and the corresponding controls put in place to manage/mitigate the identified risks, were presented to the Audit Committee on 29 May 2003. The above procedure forms the on-going process used to identify, evaluate and manage significant risks. Other Key Elements Of Internal Controls The other key elements of the Group’s internal control systems are: Statement On Internal Control • The independent internal audit function reports directly to the Audit Committee. Based on their review during the financial year ended 31 March 2003, the Board is pleased to report that there were no major weaknesses noted in the areas audited. All recommendations proposed by the internal audit function in improving the internal controls are considered and implemented in concert with Management. • Monthly management meetings convened to discuss the Group’s operations and performance. This includes the monthly monitoring of results against budget, with significant variance explained and appropriate action taken. • Daily/weekly staff meetings convened to discuss the progress of projects. • Clear lines of responsibilities and authority limits of all departments. This internal control acts as a check and balance. • Tender Committee approves the involvement of the Group in any property development and construction projects. A minimum number of three quotations are called for and tenders are awarded based on factors such as track record, quality and speed of delivery. • A sound financial system that captures every single financial transaction. From this data captured, the Group produces consolidated monthly management accounts and quarterly performances, which allow the management to focus on areas of concern. • Regular site visits by members of the senior management team. 30 Annual Report 2003
  • 33. Audit Committee Report The Board of Siah Brothers Corporation Berhad is pleased to present below the Audit Committee Report for the financial year ended 31 March 2003. COMPOSITION The members of the Audit Committee are as follows: Chairperson : Dato’ Dr. Norraesah Bt. Haji Mohamad (Independent Non-Executive Director) Members : Tan Sri Dato’ Ir. Muhammad Yusuff Bin Hj. Muhammad Yunus (Independent Non-Executive Director) (Resigned on 14 August 2002) Datuk Sim Peng Choon (Non-Executive Director) Vincent Koh Kok Kee (Independent Non-Executive Director) Secretaries : Chong Fook Sin Kan Chee Jing MEMBERS’ ATTENDANCE OF AUDIT COMMITTEE MEETINGS Normally, the Audit Committee meets at least 4 times during the financial year. However, additional meetings may be convened to deliberate and resolve urgent and significant matters in between scheduled meetings. During the financial year ended 31 March 2003, the Audit Committee met 4 times and details of members’ attendance are as follows: Number of meetings attended Dato’ Dr. Norraesah Bt. Haji Mohamad 4/4 Tan Sri Dato’ Ir. Muhammad Yusuff Bin Hj. Muhammad Yunus (Resigned on 14 August 2002) - Datuk Sim Peng Choon 4/4 Vincent Koh Kok Kee 4/4 An Executive Director and the Group Financial Controller were present by invitation at all the meetings. The outsourced internal auditors were present whenever invited. Audit Committee Report SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE The following activities were undertaken by the Audit Committee during the financial year ended 31 March 2003: (a) Reviewed the audit plan of the external auditors, in terms of the nature of the audit procedures, significant accounting and auditing issues, impact of new or proposed changes in the accounting standards and regulatory requirements. (b) Reviewed the unaudited quarterly report on the consolidated results of the Group for the quarters ended 31 March 2002, 30 June 2002, 30 September 2002 and 31 December 2002. (c) Reviewed the external auditors’ reports in relation to their audit findings and the accounting issues arising from the audit of the Company’s annual financial results before submitting its recommendations to the Board for approval. (d) Reviewed related party transactions and conflict of interest situation that may arise within the Group. (e) Reviewed the recovery of certain major long outstanding debts. Siah Brothers Corporation Berhad (199310-P) 31
  • 34. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE (cont’d) (f) Approved the internal audit plan and reviewed the findings of the internal auditors, management’s response, remedial actions taken and follow-ups. (g) Noted new developments in accounting standards issued by the Malaysian Accounting Standards Board. (h) Reviewed the Company’s compliance with certain government and authorities regulations. (i) Assessed the performance of the Company’s financial management. SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION The internal audit function is independent of the operations of the Group and provides reasonable assurance that the Group’s system of internal control is satisfactory and operating effectively. The areas reviewed by the internal audit function for the corporate office and ongoing property development and construction projects up to the date of this report are as follows: (i) assessing the saleability of projects and approving of projects for development; (ii) development of the construction project budget; (iii) obtaining the necessary licenses and permits; (iv) close monitoring of project against the construction timetable, building plan and budget; (v) timely issuance of the consultants’ certification and certificate of fitness; (vi) assessment of the suitability of third party sub-contractors and the monitoring of their construction work; (vii) ordering of supplies; (viii) reviewed and updated the risk profile of the Group. The process involved consultation with the respective Heads of Department on the existing risks and related controls identified previously to ensure continued relevance to the Group. In addition, a few more risks and related controls were included in the risk register. The revised risk register was reviewed and adopted by the Audit Committee; (ix) file maintenance and document custodian; (x) identification and tagging of properties to purchaser; (xi) sales administration processing; and Audit Committee Report (xii) collection processing. A number of minor internal control weaknesses were identified during the financial year, all of which have been appropriately addressed. None of the weaknesses have resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report. The 2003/2004 internal audit plan covers: (a) project management, this includes a review of the construction timetable, building plan and budget; (b) sales administrative processes, specifically the tagging of properties purchased by buyers and the timeliness and controls involved in the collection of amounts due from buyers; and (c) the framework for file maintenance including the existing filing system for documents, file retrievals and identification of the relevant document custodian. The abovementioned areas to be covered by the outsourced internal audit function will applicable for the projects which are located in: (i) Kuantan; (ii) Kota Kinabalu; (iii) Klang; and (iv) Jalan Ipoh, Kuala Lumpur. 32 Annual Report 2003
  • 35. TERMS OF REFERENCE OF THE AUDIT COMMITTEE Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of at least 3 directors, a majority of whom are independent. At least one member of the Committee must be: (i) a member of the Malaysian Institute of Accountants (“MIA”); or (ii) if he/she is not a member of the MIA, he must have at least 3 years working experience and • he/she must have passed the examinations specified in Part I of the 1st Schedule to the Accountants Act, 1967; or • he/she must be a member of one of the associations of accountants specified in Part II of the 1st Schedule to the Accountants Act, 1967. The members of the Committee shall elect a Chairman from amongst their number who shall be an independent director. In order to form a quorum in respect of a meeting of the Committee, the majority of the members present must be independent directors. Attendance At Meetings The Group Financial Controller, the Head of Internal Audit and a representative of the external auditors shall normally attend meetings. Other directors and employees of the Company may attend meetings at the Committee’s invitation. However, at least once a year the Committee shall meet with the external auditors without any executive director present. The Company Secretary shall be the secretary of the Committee. Frequency Of Meetings Meetings shall be held not less than four times a year. The external auditors may request a meeting if they consider that one is necessary. Authority The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all the employees are directed to cooperate with any request made by the Committee. The Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of an outsider with relevant experience and expertise, if it considers this necessary. Audit Committee Report Duties The duties of the Audit Committee shall be: (1) to consider the appointment of the external auditors, the audit fees and any questions of nomination, resignation or dismissal. (2) to discuss with the external auditors before the audit commences the nature and scope of the audit and ensure co-ordination where more than one audit firm is involved. (3) to discuss with the external auditors the evaluation of the system of internal controls, audit report and ensure assistance given by the employees to the external auditors. Siah Brothers Corporation Berhad (199310-P) 33
  • 36. Duties (cont’d) (4) to review the quarterly and year-end financial statements before submission to the Board, focusing particularly on: • any changes or implementation of changes in accounting policies and practices; • major judgement areas; • significant adjustments arising from the audit; • significant and unusual events; • the going concern assumption; • compliance with accounting standards; and • compliance with stock exchange and legal requirements (5) to discuss problems and reservations arising from the interim and final audits and any matters the external auditor may wish to discuss in the absence of management, where necessary. (6) to review the external auditors’ management letter and management’s response. (7) to do the following where an internal audit function exists: • review the adequacy of the scope, functions and resources of the internal audit function and that it has the necessary authority to carry out its work. • review the internal audit programme and processes and results of the internal audit programme, processes and investigation and where necessary, ensure that appropriate action is taken on the recommendations of the internal audit function. • review any appraisal or assessment of the performance of the members of the internal audit function. • approve the appointment or termination of senior staff members of the internal audit function. • inform itself of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning. (8) to consider any related party transactions and conflict of interest situations that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management Audit Committee Report integrity. (9) to consider the findings of internal investigations and management’s response and ensure co-ordination between internal and external auditors. (10) to consider other topics, as defined by the Board. Reporting Procedure The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. 34 Annual Report 2003
  • 37. Financial Statements Directors’ Report 36 Statement By Directors 41 Statutory Declaration 41 Report Of The Auditors 42 Balance Sheets 43 Income Statements 44 Statements Of Changes In Equity 45 Cash Flow Stattements 46 Notes To The Financial Stattements 48
  • 38. 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 2003. 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. RESULTS THE GROUP THE COMPANY RM RM Profit after taxation for the financial year 2,010,893 2,378,172 DIVIDENDS Since the end of the previous financial year, the Company paid a dividend of 5.5% per Irredeemable Cumulative Convertible 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. For the financial year, (i) 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 (ii) the directors recommend the payment of a first and final dividend of 1% per ordinary share less 28% tax amounting to RM544,334. 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. ISSUES OF SHARES AND DEBENTURES During the financial year, (a) there were no changes in the authorised capital of the Company; (b) the Company increased its issued and paid-up capital from RM50,468,943 to RM75,602,000 by way of: (i) the conversion of 115,600,000 Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) of RM1 each Directors’ Report into 25,130,057 ordinary shares of RM1 each. The conversion was made on the following basis: • 25,127,557 new ordinary shares of RM1 each were issued by the tendering of 115,590,000 ICULS with nominal value of RM1 each; • 2,500 new ordinary shares of RM1 each were issued by the tendering of 10,000 ICULS with nominal value of RM1 each and cash subscription of RM1,500. The new shares which arose from the conversion of the ICULS rank pari passu in all respects with the existing shares of the Company. (ii) the exercise of share options by eligible employees pursuant to the Employee Share Option Scheme of 3,000 ordinary shares of RM1 each. The new shares issued rank pari passu in all respects with the existing shares of the Company. (c) the Company issued RM61,961,250 Al-Bai Bithaman Ajil Bonds (ABBA Bonds) comprising RM49,569,000 nominal value Primary Bonds and RM12,392,250 nominal value Secondary Bonds for working capital purposes. 36 Annual Report 2003
  • 39. 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 2002 1,754,000 Lapsed during the financial year due to: - exercised during the financial year (3,000) - staff resignation (87,000) At 31 March 2003 1,664,000 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 Kuala Lumpur Stock Exchange 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 (v) the shares to be alloted 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 has in issue a total of 17,076,200 TSRs, the expiry date of which has been extended to 20 February 2004. The TSRs entitle the holders thereof the rights 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. BAD AND DOUBTFUL DEBTS Before the financial statements of the Group and of the Company were made out, the directors took reasonable Directors’ Report 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. Siah Brothers Corporation Berhad (199310-P) 37
  • 40. 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 47 to the financial statements. At the date of this report, there does not exist: (i) 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 (ii) 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. 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 Directors’ Report DATO’ DR. NORRAESAH BT HAJI MOHAMAD DATUK SIM PENG CHOON ABDUL RAHMAN BIN A.SHUKOR (Alternate to DATUK SIM PENG CHOON) VINCENT KOH KOK KEE (Resigned on 31 May 2003) TAN SRI DATO’ IR MUHAMMAD YUSUFF BIN HAJI MUHAMMAD YUNUS (Resigned on 14 August 2002) Pursuant to Section 129 of the Companies Act, 1965, Sia Kwee Mow @ Sia Hok Chai, Datuk Sim Peng Choon and Dato’ Lim Phaik Gan retire at the forthcoming Annual General Meeting and offer themselves for re-appointment under the provision 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, Dato’ Dr. Norraesah Bt Haji Mohamad retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers herself for re-election. 38 Annual Report 2003
  • 41. 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 ALLOTMENT/ AT 1.4.2002 BOUGHT SOLD 31.3.2003 DIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 3,982,400 446,576 (2,948,176) 1,480,800 SIA TEONG HENG 1,296,400 1,095,412 (2,056,820) 334,992 MUN CHONG SHING @ MUN CHONG TIAN 17,000 4,782 - 21,782 DATO’ LIM PHAIK GAN 5,000 6,000 - 11,000 DATUK SIM PENG CHOON 10,000 869 - 10,869 INDIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 7,463,832 19,498,523 (7,463,832) 19,498,523 SIA TEONG HENG 7,463,832 19,498,523 (7,463,832) 19,498,523 TSRs AT AT 1.4.2002 BOUGHT SOLD 31.3.2003 DIRECT INTERESTS SIA KWEE MOW @ SIA HOK 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 HOK 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 1.4.2002 GRANTED LAPSED 31.3.2003 DIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 450,000 - - 450,000 Directors’ Report SIA TEONG HENG 350,000 - - 350,000 By virtue of their interests in the Company, Sia Kwee Mow @ Sia Hok Chai and Sia Teong Heng are deemed to have interests in the shares in the subsidiaries to the extent of the Company’s interest, in accordance with Section 6A of the Companies Act, 1965. None of the other directors holding office at the end of the financial year had any interests in shares, TSRs or options under the ESOS of the Company or its related corporations during the financial year. Siah Brothers Corporation Berhad (199310-P) 39
  • 42. 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 except for the existing TSRs held by certain directors which would enable them to acquire new shares in the Company and the share options granted pursuant to the ESOS. SIGNIFICANT EVENTS The significant events involving the Group and the Company during the current financial year are disclosed in Note 49 to the financial statements. AUDITORS The auditors, Messrs. Horwath Mok & Poon, who are now practising as Messrs. Horwath with effect from 1 January 2003, 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, Malaysia 25 July 2003 Directors’ Report 40 Annual Report 2003
  • 43. Statement By Directors We, SIA KWEE MOW @ SIA HOK CHAI and MUN CHONG SHING @ MUN CHONG TIAN, being two of the directors of Siah Brothers Corporation Berhad, state that, in the opinion of the directors, the financial statements set out on pages 43 to 77 are drawn up in accordance with applicable approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 March 2003 and of their results and cash flows for the financial year ended on that date. Statement By Directors SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS SIA KWEE MOW @ SIA HOK CHAI MUN CHONG SHING @ MUN CHONG TIAN Kuala Lumpur, Malaysia 25 July 2003 Statutory Declaration I, NG KEE CHYE, I/C No. 640324-06-5691, being the officer primarily responsible for the financial management of Siah Brothers Corporation Berhad, do solemnly and sincerely declare that the financial statements set out on pages 43 to 77 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 25 July 2003 Statutory Declaration NG KEE CHYE Before me, HARON HASHIM (W128) Commissioner for Oaths Kuala Lumpur 25 July 2003 Siah Brothers Corporation Berhad (199310-P) 41
  • 44. Report Of The Auditors to the members of Siah Brothers Corporation Berhad We have audited the financial statements set out on pages 43 to 77. 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 2003 and their results and cash flows for the financial year ended on that date; and (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company; and (b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and by the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act. We have considered the financial statements and the auditors’ reports thereon of the subsidiaries for which we have not acted as auditors, as indicated in Note 6 to the financial statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comments made under Section 174 (3) of the said Act. Report Of The Auditors HORWATH MOK & POON ONN KIEN HOE Firm No: AF 0995 Approval No: 1772/11/04 (J/PH) Chartered Accountants Partner Kuala Lumpur 25 July 2003 42 Annual Report 2003
  • 45. Balance Sheets at 31 March 2003 THE GROUP THE COMPANY 2003 2002 2003 2002 (Restated) (Restated) NOTE RM RM RM RM ASSETS Investment in subsidiaries 6 - - 211,064,785 167,370,110 Interest in associates 7 110,700,175 119,902,566 2,400,000 10,440,450 Property, plant and equipment 8 35,812,639 7,047,290 53,152 75,503 Investment properties 9 41,774,547 21,088,833 - - Other assets 10 382,107 714,168 - - Goodwill on consolidation 11 27,271,844 10,245,527 - - 215,941,312 158,998,384 213,517,937 177,886,063 CURRENT ASSETS Inventories 12 14,109,911 9,269,103 - - Property development in progress 13 54,738,163 28,591,098 - - Receivables 14 68,079,974 78,944,793 123,962 6,401,217 Amount owing by contract customers 15 685,256 1,407,450 - - Amounts owing by subsidiaries 16 - - 52,644,365 46,676,415 Amounts owing by associates 17 5,525,184 5,448,175 11,434 51,883 Tax recoverable 18 5,350,142 3,971,217 11,265,166 9,913,290 Short term deposits with licensed banks 19 1,422,125 5,042,274 1,239,225 5,012,274 Cash and bank balances 20 6,084,094 1,460,540 5,201,131 1,904 155,994,849 134,134,650 70,485,283 68,056,983 LESS: CURRENT LIABILITIES Amount owing to contract customers 15 4,769,567 2,673,438 - - Payables 21 26,618,315 31,260,945 331,492 245,422 Amounts owing to subsidiaries 16 - - 12,635,183 21,100,467 Amounts owing to associates 17 65,500 65,500 - - Amounts owing to directors 22 2,450,481 1,967,680 1,967,680 1,967,680 Dividend payable 270,587 270,587 270,587 270,587 Short term borrowings 23 47,707,856 41,029,726 11,413,736 7,337,727 ABBA Bonds 24 2,478,450 - 2,478,450 - 84,360,756 77,267,876 29,097,128 30,921,883 NET CURRENT ASSETS 71,634,093 56,866,774 41,388,155 37,135,100 287,575,405 215,865,158 254,906,092 215,021,163 FINANCED BY: Share capital 25 82,435,000 57,301,943 82,435,000 57,301,943 Balance Sheets Share application account 26 - 115,600,000 - 115,600,000 Reserves 27 134,681,876 42,524,427 134,643,948 42,119,220 Shareholders’ equity 217,116,876 215,426,370 217,078,948 215,021,163 ABBA Bonds 24 37,827,144 - 37,827,144 - Deferred liabilities 28 32,631,385 438,788 - - 287,575,405 215,865,158 254,906,092 215,021,163 NET TANGIBLE ASSETS PER ORDINARY SHARE - Actual 32 242 sen 393 sen - Proforma 32 N/A 262 sen The annexed notes form an integral part of these financial statements. Siah Brothers Corporation Berhad (199310-P) 43
  • 46. Income Statements for the financial year ended 31 March 2003 THE GROUP THE COMPANY 2003 2002 2003 2002 (Restated) (Restated) NOTE RM RM RM RM TURNOVER 33 69,828,919 81,644,823 8,982,613 9,277,687 COST OF SALES 34 (48,699,540) (68,499,179) - - GROSS PROFIT 21,129,379 13,145,644 8,982,613 9,277,687 OTHER OPERATING INCOME 3,097,647 247,281 - 59,039 ADMINISTRATIVE EXPENSES (6,793,398) (3,863,420) (1,069,681) (1,076,604) OTHER OPERATING EXPENSES (9,417,624) (1,651,190) (156,715) (352,121) PROFIT FROM OPERATIONS 8,016,004 7,878,315 7,756,217 7,908,001 FINANCE COSTS (6,793,334) (9,611,991) (4,464,721) (8,529,384) SHARE OF PROFIT OF ASSOCIATES 3,926,816 3,351,575 - - PROFIT/(LOSS) BEFORE TAXATION 35 5,149,486 1,617,899 3,291,496 (621,383) TAXATION 36 (3,138,593) (444,278) (913,324) (94,000) PROFIT/(LOSS) AFTER TAXATION 2,010,893 1,173,621 2,378,172 (715,383) Earnings per share - basic 37 2.4 sen 1.8 sen - diluted 37 N/A N/A Dividend per ordinary share - Final 38 1 sen - The annexed notes form an integral part of these financial statements. Income Statements 44 Annual Report 2003
  • 47. Statements Of Changes In Equity for the financial year ended 31 March 2003 SHARE SHARE APPLICATION SHARE RETAINED CAPITAL CAPITAL ACCOUNT PREMIUM PROFITS RESERVE TOTAL NOTE RM RM RM RM RM RM THE GROUP Balance at 1.4.2001 (as previously reported) 57,301,943 - 21,306,521 20,580,642 1,199,999 100,389,105 Prior year adjustments 39 - - - (1,155,000) - (1,155,000) Balance at 1.4.2001 (as restated) 57,301,943 - 21,306,521 19,425,642 1,199,999 99,234,105 Arising from conversion of Irredeemable Convertible Unsecured Loan Stock (“ICULS”) to ordinary shares - - 1,500 - - 1,500 Shares pending allotment arising on expiry of ICULS - 115,600,000 - - - 115,600,000 Expenses incurred on conversion of ICULS - - (312,269) - - (312,269) Profit after taxation for the financial year (as restated) - - - 1,173,621 - 1,173,621 Dividends 38 - - - (270,587) - (270,587) Balance at 31.3.2002/1.4.2002 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 38 - - - (270,587) - (270,587) Balance at 31.3.2003 82,435,000 - 111,412,895 22,068,982 1,199,999 217,116,876 THE COMPANY Balance at 1.4.2001 (as previously reported) 57,301,943 - 21,306,521 26,234,438 - 104,842,902 Prior year adjustments 39 - - - (4,125,000) - (4,125,000) Balance at 1.4.2001 (as restated) 57,301,943 - 21,306,521 22,109,438 - 100,717,902 Arising from conversion of ICULS to ordinary shares - - 1,500 - - 1,500 Shares pending allotment arising on expiry of ICULS - 115,600,000 - - - 115,600,000 Expenses incurred on Statements Of Changes In Equity conversion of ICULS - - (312,269) - - (312,269) Loss after taxation for the financial year (as restated) - - - (715,383) - (715,383) Dividends 38 - - - (270,587) - (270,587) Balance at 31.3.2002/1.4.2002 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 38 - - - (270,587) - (270,587) Balance at 31.3.2003 82,435,000 - 111,412,895 23,231,053 - 217,078,948 The retained profits of the Group are attributable to/(absorbed by): 2003 2002 RM RM The Company 23,231,053 21,123,468 Subsidiaries (16,643,931) (18,318,593) Associates 15,481,860 17,523,801 22,068,982 20,328,676 The annexed notes form an integral part of these financial statements. Siah Brothers Corporation Berhad (199310-P) 45
  • 48. Cash Flow Statements for the financial year ended 31 March 2003 THE GROUP THE COMPANY 2003 2002 2003 2002 (Restated) NOTE RM RM RM RM CASH FLOWS FROM/(FOR) OPERATING ACTIVITIES Profit/(Loss) before taxation 5,149,486 1,617,899 3,291,496 (621,383) Adjustments for: Allowance for doubtful debts 8,625,447 816,507 - - Amortisation of bonds expenses 134,364 - 134,364 - Bad debts written off 110,965 101,340 - - Depreciation and amortisation of property, plant and equipment 406,603 325,978 22,351 32,676 Interest expense 6,407,721 9,474,903 4,442,243 8,461,022 Loss on disposal of investment properties 150,154 33,015 - - Plant and equipment written off - 2,800 - - Dividend income - - (8,090,000) (7,805,555) Gain on disposal of property, plant and equipment (7,302) (131,031) - (59,039) Interest income (110,604) (585,124) (622,613) (1,152,687) Writeback of diminution in value of inventory (6,527) - - - Writeback of allowance for doubtful debts (1,988,813) - - - Share of profit in associates (3,926,816) (3,351,575) - - Operating profit/(loss) before working capital changes 14,944,678 8,304,712 (822,159) (1,144,966) Decrease in inventories 10,089,220 471,208 - - Increase in property development-in-progress (15,568,195) (1,633,516) - - Decrease/(Increase) in trade and other receivables 11,175,302 (5,683,694) 6,277,255 (625,803) (Decrease)/Increase in trade and other payables (8,910,013) (3,611,900) 86,070 (176,117) Increase in amount owing to contract customers 2,287,849 298,050 - - CASH FROM/(FOR) OPERATIONS 14,018,841 (1,855,140) 5,541,166 (1,946,886) Interest paid (4,702,299) (10,311,139) (1,880,098) (8,461,022) Cash Flow Statements Taxes paid (3,377,151) (2,225,772) - - NET CASH FROM/(FOR) OPERATING ACTIVITIES 5,939,391 (14,392,051) 3,661,068 (10,407,908) The annexed notes form an integral part of these financial statements. 46 Annual Report 2003
  • 49. THE GROUP THE COMPANY 2003 2002 2003 2002 (Restated) NOTE RM RM RM RM CASH FLOWS (FOR)/FROM INVESTING ACTIVITIES Interest received 641,078 949,238 622,613 1,152,687 Dividends received from subsidiaries - - 3,816,000 5,620,000 Dividends received from associate 2,116,800 - 2,008,800 - Net cash outflow on acquisition of subsidiary 40 (34,835,444) - (35,000,000) - Expenses incurred on acquisition of subsidiary - - (654,225) - Purchase of property, plant and equipment 41 (201,665) (115,327) - (15,400) Purchase of investment properties (3,438,068) - - - Hotel development expenditure (386,797) - - - Proceeds from disposal of property, plant and equipment 149,222 183,039 - 68,500 Proceeds from disposal of investment properties 952,000 1,164,915 - - Incidental expenses on investment properties (42,589) (161,151) - - Proceeds from disposal of subsidiary - 27,075,000 - 27,075,000 Placement of cash in sinking fund account 20 (5,198,398) - (5,198,398) - NET CASH (FOR)/FROM INVESTING ACTIVITIES (40,243,861) 29,095,714 (34,405,210) 33,900,787 CASH FLOWS FROM/(FOR) FINANCING ACTIVITIES Proceeds from issuance of shares 4,200 - 4,200 - Proceeds from bonds 24 38,848,310 - 38,848,310 - Repayment of bonds 24 (1,239,225) - (1,239,225) - Net repayment by/(Advances to) associates (42,209) 261,523 40,449 49,500 Net advances to subsidiaries - - (14,433,234) (9,405,022) Repayment to a director - (951,120) - (951,120) Dividend paid to shareholders of the Company - (545,065) - (545,065) Payment of expenses on conversion of ICULS (54,000) (312,269) (54,000) (312,269) Proceeds received for conversion of ICULS - 1,500 - 1,500 Cash Flow Statements Dividend paid to holder of ICCPS (270,587) (270,587) (270,587) (270,587) Repayment of revolving credit (3,280,000) (1,320,000) (680,000) (1,320,000) Repayment of loans (4,103,454) (74,250) - - Repayment to hire purchase payables (87,784) (83,130) - - NET CASH FROM/(FOR) FINANCING ACTIVITIES 29,775,251 (3,293,398) 22,215,913 (12,753,063) NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (4,529,219) 11,410,265 (8,528,229) 10,739,816 CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR (14,340,876) (25,751,141) 3,356,451 (7,383,365) CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR 42 (18,870,095) (14,340,876) (5,171,778) 3,356,451 The annexed notes form an integral part of these financial statements. Siah Brothers Corporation Berhad (199310-P) 47
  • 50. Notes To The Financial Statements for the financial year ended 31 March 2003 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. 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. (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 Notes To The Financial Statements 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 61% of trade debts due from a major customer, details of which 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. 48 Annual Report 2003
  • 51. 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. The new applicable approved accounting standard adopted in these financial statements is MASB 19 – Events After Balance Sheet Date. Comparative figures have been adjusted to conform with changes in presentation due to the requirements of the new MASB that have been applied retrospectively. Save for the adoption of MASB 19 as stated in Note 39 to the financial statements, there are no other changes to the accounting policies adopted by the Company. 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 2003. 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 control over the 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 of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair value of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group. (b) Goodwill or Negative Goodwill On Consolidation Goodwill represents the excess of the fair value of the purchase consideration over the Group’s share of the fair values of the separable net assets of subsidiaries at the date of acquisition. Negative goodwill represents the excess of the Group’s share of the fair values of the separable net assets of subsidiaries at the date of acquisition over the fair value of the purchase consideration. Notes To The Financial Statements 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 written off is taken to the income statement. (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. Siah Brothers Corporation Berhad (199310-P) 49
  • 52. 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (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: 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% The Group does not have a policy for frequent revaluation of the properties. Surpluses arising from the revaluation of the properties are credited to a revaluation reserve. Deficits arising from the revaluation, to the extent that they are not supported by any previous revaluation surpluses, are charged to the income statement. (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 amounts 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 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 Notes To The Financial Statements 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 The investment 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 Investment properties are held as long term investments to generate income and for capital gain, and are stated at cost. These properties are not depreciated. (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. 50 Annual Report 2003
  • 53. 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (i) Property Development-In-Progress Property development-in-progress comprises land and related development expenditure incurred plus attributable profits less progress billings and foreseeable losses, if any. Land is stated at cost. Development expenditure comprises construction and other related development costs and administrative overheads relating to the property development. Interest costs on borrowings taken to finance the relevant development projects are included in the development expenditure from commencement to the completion of the development projects. Attributable profits are determined based on the percentage of completion method, on sold properties. (j) 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. (k) 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. (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. (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 capitalized as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. Notes To The Financial Statements 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 amortization 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) Deferred Taxation Deferred taxation is provided using the liability method on all material timing differences except where no liability is expected to arise in the foreseeable future. Deferred tax benefit is only recognised when there is reasonable expectation of realisation in the foreseeable future. (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 approximate rates ruling as of that date. All exchange differences are taken to the income statement. Siah Brothers Corporation Berhad (199310-P) 51
  • 54. 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (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. (r) Equity Instruments Ordinary shares and convertible preference shares are classified as equity. (s) Dividends Dividends on equity are recognised as liabilities when declared. (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. (v) Income Recognition (i) Construction Contracts Notes To The Financial Statements 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. 52 Annual Report 2003
  • 55. 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (v) Income Recognition (cont’d) (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. (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. Dividend income was recognised upon declaration by the subsidiaries and associates in previous financial years. During the financial year, there was a change in the accounting policy with regards to the revenue recognition of dividends to conform with the requirements of MASB 19 – Events After The Balance Sheet Date. The change in the accounting policy has an effect of increasing the profit before taxation of the Company for the current financial year by RM5,300,000 and decreasing the profit before taxation for the previous financial year by RM1,175,000. It also has the effect of decreasing the taxation of the Group for the current financial year by RM1,484,000 and increasing the taxation for the previous financial year by RM329,000. The change in the accounting policy is made retrospectively and the effect on previous financial years has been accounted for as prior year adjustments. (viii)Interest Income Interest income is recognised on an accrual basis, based on the effective yield on the investment. Notes To The Financial Statements 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. Siah Brothers Corporation Berhad (199310-P) 53
  • 56. 6. INVESTMENT IN SUBSIDIARIES THE COMPANY 2003 2002 RM RM Unquoted shares, at cost At 1 April 2002/2001 167,370,110 167,370,110 Additions during the financial year 43,694,675 - At 31 March 211,064,785 167,370,110 Details of the subsidiaries, which are all incorporated in Malaysia, are as follows: Effective Equity Interest 2003 2002 Name of Company % % Principal Activities Syarikat Siah Brothers Trading Sdn. Bhd. 100 100 General building contractor and investment holding Syarikat Siah Brothers Construction 100 100 Building and civil engineering Sdn. Bhd. works Lifeplus – Siah Brothers Trading JV 100 100 Project management and its Sdn. Bhd. related technical services Siah Brothers Enterprise Sdn. Bhd.* 100 100 Building contractor Siah Brothers Land Sdn. Bhd. 100 100 Investment holding Seri Ampangan Realty Sdn. Bhd. 100 100 Property development Sinaran Naga Sdn. Bhd. 100 100 Property development Siah Brothers Development Sdn. Bhd.* 100 100 Proposed property development Tiara Development Sdn. Bhd.* 100 100 Proposed property development SBC Homes Sdn. Bhd.* 100 100 Proposed property development Mixwell (Malaysia) Sdn. Bhd. 100 100 Project management and property development Winsome Ventures Sdn. Bhd. 100 100 Intended property management Siah Brothers Properties Sdn. Bhd.* 100 100 Investment holding Notes To The Financial Statements Aureate Construction Sdn. Bhd.* 100 100 Property investment SBC Leisure Sdn. Bhd.* 100 100 Property development SBC Towers Sdn. Bhd.* 100 100 Property development Siah Brothers Project Management 100 100 Provision of management Sdn. Bhd.* services Siah Brothers Industries Sdn. Bhd.* 100 100 Investment holding South-East Best Sdn. Bhd.# 100 20 Property development Gracemart Resources Sdn. Bhd.## 100 20 Property development Sutrati Development Sdn. Bhd.## 100 20 Dormant Masahmura Sdn. Bhd.* 51 51 Manufacturing of material handling equipment and metal frames Masahmura Sales & Service Sdn. Bhd. 51 51 Trading of light industrial handling equipment and metal frames * Not audited by Horwath # During the financial year, the Company acquired the remaining 80% of its equity interest in South-East Best Sdn. Bhd. (“SEB”) thereby resulting in SEB becoming a subsidiary. ## Held by SEB 54 Annual Report 2003
  • 57. 7. INTEREST IN ASSOCIATES THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Unquoted shares, at cost 3,600,001 10,760,451 2,400,000 10,440,450 Unquoted shares at Group cost 91,618,314 91,618,314 - - Share of post acquisition reserves 15,481,860 17,523,801 - - 110,700,175 119,902,566 2,400,000 10,440,450 THE GROUP 2003 2002 RM RM The interest in associates comprises: Group’s share of net tangible assets - at cost 64,684,205 73,886,596 - at fair value 45,952,003 45,952,003 Group’s share of intangible assets 63,967 63,967 110,700,175 119,902,566 Details of the associates, which are all incorporated in Malaysia, are as follows: Effective Equity Interest 2003 2002 Name of Company % % Principal Activities Ligamas Sdn. Bhd.# 50.0 50.0 Property development Varich Industries Sdn. Bhd.* 50.0 50.0 Proposed quarrying Paling Industries Sdn. Bhd.# 40.0 40.0 Manufacturing of plastic building materials Liga Canggih Sdn. Bhd.*## 40.0 40.0 Dormant Notes To The Financial Statements Sri Berjaya Development Sdn. Bhd.* 33.3 33.3 Investment and development of landed properties Sri Rawang Properties Sdn. Bhd.* 22.2 22.2 Investment in properties and rubber estates Sam & Lau Plantation Sdn. Bhd.*### 50.0 - Tree plantation and nursery operators South-East Best Sdn. Bhd.^ - 20.0 Property development Gracemart Resources Sdn. Bhd.### - 20.0 Property development Sutrati Development Sdn. Bhd.### - 20.0 Dormant * The results of these associates have not been equity accounted as the amounts involved are insignificant. # Share of results of these associates are based on the latest available unaudited management financial statements made up to 31 March 2003. ## Held by Paling ### Held by SEB ^ During the financial year, the Company acquired the remaining 80% of its equity interest in South-East Best Sdn. Bhd. (“SEB”) thereby resulting in SEB becoming a subsidiary. Siah Brothers Corporation Berhad (199310-P) 55
  • 58. 8. PROPERTY, PLANT AND EQUIPMENT THE GROUP ACQUISITION TRANSFER TO DEPRE- AT OF DEVELOPMENT CIATION AT 1.4.2002 SUBSIDIARY ADDITIONS DISPOSAL LAND CHARGE 31.3.2003 NET BOOK VALUE RM RM RM RM RM RM RM Freehold land 5,748,145 - - (30,000) (979,312) - 4,738,833 Land and hotel development expenditure - 29,489,968 386,797 - - - 29,876,765 Plant and machinery, construction machinery and equipment 77,999 - 635 - - (15,282) 63,352 Formwork, scaffoldings and containers 15,310 - - - - (4,848) 10,462 Office renovation, office equipment, computers, furniture and fittings, tools and fittings 804,013 214,754 201,030 (111,919) - (269,301) 838,577 Motor vehicles 401,823 - - (1) - (117,172) 284,650 Total 7,047,290 29,704,722 588,462 (141,920) (979,312) (406,603) 35,812,639 THE GROUP ACCUMULATED NET BOOK AT COST DEPRECIATION VALUE RM RM RM 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 Notes To The Financial Statements 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 AT 31.3.2002 Freehold land 5,748,145 - 5,748,145 Plant and machinery, construction machinery and equipment 4,373,622 (4,295,623) 77,999 Formwork, scaffoldings and containers 4,316,916 (4,301,606) 15,310 Office renovation, office equipment, computers, furniture and fittings, tools and fittings 3,626,222 (2,822,209) 804,013 Motor vehicles 1,594,753 (1,192,930) 401,823 19,659,658 (12,612,368) 7,047,290 Land and hotel development expenditure consists of: 31.3.2003 31.3.2002 RM RM Long leasehold land, at cost 27,691,066 - Hotel development expenditure 2,185,699 - 29,876,765 - 56 Annual Report 2003
  • 59. 8. PROPERTY, PLANT AND EQUIPMENT (cont’d) THE COMPANY AT DEPRECIATION AT 1.4.2002 CHARGE 31.3.2003 NET BOOK VALUE RM RM RM Office equipment, computers, furniture and fittings 75,502 (22,351) 53,151 Motor vehicles 1 - 1 75,503 (22,351) 53,152 AT ACCUMULATED NET COST DEPRECIATION BOOK VALUE RM RM RM 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 At 31.3.2002 Office equipment, computers, furniture and fittings 370,801 (295,299) 75,502 Motor vehicles 376,950 (376,949) 1 747,751 (672,248) 75,503 The motor vehicles of the Group acquired under hire purchase terms were carried at net book value of RM231,384 (2002 – RM402,608) at the balance sheet date. The carrying value of certain property, plant and equipment that are charged to financial institutions to secure banking facilities granted to the Group are as follows: THE GROUP 2003 2002 RM RM Furniture and fittings 107,183 - Office and other equipment 4,951 - Notes To The Financial Statements Land and hotel development expenditure 29,876,765 - Office equipment 9,976 - 29,998,875 - 9. INVESTMENT PROPERTIES THE GROUP 2003 2002 RM RM Leasehold land 19,778,424 4,979,933 Expenditure on land 4,202,191 318,927 23,980,615 5,298,860 Freehold land and buildings 15,812,472 16,987,903 Leasehold land and buildings 3,041,025 - 18,853,497 16,987,903 Disposed during the financial year (1,059,565) (1,197,930) 17,793,932 15,789,973 41,774,547 21,088,833 Siah Brothers Corporation Berhad (199310-P) 57
  • 60. 9. INVESTMENT PROPERTIES (cont’d) Freehold land and building of a subsidiary costing RM2,792,736 in the previous financial year was charged to a licensed bank for a term loan facility granted to the subsidiary. The lease period of the leasehold land expires in the year 2086. Based on valuation exercises carried out on 27 March 2000 and 2 January 2002 by an independent professional valuer, the market value of certain investment properties of the Group amounts to approximately RM54.61 million (2002 – RM35.58 million). No valuation exercise has been carried out on the properties since the last exercise in the financial year 2002. 10. OTHER ASSETS THE GROUP 2003 2002 RM RM Other assets 189,807 521,868 Other investments Quoted shares in Malaysia, at cost 12,300 12,300 Unquoted shares, at cost 180,000 180,000 192,300 192,300 382,107 714,168 Market value of quoted shares 4,455 5,850 Other assets are retention monies relating to amounts which are due and receivable after twelve months from the balance sheet date, upon expiry of the warranty period of the relevant contracts. 11. GOODWILL THE GROUP 2003 2002 RM RM At 1 April 2002/2001 10,245,527 10,245,527 Notes To The Financial Statements Goodwill arising from the acquisition of equity interest in a subsidiary 17,026,317 - At 31 March 27,271,844 10,245,527 12. INVENTORIES THE GROUP 2003 2002 RM RM Unsold completed properties, at cost 14,109,911 9,269,103 Certain inventories costing RM1,423,220 (2002 – Nil) are charged to a third party for the issuance of bonds granted to the Company. Certain inventories costing RM11,528,558 (2002 – Nil) are charged to licensed banks and financial institutions for banking facilities granted to a subsidiary. None of the inventories are carried at net realisable value. 58 Annual Report 2003
  • 61. 13. PROPERTY DEVELOPMENT-IN-PROGRESS THE GROUP 2003 2002 RM RM Freehold land, at cost 15,406,955 14,547,886 Leasehold land, at cost 8,340,583 801,805 Land and development expenditure 41,721,744 46,155,119 65,469,282 61,504,810 Attributable profits 3,709,493 8,665,215 69,178,775 70,170,025 Progress billings (14,440,612) (41,578,927) 54,738,163 28,591,098 Included in development expenditure is interest expense capitalised during the financial year amounting to RM856,723 (2002 – RM836,236). Leasehold land of a subsidiary costing RM7,674,555 (2002 – Nil) is charged to a licensed bank for a term loan facility granted to the subsidiary. 14. RECEIVABLES THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Trade receivables 69,665,907 58,910,469 - - Retention receivable 5,709,953 10,081,043 - - Total trade receivables 75,375,860 68,991,512 - - Allowance for doubtful debts At 1 April 2002/2001 (6,803,879) (5,987,372) - - Acquisition of subsidiary (22,819) - - - Additions (8,216,602) (816,507) - - Notes To The Financial Statements Write-back 1,988,813 - - - At 31 March (13,054,487) (6,803,879) - - Net trade receivables 62,321,373 62,187,633 - - Other receivables, deposits and prepayment 8,849,878 19,439,592 2,476,699 8,753,954 Allowance for doubtful debts At 1 April 2002/2001 (2,682,432) (2,682,432) (2,352,737) (2,352,737) Additions (408,845) - - - At 31 March (3,091,277) (2,682,432) (2,352,737) (2,352,737) Net other receivables, deposits and prepayment 5,758,601 16,757,160 123,962 6,401,217 Total receivables 68,079,974 78,944,793 123,962 6,401,217 Siah Brothers Corporation Berhad (199310-P) 59
  • 62. 14. RECEIVABLES (cont’d) Included in trade receivables at the balance sheet date is RM37,720,372 (2002 – RM37,720,372) owing by Smart Home Sdn. Bhd. (“SH”), a related party. Details of the related party relationship and nature of the transactions and balances are set out in Note 45 to the financial statements. The amount owing by SH has been outstanding since 1996. During the financial year, SH has proposed to settle the amount owing in the following manner: (i) transfer of several parcels of land with development potential for a total consideration of RM34,760,000; and (ii) the balance is to be settled by cash and/or other consideration to be mutually agreed between SH and the Group. The Board of Directors, assisted by independent advisers, are reviewing the terms of the settlement as well as the valuation of the land offered for settlement, and a decision is expected to be made in the next financial year. The directors are of the opinion that the amount owing by SH will be recovered in full in due course, and as such, no allowance for doubtful debt is required. Included in other receivables is RM2,647,103 (2002 – RM4,582,518) due from sub-contractors for the purchase of building materials. The amount owing is unsecured, interest-free, and is to be repaid via deductions against future claims for work performed by the sub-contractors. Also included in other receivables is an amount owing by a related party of RM500,000 (2002 – Nil). The details of the transaction and the balance are disclosed in Note 45 to the financial statements. Credit terms of trade receivables, other than the amount owed by SH, range from 14 to 30 days. 15. AMOUNT OWING BY/(TO) CONTRACT CUSTOMERS THE GROUP 2003 2002 RM RM Amount owing by contract customers Contract costs incurred to date 8,090,361 29,952,686 Attributable profits 241,371 8,335,542 8,331,732 38,288,228 Progress billings (7,646,476) (36,880,778) Notes To The Financial Statements Amount owing by contract customers 685,256 1,407,450 Amount owing to contract customers Contract costs incurred to date 184,168,929 173,176,995 Attributable profits 8,802,347 7,214,110 192,971,276 180,391,105 Progress billings (197,740,843) (183,064,543) Amount owing to contract customers (4,769,567) (2,673,438) Included in costs incurred on contract works is interest income capitalised during the financial year of RM530,474 (2002 – RM364,114). 60 Annual Report 2003
  • 63. 16. AMOUNTS OWING BY/(TO) SUBSIDIARIES THE COMPANY 2003 2002 RM RM Amounts owing by: Non-trade - Interest-bearing 6,582,470 6,996,470 - Interest-free 46,061,895 39,679,945 52,644,365 46,676,415 Amounts owing to: Non-trade - Interest-bearing 3,797,629 12,740,618 - Interest-free 8,837,554 8,359,849 12,635,183 21,100,467 The above amounts owing are unsecured and not subject to fixed terms of repayment. The interest-bearing amounts are subject to interest at rates ranging from 8.4% to 8.65% (2002 - 8.65% to 9.05%) per annum. 17. AMOUNTS OWING BY/(TO) ASSOCIATES The amounts owing are unsecured, interest-free and not subject to fixed terms of repayment. 18. TAX RECOVERABLE Subject to agreement with the tax authorities, the Company has tax recoverable of RM11,265,166 at the balance sheet date in respect of the financial years ended 31 March 1997 to 31 March 2003. At the date of this report, the amount is still pending agreement with the tax authorities. 19. SHORT TERM DEPOSITS WITH LICENSED BANKS The weighted average effective interest rates of deposits at the balance sheet date were as follows: THE GROUP THE COMPANY 2003 2002 2003 2002 Notes To The Financial Statements % % % % Licensed bank 2.84 3.20 2.77 3.20 Deposits of the Company and the Group have average maturities of 30 days (2002 – 30 days). The deposit of the Company in respect of the current financial year has been charged as security for the issuance of ABBA Bonds as disclosed in Note 24 to the financial statements. 20. CASH AND BANK BALANCES THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Cash and bank balances 885,696 1,460,540 2,733 1,904 Sinking fund account (Note 42) 5,198,398 - 5,198,398 - 6,084,094 1,460,540 5,201,131 1,904 Included in the cash and bank balances of the Group is RM518,922 (2002 – RM686,692) maintained under the Housing Development Accounts pursuant to Section 7A of the Housing Development (Control and Licensing ) Act, 1966. The sinking fund account is maintained with a financial institution and has been charged as security for the repayment of the ABBA Bonds. Siah Brothers Corporation Berhad (199310-P) 61
  • 64. 21. PAYABLES THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Trade payables 20,217,451 18,180,622 - - Retention payable 5,680,103 6,310,023 - - Total trade payables 25,897,554 24,490,645 - - Other payables and accruals 632,977 6,682,516 331,492 245,422 Hire purchase payables (Note 28a) 87,784 87,784 - - 26,618,315 31,260,945 331,492 245,422 Credit terms of trade payables range from 30 to 60 days. Included in other payables is an amount owing to a related party of RM108,222 (2002 - RM160,534). The details of the transaction and the balance are disclosed in Note 45 to the financial statements. 22. AMOUNTS OWING TO DIRECTORS THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Sia Kwee Mow @ Sia Hok Chai 1,967,680 1,967,680 1,967,680 1,967,680 Sia Teong Heng 482,801 - - - 2,450,481 1,967,680 1,967,680 1,967,680 The above amounts owing are unsecured and not subject to fixed terms of repayment. The amount owing to Sia Kwee Mow @ Sia Hok Chai bears interest at 5.5% (2002 – 5.5%) per annum. 23. SHORT TERM BORROWINGS 2003 2002 Notes To The Financial Statements Secured Unsecured Total Secured Unsecured Total RM RM RM RM RM RM THE GROUP Bridging loans (Note 30) 8,167,060 - 8,167,060 - - - Term loans (Note 29) 1,568,480 - 1,568,480 111,636 - 111,636 Revolving credits - 16,794,400 16,794,400 - 20,074,400 20,074,400 Bank overdrafts (Note 42) - 21,177,916 21,177,916 - 20,843,690 20,843,690 9,735,540 37,972,316 47,707,856 111,636 40,918,090 41,029,726 THE COMPANY Bridging loans (Note 30) - - - - - - Term loans (Note 29) - - - - - - Revolving credits - 5,000,000 5,000,000 - 5,680,000 5,680,000 Bank overdrafts (Note 42) - 6,413,736 6,413,736 - 1,657,727 1,657,727 - 11,413,736 11,413,736 - 7,337,727 7,337,727 62 Annual Report 2003
  • 65. 23. SHORT TERM BORROWINGS (cont’d) The weighted average effective interest rates at the balance sheet date for borrowings (excluding hire purchase) which bear interest at floating rates, were as follows: THE GROUP THE COMPANY 2003 2002 2003 2002 % % % % Bridging loans 7.87 - - - Term loans 7.94 - - - Revolving credits 6.05 6.06 7.55 7.58 Bank overdrafts 8.45 8.14 8.68 8.80 24. ABBA BONDS THE GROUP/THE COMPANY 2003 2002 RM RM Al-Bai Bithaman Ajil Bonds (nominal value) 61,961,250 - Less: ABBA Bonds issuance expenses (1,151,690) - Finance charges on bonds issue (21,961,250) - Net proceeds 38,848,310 - Cumulation of amortisation of ABBA Bonds issuance expenses 134,364 - Cumulation of amortisation of finance charges on ABBA Bonds issue 2,562,145 - Net proceeds 41,544,819 - Less: Repayment during the financial year (1,239,225) - 40,305,594 - Representing ABBA Bonds: - Due within 12 months 2,478,450 - - Due after 12 months 37,827,144 - 40,305,594 - Analysis of the ABBA Bonds: Notes To The Financial Statements - Not later than one year 2,478,450 - - Later than one year and not later than five years 59,482,800 - 61,961,250 - During the financial year, the Company issued RM61,961,250 nominal value Al-Bai Bithaman Ajil Bonds (ABBA Bonds) comprising RM49,569,000 nominal value Primary Bonds and 10 equal tranches Secondary Bonds with RM12,392,250 nominal value. The Primary Bonds are redeemable at maturity. Each Primary Bond is supported by 10 Secondary Bonds which are redeemable in semi-annual instalments commencing 6 months from the date of first issue of the Secondary Bonds. The ABBA Bonds were placed out to a licensed financial institution via a private placement. The tenure of the ABBA Bonds is 5 years from the date of issue. The profit margin on the ABBA Bonds is at a fixed percentage of 5.00% per annum, payable in arrears on a semi-annual basis represented by the Secondary Bonds. The ABBA Bonds are issued based on a 10% per annum yield to maturity. The ABBA Bonds are secured in the following manner: (i) by a third party first legal charge over certain properties of a subsidiary; (ii) by a third party first legal charge over all the shares held by a wholly owned subsidiary in an associate; (iii) by a first party charge over a reserve account which is an Islamic banking account has been opened for the placement of all monies received from dividends, unappropriated profits and bonus shares accruing to a subsidiary; and (iv) by a first party charge over a sinking fund account and a Mudharabah Account of the Company. Siah Brothers Corporation Berhad (199310-P) 63
  • 66. 25. SHARE CAPITAL THE COMPANY 2003 2002 RM RM AUTHORISED Ordinary shares of RM1 each At 1 April/31 March 193,167,000 193,167,000 5.5% ICCPS of RM1 each At 1 April/31 March 6,833,000 6,833,000 Total authorised share capital 200,000,000 200,000,000 ISSUED AND FULLY PAID-UP Ordinary shares of RM1 each At 1 April 2002/2001 50,468,943 50,468,943 Allotment during the financial year 25,133,057 - At 31 March 75,602,000 50,468,943 5.5% ICCPS of RM1 each At 1 April/31 March 6,833,000 6,833,000 Total issued and fully paid-up share capital 82,435,000 57,301,943 The main terms of the 5.5% ICCPS are as follows: (a) entitlement to receive a fixed cumulative preferential dividend of 5.5% per annum payable annually in arrears; (b) the ICCPS shall mature after 5 years from the date of issue of 5 May 1999 and will be automatically converted into ordinary shares of the Company on the maturity date of 4 May 2004; (c) the holders have the option to convert all ICCPS into ordinary shares at any time after the date of issue until the maturity date. The ICCPS are not redeemable for cash; (d) the conversion price into ordinary shares is fixed at RM1.00 per share; (e) the ICCPS shall rank in priority to the ordinary shares of the Company in respect of return of capital on Notes To The Financial Statements liquidation or otherwise for the par value of the ICCPS plus any arrears in dividend, provided that there shall be no further right to participate in the surplus assets or profits of the Company; and (f) there are no voting rights other than the rights to vote at meetings convened for the purpose of reducing the capital, or winding up, or sanctioning a sale of undertaking, or where the proposition directly affects the rights and privileges of the holders of the ICCPS. During the financial year, the Company increased its issued and paid-up capital from RM50,468,943 to RM75,602,000 by way of: (i) the conversion of 115,600,000 Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) of RM1 each into 25,130,057 ordinary shares of RM1 each. The conversion was made on the following basis: • 25,127,557 new ordinary shares of RM1 each were issued by the tendering of 115,590,000 ICULS with nominal value of RM1 each; • 2,500 new ordinary shares of RM1 each were issued by the tendering of 10,000 ICULS with nominal value of RM1 each and cash subscription of RM1,500. The new shares which arose from the conversion of the ICULS rank pari passu in all respects with the existing shares of the Company. (ii) the exercise of share options by eligible employees pursuant to the Employee Share Option Scheme of 3,000 ordinary shares of RM1 each. The new shares issued rank pari passu in all respects with the existing shares of the Company. 64 Annual Report 2003
  • 67. 26. SHARE APPLICATION ACCOUNT The share application account represents the sum arising from the mandatory conversion of the ICULS. 27. RESERVES THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Share premium reserve (Note a) At 1 April 2002/2001 20,995,752 21,306,521 20,995,752 21,306,521 Arising from conversion of ICULS to ordinary shares - 1,500 - 1,500 Arising from issuance of shares 90,471,143 - 90,471,143 - Set-off against expenses incurred on conversion of ICULS (54,000) (312,269) (54,000) (312,269) At 31 March 111,412,895 20,995,752 111,412,895 20,995,752 Capital reserve (Note b) 1,199,999 1,199,999 - - Retained profits (Note c) 22,068,982 20,328,676 23,231,053 21,123,468 134,681,876 42,524,427 134,643,948 42,119,220 (a) The share premium reserve is not available for distribution by way of dividends. (b) The capital reserve arose from a bonus issue of ordinary shares on 21 August 1992 by a former subsidiary, and is not available for distribution by way of dividends. (c) Subject to agreement with the tax authorities, at the balance sheet date, the Company has: (i) tax-exempt income of approximately RM233,000 (2002 – RM233,000) available for the purpose of paying tax-exempt dividends; and (ii) tax credit under Section 108 of the Income Tax Act, 1967 to frank the payment of dividends of approximately RM11,366,000 (2002 – RM11,366,000) out of its entire retained profits without incurring any additional tax liability. Notes To The Financial Statements 28. DEFERRED LIABILITIES THE GROUP 2003 2002 RM RM Term loans - Note 29 2,460,155 215,520 Hire purchase payables - Note a 135,484 223,268 Deferred taxation - Note 31 966,746 - Amount owing to Sabah State Government – Note b 29,069,000 - 32,631,385 438,788 (a) Hire purchase payables Future minimum hire purchase payments - repayable not later than one year 110,916 110,916 - repayable later than one year and not later than five years 171,258 282,174 282,174 393,090 Future finance charges (58,906) (82,038) Present value of hire purchase liabilities 223,268 311,052 Siah Brothers Corporation Berhad (199310-P) 65
  • 68. 28. DEFERRED LIABILITIES (cont’d) THE GROUP 2003 2002 RM RM Present value of hire purchase liabilities: Not later than one year (Note 21) 87,784 87,784 Later than one year and not later than five years 135,484 223,268 223,268 311,052 The hire purchase liabilities at the balance sheet date bore interest at between 5.25% to 5.35% (2002 – 5.25% to 5.35%) per annum. (b) Amount owing to Sabah State Government The amount owing to the Sabah State Government arose from the acquisition of a subsidiary, SEB. The details of the investment are disclosed in Note 49 to the financial statements. The amount owing to the Sabah State Government shall be paid in the form of 130 units of the property to be completed within a period of five years from the commencement of their construction as consideration in kind pursuant to a joint venture contract entered into by SEB with the State Government. The contract, dated 5 September 1994, states that the subsidiary is committed to jointly develop with the Sabah State Government a parcel of state land covering an area of approximately 26 acres into residential apartments, townhouses, condominiums and a hotel. On 16 July 2002, the Sabah State Government agreed to execute the change of their entitlement that had not been settled amounting RM29,069,000 by the construction of an office building for the Land and Survey Department (Jabatan Tanah dan Ukur) and part of a building for the Ministry of Finance at the same value by the subsidiary. On 21 October 2002, the subsidiary was requested to prepare the Contract Document and Estimation for the above project. To-date, the subsidiary is in the process of finalising the details of the project with the Sabah State Government. 29. TERM LOANS THE GROUP 2003 2002 Notes To The Financial Statements RM RM Term loans 4,028,635 327,156 Less: Portion repayable within twelve months (Note 23) (1,568,480) (111,636) Portion repayable after twelve months (Note 28) 2,460,155 215,520 The long term loans are repayable as follows: Not later than one year 1,568,480 111,636 Later than one year and not later than five years 2,029,475 215,520 Later than five years 430,680 - 4,028,635 327,156 Details of the term loans outstanding at the balance sheet date are as follows: THE GROUP 2003 2002 Term loan RM RM 1 - 327,156 2 3,541,663 - 3 486,972 - 4,028,635 327,156 66 Annual Report 2003
  • 69. 29. TERM LOANS (cont’d) Monthly Number of Instalment Interest Rate Date of Monthly Amount Per Annum Commencement Term loan Instalments RM % of Repayment 1 162 39,429 1.5% + BLR September 1994 2 25 141,667 8.15% to 8.55% May 2003 3 264 3,617 6.4% January 2003 The term loans are secured as follows: (a) by way of a first legal charge over 3 pieces of converted residential land of a subsidiary; (b) by way of a third party legal charge over 2 units of the inventories of a subsidiary; and (c) by the personal guarantee by one of the directors of the Company. 30. BRIDGING LOAN THE GROUP 2003 2002 RM RM Not later than one year (Note 23) 8,167,060 - The syndicated bridging loan from three licensed financial institutions is subject to interest at 1.125% to 1.750% (2002 – Nil) per annum above the bank’s base lending rate / cost of funds of the respective lenders and is secured by way of: (i) a first fixed charge over the properties of a subsidiary; (ii) a debenture incorporating a fixed and floating charge over all present and future assets of a subsidiary; (iii) an assignment of all present and future rights, title and interest under a construction contract and construction guarantees from a related company of a subsidiary; and (iv) the joint and several guarantees of a director of a subsidiary and the Company. The loan is repayable by way of redemption of the individual units of a subsidiary’s development property, or Notes To The Financial Statements in 12 quarterly instalments commencing from April 2001, whichever is earlier. 31. DEFERRED TAXATION THE GROUP 2003 2002 RM RM At 1 April 2002/2001 - - Addition through the revaluation surplus on leasehold land of a subsidiary (Note 28) 966,746 - 966,746 - 32. NET TANGIBLE ASSETS PER SHARE The actual net tangible assets per share is calculated based on the net tangible assets value of RM183,012,032 (2002 - RM198,347,843) attributable to ordinary shares divided by the number of ordinary shares in issue at the balance sheet date of 75,602,000 (2002 - 50,468,943) shares. The proforma net tangible assets per share of the previous financial year is calculated based on the net tangible assets value of RM198,347,843 attributable to ordinary shares divided by the proforma enlarged number of ordinary shares of 75,599,000 after taking into account the allotment of new ordinary shares pursuant to the mandatory conversion of the ICULS. Siah Brothers Corporation Berhad (199310-P) 67
  • 70. 33. TURNOVER THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Revenue from construction contracts 35,362,729 56,858,840 - - Proportionate sales value of development properties 34,366,715 24,084,755 - - Rental income 64,200 119,300 - - Dividend income - - 8,090,000 8,125,000 Interest income 35,275 536,328 35,275 533,461 Other interest income - - 587,338 619,226 Management and administrative charges - 45,600 270,000 - 69,828,919 81,644,823 8,982,613 9,277,687 Continuing operations: - existing 65,260,219 81,644,823 8,982,613 9,277,687 - new acquisition 4,568,700 - - - 69,828,919 81,644,823 8,982,613 9,277,687 34. COST OF SALES THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Construction costs 37,647,813 65,941,186 - - Land and development expenditure 10,913,140 2,339,143 - - Direct costs 88,062 162,878 - - Management and administrative charges 50,525 55,972 - - 48,699,540 68,499,179 - - 35. PROFIT/(LOSS) BEFORE TAXATION THE GROUP THE COMPANY Notes To The Financial Statements 2003 2002 2003 2002 RM RM RM RM Profit/(Loss) before taxation is arrived at after charging/(crediting): Allowance for doubtful debts 8,625,447 816,507 - - Amortisation of bond expenses 134,364 - 134,364 - Auditors’ remuneration - for the financial year 59,700 51,500 13,000 11,000 - underprovision in previous financial year 2,000 - 2,000 - Bad debts written off 110,965 101,340 - - Contract costs 37,647,814 65,941,186 - - Depreciation of property, plant and equipment 406,603 325,978 22,351 32,676 Directors’ benefits-in-kind 16,925 31,875 16,925 29,625 Directors’ fees 67,000 46,000 67,000 46,000 Directors’ remuneration 752,400 594,500 516,900 419,625 Dividend income over-recognised - 319,445 - 319,445 Finance charges on bonds 2,562,145 - 2,562,145 - 68 Annual Report 2003
  • 71. 35. PROFIT/(LOSS) BEFORE TAXATION (cont’d) THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Interest expense - bank borrowings 3,178,494 3,175,729 1,093,069 1,354,608 - hire purchase 23,132 21,884 - - - ICULS - 5,717,576 - 5,717,576 - loans 113,476 197,918 787,029 1,388,838 - others 530,474 361,796 - - Loss on disposal of investment properties 150,154 33,015 - - Plant and equipment written off - 2,800 - - Rental expense - premises - - 60,000 55,930 - machinery and equipment 15,651 14,883 - - Staff costs 2,598,056 1,996,604 72,786 149,581 Gross dividend income - subsidiaries (unquoted) - - (5,300,000) (8,125,000) - associate - - (2,790,000) - Interest income - licensed financial institutions (36,891) (533,461) (35,275) (533,461) - subsidiaries - - (587,338) (619,226) - others (73,713) (51,663) - - Management and administrative charges (45,600) (45,600) - - Gain on disposal of property, plant and equipment (7,302) (131,031) - (59,039) Rental of premises (315,672) (284,414) - - Writeback of allowance for doubtful debts (1,988,813) - - - Writeback of diminution in value of inventory (6,527) - - - 36. TAXATION THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Notes To The Financial Statements Current 982,916 (538,495) 913,324 94,000 Share of associates’ taxation 1,100,935 982,773 - - 2,083,851 444,278 913,324 94,000 Underprovision in previous financial year 1,054,742 - - - 3,138,593 444,278 913,324 94,000 The effective tax rate of the Company is higher than the statutory tax rate mainly due to certain expenses being disallowed for taxation purposes. Similarly, the effective tax rate of the Group is higher due to losses of certain subsidiaries not being utilised against the taxable profit of other subsidiaries as no group relief is available in Malaysia. Subject to agreement with the tax authorities, the Group has unutilised tax losses and unabsorbed capital allowances of approximately RM5,834,000 (2002 – RM4,682,000) and RM725,000 (2002 – RM689,000) respectively available at the balance sheet date to be carried forward for offset against future taxable business income. Siah Brothers Corporation Berhad (199310-P) 69
  • 72. 36. TAXATION (cont’d) The potential deferred taxation benefits, arising from timing differences, that have not been accounted for in the financial statements are as follows: UNUTILISED UNABSORBED TAX CAPITAL LOSSES ALLOWANCES OTHERS TOTAL RM RM RM RM At 1 April 2001 979,000 150,000 - 1,129,000 Arising during the financial year 331,000 41,000 611,000 983,000 At 31 March 2002/1 April 2002 1,310,000 191,000 611,000 2,112,000 Arising during the financial year 323,000 11,000 275,000 609,000 At 31 March 2003 1,633,000 202,000 886,000 2,721,000 37. EARNINGS PER SHARE Basic earnings per share (“EPS”) is arrived at by dividing the profit after taxation attributable to shareholders after deducting preference dividend of RM270,587 (2002 - RM270,587) by the weighted average number of ordinary shares in issue during the financial year of approximately 73,507,579 (2002 – 50,468,943). The computation of diluted EPS is not applicable as the effects of conversion of each class of potential ordinary shares are anti-dilutive. 38. DIVIDENDS THE COMPANY 2003 2002 RM RM Declared – dividend of 5.5% per ICCPS less 28% tax (2002 - 5.5% per ICCPS less 28% tax) 270,587 270,587 At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 March 2003 of 1 sen per ordinary share of RM1 each less 28% tax (2002 - Nil) amounting to RM544,334 (2002 - Nil) Notes To The Financial Statements will be tabled for shareholders’ approval. These financial statements do not reflect this final dividend which will be accrued as a liability upon approval by shareholders. This represents a change in accounting treatment with respect to the recognition of liabilities in compliance with the new MASB 19 - Events After The Balance Sheet Date. 39. PRIOR YEAR ADJUSTMENTS The prior year adjustments are in respect of the change in the accounting policy with regards to revenue recognition for dividend income as explained in Note 5(v) to the financial statements. The comparative figures have been restated accordingly as disclosed in Note 51 to the financial statements. 70 Annual Report 2003
  • 73. 40. SUMMARY OF EFFECTS OF ACQUISITION OF A SUBSIDIARY During the financial year, the Company paid RM35,000,000 in cash to acquire an 80% equity interest in South-East Best Sdn. Bhd.. The effect of the acquisition of the subsidiary on the financial results of the Group for the financial year was as follows: THE GROUP 2003 2002 RM RM Turnover 4,568,700 - Cost of sales (3,855,913) - Gross Profit 712,787 - Other operating income 509,312 - Less: Operating expenses Administrative expenses (653,287) - Selling and distribution expenses (250,750) - Other operating expenses (1,245,105) - Loss from operations (927,043) - Finance costs (709,550) - Loss before taxation (1,636,593) - Pre-acquisition loss 149,996 - Decrease in net profit of the Group (1,486,597) - The effect of the acquisition of the subsidiary on the financial position of the Group at the financial year end is as follows: THE GROUP 2003 2002 RM RM Investment in associate 880,000 - Property, plant and equipment 29,998,876 - Notes To The Financial Statements Properties held for future development 18,537,782 - Current assets 25,836,655 - Current liabilities (3,878,840) - Deferred liabilities (42,231,441) - Increase in net assets of the Group 29,143,032 - THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Property, plant and equipment 29,704,722 - - - Investment in associate 880,000 - - - Properties held for future development 27,050,046 - - - Current assets 22,503,103 - - - Current liabilities (8,879,842) - - Deferred liabilities (41,735,746) - - - Net assets in subsidiary acquired 29,522,283 - - - Reduction in net assets arising from acquisition (10,894,375) - - - Net assets 18,627,908 - - - Goodwill on acquisition 17,026,317 - - - Siah Brothers Corporation Berhad (199310-P) 71
  • 74. 40. SUMMARY OF EFFECTS OF ACQUISITION OF A SUBSIDIARY (cont’d) THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Purchase consideration 35,654,225 - 35,000,000 - Cash and cash equivalents acquired (818,781) - - - Net cash outflow on acquisition of subsidiary 34,835,444 - 35,000,000 - 41. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Purchase of property, plant and equipment 201,665 208,427 - 15,400 Amount financed through hire purchase arrangements - (93,100) - - Cash disbursed for the purchase of property, plant and equipment 201,665 115,327 - 15,400 42. CASH AND CASH EQUIVALENTS For the purpose of the cash flow statements, cash and cash equivalents comprise the following: THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Short term deposits (Note 19) 1,422,125 5,042,274 1,239,225 5,012,274 Cash and bank balances (Note 20) 6,084,094 1,460,540 5,201,131 1,904 Bank overdrafts (Note 23) (21,177,916) (20,843,690) (6,413,736) (1,657,727) (13,671,697) (14,340,876) 26,620 3,356,451 Less: Cash placed in sinking fund Notes To The Financial Statements account (Note 20) (5,198,398) - (5,198,398) - (18,870,095) (14,340,876) (5,171,778) 3,356,451 43. DIRECTORS’ REMUNERATION The aggregate amount of emoluments received and receivable by directors of the Company during the financial year are as follows: THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM DIRECTORS’ FEES: 1. Mun Chong Shing @ Mun Chong Tian 12,000 3,000 12,000 3,000 2. Dato’ Lim Phaik Gan 12,000 12,000 12,000 12,000 3. Dato’ Dr. Norraesah Bt Haji Mohamad 13,000 13,000 13,000 13,000 4. Datuk Sim Peng Choon 12,000 12,000 12,000 12,000 5. Vincent Koh Kok Kee 12,000 6,000 12,000 6,000 6. Tan Sri Dato’ Ir Muhammad Yusuff Bin Haji Muhammad Yunus 6,000 - 6,000 - 67,000 46,000 67,000 46,000 72 Annual Report 2003
  • 75. 43. DIRECTORS’ REMUNERATION (cont’d) THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM DIRECTORS’ NON-FEE EMOLUMENTS: 1. Sia Kwee Mow @ Sia Hok Chai 486,000 396,000 486,000 396,000 2. Sia Teong Heng 255,000 180,000 19,500 15,750 3. Mun Chong Shing @ Mun Chong Tian 1,200 300 1,200 300 4. Dato’ Lim Phaik Gan 1,200 900 1,200 900 5. Dato’ Dr. Norraesah Bt Haji Mohamad 2,400 1,500 2,400 1,500 6. Datuk Sim Peng Choon 3,000 2,100 3,000 2,100 7. Vincent Koh Kok Kee 3,000 1,200 3,000 1,200 8. Tan Sri Dato’ Ir Muhammad Yusuff Bin Haji Muhammad Yunus 600 - 600 - 9. Yeoh Hock Thong - 12,500 - 1,875 752,400 594,500 516,900 419,625 Apart from the amounts disclosed under directors’ remuneration above, the estimated monetary value of other benefits-in-kind received by the following directors during the financial year, otherwise than in cash are as follows: THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM 1. Sia Kwee Mow @ Sia Hok Chai 16,925 16,925 16,925 16,925 2. Sia Teong Heng - 13,500 - 11,250 3. Yeoh Hock Thong - 1,450 - 1,450 16,925 31,875 16,925 29,625 44. RELATED COMPANY TRANSACTIONS THE COMPANY 2003 2002 Notes To The Financial Statements RM RM Interest paid to subsidiaries 678,807 1,228,304 Rental paid to a subsidiary 60,000 55,930 Dividend income received/receivable from subsidiaries 5,300,000 8,125,000 Interest received from subsidiaries 587,338 619,226 Management fee received from subsidiaries 270,000 - 45. RELATED PARTY TRANSACTIONS/BALANCES GROUP NAME OF 2003 2002 RELATED PARTY NOTE NATURE OF TRANSACTION RM RM Ligamas Sdn. Bhd. (a) Progress billings received/receivable 19,114,882 17,559,960 Paling Industries (a) Purchase of material 58,873 181,113 Sdn. Bhd. Gross dividend income received 2,790,000 - Sri Rawang Properties Sdn. Bhd. (a) Gross dividend income received 150,000 - Sia Teong Leng (c) & (d) Property sold - 600,000 Siah Brothers Corporation Berhad (199310-P) 73
  • 76. 45. RELATED PARTY TRANSACTIONS/BALANCES (cont’d) GROUP NAME OF 2003 2002 RELATED PARTY NOTE NATURE OF TRANSACTION RM RM Wong Hon Kum (c) Retainer fee paid 42,000 42,000 Sia Poh Eng (d) Property sold 550,000 - Sia Kwee Mow @ Sia Hok Chai (e) Interest paid/payable 108,222 160,534 RECEIVABLE PAYABLE GROUP GROUP NAME OF 2003 2002 2003 2002 RELATED PARTIES NOTE RM RM RM RM Ligamas Sdn. Bhd. (a) 9,886,903 10,258,378 - - Paling Industries Sdn. Bhd. (a) - - - 38,534 Smart Home Sdn. Bhd. (b) 37,720,372 37,720,372 - - Sia Poh Eng (d) 500,000 - - - Sia Kwee Mow @ Sia Hok Chai (e) - - 108,222 160,534 (a) Associates (b) A company in which Sia Kwee Mow @ Sia Hok Chai, who is a director of the Company, has direct interest. (c) A director of certain related companies (d) A person connected to Sia Kwee Mow @ Sia Hok Chai and Sia Teong Heng (e) A director of the Company In the opinion of the directors, the above transactions have been entered into in the ordinary course of business on terms established by arm’s length negotiations between the parties. Notes To The Financial Statements 46. CAPITAL COMMITMENT THE COMPANY 2003 2002 RM RM Approved capital commitment contracted but not provided for - 29,050,000 The capital commitment in the previous financial year relates to the balance of the consideration payable for the acquisition of an 80% equity interest in South-East Best Sdn. Bhd.. 47. CONTINGENT LIABILITIES THE COMPANY 2003 2002 RM RM Corporate guarantee (unsecured) given to banks and other licensed financial institutions for credit facilities granted to subsidiaries - funded facilities 26,616,000 30,352,000 - non-funded facilities 3,907,000 4,472,000 30,523,000 34,824,000 74 Annual Report 2003
  • 77. 48. SEGMENTAL REPORTING PROPERTY MANUFACTURING CONS- DEVELOP- AND THE GROUP TRUCTION MENT INVESTMENT TRADING ELIMINATIONS GROUP 2003 RM RM RM RM RM RM REVENUE: External revenue 35,362,729 34,366,715 99,475 - - 69,828,919 Intersegment revenue 15,298,779 - 6,401,224 - (21,700,003) - Total revenue 50,661,508 34,366,715 6,500,699 - (21,700,003) 69,828,919 Results: Segment results 7,690,175 2,510,945 4,884,004 (15,190) (7,053,930) 8,016,004 Finance costs (6,793,334) Share of results of associates - 1,884,741 - 2,042,075 - 3,926,816 Profit from ordinary activities before taxation 5,149,486 Taxation (3,138,593) Profit from ordinary activities after taxation 2,010,893 PROPERTY MANUFACTURING CONS- DEVELOP- AND THE GROUP TRUCTION MENT INVESTMENT TRADING GROUP 2003 RM RM RM RM RM Other information Segment assets 39,398,622 287,381,500 26,959,851 12,846,046 366,586,019 Unallocated assets 5,350,142 371,936,161 Segment liabilities 43,876,909 55,859,860 14,750,259 26,663 114,513,691 Unallocated liabilities 40,305,594 154,819,285 Capital expenditure 7,700 580,762 - - 588,462 Notes To The Financial Statements Depreciation 142,474 229,114 32,016 2,999 406,603 PROPERTY MANUFACTURING CONS- DEVELOP- AND THE GROUP TRUCTION MENT INVESTMENT TRADING ELIMINATIONS GROUP 2002 RM RM RM RM RM RM REVENUE: External revenue 56,858,840 24,084,755 701,228 - 81,644,823 Intersegment revenue 16,644,238 - 10,161,626 - (26,805,864) - Total revenue 73,503,078 24,084,755 10,862,854 - (26,805,864) 81,644,823 Results: Segment results 6,503,527 4,025,639 8,947,252 (8,006) (11,590,097) 7,878,315 Finance costs (9,611,991) Share of results of associates - 1,511,621 - 1,839,954 - 3,351,575 Profit from ordinary activities before taxation 1,617,899 Taxation (444,278) Profit from ordinary activities after taxation 1,173,621 Siah Brothers Corporation Berhad (199310-P) 75
  • 78. 48. SEGMENTAL REPORTING (cont’d) PROPERTY MANUFACTURING CONS- DEVELOP- AND THE GROUP TRUCTION MENT INVESTMENT TRADING GROUP 2002 RM RM RM RM RM Other information Segment assets 47,120,266 214,434,561 15,417,666 12,189,324 289,161,817 Unallocated assets 3,971,217 293,133,034 Segment liabilities 53,795,745 13,105,051 10,776,147 29,721 77,706,664 Capital expenditure 70,088 122,099 16,240 - 208,427 Depreciation 208,060 72,489 42,341 3,088 325,978 No geographical analysis has been prepared as the Group operates wholly in Malaysia. 49. SIGNIFICANT EVENTS The following are the significant events involving the Group and the Company: (a) At the Extraordinary General Meeting convened on 30 April 2002, the shareholders of the Company approved the acquisition by the Company of 500,000 ordinary shares of RM1 each in South-East Best Sdn. Bhd., representing an 80% equity interest in SEB for a cash consideration of RM35,000,000. (b) On 18 June 2002, the nominal value of the ABBA Bonds initially approved by the Board of Directors on 27 September 2001, was revised to RM61,961,250 comprising RM49,569,000 nominal value Primary Al-Bai Bithaman Ajil Bonds (“Primary ABBA Bonds”) and RM12,392,250 nominal value Secondary Al-Bai Bithaman Ajil Bonds (“Secondary ABBA Bonds”). The proposed ABBA Bonds were placed out to a licensed financial institution via a private placement exercise. The ABBA Bonds have a tenure of five (5) years from the date of issue. The profit margin on the ABBA Bonds is at a fixed percentage of 5.00% per annum, payable in arrears on a semi-annual basis represented by the Secondary ABBA Bonds. The ABBA Bonds are secured in the manner disclosed in Note 24 to the financial statements. The Company submitted the application in relation to the proposed ABBA Bonds to the Securities Commission (“SC”) on 20 June 2002. The application was approved by the SC on 19 July 2002. Notes To The Financial Statements 50. NUMBER OF EMPLOYEES THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM Number of employees at the balance sheet date 90 55 9 8 51. COMPARATIVE FIGURES Following the adoption of MASB 19, “Events After The Balance Sheet Date”, in the preparation of this set of financial statements the presentation and classification of dividends in the financial statements have been changed. Accordingly, comparative amounts for dividends have been reclassified to ensure comparability with the current financial year’s presentation. 76 Annual Report 2003
  • 79. 51. COMPARATIVE FIGURES (cont’d) The following comparative figures of the Group and of the Company have been reclassified to conform with the current financial year’s presentation: AS PREVIOUSLY AS RESTATED REPORTED THE GROUP THE COMPANY THE GROUP THE COMPANY RM RM RM RM BALANCE SHEETS (EXTRACT): Receivables - 6,401,217 - 10,217,217 Tax recoverable 3,971,217 9,913,290 5,455,217 11,397,290 Reserves 42,524,427 42,119,220 44,008,427 47,419,220 INCOME STATEMENTS (EXTRACT): Turnover - 9,277,687 - 10,452,687 Taxation (444,278) - (115,278) - Profit after taxation 1,173,621 - 1,502,621 - CASH FLOW STATEMENTS (EXTRACT): (Loss)/Profit before taxation - (621,383) - 553,617 Dividend income - (7,805,555) - (8,980,555) 52. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES Fair value is defined as the amount at which the financial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced or liquidation sale. Fair values are obtained from quoted market prices, discounted cash flow models and option pricing models as appropriate. The following methods and assumptions are used to estimate the fair value of each class of financial instruments: (i) Bank balances and other liquid funds and short term receivables The carrying amounts approximate the fair value due to the relatively short term maturity of these instruments. Notes To The Financial Statements (ii) Quoted and unquoted investments The fair values of quoted investments are estimated based on quoted market prices for these investments. For unquoted investments, it is not practicable to determine the fair values because of the lack of quoted market prices and the assumptions used in valuation models to value these investments cannot be reasonably determined. (ii) Short term borrowings and other current liabilities The carrying amounts approximate the fair values because of the short period to maturity of these instruments. (iv) Long term bank loans The carrying amounts approximate the fair values as these instruments bear interest at variable rates. (v) Lease obligations The fair value of lease obligations is determined by discounting the relevant cash flow using current interest rates for similar instruments at the balance sheet date. There is no disclosure of fair value for investments in subsidiaries and associate, and borrowings under the basis of Islamic banking principles as these are excluded from MASB 24 – Financial Instruments: Disclosure and Presentation. Siah Brothers Corporation Berhad (199310-P) 77
  • 80. Group Properties as at 31 March 2003 Location Tenure/ Land/ Net Book Value Description Date of (Age of (Built-Up) As At Acquisition*/ building or Area 31. 03. 2003 Revaluation date of expiry) Sq. Ft. RM 1. Lot 172, Freehold 2,102/ 426,750 4 storey 29/03/2000 Section 85 (28 years) (6,404) Shophouse Town & District of Kuala Lumpur for rental Wilayah Persekutuan (Nos. 422, 422A, 422B & 422C Jalan Pahang, Kuala Lumpur) 2. Lot 128, 129, 130, Freehold 5,513/ 3,739,156 6 1/2 storey 28/03/2000 Section 47 (23-25 years) (38,238) commercial Town of Kuala Lumpur building for office Wilayah Persekutuan headquarters (Wisma Siah Brothers and for rental No. 74, Jalan Pahang Kuala Lumpur) 3. Lot 31 & 32, Freehold 4,792/ 400,000 3 storey 29/03/2000 Village of Ulu Klang (15 years) (5,340) commercial District of Gombak building for Selangor Darul Ehsan factory 4. Lot 54, Freehold 3,584 11,000 Vacant land 27/03/2000 Pekan Rembia for future District of Alor Gajah, Melaka development 5. No. B4-3, Freehold (1,672) 635,360 Condominium 27/03/2000 Sri Bukit Tunku (10 years) units for rental Kuala Lumpur 6. Unit B2, B3, C1, C3, C5, C6 Freehold (11,290) 2,792,737 Condominium 27/03/2000 Intan Kenny Condominiums (9 years) units for rental 29 Persiaran Bukit Tunku, Bukit Tunku, 50480 Kuala Lumpur 7. GM 2414, Lot No. 9332 Freehold 8,902 483,523 Vacant land 28/03/2000 Mukim Batu, Daerah and (7 years) for future Negeri Wilayah Persekutuan development 8. P.T. 8995, 8997, 9006, 9077 Leasehold 683,762 473,197 Vacant land 28/03/2000 Mukim Batu Daerah and expiring on for future Negeri Wilayah Persekutuan 22/4/2086 development 9. P.T. 9004 Leasehold 230,770 176,851 Land currently 28/03/2000 Mukim Batu Daerah and expiring on under Negeri Wilayah Persekutuan 22/4/2086 development 10. P.T. 41547, 41558-41559, Freehold 31,050/ 1,599,453 1 1/2 storey 30/03/2000 41563-41564, 41570, 41576, (8 years) (22,500) light industrial 41584 and 41606. building Jalan Gamban Group Properties Mukim Kuala Kuantan District of Kuantan Pahang Darul Makmur 11. P.T. 57232 and 57243 Freehold 2,670/ 237,482 2 storey 30/03/2000 Jalan Gambang (8 years) (5,080) shop office Mukim Kuala Kuantan, District of Kuantan, Pahang Darul Makmur 12. P.T. 42031, 42042-42050, Freehold 2,006,367 4,309,468 Vacant land 16/12/1993 * 42052-42056, for future Mukim Kuala Kuantan, development District of Kuantan, Pahang Darul Makmur 78 Annual Report 2003
  • 81. Location Tenure/(Age Land/ Net Book Value Description Date of of building (Built-Up) As At Acquisition*/ or date Area 31. 03. 2003 Revaluation of expiry) Sq. Ft. RM 13. P.T. 42029, Freehold 49,051 156,321 Vacant land 30/03/2000 Mukim Kuala Kuantan for future District of Kuantan, Pahang development 14. P.T. 42051 Freehold 465,672 1,365,622 Land currently 30/03/2000 Mukim Kuala Kuantan under District of Kuantan, Pahang development 15. P.T. 9076 & 9005 Leasehold 519,164 18,150,000 Vacant land 28/03/2000 Mukim Batu Daerah and expiring on for future Negeri Wilayah Persekutuan 22/4/2086 development 16. Lot No. 2398, Freehold 1,132,637 13,510,000 Vacant land 05/04/1999 * Mukim of Batang Kali for future District of Hulu Selangor development 17. 29 units at Block K Leasehold (39,180) 8,027,442 Condominium 30/04/2002 * The Peak Condominium expiring on units for sale Signal Hill, Tanjung Lipat, Likas 31/12/2093 and for rent District of Kota Kinabalu State of Sabah 18. 23 units at Block M Leasehold (29,883) 6,338,812 Condominium 30/04/2002 * The Peak Condominium expiring on units for sale Signal Hill, Tanjung Lipat, Likas 31/12/2093 and for rent District of Kota Kinabalu State of Sabah 19. Lot 2 (TL017546495) Leasehold 232,163 9,942,632 Vacant land 30/04/2002 * Signal Hill, Tanjung Lipat, expiring on for future District of Kota Kinabalu 31/12/2093 development State of Sabah 20. Lot 3 (TL017546486) Leasehold 195,139 29,500,000 Vacant land 30/04/2002 * Signal Hill, Tanjung Lipat, expiring on for future District of Kota Kinabalu 31/12/2093 development State of Sabah of hotel 21. Lot 4 (TL017546511) Leasehold 96,263 4,123,169 Vacant land 30/04/2002 * Signal Hill, Tanjung Lipat, expiring on for future District of Kota Kinabalu 31/12/2093 development State of Sabah 22. CL015162026 Leasehold 104,103 2,978,034 Vacant land 30/04/2002 * Signal Hill/Likas Bay expiring on for future District of Kota Kinabalu 16/09/2911 development State of Sabah 23. CL015162035 Leasehold 85,809 2,454,698 Vacant land 30/04/2002 * Group Properties Signal Hill/Likas Bay expiring on for future District of Kota Kinabalu 16/09/2911 development State of Sabah 24. CL015162044 Leasehold 104,539 2,990,494 Vacant land 30/04/2002 * Signal Hill/Likas Bay expiring on for future District of Kota Kinabalu 16/09/2911 development State of Sabah Siah Brothers Corporation Berhad (199310-P) 79
  • 82. Shareholders’ Information as at 31 July 2003 Authorised Share Capital : RM200,000,000 Issued and Fully Paid Up Capital : RM82,435,000 Class of Shares - Ordinary shares of RM1 each : 75,602,000 - 5.5% Irredeemable Cumulative Convertible Preference Shares of RM1 each : 6,833,000 Voting Right : 1 vote per ordinary share DISTRIBUTION SCHEDULE No. of % of % of Issued Shareholding Category Shareholders Shareholders No. of Shares Capital 1 - 99 63 1.56 2,631 0.00 100 - 1,000 1,304 32.23 1,124,156 1.49 1,001 - 10,000 2,314 57.19 8,196,942 10.84 10,001 - 100,000 325 8.03 9,200,520 12.17 100,001 - 3,780,099 36 0.89 20,037,228 26.50 3,780,100 - 75,602,000 4 0.10 37,040,523 49.00 Total 4,046 100.00 75,602,000 100.00 THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors) No. of Shares % of Issued Name of Shareholders Held Capital 1. LOM Holdings Sdn Bhd 14,317,500 18.94 2. Malayan Banking Berhad 9,000,000 11.90 3. Amanah Raya Nominees (Tempatan) Sdn Bhd 8,542,000 11.30 - Skim Amanah Saham Bumiputera 4. Evergreen Legacy Sdn Bhd 5,181,023 6.85 5. Malayan Banking Berhad 3,468,828 4.59 6. DB (Malaysia) Nominee (Asing) Sdn Bhd 2,600,000 3.44 - Deutsche Bank AG Singapore PBD for Southwark Limited 7. DB (Malaysia) Nominee (Asing) Sdn Bhd 2,570,400 3.40 - Deutsche Bank AG Singapore PBD for Penfold Holdings Limited 8. RHB Capital Nominees (Tempatan) Sdn Bhd 1,480,800 1.96 - Pledged Securities Account for Sia Kwee Mow @ Sia Hok Chai (STH 981069) 9. Nican Asia Limited 1,106,478 1.46 10. Chay Kwai Gong @ Siah Kwee Swee 802,830 1.06 11. Mun Oi @ Mun Oi Lin 755,800 1.00 Shareholders’ Information 12. Siah Chong Hock 722,000 0.96 13. Siah Teong Woei 561,407 0.74 14. Sia Tian Soong @ Sia Tong Sang 491,000 0.65 15. Siah Chong Ong 382,400 0.51 16. United Overseas Nominees (Tempatan) Sdn Bhd 343,723 0.45 - Pledged Securities Account for Siah Teong Chein (KL) 17. Siah Teong Yin 328,723 0.43 18. Poo Choo @ Ong Poo Choi 324,100 0.43 19. Citicorp Nominees (Tempatan) Sdn Bhd 316,304 0.42 - Pledged Securities Account for Siah Teong Woei (471465) 20. Sia Tzu Lung 314,592 0.42 21. Chan Wan Moi 275,000 0.36 22. Siah Chong Guan 257,400 0.34 23. Mayban Securities Nominees (Tempatan) Sdn. Bhd. 234,100 0.31 - Pledged Securities Account for Wan Yet Cheong (REM 882-Margin) 24. Chew Siew Ying 229,000 0.30 25. Wong Chee Choon 213,200 0.28 26. Kuala Lumpur City Nominees (Tempatan) Sdn. Bhd. 202,000 0.27 - Pledged Securities Account for Tan Moi Joo (D18) 80 Annual Report 2003
  • 83. THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors) (cont’d) No. of Shares % of Issued Name of Shareholders Held Capital 27. Lok Huey Yen 190,000 0.25 28. Sia Poh Choo @ Sia Swee Choo 189,700 0.25 29. Siah Teong Teck 176,000 0.23 30. Sia Teong Heng 171,891 0.23 TOTAL 55,748,199 73.73 DIRECTORS’ SHAREHOLDINGS (As per Register of Directors’ Shareholdings) Direct Interest Indirect Interest Name of Directors Shareholdings % Shareholdings % Sia Kwee Mow @ Sia Hok Chai 1,480,800 (a) 1.96 19,498,523 (b) 25.79 Sia Teong Heng 334,992 0.44 19,498,523 (b) 25.79 Mun Chong Shing @ Mun Chong Tian 21,782 0.03 - - Dato’ Lim Phaik Gan - - - - Dato’ Dr. Norraesah bt. Haji Mohamad - - - - Datuk Sim Peng Choon 10,869 0.01 - - Abdul Rahman bin A. Shukor (Alternate to Datuk Sim Peng Choon) - - - - Notes: (a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares). SUBSTANTIAL SHAREHOLDERS (excluding bare trustees) (As per Register of Substantial Shareholders) No. of shares held or % of beneficially interested in Issued Capital Name of Substantial Shareholders Direct Indirect Direct Indirect Shareholders’ Information Pemegang Amanah Raya Malaysia 8,542,000 - 11.30 - - Skim Amanah Saham Bumiputera Sia Kwee Mow @ Sia Hok Chai 1,480,800 (a) 19,498,523 (b) 1.96 25.79 Sia Teong Heng 334,992 19,498,523 (b) 0.44 25.79 LOM Holdings Sdn. Bhd. 14,317,500 5,181,023 (c) 18.94 6.85 Evergreen Legacy Sdn. Bhd. 5,181,023 - 6.85 - Malayan Banking Berhad 12,468,828 - 16.49 - Notes: (a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares) (c) Deemed interest by virtue of its shareholding in Evergreen Legacy Sdn. Bhd. (5,181,023 shares) Siah Brothers Corporation Berhad (199310-P) 81
  • 84. Transferable Subscription Rights (“TSR”) Holders’ Information as at 31 July 2003 No. of TSR : 17,076,200 Exercise Price : RM3.50 for one ordinary share of RM1.00 each Exercise Period : 21 February 1994 to 20 February 2004 Exercise Rights : Each TSR entitles the holder to subscribe for one ordinary share of RM1.00 each TSR exercised during : None the year ended 31 March 2003 DISTRIBUTION SCHEDULE No. of TSR % of TSR TSR Holding Category Holders Holders No. of TSR % of TSR 1 - 99 1 0.08 80 0.00 100 - 1,000 421 33.90 344,700 2.02 1,001 - 10,000 621 50.00 2,653,480 15.54 10,001 - 100,000 188 15.14 4,854,400 28.43 100,001 - 853,809 8 0.64 1,678,660 9.83 853,810 - 17,076,200 3 0.24 7,544,880 44.18 Total 1,242 100.00 17,076,200 100.00 THIRTY LARGEST TSR HOLDERS (As per Record of Depositors) Transferable Subscription Rights (“TSR”) Holders’ Information Name of TSR Holders No. of TSR Held % of TSR 1. Sia Kwee Mow @ Sia Hok Chai 3,078,500 18.03 2. Permodalan Nasional Berhad 2,769,800 16.22 3. Evergreen Legacy Sdn Bhd 1,696,580 9.94 4. DB (Malaysia) Nominee (Asing) Sdn Bhd 600,000 3.51 - Deutsche Bank AG Singapore PBD for Southwark Limited 5. Tan Yong Tian 242,000 1.42 6. Ismail bin Mohd Tom 230,000 1.35 7. Siah Chong Hock 139,580 0.82 8. Kenanga Nominees (Asing) Sdn Bhd 129,000 0.76 - Joyway Investment Limited 9. Sia Tzu Lung 121,080 0.71 10. Mayban Nominees (Tempatan) Sdn Bhd 110,000 0.64 - Pledged Securities Account for Tang Huong Kiong (211AW1320) 11. Wong Ah Loke @ Wong Heng Loke 107,000 0.63 12. Lee Ying Yee 84,000 0.49 13. Amsec Nominees (Tempatan) Sdn Bhd 81,000 0.47 - Pledged Securities Account for Cham Chee Khim 14. Ong Hock Lye 80,000 0.47 15. Siah Teong Woei 77,000 0.45 16. Mun Oi @ Mun Oi Lin 70,000 0.41 17. Amsec Nominees (Tempatan) Sdn Bhd 70,000 0.41 - Pledged Securities Account for Maiden Abdul Kadir bin Mohd Ali 18. Lee Chen Choi 63,000 0.37 19. Bey Leang Seng 57,000 0.33 20. Yap Meng Wah 56,500 0.33 21 Tiew Siok Tuan 55,000 0.32 22. Siah Teong Chein 53,000 0.31 23. Siah Teong Ban 52,000 0.30 24. Liew Shou Kong 52,000 0.30 25. Perfect Consistence Sdn Bhd 50,200 0.29 26. Suhaimi bin Ishak 50,000 0.29 27. Sim Gim Shun 50,000 0.29 28. Ong Cho Ho 50,000 0.29 82 Annual Report 2003
  • 85. THIRTY LARGEST TSR HOLDERS (As per Record of Depositors) (cont’d) Name of TSR Holders No. of TSR Held % of TSR 29. Mayban Securities Nominees (Tempatan) Sdn. Bhd. 50,000 0.29 - Pledged Securities Account for Chow Wai Ken (Rem 609-Margin) 30. Mayban Securities Nominees (Tempatan) Sdn. Bhd. 50,000 0.29 - Pledged Securities Account for Wong Sing Kuong (28G) TOTAL 10,374,240 60.73 DIRECTORS’ INTEREST IN TSR (As per Register of Directors’ TSR Holdings) Direct Interest Indirect Interest Name of Directors TSR holdings % TSR holdings % Sia Kwee Mow @ Sia Hok Chai 3,078,500 18.03 1,746,780(a) 10.23 Sia Teong Heng - - 1,746,780(a) 10.23 Mun Chong Shing @ Mun Chong Tian 12,500 0.07 - - Dato’ Lim Phaik Gan - - - - Dato’ Dr. Norraesah bt. Haji Mohamad 4,000 0.02 - - Datuk Sim Peng Choon - - - - Abdul Rahman bin A. Shukor (Alternate to Datuk Sim Peng Choon) - - - - Transferable Subscription Rights (“TSR”) Holders’ Information Note: (a) Deemed interest by virtue of his shareholding in Evergreen Legacy Sdn. Bhd. (1,696,580 TSR) and Perfect Consistence Sdn. Bhd. (50,200 TSR). Siah Brothers Corporation Berhad (199310-P) 83
  • 86. Notes
  • 87. PROXY FORM SIAH BROTHERS CORPORATION BERHAD Company No: 199310-P (Incorporated in Malaysia) I/We, ______________________________________________________________________________________ of ________________________________________________________________________________________ being a member/ members of the abovenamed Company do hereby appoint ______________________________ _____________________________________ of ___________________________________________________ _____________________________ or failing whom, ________________________________________________ of ________________________________________________________________________________________ as my/our proxy to vote for me/us and on my/our behalf at the Thirteenth Annual General Meeting of the Company to be held at the Penthouse, 5th Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpur on Friday, 26 September 2003 at 11.00 a.m. and at any adjournment thereof in the manner indicated below: No. Resolution For Against 1. Adoption of Reports and Audited Financial Statements 2. Declaration of a first and final dividend 3. Payment of Directors’ fees 4. Re-appointment of Director: YBhg. Dato’ Lim Phaik Gan 5. Re-appointment of Director: Mr. Sia Kwee Mow @ Sia Hok Chai 6. Re-election of Director: YBhg. Dato’ Dr. Norraesah Bt. Haji Mohamad 7. Appointment of Auditors 8. Authority to Directors to allot and issue shares 9. Approval for proposed change of name of the Company (Please indicate with an ‘X’ in the appropriate box against each resolution how you wish your proxy to vote. If no instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion.) Dated this ______________________ day of ______________________, 2003 Number of Shares held ________________________________ Signature of Member(s) NOTES: A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote instead of him. To be valid, this form duly completed must be deposited at the Registered Office of the Company not less than forty-eight (48) hours before the time for holding the meeting. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. If the appointor is a corporation, this form must be executed under its common seal or under the hand of the attorney.
  • 88. FOLD THIS FLAP FOR SEALING 2nd FOLD HERE Affix Stamp The Company Secretaries SIAH BROTHERS CORPORATION BERHAD(199310-P) Wisma Siah Brothers, 74A, Jalan Pahang, 53000 Kuala Lumpur. 1st FOLD HERE