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SBC Corporation Berhad: Annual Report 2004 960kb
 

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    SBC Corporation Berhad: Annual Report 2004 960kb SBC Corporation Berhad: Annual Report 2004 960kb Document Transcript

    • 2 0 0 4 R E P O R T A N N U A L an adherence to industr y's highest ethics (formerly known as siah brothers corporation berhad) (199310-P) sbc corporation berhad sbc corporation berhad annual repor t 2004 sbc corporation berhad (199310-P) Wisma Siah Brothers, 74A Jalan Pahang, 53000 Kuala Lumpur. Tel: 03 4041 8118 Fax: 03 4043 5281 (formerly known as siah brothers corporation berhad) designed & produced by mintlav@streamyx.com
    • c o r e p u r p o s e c o r e v a l u e Adherence to industry's highest ethics Use of designs and processes that promote standards Equipping our people to anticipate and respond to the needs of our customers and stakeholders To build upon our construction heritage to design and deliver exciting, unique and valuable solutions for buildings and communities
    • CONTENTS corporate section notice of annual general meeting 2 notice of dividend payment 3 statement accompanying notice of annual general meeting 3 corporate information 4 directors’ profile 5 corporate structure 11 group financial highlights 12 statement of directors’ responsibilities 13 executive chairman’s statement 14 penyata pengerusi eksekutif 18 statement of corporate governance 22 statement on internal control 30 audit committee report 32 group properties 88 shareholders’ information 90 proxy form financial statements 37 - 87
    • notice of annual general meeting NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Fourteenth Annual General Meeting of SBC Corporation Berhad (Formerly known as Siah Brothers Corporation Berhad) will be held at the Penthouse, 5th Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpur on Thursday, 23 September 2004 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 (Resolution 1) year ended 31 March 2004 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 2004. 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 Mr Sia Teong Heng as a Director retiring by rotation pursuant to Article 77 of (Resolution 6) the Articles of Association of the Company. 6. To re-elect the following Directors retiring pursuant to Article 84 of the Articles of Association of the Company: (a) YBhg. Dato’ Zainol Abidin Bin Haji A. Hamid (Resolution 7) (b) En. Ahmad Fizal Bin Othman (Resolution 8) 7. To re-appoint Messrs. Horwath as Auditors of the Company and to authorise the (Resolution 9) Directors to fix their remuneration. 8. As Special Business, to consider and, if thought fit, to pass the following Ordinary (Resolution 10) Resolution: AUTHORITY TO DIRECTORS TO ALLOT AND ISSUE SHARES “THAT subject always to the Companies Act, 1965, the Articles of Association of the Company and the approval from the Bursa Malaysia Securities Berhad and other governmental/regulatory bodies, where such approval shall be necessary, the Directors be and are hereby authorised pursuant to Section 132D of the Companies Act, 1965, to allot and issue shares in the Company, at any time and upon such terms and conditions and for such purposes as they may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per cent (10%) of the issued capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.” 9. To consider any other business for which due notice shall have been given. P A G E 2
    • notice of dividend payment NOTICE OF DIVIDEND PAYMENT NOTICE IS HEREBY GIVEN that subject to the approval of the shareholders at the Fourteenth Annual General Meeting of the Company, the first and final dividend of 1% less 28% income tax for the year ended 31 March 2004 will be paid on 29 October 2004 to Depositors registered in the Record of Depositors on 18 October 2004. 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 18 October 2004 in respect of ordinary transfers; and b) shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad. NOTES: 1) Proxy: 2) Resolution 10: 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 opportunities in prospective areas so as to and vote instead of him. Where a member broaden the operating base and earnings appoints more than one (1) proxy, the potential of the Company. Such expansion plans appointment shall be invalid unless he specifies may require the issue of new shares not CHONG FOOK SIN the proportions of his holdings to be represented exceeding 10 per cent (10%) of the Company’s KAN CHEE JING by each proxy. To be valid, the proxy form duly issued share capital. With the passing of the completed must be deposited at the Registered resolution by the shareholders of the Company at Company Secretaries Office of the Company not less than forty-eight the forthcoming Annual General Meeting, the (48) hours before the time for holding the Directors would avoid delay and cost of meeting. If the appointor is a corporation, this convening further general meetings to approve Kuala Lumpur form must be executed under its common seal or the issue of shares for such purposes. under the hand of its attorney. 30 August 2004 statement accompanying notice of annual general meeting pursuant to paragraph 8.28 (2) of the listing requirements of Bursa Malaysia Securities Berhad (1) The following are the Directors standing for re-appointment and re-election at the Fourteenth 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 Mr Sia Teong Heng as a Director pursuant to Article 77 of the Articles of Association of the Company. (c) Re-election of the following Directors pursuant to Article 84 of the Articles of Association of the Company: (i) YBhg. Dato’ Zainol Abidin Bin Haji A. Hamid (ii) En. Ahmad Fizal Bin Othman (2) There were six (6) Directors’ Meetings held during the financial year ended 31 March 2004. Details of attendance of the Directors are set out in the Statement of Corporate Governance appearing on page 23 of P this Annual Report. A (3) The Fourteenth Annual General Meeting will be held at the Penthouse, 5th Floor, Wisma Siah Brothers, G 74, Jalan Pahang, 53000 Kuala Lumpur on Thursday, 23 September 2004 at 11.00 a.m. E 3 (4) The profile of Directors standing for re-appointment and re-election as mentioned in paragraph 1 above at the Fourteenth Annual General Meeting are set out in pages 5 to 10 of this Annual Report.
    • corporate information as at 10 August 2004 BOARD OF DIRECTORS CORPORATE INFORMATION 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 Dato' Zainol Abidin Bin Haji A. Hamid LLB (Hons) Dato' Dr Norraesah Bt. Haji Mohamad Non-Executive Director DSPN, PhD., B.Sc.(Econ) Independent Non-Executive Director Ahmad Fizal Bin Othman B.Acc & Fin. (Hons) Independent Non-Executive Director AUDIT COMMITTEE REMUNERATION COMMITTEE Dato' Dr. Norraesah Bt. Haji Mohamad Dato' Zainol Abidin Bin Haji A. Hamid Chairperson & Independent Non-Executive Director Chairman & Non-Executive Director DSPN, PhD., B.Sc.(Econ) LLB (Hons) Dato' Lim Phaik Gan Dato' Lim Phaik Gan DPMP, DMPN, M.A.(Law), FCI, ARB DPMP, DMPN, M.A.(Law), FCI, ARB Independent Non-Executive Director Independent Non-Executive Director Ahmad Fizal Bin Othman Dato' Dr Norraesah Bt. Haji Mohamad B.Acc & Fin. (Hons) DSPN, PhD., B.Sc.(Econ) Independent Non-Executive Director Independent Non-Executive Director Sia Teong Heng Sia Teong Heng B.Sc. (Eng), M.Sc. B.Sc. (Eng), M.Sc. Managing Director Managing Director EXECUTIVE MANAGEMENT NOMINATION COMMITTEE Sia Teong Heng Dato' Lim Phaik Gan Chairman & Managing Director Chairperson & Independent Non-Executive Director B.Sc. (Eng), M.Sc. DPMP, DMPN, M.A.(Law), FCI, ARB Sia Teong Leng Dato' Dr Norraesah Bt. Haji Mohamad B.A. (Hons) (Law & Econs), M.B.A. DSPN, PhD., B.Sc.(Econ) Corporate Director Independent Non-Executive Director Ng Kee Chye Ahmad Fizal Bin Othman CA., B.Acc (Hons) B.Acc & Fin. (Hons) Group Chief Financial Officer Independent Non-Executive Director Teh Kai Chua Mun Chong Shing @ Mun Chong Tian B.Sc. (Eng) Non-Executive Director General Manager - Technical SOLICITORS AUDITORS Cheang & Ariff Horwath 39 Court Chartered Accountants 39, Jalan Yap Kwan Seng, 50450 Kuala Lumpur Level 16 Tower C, Megan Phileo Avenue Lim & Yeoh 12 Jalan Yap Kwan Seng, 50450 Kuala Lumpur 145-M Jalan Maharajalela, 50150 Kuala Lumpur PRINCIPAL BANKERS Lee, Perara & Tan Affin Merchant Bank Berhad 55, Jalan Thambapillai, Off Jalan Tun Sambanthan Alliance Bank Malaysia Berhad Brickfields, 50470 Kuala Lumpur Aseambankers Malaysia Berhad Bangkok Bank Berhad COMPANY SECRETARIES Bumiputra Commerce Bank Berhad Chong Fook Sin United Overseas Bank (Malaysia) Berhad ATII, MCCS, AFA Utama Merchant Bank Berhad Kan Chee Jing P ACIS REGISTRARS A G Tacs Corporate Services Sdn. Bhd. REGISTERED OFFICE E Unit No. 203, 2nd Floor, Block C, Damansara Intan Wisma Siah Brothers 4 74A Jalan Pahang, 53000 Kuala Lumpur No. 1, Jalan SS 20/27, 47400 Petaling Jaya Tel: 03-4041 8118 Fax: 03-4043 5281 Tel: 03-7118 2688 Fax: 03-7118 2693 STOCK EXCHANGE LISTING Main Board Bursa Malaysia Securities Berhad
    • directors’ profile as at 30 July 2004 DIRECTORS’ PROFILE Sia Kwee Mow @ Sia Hok Chai Sia Kwee Mow @ Sia Hok Chai, a Malaysian, aged 71, is the Executive Chairman of SBC Corporation Berhad (“SBC”). He has been a Director of SBC since its incorporation on 14 June 1990. He has over 50 years of experience in building and civil engineering contracting and not less than 32 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) 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). By virtue of his interests in SBC, he is deemed to have interests in the securities of SBC’s subsidiaries to the extent of SBC’s interest in accordance with Section 6A of the Companies Act, 1965. He is the father of Sia Teong Heng, the Managing Director and a major shareholder of SBC. He does not have any conflict of interest with SBC except for those transactions disclosed in Note 42 to the financial statements. He has not been convicted of any offence within the past 10 years. He attended all the six Board Meetings held during the last financial year. P A G E 5
    • DIRECTORS’ PROFILE Sia Teong Heng Sia Teong Heng, a Malaysian, aged 41, is the Managing Director of SBC Corporation Berhad (“SBC”). He was appointed as a Director of SBC on 5 February 1991. He is a member of the Audit Committee and the Remuneration Committee of SBC. He graduated in 1985 with a degree in Bachelor of Science in Civil Engineering from Loughborough University, United Kingdom ("UK") and a Master degree in Management Science from Imperial College, University of London, UK in 1986. His career began in investment banking in 1987 with Morgan Grenfell (Asia) Ltd., Singapore. He joined SBC in 1991. Presently, he also sits on the boards of several subsidiaries of SBC. His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 2,017,992 (a) 19,498,523 (b) Employees’ Shares Option Scheme 350,000 - (a) 1,774,000 shares are held in bare trust by Amsec Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares). By virtue of his interests in SBC, he is deemed to have interests in the securities of SBC’s subsidiaries to the extent of SBC’s interest in accordance with Section 6A of the Companies Act, 1965. He is a son of Sia Kwee Mow @ Sia Hok Chai, the Executive Chairman and a major shareholder of SBC. He does not have any conflict of interest with SBC except for those transactions disclosed in Note 42 to the financial statements. He has not been convicted of any offence within the past 10 years. He attended five of the six Board Meetings held during the last financial year. P A G E 6
    • DIRECTORS’ PROFILE Mun Chong Shing @ Mun Chong Tian Mun Chong Shing @ Mun Chong Tian, a Malaysian, aged 67, was appointed as an Executive Director of SBC Corporation Berhad ("SBC") on 1 April, 1996 when he was employed as General Manager of Paling Industries Sdn. Bhd. (“Paling”) from 1987 and appointed as a Director in 1991 and remained in both positions until his retirement on 31 December 2001. On 31 December 2001, he was redesignated as a Non-Executive Director of SBC. He is a member of the Nomination Committee of SBC. He has received training in Sales Management conducted by the National Productive Centre and the Malaysian Institute of Management and a General Management Programme at the National Productivity Board, Singapore. Prior to his involvement with Paling, he was employed as General Manager in Hume Industries (M) Bhd. where he has had extensive exposure to industrial engineering and management. His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 21,782 - He does not hold any securities, direct or indirect, in any of SBC’s subsidiaries. He is a brother-in-law to Sia Kwee Mow @ Sia Hok Chai and an uncle to Sia Teong Heng, both are Directors and major shareholders of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended all the six Board Meetings held during the last financial year. P A G E 7
    • DIRECTORS’ PROFILE Dato' Lim Phaik Gan Dato' Lim Phaik Gan, a Malaysian, aged 84, was appointed as an Independent Non-Executive Director of SBC Corporation Berhad ("SBC") on 5 February 1991. She is the Senior Independent Non-Executive Director, the Chairperson of the Nomination Committee and a member of the Audit Committee and the Remuneration Committee of SBC. She is an advocate and solicitor and was called to the Bar of England and the Bar of Malaysia. She obtained a Master of Arts degree in Law from the University of Cambridge, United Kingdom and was in active practice at the Bar of Malaysia from 1954 to 1971 and from 1980 until today. Since 1955, she has had a distinguished career in both the private and public sectors. In 1970, she was a member of the National Economic Consultative Council established when Parliament was suspended as a result of riots in 1969. From 1971 to 1980, she served as ambassador and the Deputy Permanent Representative of Malaysia to the United Nations and successively as the Malaysian Ambassador to Yugoslavia, Austria, Belgium and the European Economic Community. She was Malaysia's Permanent Representative to the United Nations Industrial and Development Organisation and International Atomic Energy Agency in Vienna, and served as chairman in various committees. After her retirement from the Malaysian Foreign Service in 1980, she was appointed by the Government as Director of the Kuala Lumpur Regional Centre for Arbitration, an international organisation involved in the conduct and administration of international commercial arbitration for the settlement of disputes arising out of international commercial contracts and joint ventures, in which capacity she served from 1982 to 2000. She is currently a member of the Board of Trustees of the Institute of Strategic and International Studies. She does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. She has no family relationship with any Director and/or major shareholder of SBC. She does not have any conflict of interest with SBC. She has not been convicted of any offence within the past 10 years. She attended all the six Board Meetings held during the last financial year. P A G E 8
    • DIRECTORS’ PROFILE Dato’ Dr. Norraesah Bt. Haji Mohamad Dato’ Dr. Norraesah Bt. Haji Mohamad, a Malaysian, aged 56, was appointed as an Independent Non-Executive Director of SBC Corporation Berhad ("SBC") on 8 July 1991. She is the Chairperson of the Audit Committee and a member of the Nomination Committee and the Remuneration Committee of SBC. She holds a Doctorate Degree in Economics Science (International Economics and Finance) which she obtained in 1986 from University of Paris 1, Pantheon Sorbonne, France. She has over 31 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. She does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. She has no family relationship with any Director and/or major shareholder of SBC. She does not have any conflict of interest with SBC. She has not been convicted of any offence within the past 10 years. She attended all the six Board Meetings held during the last financial year. P A G E 9
    • DIRECTORS’ PROFILE Dato’ Zainol Abidin Bin Haji A. Hamid Dato’ Zainol Abidin Bin Haji A. Hamid, a Malaysian, aged 62, was appointed as a Non-Executive Director of SBC Corporation Berhad ("SBC") on 10 October 2003, representing the interest of Permodalan Nasional Berhad. He is the Chairman of the Remuneration Committee of SBC. He graduated with LLB (Hons) from the University of London in 1995. He joined the Kedah State Government in 1966 as a civil servant. From 1973 to 1981, he was the District Officer for Sik, then Padang Terap and finally Kubang Pasu. He was General Manager and Director of Kedah Cement Sdn Bhd from 1981 to 1996 and Managing Director of Kedah Cement Marketing Sdn Bhd form 1990 to 1996. He sits on the Board of Paragon Union Berhad. He does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. He has no family relationship with any Director and/or major shareholder of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended all the three Board Meetings held during the last financial year since his appointment to the Board of SBC. Ahmad Fizal Bin Othman Ahmad Fizal Bin Othman, a Malaysian, aged 41, was appointed as an Independent Non-Executive Director of SBC Corporation Berhad ("SBC") on 24 February 2004. He is a member of the Audit Committee and the Nomination Committee of SBC. He graduated with a Bachelor in Accounting and Finance (Hons) from the Middlesex University, London. He is a well-rounded and experienced businessman and involved in a multitude of industries. Currently, he immerses himself in retail, multimedia and technology. He does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. He has no family relationship with any Director and/or major shareholder of SBC. He does not have any conflict of interest with SBC He has not been convicted of any offence within the past 10 years. He did not attend any Board Meeting during the last financial year as there was no such Meeting held after his appointment up to 31 March 2004. P A G E 10
    • corporate structure as at 10 August 2004 CORPORATE STRUCTURE INVESTMENT HOLDING Siah Brothers Land Sdn Bhd 100% • Siah Brothers Properties Sdn Bhd 100% • Siah Brothers Industries Sdn Bhd 100% • PROPERTY DEVELOPMENT Seri Ampangan Realty Sdn Bhd 100% • Sinaran Naga Sdn Bhd 100% • Mixwell (Malaysia) Sdn Bhd 100% • South-East Best Sdn Bhd 100% • Gracemart Resources Sdn Bhd 100% • Sutrati Development Sdn Bhd 100% • Siah Brothers Development Sdn Bhd 100% • Tiara Development Sdn Bhd 100% • SBC Homes Sdn Bhd 100% • Winsome Ventures Sdn Bhd 100% • SBC Leisure Sdn Bhd 100% • SBC Towers Sdn Bhd 100% • S Brothers Project Management Sdn Bhd iah 100% • Ligamas Sdn Bhd 50% • Sri Berjaya Development Sdn Bhd 33.3% • CONSTRUCTION • 100% Syarikat Siah Brothers Trading Sdn Bhd • 100% Syarikat Siah Brothers Construction Sdn Bhd • 100% Siah Brothers Enterprise Sdn Bhd • 100% Lifeplus - Siah Brothers Trading JV Sdn Bhd PROPERTY INVESTMENT • 100% Aureate Construction Sdn Bhd • 22.2% Sri Rawang Properties Sdn Bhd MANUFACTURING & TRADING • 40% Paling Industries Sdn Bhd • 40% Liga Canggih Sdn Bhd • 51% Masahmura Sdn Bhd • 51% Masahmura Sales & Service Sdn Bhd • 50% Varich Industries Sdn Bhd PLANTATION & NURSERY P A • 50% Sam & Lau Plantation Sdn Bhd G E 11
    • group financial highlights GROUP FINANCIAL HIGHLIGHTS for the financial year ended 31 March 2004 2004 2003 2002 2001 2000 (Restated) RM’000 RM’000 RM’000 RM’000 RM’000 RESULTS Turnover 86,317 69,829 81,645 92,411 114,707 Profit before taxation 6,996 5,149 1,618 1,421 2,555 Profit after taxation but before minority interest 2,073 011 1,174 2, 1,071 3,729 Profit attributable to shareholders 2,073 2,011 1,174 1,071 3,729 ASSETS EMPLOYED Property, plant and equipment 36,246 35,813 7,047 7,586 13,090 Investments and other assets 153,703 152,856 141,705 140,323 141,031 Net current assets 73,632 71,634 56,867 58,346 56,393 Goodwill and deferred expenditure 27,318 27,272 10,246 10,246 8,253 290,899 287,575 215,865 216,501 218,767 FINANCED BY Share capital 82,435 82,435 57,302 57,302 57,302 Share application account - - 115,600 - - Reserves 135,940 134,682 42,524 43,087 42,832 Irredeemable Convertible Unsecurred Loan Stocks - - - 115,600 115,600 ABBA Bonds 39,712 37,827 - - - Deferred liabilities 32,812 32,631 439 512 3,033 290,899 287,575 215,865 216,501 218,767 SELECTED RATIOS Net earnings per share (sen) 2.4 2.4 1.8 1.6 6.9 Net tangible assets per share (sen) 244 242 393 165 169 Gross dividend (%) 1.0 1.0 - 1.5 1.5 6,996 290,899 218,375 86,317 287,575 217,117 5,149 69,829 2004 2004 2004 2004 215.426 81,645 215,865 2003 2003 2003 2003 1,618 92,411 216,501 2002 2002 2002 2002 100,389 1,421 114,707 P 218,767 2001 2001 2001 2001 A 100,134 G 2,555 E 12 2000 2000 2000 2000 Profit Before Taxation Assets Employed Turnover Shareholders’ Fund (RM’000) (RM’000) (RM’000) (RM’000)
    • statement of directors’ responsibilities in respect of the preparation of the financial statements STATEMENT OF DIRECTORS’ RESPONSIBILITIES 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 2004 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. P A G E 13
    • executive chairman’s statement EXECUTIVE CHAIRMAN’S STATEMENT To our shareholders, customers, employees, partners, suppliers and friends, ON BEHALF OF THE BOARD OF DIRECTORS, I AM PLEASED TO PRESENT THE ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS OF SBC CORPORATION BERHAD FOR THE FINANCIAL YEAR ENDED Kota Damansara, Petaling Jaya 31 MARCH 2004 Financial Review The Group's revenue rose to RM86.32 million, which is an increase of 24% compared with RM69.83 million a year ago. Pre-tax profit increased 36% to RM7.00 million from RM5.15 million achieved in the corresponding period last year, largely attributable to the improved economic environment, completion of projects ahead of schedule and increased residential sales. Perkampungan Seri Mahkota Aman, Kuantan Bandar Utama, Batang Kali P A G E Taman Suria Pendamar, Klang 14
    • EXECUTIVE CHAIRMAN’S STATEMENT Operations Review The better performance achieved for the current financial year under review was in a large part supported by strong return of retail interest in residential housing and incentives given under the Government's stimulus package and lower interest rates. The Group will continue to be market-driven and with our activities focused on providing good value for our residential homeowners, with continual emphasis on our designs and workmanship. This year saw the handover of Phase 1C, Section 4, Bandar Utama Batang Kali, Selangor and Precinct 4, Block E, Taman Mastiara, Kuala Lumpur. Meanwhile, works have started in Phase 1D & 1E, Section 4, Bandar Utama Batang Kali, Selangor; Phase 2, Taman Suria Pendamar, Klang; Phase 5, Perkampungan Seri Mahkota Aman, Kuantan, Pahang and Signal Hill Park @ The Peak, Kota Kinabalu, Sabah. Construction revenue continues to drive the Group's business activities. The turnkey construction such as the rapid completion of Damansara Emas at Kota Damansara is one such contributor. The Group recognizes that the construction market in Malaysia remains highly competitive at the present moment, and thus continues its policy of selective tendering. Against a background of uncertain global environment, the manufacturing associate, Paling Industries Sdn Bhd achieved significantly higher revenue of RM32.66 million, an increase of 18% over 2003's revenue of RM27.77 million. The increase in turnover was negated by lower margins on account of greater volatility increase in raw material cost and yet higher productivity and production yield targets were met. This resulted in slightly higher profits of RM2.78 million in the year in comparison to RM2.29 million in the previous year. The Group continues with its core business of assisting institutional clients with "Construct & Finance Initiative" as well as selectively building up its list of future development sites (such as its recently concluded debt settlement, effectively increasing the Group's land bank by 66.7 acres, at locations within the Klang Valley/Selangor). Over the years, the Group has also been widening its geographical reach with its formula of facilitating new housing areas, or "SBC Communities", as the Group would prefer to refer them as. To date, we have begun at five (5) locations across the nation such as West Selangor, North Selangor, the capital city KL, Kota Kinabalu and Kuantan, masterplanned as sustainable communities. Taman Mastiara, Kuala Lumpur P A G E 15
    • EXECUTIVE CHAIRMAN’S STATEMENT Corporate Development The Company and its wholly-owned subsidiaries, Syarikat Siah Brothers Construction Sdn Bhd ("SSBC") and Mixwell (Malaysia) Sdn Bhd ("Mixwell"), had on 16 January 2004 entered into a deed settlement with Smart Home Sdn Bhd ("SHSB") whereby SHSB has agreed to settle the entire indebtedness amounting to RM37,720,372 owing by SHSB to SSBC and Mixwell collectively. SHSB shall settle in kind by transferring and/or procuring the transfer of six (6) parcels of land located at Batang Kali, Hulu Yam and Gombak of Selangor; and Setapak and Sungei Besi of Kuala Lumpur. The Proposed Debt Settlement was approved by the shareholders of the Company at the Extraordinary General Meeting held on 16 April 2004. The Foreign Investment Committee has also via its letter dated 6 April 2004 notified that it has no objection to the Proposed Debt Settlement. As part of the Group's objective to broaden its identity (as it currently covers its activity beyond pure building trade), whilst retaining the anchor brand within its wholly owned building subsidiary, it has changed the parent/investment holding company’s name to SBC Corporation Berhad accompanied by an Signal Hill Park, Kota Kinabalu updated version of its logo. Boardroom Change I would like to thank Datuk Sim Peng Choon (a nominee Director for Permodalan Nasional Berhad) and Encik Abdul Rahman Bin A. Shukor who was appointed as alternate Director to Datuk Sim Peng Choon, who have retired and ceased to be directors from the Board Perkampungan Seri Mahkota Aman, Kuantan respectively, for their invaluable contribution to the development of the Group during their terms in office. I would also like to take this opportunity to welcome on Board, Dato' Zainol Abidin Bin Haji A. Hamid and Encik Ahmad Fizal Bin Othman as a nominee Non-Executive Director for Permodalan Nasional Berhad and Independent Non-Executive Director respectively. Perkampungan Seri Mahkota Aman, Kuantan P A G E 16
    • EXECUTIVE CHAIRMAN’S STATEMENT Economic And Business Outlook The external environment and global economic outlook will continue to be affected by geopolitical and economic uncertainties. The Malaysian economy is expected to register a moderation in GDP growth of about 6.0% and 6.5% in 2004-05, driven by higher exports and domestic demand, primarily from private sector, as the Government's pro-growth fiscal and monetary measures start bearing fruit. The construction industry meanwhile is expected to grow at a moderate rate of 1.5%. The favourable election results at the recently concluded general election in Malaysia will also boost business sentiment and optimism. And this augurs well for the business community on the whole. With the brighter economic outlook, the prospects for a revitalized property sector are conducive to the Group's operating and business environment. The Group will keep to its strategy of offering a comprehensive range of building products from affordable housing to high-end niche projects for house buyers. Nevertheless, the Group strives to differentiate its products through progressive designs, timely completion, quality finishing and value pricing. We anticipate our performance to be satisfactory in the coming year. Dividend The Board is pleased to recommend a first and final dividend of 1% per ordinary share less 28% tax for the financial year ended 31 March 2004. 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 and Acknowledgement I would like to take this opportunity to thank everyone within the SBC Group. Your effective execution of SBC corporate strategies through sheer hard work, commitment and team work in a demanding and challenging business environment have certainly contributed much to the success of the Group. Finally, I would also like to thank our shareholders, customers, joint venture partners, business associates, bankers and government authorities for their confidence in the Board and the management. Thank you. P A G Sia Kwee Mow @ Sia Hok Chai JMN, FFB, FCIOB, FAIB E 17 Executive Chairman Paling’s Products 10 August 2004
    • penyata pengerusi eksekutif PENYATA PENGERUSI EKSEKUTIF Kepada para pemegang saham, pelanggan, kakitangan, rakan kongsi, pembekal dan rakan-rakan seperjuangan, SAYA BAGI PIHAK LEMBAGA PENGARAH DENGAN SUKACITANYA MEMPERSEMBAHKAN LAPORAN TAHUNAN DAN PENYATA KEWANGAN SBC CORPORATION BERHAD BAGI TAHUN KEWANGAN BERAKHIR 31 MAC 2004. Kota Damansara, Petaling Jaya Ulasan Kewangan Perolehan Kumpulan telah mencapai RM86.32 juta, dengan peningkatan sebanyak 24% berbanding dengan RM69.83 juta pada tahun lepas. Keuntungan sebelum cukai meningkat sebanyak 36% kepada RM7.00 juta berbanding RM5.15 juta yang telah dicapai pada masa yang sama tahun lepas, berpunca daripada keadaan ekonomi yang bertambah baik, penyempurnaan awal projek sebelum tarikh matang dan juga Perkampungan Seri Mahkota Aman, Kuantan daripada peningkatan dalam jualan perumahan. Bandar Utama, Batang Kali P A G E Taman Suria Pendamar, Klang 18
    • PENYATA PENGERUSI EKSEKUTIF Ulasan Operasi Pencapaian prestasi yang lebih baik pada tahun kewangan ini disumbangkan sebahagian besarnya oleh pulangan faedah runcit yang kukuh hasil daripada skim jualan perumahan dan juga insentif-insentif yang ditawarkan dalam pakej perangsang Kerajaan berserta kadar faedah yang lebih rendah. Kumpulan akan terus menumpukan perhatian pada kehendak pasaran, dan memfokuskan kegiatan-kegiatan kami dengan menghasilkan mutu yang tinggi untuk para pemilik rumah, dengan penumpuan ke atas rekacipta dan kualiti kerja. Kumpulan telah berjaya dalam penyempurnaan dan penyerahan Fasa 1C, Seksyen 4, Bandar Utama Batang Kali, Selangor dan Precinct 4, Blok E, Taman Mastiara, Kuala Lumpur pada tahun ini. Pada masa yang sama, kerja-kerja juga telah dimulakan di Fasa ID & IE, Seksyen 4, Bandar Utama Batang Kali, Selangor; Fasa 2, Taman Suria Pendamar, Klang; Fasa 5, Perkampungan Seri Makhota Aman, Kuantan, Pahang dan Signal Hill Park @ The Peak, Kota Kinabalu, Sabah. Pendapatan daripada sektor pembinaan adalah pendorong utama bagi aktiviti-aktiviti Kumpulan. Pembinaan ‘turnkey’ seperti penyempurnaan yang cepat dalam projek Damansara Emas di Kota Damansara merupakan satu penyumbang besar. Kumpulan sedar bahawa saingan yang hebat masih wujud dalam sektor pembinaan di pasaran Malaysia pada masa ini, maka Kumpulan akan terus berpegang pada polisinya dalam pemilihan tendernya. Di sebalik keadaan ekonomi global yang tidak stabil, syarikat bersekutu sektor pembuatan kami, Paling Industries Sdn Bhd, telah mencatatkan perolehan yang lebih tinggi sebanyak RM32.66 juta, iaitu peningkatan sebanyak 18% berbanding dengan perolehan sebanyak RM27.77 juta pada tahun 2003. Peningkatan dalam perolehan ini dikurangkan oleh margin yang lebih rendah akibat daripada ketidaktentuan dalam peningkatan kos bahan mentah; walaubagaimanpun penghasilan produktiviti berjaya dicapai dengan kadar produktiviti yang tinggi. Keadaan ini telah menyumbangkan keuntungan yang lebih tinggi sebanyak RM2.78 juta pada tahun ini berbanding RM2.29 juta pada tahun lepas. Kumpulan akan meneruskan tumpuan ke atas aktiviti utama perniagaannya dengan membantu para pelanggan dari institusi yang berkaitan melalui “Inisiatif Pembinaan dan Kewangan”, serta menyediakan secara terperinci senarai kawasan-kawasan untuk pembangunan masa depan (sebagai contohnya, penyelesaian hutang yang disempurnakan baru-baru ini telah membantu menambahkan jumlah keluasan tanah Kumpulan seluas 66.7 ekar, di lokasi-lokasi dalam persekitaran Lembah Klang/Selangor). Pada tahun-tahun kebelakangan ini, Kumpulan juga telah memperluaskan lingkungan geografikalnya Taman Mastiara, Kuala Lumpur melalui formula penempatan kawasan perumahan baru, atau “Komuniti SBC”, sepertimana yang lebih dikenali oleh Kumpulan. Kini, kami telah memulakan usaha ini di lima (5) lokasi di seluruh negara seperti di kawasan Selangor Barat, Selangor Utara, ibukota Kuala Lumpur, Kota Kinabalu dan Kuantan, yang mengutamakan rancangan pembangunan komuniti yang kukuh. P A G E Signal Hill Park, Kota Kinabalu 19
    • PENYATA PENGERUSI EKSEKUTIF Perkembangan Korporat Syarikat ini bersama dengan anak-anak syarikatnya, Syarikat Siah Brothers Construction Sdn Bhd (“SSBC”) dan Mixwell (Malaysia) Sdn Bhd (“Mixwell”) telah menandatangani perjanjian dengan Smart Home Sdn Bhd (SHSB) pada 16 Januari 2004, di mana SHSB telah berjanji untuk melangsaikan kesemua hutangnya kepada SSBC dan Mixwell yang berjumlah sebanyak RM37,720,372. Hutang tersebut akan diselesaikan dengan memindahkan dan/atau berjaya memperolehi pemindahan enam (6) tapak pembinaan yang terletak di Batang Kali, Hulu Yam dan Gombak, Selangor; serta Setapak dan Sungai Besi di Kuala Lumpur. Cadangan Penyelesaian Hutang ini telah diluluskan oleh para pemegang saham syarikat di Mesyuarat Agung Luar Biasa yang diadakan pada 16 April 2004. Jawatankuasa Pelaburan Asing juga telah melalui suratnya yang bertarikh 6 April 2004 menyatakan bahawa ia tidak mempunyai bantahan terhadap Cadangan Penyelesaian Hutang tersebut. Sebagai sebahagian daripada objektif Kumpulan untuk memperkembangkan identitinya, (memandangkan aktiviti Kumpulan kini telah menjangkaui perniagaan sektor pembinaan), dan pada masa yang sama telah mengekalkan jenama utamanya di kalangan anak-anak syarikat dalam sektor ini, maka Kumpulan telah mengubah nama syarikat induk/syarikat pelaburan kepada SBC Corporation Berhad bersampingan dengan versi logo yang terbaru. Perubahan Lembaga Pengarah Saya ingin merakamkan penghargaan ikhlas dan terima kasih kepada Datuk Sim Peng Choon (Pengarah nomini bagi Permodalan Nasional Berhad) dan Encik Abdul Rahman Bin A. Shukor yang telah dipilih sebagai Pengarah alternate kepada Datuk Sim Peng Choon, yang telah bersara dan berhenti sebagai ahli Lembaga Pengarah masing-masing, atas sumbangan mereka yang tidak Perkampungan Seri Mahkota Aman, Kuantan terhingga terhadap kejayaan Kumpulan sepanjang perkhidmatan mereka. Saya juga ingin mengambil kesempatan ini untuk mengalu-alukan kehadiran Dato’ Zainol Abidin Bin Haji A. Hamid, selaku Pengarah Bukan Eksekutif untuk Permodalan Nasional Berhad, dan Encik Ahmad Fizal Bin Othman sebagai Pengarah Bebas Bukan Eksekutif Kumpulan ini. Tinjauan Ekonomi Dan Perniagaan Perkampungan Seri Mahkota Aman, Kuantan Persekitaran luaran dan ekonomi global akan terus dipengaruhi oleh keadaan geopolitik dan ekonomi yang tidak stabil. Ekonomi Malaysia dianggarkan akan mencatat Keluaran Dalam Negeri Kasar yang sederhana iaitu 6.0% hingga 6.5% dalam tahun 2004-05, yang berpunca daripada kenaikan eksport dan peningkatan permintaan dalaman, terutamanya daripada sektor swasta, sementara tindakan pro-pembangunan fiskal dan perangkaan kewangan oleh pihak kerajaan telah menunjukkan hasilnya. Industri pembinaan pula dijangka akan meningkat pada kadar 1.5%. Keputusan yang disambut baik dalam pilihanraya umum yang diadakan baru-baru ini telah memberi kesan positif serta menaikkan lagi sentimen perniagaan. Keadaan ini mendatangkan kesan yang baik kepada keseluruhan komuniti perniagaan. P A Dengan tinjauan ekonomi yang lebih ceria, prospek untuk sektor pembinaan yang lebih cerah adalah sehaluan G dengan keadaan operasi dan perniagaan Kumpulan. Kumpulan akan terus menuruti strateginya untuk menawarkan E produk-produk pembinaan yang komprehensif daripada perumahan yang mampu dimiliki semua ke projek-projek 20 bertaraf tinggi untuk para pembeli rumah. Namun demikian, Kumpulan akan terus berusaha sedaya upaya membezakan hasil keluarannya daripada yang lain dari segi rekabentuk, penyempurnaan dalam masa yang ditetapkan, kemasan bermutu berserta harga yang kompetitif. Kami mengharapkan pencapaian yang memuaskan dalam tahun akan datang.
    • PENYATA PENGERUSI EKSEKUTIF Dividen Lembaga Pengarah telah mencadangkan pembayaran dividen tahunan sebanyak 1% sesaham tolak cukai 28% untuk tahun kewangan berakhir 31 Mac 2004. Pembayaran untuk dividen ini akan diumumkan tertakluk kepada persetujuan para pemegang saham pada Mesyuarat Agung Tahunan akan datang. Penghargaan Saya ingin mengambil kesempatan ini untuk mengucapkan ribuan terima kasih kepada para tenaga pekerja di Kumpulan SBC. Kegigihan anda dalam melaksanakan strategi korporat SBC melalui usaha yang tidak berbelah bahagi, komitmen serta kebolehan bekerja secara kumpulan dalam situasi perniagaan yang penuh dengan cabaran telah menyumbangkan kejayaan yang tinggi kepada Kumpulan ini. Akhirnya, saya juga ingin menyatakan penghargaan kami kepada para pemegang saham, para pelanggan, rakan-rakan perkongsian, rakan-rakan perniagaan, ahli-ahli bank dan pihak kerajaan atas kepercayaan dan sokongan mereka terhadap pihak Lembaga dan pengurusan. Sekian, terima kasih. Sia Kwee Mow @ Sia Hok Chai JMN, FFB, FCIOB, FAIB Pengarah Eksekutif 10 Ogos 2004 Produk-produk Keluaran Paling P A G E 21
    • statement of corporate governance STATEMENT OF CORPORATE GOVERNANCE as at 8 August 2004 The Board of Directors of SBC Corporation Berhad remains firmly committed towards ensuring the highest standard of corporate governance is maintained throughout the Company and its subsidiaries (“the Group”). Hence, the Board is fully dedicated to continuously evaluating the Group’s corporate governance practices and procedures with a view to ensure the principles and best practices in corporate governance as promulgated by the Malaysian Code on Corporate Governance (“the Code”) is applied and adhered to in the best interests of the stakeholders. This disclosure statement sets out the manner in which the Group has applied and complied with the Principles of the Code and the extent of compliance with Best Practices as set out in Part 1 and 2 of the Code. BOARD OF DIRECTORS Composition and Balance As at the date of this statement, the Board consists of 7 members, comprising 3 independent non-executive Directors, 2 non-executive Directors and 2 executive Directors which satisfies Bursa Malaysia Securities Berhad (“Bursa Securities”) Listing Requirements of having at least 2 Directors or 1/3 of the Board whichever is higher, who are independent Directors. The Group is led by an experienced Board. The Directors are from diverse backgrounds and have a wide range of skills and experience relevant to managing and directing the Group’s operations. The Executive Directors are responsible for implementing policies of the Board, overseeing the Group’s operations and developing the Group’s business strategies. The role of the Independent Non-Executive Directors is to provide objective and independent judgement to the decision making of the Board and as such, provide an effective check and balance to the Board’s decision making process. The Board is satisfied that the current Board composition fairly reflects the investment of minority shareholders in the Company and represents the needed mix of skills and experience required to discharge the Board’s duties and responsibilities. Furthermore, no individual Director or group of Directors can dominate the Board’s decision making process. The profiles of the members of the Board are set out in this Annual Report under the section named Profile of the Directors. Duties and Responsibilities The Board recognises its key role in charting the strategic direction, development and control of the Group and has adopted the specific responsibilities that are listed in the Code, which facilitates the discharge of the Board’s stewardship responsibilities. The roles of the Chairman and Managing Director are clearly distinct to ensure that there is a balance of power and authority. The Chairman is primarily responsible for the 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. Dato’ Lim Phaik Gan is the senior independent non-executive director to whom concerns may be conveyed. P A G E 22
    • STATEMENT OF CORPORATE GOVERNANCE 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 2004, the Board met 6 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 below. Name of Director Designation No. of meetings attended Sia Kwee Mow @ Sia Hok Chai Executive Chairman 6 Sia Teong Heng Managing Director 5 Mun Chong Shing @ Mun Chong Tian Non-Executive Director 6 Dato’ Lim Phaik Gan Independent Non-Executive Director 6 Dato’ Dr. Norraesah Bt. Haji Mohamad Independent Non-Executive Director 6 Dato’ Zainol Abidin Bin Haji A. Hamid Non-Executive Director 3 (appointed on 10 October 2003) Ahmad Fizal Bin Othman Independent Non-Executive Director Not Applicable (appointed on 24 February 2004) Datuk Sim Peng Choon Non-Executive Director 1 (resigned on 19 August 2003) Abdul Rahman Bin A. Shukor Non-Executive Director Nil (ceased on 19 August 2003) (alternate to Datuk Sim Peng Choon) Vincent Koh Kok Kee Independent Non-Executive Director 1 (resigned on 31 May 2003) The Board members have unrestricted and timely access to all information necessary for the discharge of their responsibilities. All Directors are provided with all relevant information and reports on financial, operational, corporate, regulatory, business development by way of Board papers or upon specific request for informed decision making and effective discharge of their duties. These documents are comprehensive and include qualitative and quantitative information to enable the Board members to make informed decisions. Notice of Board Meetings and board papers are provided to directors in advance so that meaningful deliberation and sound decisions can be made at Board meetings. All proceedings of the Board meetings are minuted by the Company Secretary. There is a formal schedule of matters reserved specifically for Board’s decision, 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. Re-election and Re-appointment of Directors In accordance with the Company’s Articles of Association, one third of the Directors shall retire by rotation from office and be eligible for re-election at the annual general meeting and all Directors appointed by the Board are subject to re-election by shareholders at the first opportunity after their appointment. Furthermore, each Director shall retire from office at least once in every three years. Directors who are of or over the age of seventy years shall also retire from office and be eligible for re-appointment at the annual general meeting pursuant to Section 129 (6) of the Companies Act, 1965. P A G E 23
    • STATEMENT OF CORPORATE GOVERNANCE BOARD OF DIRECTORS (CONT’D) Directors’ Training All members of the Board have attended the Mandatory Accrediation Programme (MAP). The Board will ensure that all its members continue to attend training programmes and seminars to keep abreast with the relevant developments on a continuous basis in compliance with the Bursa Securities Practice Note No. 15/2003. For new Directors, a familiarisation program will be conducted for them. This includes a presentation of the Group’s operations by senior management and visits to the existing project sites. Board Committees The Board has delegated certain of its responsibilities to three committees. These are the Audit, the Nomination and the Remuneration Committees. All Board committees are provided with written terms of reference. AUDIT COMMITTEE The report of the Audit Committee is set out on pages 32 to 36 of this annual report. NOMINATION COMMITTEE (“NC”) The members of the NC at the date of this report and their attendance at the meetings held during the financial year ended 31 March 2004 are as follows: No. of meetings held during the No. of financial year ended meetings 31 March 2004 attended Dato’ Lim Phaik Gan - Chairperson (Independent Non-Executive Director) 2 2 Dato’ Dr Norraesah Bt Haji Mohamad (Independent Non-Executive Director) 2 2 Mun Chong Shing @ Mun Chong Tian (Non-Executive Director) 2 2 Ahmad Fizal Bin Othman (Independent Non-Executive Director) 2 Not Applicable (appointed on 24 February 2004) Vincent Koh Kok Kee (Independent Non-Executive Director) 2 1 (resigned on 31 May 2003) The terms of reference of the NC are as follows: (a) Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist exclusively of Non-Executive Directors, with a minimum of 3, a majority of whom are independent. The members of the Committee shall elect the Chairman from among their number who shall be an Independent Director. P In order to form a quorum in respect of a meeting of the Committee, the members present must be wholly or A a majority of whom must be Independent Directors. G E (b) Frequency of meetings 24 Meetings shall be held not less than once a year. The Company Secretary shall be the Secretary of the Committee.
    • STATEMENT OF CORPORATE GOVERNANCE NOMINATION COMMITTEE (“NC”) (CONT’D) (c) Authority The Committee is to recommend new nominees for the Board and the board committees and to assess Directors on an on-going basis. The actual decision as to who shall be nominated should be the responsibility of the full Board after considering the recommendations of the Committee. (d) Duties The duties of the Committee shall be: (i) to recommend to the Board, candidates for all directorships and in doing so, preference shall be given to shareholders or existing Board members and candidates proposed by the Chief Executive Officer and, within the bounds of practicability, by any other senior executive or any director or shareholder may also be considered. (ii) to recommend to the Board, Directors to fill the seats on board committees. (iii) to review annually, on behalf of the Board, the required mix of skills, experience and other qualities, including core competencies, which Non-Executive Directors should bring to the Board. (iv) to carry out annually, on behalf of the Board, the assessment of the effectiveness of the Board as a whole, the board committees and the contribution of each Director. (e) Reporting procedures The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. At the meetings of the NC during the financial year ended 31 March 2004, the Chairperson was elected from amongst its members and the following matters were considered and resolved: (a) re-appointment and re-election of Directors at the Annual General Meeting; (b) mix of skills, experience and qualities of all Directors; (c) the effectiveness of the Board and the contribution from each Board member; and (d) nominees for appointment to the Board and board committees REMUNERATION COMMITTEE (“RC”) The members of the RC at the date of this report and their attendance at the meetings convened during the financial year ended 31 March 2004 are as follows: No. of meetings held during the No. of financial year ended meetings 31 March 2004 attended Dato’ Zainol Abidin Bin Haji A. Hamid (Non-Executive Director) 1 Not Applicable (appointed on 24 February 2004 and was elected Chairman on 27 May 2004) Dato’ Dr Norraesah Bt Haji Mohamad (Independent Non-Executive Director) 1 1 P Dato’ Lim Phaik Gan (Independent Non-Executive Director) 1 1 A Datuk Sim Peng Choon (Non-Executive Director) 1 Not Applicable G E (resigned on 19 August 2003) Sia Teong Heng (Managing Director) 1 1 25
    • STATEMENT OF CORPORATE GOVERNANCE REMUNERATION COMMITTEE (“RC”) (CONT’D) The terms of reference of the RC are as follows: (a) Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of at least 3 directors, wholly or a majority of whom are Non-Executive Directors. The members of the Committee shall elect the Chairman from among their number who shall be a Non-Executive Director. In order to form a quorum in respect of a meeting of the Committee, the members present must be wholly or a majority of whom must be Non-Executive Directors. (b) Frequency of meetings Meetings shall be held not less than once a year. The Company Secretary shall be the Secretary of the Committee. (c) Authority The Committee is authorized to draw from outside advice as and when necessary in forming its recommendation to the Board on the remuneration of the Executive Directors in all its forms. Executive Directors should play no part in decisions on their own remuneration and should abstain from discussion of their own remuneration. The determination of the remuneration packages of the Non-Executive Directors, including Non-Executive Chairman, should be a matter for the Board as a whole. The individuals concerned should abstain from discussion of their own remuneration. (d) Duties The duty of the Committee is to recommend to the Board the structure and level of remuneration of Executive Directors. (e) Reporting procedures The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. During the financial year ended 31 March 2004, the RC met once to consider the remuneration of the Executive Chairman and Managing Director for 2004. P A G E 26
    • STATEMENT OF CORPORATE GOVERNANCE DIRECTORS’ REMUNERATION The details of the remuneration of each Director during the financial year ended 31 March 2004 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 443,520 - - 16,925 - 460,445 Sia Teong Heng 336,000 - - - 336,000 Non Executive Mun Chong Shing @ Mun Chong Tian - - 12,000 - 2,400 14,400 Dato’ Lim Phaik Gan - - 12,000 - 3,600 15,600 Dato’ Dr. Norraesah Bt. Haji Mohamad - - 13,000 - 3,900 16,900 Dato’ Zainol Abidin Bin Haji A. Hamid - - 6,000 - 600 6,600 (appointed on 10 October 2003) Ahmad Fizal Bin Othman - - 2,000 - - 2,000 (appointed on 24 February 2004) Datuk Sim Peng Choon - - 5,000 - 600 5,600 (resigned on 19 August 2003) Abdul Rahman Bin A. Shukor - - - - - - (ceased on 19 August 2003) (alternate to Datuk Sim Peng Choon) Vincent Koh Kok Kee - - 2,000 - 900 2,900 (resigned on 31 May 2003) Total 779,520 - 52,000 16,925 12,000 860,445 (b) Directors’ remuneration by bands Executive Non-Executive Total Nil - - - RM1 to RM50,000 - 7 7 RM50,001 to RM100,000 - - - RM100,001 to RM150,000 - - - RM150,001 to RM200,000 - - - RM200,001 to RM250,000 - - - RM250,001 to RM300,000 - - - RM300,001 to RM350,000 1 - 1 RM350,001 to RM400,000 - - - RM400,001 to RM450,000 - - - RM451,000 to RM500,000 1 - 1 Total 2 7 9 P A G E 27
    • STATEMENT OF CORPORATE GOVERNANCE 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 Bursa Securities Listing Requirements is set out on page 13. Internal Control The Group’s Statement on Internal Control is set out on pages 30 to 31. 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 RM25,000 of non-audit fees to the external auditors for the financial year ended 31 March 2004. Relationship with Shareholders and Investors The primary tools of communication with the shareholders of the Company are through the annual report, announcements through Bursa Securities and circulars. All queries from shareholders and members of public received through phone calls or letters are handled by the Executive Directors, Group Chief Financial Officer 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 Bursa Securities, the following compliance information is provided: 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 2004. Material Contracts Involving Directors’ and Substantial Shareholders’ Interest Proposed Debts Settlement Totalling RM37,720,372 By Smart Home Sdn Bhd To Syarikat Siah Brothers Construction Sdn Bhd And Mixwell (Malaysia) Sdn Bhd, being wholly-owned Subsidiaries Of SBC Corporation Berhad (“Proposed Debt Settlement”). SBC Corporation Berhad (“SBC”) and its wholly-owned subsidiaries, Syarikat Siah Brothers Construction Sdn Bhd (“SSBC”) and Mixwell (Malaysia) Sdn Bhd (“Mixwell”), had on 16 January 2004 entered into a deed of settlement with Smart Home Sdn Bhd (“SHSB”) whereby SHSB has agreed to settle the entire indebtedness amounting to P RM37,720,372 (“Indebtedness”) owing by SHSB to Mixwell and SSBC collectively. A G E 28
    • STATEMENT OF CORPORATE GOVERNANCE ADDITIONAL COMPLIANCE INFORMATION (CONT’D) Material Contracts Involving Directors’ and Substantial Shareholders’ Interest (Cont’d) Mr Sia Kwee Mow @ Sia Hok Chai (“SKM”) is the Executive Chairman and a major shareholder of SBC. He is also a major shareholder of SHSB. Accordingly, he is deemed interested in the Proposed Debt Settlement. Mr Sia Teong Heng (“STH”) is the son of SKM. He is the Managing Director and also a major shareholder of SBC. Accordingly, he is deemed interested in the Proposed Debt Settlement by virtue of him being a person connected to SKM pursuant to Section 122A of the Companies Act, 1965. LOM Holdings Sdn Bhd (“LOM”) is a major shareholder of SBC and is connected to SKM and STH by virtue of Section 122A of the Companies Act, 1965 as SKM and STH are major shareholders of LOM. Evergreen Legacy Sdn Bhd (“Evergreen”), a wholly-owned subsidiary of LOM, is also a major shareholder of SBC. Accordingly, LOM and Evergreen are deemed interested in the Proposed Debt Settlement. The Indebtedness was mainly in relation to a property development project of residential houses undertaken in Bandar Utama Batang Kali for which Mixwell, as the turnkey contractor for the said project, appointed SHSB as the main contractor and SHSB in turn appointed SSBC as the works contractor. The indebtedness comprises the following: Indebtedness Owing To Amount Owing (RM) Construction work done by SSBC for SHSB SSBC 8,224,762 Payments made on behalf of SHSB by Mixwell to subcontractors of SHSB for construction work done for SHSB Mixwell 20,173,275 Management fees payable by SHSB to Mixwell Mixwell 8,700,000 Payments made on behalf of SHSB by Mixwell for operating expenses incurred by SHSB Mixwell 622,335 37,720,372 SHSB shall settle the indebtedness in kind by transferring and/or procuring the transfer of six (6) parcels of land located at Batang Kali, Selangor; Setapak, Kuala Lumpur; Gombak, Selangor; Hulu Yam, Selangor; and Sungei Besi, Kuala Lumpur totaling RM37,828,242, to SBC and/or its nominee(s). The Proposed Debt Settlement was approved by the shareholders of the Company at the Extraordinary General Meeting held on 16 April 2004. The Foreign Investment Committee (“FIC”) has via its letter dated 6 April 2004, which was received on 6 May 2004, notified that it has no objection to the Proposed Debt Settlement. P A G E 29
    • statement on internal control STATEMENT ON INTERNAL CONTROL INTRODUCTION In accordance with paragraph 15.27 (b) of the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Board of SBC Corporation Berhad (“herein known as the Company”) is pleased to include a statement on the state of the Company’s internal controls as guided by the Bursa Securities’ Statement on Internal Control: Guidance for Directors of Public Listed Companies (“the Guidance”). The statement below outlines the nature and scope of the internal controls of the Group during the financial year ended 31 March 2004. BOARD RESPONSIBILITY The Board affirms its responsibility for the Company’s system of internal controls, inclusive of the risk management framework, and for reviewing the adequacy and integrity of the internal control system to ensure that shareholders’ interests and investment are safeguarded. In this regard, the responsibility of reviewing the adequacy and integrity of the internal control system has been delegated to the Audit Committee, which is empowered by its terms of reference to seek the assurance on the adequacy and integrity of the internal control system through independent reviews conducted by the internal audit function, external auditors and management. Due to inherent limitations to any system on internal controls, Management can only put into effect an internal control system which is designed to reduce rather than eliminate all the risks that may impede the achievement of the Company’s business objectives. Therefore, the internal control system can only provide reasonable and not absolute assurance against material misstatement or loss. RISK MANAGEMENT FRAMEWORK The Board maintains an ongoing commitment to strengthen the Group’s control environment and processes. Key risks relating to the Group’s operations and strategic and business plans are addressed at daily / weekly / monthly meetings attended by Senior Management and key staff. The responsibility of managing the risks of each department lies with the respective Heads of Department and it is during these meetings, significant risks identified and the corresponding internal controls implemented are communicated to Senior Management. Management with the existence of external consultants has updated risk profile of the Group. The updated risk profile was presented to the Audit Committee on 24 August 2004. The above is the description of the processes adopted by Management to identify and manage the Group’s risks. P A G E 30
    • STATEMENT ON INTERNAL CONTROL OTHER KEY ELEMENTS OF INTERNAL CONTROLS The other key elements of the Group’s internal control systems are: • The independent internal audit function reports directly to the Audit Committee. Based on their review during the financial year ended 31 March 2004, 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. P A G E 31
    • audit committee report AUDIT COMMITTEE REPORT The Board of SBC Corporation Berhad is pleased to present the Audit Committee Report for the financial year ended 31 March 2004. COMPOSITION AND MEETINGS At the date of this report, the Audit Committee comprises of the following members and details of attendance of each member at the Audit Committee meetings held during the financial year ended 31 March 2004 are as follows: Number of meetings held during the financial year Attendance ended 31 March 2004 of meetings Chairperson: Dato’ Dr. Norraesah Bt. Haji Mohamad 4 4 (Independent Non-Executive Director) Members: Dato’ Lim Phaik Gan (appointed on 19 August 2003) 4 3 (Independent Non-Executive Director) Sia Teong Heng (appointed on 19 August 2003) 4 3 (Managing Director) Ahmad Fizal Bin Othman (appointed on 24 February 2004) 4 Not Applicable (Independent Non-Executive Director) Datuk Sim Peng Choon (resigned on 19 August 2003) 4 1 (Non-Executive Director) Vincent Koh Kok Kee (resigned on 31 May 2003) 4 1 (Independent Non-Executive Director) The Audit Committee, normally, meets 4 times during the financial year with additional meetings convened between scheduled meetings, if necessary, to deliberate on urgent and significant matters. The Group Chief Financial Officer, the outsourced internal auditor and the external auditors attended the meetings at the invitation of the Audit Committee, where considered necessary. The Company Secretary is responsible for distributing the agenda of the meetings and relevant information to the Audit Committee members well in advance of their meetings, and recording the proceedings of the Audit Committee meetings. P A G E 32
    • 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 2004: (a) Discussed and reviewed the external auditors’ plan, scope and nature of work, results of their audit. (b) Reviewed the report of the external auditors in relation to their findings and accounting issues arising from the audit of the Group’s annual financial results. (c) Reviewed the unaudited quarterly report on the consolidated results of the Group for the quarters ended 31 March 2003, 30 June 2003, 30 September 2003 and 31 December 2003. (d) Reviewed related party transactions and conflicts of interest situation that may arise within the Group. (e) Approved the internal audit plan and reviewed the internal audit reports prepared by the outsourced internal audit function in conjunction with their execution of the approved internal audit plan and the follow up on the remedial actions implemented by Management in respect of the internal control weaknesses identified. (f) Noted new developments in accounting standard issued by the Malaysian Accounting Standards Board. (g) Reviewed compliance with certain government and authorities regulations. (h) Assessed the performance of the Company’s financial management. SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION The internal audit function of the Group is outsourced to external consultants and they are responsible for assisting the Audit Committee through the execution of the approved internal audit plan to ensure that the Group’s internal controls system is adequately and operating effectively. During the financial year ended 31 March 2004, the areas reviewed by the internal audit function were as follows: (a) Documentation maintenance and custodian; (b) Launch of projects; (c) Sales administration processing; (d) Progress of construction; (e) Processing of collections; (f) Property management; (g) Reviewed and updated the risk profile of the Group; and (h) Cash flow management. A number of minor internal control weaknesses were identified, all of which have been appropriately addressed and none have resulted in material losses, contingencies or uncertainties that would require disclosure in the annual report. P A G E 33
    • AUDIT COMMITTEE REPORT SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION (CONT’D) The internal audit plan for 2004/2005 was presented to the Audit Committee for review and approval subsequent to the financial year ended 31 March 2004 and covers the following areas: (i) Procurement of services; (ii) Pre-development processes; (iii) Sales administration processes; (iv) Monitoring of the progress of construction; (v) Handover procedures and complaint management; (vi) Billings and collection procedures; (vii) Related party transactions; (viii) Property management; and (ix) Assist in the update of the risk profile. The abovementioned areas to be reviewed are applicable for the Group’s projects which are located in Kuantan, Kota Kinabalu, Klang and Jalan Ipoh, Kuala Lumpur. TERMS OF REFERENCE OF THE AUDIT COMMITTEE Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of at least 3 directors, a majority of whom are independent. At least one member of the Committee must be: (i) a member of the Malaysian Institute of Accountants (“MIA”); or (ii) if he is not a member of the MIA, he must have at least 3 years working experience and • he must have passed the examinations specified in Part I of the 1st Schedule to the Accountant Act, 1967; or • he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule to the Accountants Act, 1967. The members of the Committee shall elect a Chairman from amongst their number who shall be an independent director. In order to form a quorum in respect of a meeting of the Committee, the majority of the members present must be independent directors. Attendance At Meeting The Group Chief Financial Officer, 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 P invitation. However, at least once a year the Committee shall meet with the external auditors without any executive A director present. G E The Company Secretary shall be the secretary of the Committee. 34
    • AUDIT COMMITTEE REPORT TERMS OF REFERENCE OF THE AUDIT COMMITTEE (CONT’D) 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. Duties The duties of the Audit Committee shall be: (1) To consider the appointment of the external auditors, the audit fees and any questions of nomination, resignation or dismissal. (2) To discuss with the external auditors before the audit commences the nature and scope of the audit and ensure co-ordination where more than one audit firm is involved. (3) To discuss with the external auditors the evaluation of the system of internal controls, audit report and ensure assistance given by the employees to the external auditors. (4) To review the quarterly and year-end financial statements before submission to the Board, focusing particularly on: • any changes or implementation of charges 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. P A G E 35
    • AUDIT COMMITTEE REPORT TERMS OF REFERENCE OF THE AUDIT COMMITTEE (CONT’D) Duties (Cont’d) (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 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. P A G E 36
    • financial statements directors’ report 38 statement by directors 44 statutory declaration 44 report of the auditors 45 balance sheets 46 income statements 48 statements of changes in equity 49 cash flow statements 50 notes to the financial statements 53
    • directors’ report DIRECTORS’ REPORT The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 March 2004. PRINCIPAL ACTIVITIES The Company is principally engaged in the business of investment holding and the provision of management and administrative services to the subsidiaries. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. CHANGE OF NAME On 21 October 2003, the Company changed its name from Siah Brothers Corporation Berhad to SBC Corporation Berhad. RESULTS THE GROUP THE COMPANY RM RM Profit/(Loss) after taxation for the financial year 2,072,995 (352,434) DIVIDENDS Since the end of the previous financial year, the Company paid a dividend of 5.5% per Irredeemable Convertible Cumulative Preference Share (“ICCPS”) less 28% tax amounting to RM270,587 in respect of the previous financial year, in accordance with the terms of issue of the ICCPS and a first and final dividend of 1% per ordinary share less 28% tax amounting to RM544,330 in respect of the previous financial year. For the current financial year, (a) the directors have declared the payment of a dividend of 5.5% per ICCPS less 28% tax amounting to RM270,587, in accordance with the terms of issue of the ICCPS; and (b) the directors recommend the payment of first and final dividend of 1% per ordinary share less 28% tax amounting to RM593,532. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year except as disclosed in the financial statements. ISSUES OF SHARES AND DEBENTURES During the financial year, P A (a) there were no changes in the authorised and issued and paid-up capital of the Company; and G E (b) there were no issues of debentures by the Company. 38
    • DIRECTORS’ REPORT EMPLOYEE SHARE OPTION SCHEME (“ESOS”) Pursuant to the ESOS which was implemented on 14 July 2000, the movement in the options to subscribe for new shares of RM1 each in the Company at an exercise price of RM1.40 per share is as follows: NUMBER OF ORDINARY SHARES OF RM1 EACH UNDER OPTION At 1 April 2003 1,664,000 Lapsed during the financial year due to: - exercised during the financial year - - staff resignation (174,000) At 31 March 2004 1,490,000 The salient features of the ESOS are as follows: (i) eligible employees are employees who have served in the employment of any company within the Group for at least one year of continuous service; (ii) the total number of new ordinary shares to be offered under the ESOS shall not exceed 10% of the total issued and paid-up ordinary share capital of the Company at any point of time during the existence of the ESOS which shall be in force for a period of 5 years from the date of offer; (iii) the possible allocation for any single eligible employee during the existence of the ESOS shall not be less than 1,000 or more than 450,000 shares subject to the maximum allowable allocation according to their respective categories; (iv) the subscription price was based on the weighted average market price of the shares as shown in the Daily Official List of the Bursa Malaysia Securities Berhad for the 5 market days prior to the date of offer with an allowance for a discount of not more than 10% therefrom or at par value, whichever is higher; and (v) the shares to be allotted upon any exercise of an option will, upon allotment, rank pari passu in all respects with the existing issued and paid-up ordinary shares of the Company. OPTIONS GRANTED OVER UNISSUED SHARES During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company, other than the existing options under the ESOS and Transferable Subscription Rights (“TSRs”). The Company issued a total of 17,076,200 TSRs, the expiry date of which had been extended to 20 February 2004. The TSRs entitle the holders thereof the right to subscribe for new ordinary shares of RM1 each on the basis of 1 new ordinary share of RM1 each for every TSR held at a pre-determined subscription price of RM3.50 per share. During the financial year, none of the subscription rights under the TSRs were exercised and the TSRs expired on 20 February 2004. P A G E 39
    • DIRECTORS’ REPORT BAD AND DOUBTFUL DEBTS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satisfied themselves that there are no known bad debts and that adequate allowance had been made for doubtful debts. At the date of this report, the directors are not aware of any circumstances that would require the writing off of bad debts, or additional allowance for doubtful debts in the financial statements of the Group and of the Company. CURRENT ASSETS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their values as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise. At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading. VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES The contingent liabilities of the Company are disclosed in Note 43 to the financial statements. At the date of this report, there does not exist: (a) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; or (b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year. No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. P A G E 40
    • DIRECTORS’ REPORT 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 DATO’ DR. NORRAESAH BT HAJI MOHAMAD DATUK SIM PENG CHOON (RESIGNED ON 19.8.2003) ABDUL RAHMAN BIN A. SHUKOR (ALTERNATE TO DATUK SIM PENG CHOON; CEASED ON 19.8.2003) DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID (APPOINTED ON 10.10.2003) AHMAD FIZAL BIN OTHMAN (APPOINTED ON 24.2.2004) Pursuant to Section 129 of the Companies Act, 1965, Sia Kwee Mow @ Sia Hok Chai and Dato’ Lim Phaik Gan retire at the forthcoming Annual General Meeting and offer themselves for re-appointment under the provisions of Section 129(6) of the said Act to hold office until the next Annual General Meeting of the Company. Pursuant to Article 77 of the Articles of Association of the Company, Sia Teong Heng retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election. Pursuant to Article 84 of the Articles of Association of the Company, Dato’ Zainol Abidin Bin Haji A. Hamid and Ahmad Fizal Bin Othman retire at the forthcoming Annual General Meeting and offer themselves for re-election. DIRECTORS’ INTERESTS According to the register of directors’ shareholdings, the interests of directors holding office at the end of the financial year, in shares, TSRs and options under the ESOS in the Company during the financial year are as follows: NUMBER OF ORDINARY SHARES OF RM1 EACH AT AT 1.4.2003 BOUGHT SOLD 31.3.2004 DIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 1,480,800 - - 1,480,800 SIA TEONG HENG 334,992 993,000 - 1,327,992 MUN CHONG SHING @ MUN CHONG TIAN 21,782 - - 21,782 DATO’ LIM PHAIK GAN 11,000 - (11,000) - INDIRECT INTERESTS P A SIA KWEE MOW @ SIA HOK CHAI 19,498,523 - - 19,498,523 G E SIA TEONG HENG 19,498,523 - - 19,498,523 41
    • DIRECTORS’ REPORT DIRECTORS’ INTERESTS (CONT’D) TSRs AT AT 1.4.2003 BOUGHT EXPIRED 31.3.2004 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 1.4.2003 GRANTED EXERCISED 31.3.2004 DIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 450,000 - - 450,000 SIA TEONG HENG 350,000 - - 350,000 By virtue of their interests in the Company, Sia Kwee Mow @ Sia Hok Chai and Sia Teong Heng are deemed to have interests in the shares in the subsidiaries to the extent of the Company’s interests, in accordance with Section 6A of the Companies Act, 1965. None of the other directors holding office at the end of the financial year had any interests in shares, TSRs or options under the ESOS of the Company or its related corporations during the financial year. DIRECTORS’ BENEFITS Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors as shown in the financial statements, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain directors have substantial financial interests as disclosed in Note 42 to the financial statements. Neither during nor at the end of the financial year was the Company or its subsidiaries a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate except for the share options granted pursuant to the ESOS. P A G E 42
    • DIRECTORS’ REPORT SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE The significant event subsequent to the balance sheet date involving the Group and the Company is disclosed in Note 45 to the financial statements. AUDITORS The auditors, Messrs. Horwath, have expressed their willingness to continue in office. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian Kuala Lumpur 20 July 2004 P A G E 43
    • statement by directors STATEMENT BY DIRECTORS We, Sia Kwee Mow @ Sia Hok Chai and Mun Chong Shing @ Mun Chong Tian, being two of the directors of SBC Corporation Berhad (formerly known as Siah Brothers Corporation Berhad), state that, in the opinion of the directors, the financial statements set out on pages 46 to 87 are drawn up in accordance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 March 2004 and of their results and cash flows for the financial year ended on that date. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian Kuala Lumpur 20 July 2004 statutory declaration STATUTORY DECLARATION I, Ng Kee Chye, I/C No. 640324-06-5691, being the officer primarily responsible for the financial management of SBC Corporation Berhad (formerly known as Siah Brothers Corporation Berhad), do solemnly and sincerely declare that the financial statements set out on pages 46 to 87 are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by Ng Kee Chye, I/C No. 640324-06-5691, at Kuala Lumpur in the Federal Territory on this 20 July 2004 Ng Kee Chye Before me, Haron Hashim (W128) Commissioner for Oaths P A G E Kuala Lumpur 44 20 July 2004
    • report of the auditors to the members of SBC Corporation Berhad (Formerly known as Siah Brothers Corporation Berhad) REPORT OF THE AUDITORS We have audited the financial statements set out on pages 46 to 87. The preparation of the financial statements is the responsibility of the Company’s directors. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. Our audit included examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. Our audit also included an assessment of the accounting principles used and significant estimates made by the directors as well as evaluating the overall adequacy of the presentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion. In our opinion, (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of: (i) the state of affairs of the Group and of the Company at 31 March 2004 and their results and cash flows for the financial year ended on that date; and (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company; and (b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and by the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act. We have considered the financial statements and the auditors’ reports thereon of the subsidiaries for which we have not acted as auditors, as indicated in Note 6 to the financial statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comments made under Section 174 (3) of the said Act. Horwath Oon Kien Hoe Firm No: AF 1018 Approval No: 1772/11/04 (J/PH) Chartered Accountants Partner Kuala Lumpur 20 July 2004 P A G E 45
    • balance sheets BALANCE SHEETS at 31 March 2004 THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM ASSETS Investment in subsidiaries 6 - - 211,064,785 211,064,785 Interest in associates 7 112,064,656 110,700,175 2,400,000 2,400,000 Property, plant and equipment 8 36,246,114 35,812,639 35,428 53,152 Investment properties 9 41,391,466 41,774,547 - - Other assets 10 247,107 382,107 - - Goodwill on consolidation 11 27,317,640 27,271,844 - - 217,266,983 215,941,312 213,500,213 213,517,937 CURRENT ASSETS Inventories 12 8,604,731 14,109,911 - - Property development in progress 13 50,449,300 54,738,163 - - Receivables 14 66,593,226 68,079,974 209,050 123,962 Amount owing by contract customers 15 4,775,992 685,256 - - Amounts owing by subsidiaries 16 - - 55,919,091 52,644,365 Amount owing by associates 17 5,533,926 5,525,184 11,434 11,434 Tax recoverable 18 8,331,990 5,350,142 11,823,151 11,265,166 Short term deposits with licensed banks 19 1,407,125 1,422,125 1,239,225 1,239,225 Cash and bank balances 20 3,474,278 6,084,094 2,012,100 5,201,131 149,170,568 155,994,849 71,214,051 70,485,283 LESS: CURRENT LIABILITIES Amount owing to contract customers 15 1,601,053 4,769,567 - - Payables 21 28,718,800 26,618,315 230,925 331,492 Amounts owing to subsidiaries 16 - - 12,563,323 12,635,183 Amounts owing to associates 17 78,236 65,500 - - Amounts owing to directors 22 2,450,481 2,450,481 1,967,680 1,967,680 Dividend payable 270,587 270,587 270,587 270,587 Short term borrowings 23 39,941,312 47,707,856 11,580,169 11,413,736 ABBA Bonds 24 2,478,450 2,478,450 2,478,450 2,478,450 75,538,919 84,360,756 29,091,134 29,097,128 NET CURRENT ASSETS 73,631,649 71,634,093 42,122,917 41,388,155 290,898,632 287,575,405 255,623,130 254,906,092 P A G E 46 The annexed notes form an integral part of these financial statements.
    • BALANCE SHEETS THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM FINANCED BY: Share capital 25 82,435,000 82,435,000 82,435,000 82,435,000 Reserves 26 135,939,954 134,681,876 133,476,597 134,643,948 Shareholders’ equity 218,374,954 217,116,876 215,911,597 217,078,948 ABBA Bonds 24 39,711,533 37,827,144 39,711,533 37,827,144 Deferred liabilities 27 32,812,145 32,631,385 - - 290,898,632 287,575,405 255,623,130 254,906,092 NET TANGIBLE ASSETS PER ORDINARY SHARE (RM) 31 244 sen 242 sen P A G E 47 The annexed notes form an integral part of these financial statements.
    • income statements INCOME STATEMENTS for the financial year ended 31 March 2004 THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM TURNOVER 32 86,316,639 69,828,919 7,220,737 8,982,613 COST OF SALES 33 (68,900,779) (48,699,540) - - GROSS PROFIT 17,415,860 21,129,379 7,220,737 8,982,613 OTHER OPERATING INCOME 3,911,925 3,097,647 - - ADMINISTRATIVE EXPENSES (7,420,741) (6,793,398) (891,180) (1,069,681) OTHER OPERATING EXPENSES (3,270,390) (9,417,624) (326,746) (156,715) PROFIT FROM OPERATIONS 10,636,654 8,016,004 6,002,811 7,756,217 FINANCE COSTS (7,263,617) (6,793,334) (5,533,390) (4,464,721) SHARE OF PROFIT OF ASSOCIATES 3,623,112 3,926,816 - - PROFIT BEFORE TAXATION 34 6,996,149 5,149,486 469,421 3,291,496 TAXATION 35 (4,923,154) (3,138,593) (821,855) (913,324) PROFIT/(LOSS) AFTER TAXATION 2,072,995 2,010,893 (352,434) 2,378,172 Earnings per share - basic 36 2.4 sen 2.4 sen - diluted 36 N/A N/A Dividend per ordinary share - final 37 - 1 sen P A G E 48 The annexed notes form an integral part of these financial statements.
    • statements of changes in equity for the financial year ended 31 March 2004 STATEMENTS OF CHANGES IN EQUITY SHARE SHARE APPLICATION SHARE RETAINED CAPITAL CAPITAL ACCOUNT PREMIUM PROFITS RESERVE TOTAL NOTE RM RM RM RM RM RM THE GROUP Balance at 1.4.2002 57,301,943 115,600,000 20,995,752 20,328,676 1,199,999 215,426,370 Issuance of shares 25,133,057 - - - - 25,133,057 Reversal of share application account - (115,600,000) - - - (115,600,000) Share premium arising from issuance of shares - - 90,471,143 - - 90,471,143 Expenses incurred on conversion of ICULS - - (54,000) - - (54,000) Profit after taxation for the financial year - - - 2,010,893 - 2,010,893 Dividends 37 - - - (270,587) - (270,587) Balance at 31.3.2003/1.4.2003 82,435,000 - 111,412,895 22,068,982 1,199,999 217,116,876 Profit after taxation for the financial year - - - 2,072,995 - 2,072,995 Dividends 37 - - - (814,917) - (814,917) Balance at 31.3.2004 82,435,000 - 111,412,895 23,327,060 1,199,999 218,374,954 THE COMPANY Balance at 1.4.2002 57,301,943 115,600,000 20,995,752 21,123,468 - 215,021,163 Issuance of shares 25,133,057 - - - - 25,133,057 Reversal of share application account - (115,600,000) - - - (115,600,000) Share premium arising from issuance of shares - - 90,471,143 - - 90,471,143 Expenses incurred on conversion of ICULS - - (54,000) - - (54,000) Profit after taxation for the financial year - - - 2,378,172 - 2,378,172 Dividends 37 - - - (270,587) - (270,587) Balance at 31.3.2003/1.4.2003 82,435,000 - 111,412,895 23,231,053 - 217,078,948 Loss after taxation for the financial year - - - (352,434) - (352,434) Dividends 37 - - - (814,917) - (814,917) Balance at 31.3.2004 82,435,000 - 111,412,895 22,063,702 - 215,911,597 The retained profits of the Group are attributable to/(absorbed by): 2003 2004 RM RM The Company 22,063,702 23,231,053 Subsidiaries (15,582,983) (16,643,931) Associates 16,846,341 15,481,860 23,327,060 22,068,982 P A G E 49 The annexed notes form an integral part of these financial statements.
    • cash flow statements CASH FLOW STATEMENTS for the financial year ended 31 March 2004 THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM CASH FLOWS FROM/(FOR) OPERATING ACTIVITIES Profit before taxation 6,996,149 5,149,486 469,421 3,291,496 Adjustments for: Allowance for doubtful debts 828,553 8,625,447 - - Amortisation of bonds expenses 303,272 134,364 303,272 134,364 Bad debts written off - 110,965 - - Depreciation and amortisation of property, plant and equipment 446,060 406,603 23,474 22,351 Interest expense / finance charges 7,110,435 6,407,721 5,506,995 4,442,243 Loss on disposal of investment properties 1,557,400 150,154 - - Plant and equipment written off 13,663 - - - Other investment written off 135,000 - - - Dividend income - - (4,928,000) (8,090,000) Gain on disposal of property, plant and equipment (313,882) (7,302) - - Interest income (107,322) (110,604) (612,688) (622,613) Writeback of diminution in value of inventory - (6,527) - - Writeback of allowance for doubtful debts - (1,988,813) - - Share of profit in associates (3,623,112) (3,926,816) - - Operating profit/(loss) before working capital changes 13,346,216 14,944,678 762,474 (822,159) Decrease in inventories 5,505,180 10,089,220 - - Decrease/(Increase) in property development-in-progress 4,712,161 (15,568,195) - - Decrease/(Increase) in trade and other receivables 658,195 11,175,302 (85,088) 6,277,255 Increase/(Decrease) in trade and other payables 1,707,814 (8,910,013) (100,567) 86,070 (Decrease)/Increase in amount owing to contract customers (7,259,250) 2,287,849 - - CASH FROM OPERATIONS 18,670,316 14,018,841 576,819 5,541,166 Interest paid (3,402,444) (4,702,299) (1,375,706) (1,880,098) Taxes paid (6,780,583) (3,377,151) - - NET CASH FROM/(FOR) OPERATING ACTIVITIES 8,487,289 5,939,391 (798,887) 3,661,068 P A G E 50 The annexed notes form an integral part of these financial statements.
    • CASH FLOW STATEMENTS THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM CASH FLOWS FROM/(FOR) INVESTIING ACTIVITIES Interest received 107,322 641,078 612,688 622,613 Dividends received from subsidiaries - - 2,304,000 3,816,000 Dividends received from associates 1,526,883 2,116,800 1,244,160 2,008,800 Net cash outflow on acquisition of subsidiary 38 - (34,835,444) - (35,000,000) Expenses incurred on acquisition of subsidiary - - - (654,225) Purchase of property, plant and equipment (924,876) (201,665) (5,750) - Purchase of investment properties (3,110,115) (3,438,068) - - Hotel development expenditure - (386,797) - - Proceeds from disposal of property, plant and equipment 345,560 149,222 - - Proceeds from disposal of investment properties 1,910,000 952,000 - - Incidental expenses on investment properties (20,000) (42,589) - - Withdrawal/(Placement) of cash in sinking fund account 3,188,398 (5,198,398) 3,188,398 (5,198,398) NET CASH FROM/(FOR) INVESTING ACTIVITIES 3,023,172 (40,243,861) 7,343,496 (34,405,210) CASH FLOWS (FOR)/FROM FINANCING ACTIVITIES Payment of bonds expenses (71,722) - (71,722) - Proceeds from issuance of shares - 4,200 - 4,200 Proceeds from bonds 24 - 38,848,310 - 38,848,310 Repayment of bonds 24 (2,478,450) (1,239,225) (2,478,450) (1,239,225) Net repayment by/(Advances to) associates 3,994 (42,209) - 40,449 Net advances to subsidiaries - - (3,346,586) (14,433,234) Dividend paid to shareholders of the Company (544,330) - (544,330) - Payment of expenses on conversion of ICULS - (54,000) - (54,000) Dividend paid to holders of ICCPS (270,587) (270,587) (270,587) (270,587) Repayment of revolving credit (500,000) (3,280,000) - (680,000) Repayment of loans (6,460,269) (4,103,454) - - Repayment to hire purchase payables (87,784) (87,784) - - P A G E 51 The annexed notes form an integral part of these financial statements.
    • CASH FLOW STATEMENTS THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM NET CASH (FOR)/FROM FINANCING ACTIVITIES (10,409,148) 29,775,251 (6,711,675) 22,215,913 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,101,313 (4,529,219) (167,066) (8,528,229) CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR (18,870,095) (14,340,876) (5,171,778) 3,356,451 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 39 (17,768,782) (18,870,095) (5,338,844) (5,171,778) P A G E 52 The annexed notes form an integral part of these financial statements.
    • notes to the financial statements for the financial year ended 31 March 2004 NOTES TO THE FINANCIAL STATEMENTS 1. GENERAL INFORMATION The Company is a public company limited by shares and is incorporated under the Malaysian Companies Act, 1965. The domicile of the Company is in Malaysia. The registered office, which is also the principal place of business, is at Wisma Siah Brothers, 74A, Jalan Pahang, 53000 Kuala Lumpur. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 20 July 2004. 2. PRINCIPAL ACTIVITIES The Company is principally engaged in the business of investment holding and the provision of management and administrative services to the subsidiaries. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. 3. FINANCIAL RISK MANAGEMENT POLICIES The Group's financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group's business whilst managing its currency, interest rate, market, credit, liquidity and cash flow risks. The Group operates within defined guidelines that are approved by the Board and the policies in respect of the major areas of treasury activity are as follows: (a) Currency Risk The Group does not have material foreign currency transactions, assets or liabilities and hence is not exposed to any significant or material currency risks. (b) Interest Rate Risk The Group obtains financing through bank borrowings and hire purchase. Its policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure. Surplus funds are placed with reputable financial institutions at the most favourable interest rates. (c) Market Risk The Group’s principal exposure to market risks arises mainly from changes in quoted equity prices. The Group does not use derivative instruments to manage equity risk. (d) Credit Risk The Group's exposure to credit risks, or the risk of counterparties defaulting, arises mainly from cash deposits and receivables. The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet reduced by the effects of any netting arrangements with counterparties. The Group does not have any major concentration of credit risk related to any individual customer or counterparty except for the amount owing by a major customer which constitutes approximately 61% of trade receivables. The details pertaining to the aforesaid amount are set out in Note 14 to the financial P statements. A G E 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. 53
    • NOTES TO THE FINANCIAL STATEMENTS 3. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D) (e) Liquidity and Cash Flow Risk The Group's exposure to liquidity and cashflow risks arises mainly from general funding and business activities. It practises prudent liquidity risk management by maintaining sufficient cash balances and the availability of funding through certain committed credit facilities. 4. BASIS OF ACCOUNTING The financial statements are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965. MASB 32 - Property Development Activities has been adopted in the financial statements of the Group prior to its effective date. 5. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries made up to 31 March 2004. A subsidiary is defined as a company in which the parent company holds directly or indirectly more than 50% of the equity share capital and has the power to exercise control over its financial and operating policies. All subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed off are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair value of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group. P A G E 54
    • NOTES TO THE FINANCIAL STATEMENTS 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (b) Goodwill or Negative Goodwill On Consolidation Goodwill represents the excess of the fair value of the purchase consideration over the Group’s share of the fair values of the separable net assets of subsidiaries at the date of acquisition. Negative goodwill represents the excess of the Group’s share of the fair values of the separable net assets of subsidiaries at the date of acquisition over the fair value of the purchase consideration. Goodwill is stated net of negative goodwill. The net carrying amount of goodwill is reviewed annually, and is written down for impairment where it is considered necessary. The impairment value of goodwill is taken to the consolidated income statement. (c) Associates Associates are enterprises in which the Group exercises significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not control over those policies. Investments in associates are accounted for in the consolidated financial statements by the equity method of accounting. Equity accounting involves recognising in the income statement the Group’s share of the results of the associates for the period. The Group’s investment in associates is carried in the balance sheet at an amount that reflects its share of the assets of the associates and includes goodwill (net of accumulated amortisation) on acquisition. At the date of acquisition, the fair value of the associates’ net assets are determined and these values are reflected in the consolidated financial statements. Equity accounting is discontinued when the carrying amount of the investment in an associate reaches zero, unless the Group has incurred obligations or guaranteed obligations in respect of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of associates to ensure consistency of accounting policies with those of the Group. (d) Property, Plant and Equipment Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation or amortisation. Freehold land is stated at cost and is not depreciated. Leasehold land having an unexpired term of more than fifty years is not amortised. The non-amortisation of the long term leasehold land has no material effect on the financial statements. Depreciation and amortisation is calculated under the straight-line method to write off the cost of the assets over their estimated useful lives. The principal annual rates used for this purpose are: Sales office 20% Plant and machinery, construction machinery and equipment 5% - 20% Formwork, scaffoldings and containers 10% - 25% Office renovation, office equipment, computers, furniture and fittings, tools and fittings 5% - 20% Motor vehicles 20% P A G E 55
    • NOTES TO THE FINANCIAL STATEMENTS 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (e) Impairment of Assets The carrying amounts of assets, other than those to which MASB Standard 23 Impairment of Assets does not apply, are reviewed at each balance sheet date for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. An impairment loss is charged to the income statement immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset. In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to the revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement. (f) Investments Investments in subsidiaries, associates and joint ventures are initially stated at cost in the balance sheet of the Company, and are reviewed for impairment at the end of the financial year if events or changes in circumstances indicate that their carrying values may not be recoverable. (g) Investment Properties Investments properties consist of investments in land and buildings that are not substantially occupied for use by, or in the operations, of the Company/Group. Investments properties are treated as long term investment. They are initially stated at cost and are subject to revaluations which are carried out by an independent valuer on a regular basis. Any revaluation increase is recognised in equity as a revaluation surplus; any decrease is first offset against any unutilised previously recognised revaluation surplus in respect of the same investment property, and the balance is thereafter recognised as an expense. A revaluation increase is recognised as income to the extent that it reverses a revaluation decrease of the same property previously recognised as an expense. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged to the income statement; any amount in revaluation reserve relating to that investment property is transferred to retained earnings. (h) Inventories Inventories are stated at the lower of cost and net realisable value. The unsold completed properties are stated at the lower of cost and net realisable value. For finished goods and work-in-progress, cost includes direct labour and appropriate production overheads. P The cost of unsold completed properties comprise the relevant cost of land, development expenditure and A related interest cost incurred during the development period. G E In arriving at net realisable value, due allowance is made for all damaged, obsolete and slow-moving 56 items.
    • NOTES TO THE FINANCIAL STATEMENTS 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (i) Property Development Costs Property development costs comprise costs associated with the acquisition of land and all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. Property development costs that are not recognised as an expense are recognised as an asset and carried at the lower of cost and net realisable value. When the financial outcome of a development activity can be reliably estimated, the amount of property revenues and expenses recognised in the income statement are determined by reference to the stage of completion of development activity at the balance sheet date. When the financial outcome of a development activity cannot be reliably estimated, the property development revenue is recognised only to the extent of property development costs incurred that will be recoverable. The property development costs on the development units sold are recognised as an expense in the period in which they are incurred. Where it is probable that property development costs will exceed property development revenue, any expected loss is recognised as an expense immediately, including costs to be incurred over the defects liability period. The financial effects on the change in accounting policy with respect to the treatment of property development costs is considered not material. (j) Amount Owing By/To Contract Customers The amount owing by/to contract customers is stated at cost plus profits attributable to contracts in progress less progress billings and provision for foreseeable losses, if any. Cost includes direct materials, labour and applicable overheads. (k) Receivables Receivables are carried at anticipated realisable value. Bad debts are written off in the period in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date. (l) Payables Trade and other payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. (m) Interest-bearing Borrowings Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs. Borrowing costs directly attributable to the acquisition and construction of development properties and property, plant and equipment are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. P A All other borrowing costs are charged to the income statement as an expense in the period in which they G E are incurred. 57
    • NOTES TO THE FINANCIAL STATEMENTS 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (n) Bonds Bonds issued by the Company and the Group are initially recognised based on proceeds received, net of issuance expenses incurred and are adjusted in subsequent years for amortisation of premium and/or accretion of discount to maturity, using the effective yield method. The premium amortised and/or discount accreted is recognised in the income statement over the period of the bonds. (o) Taxation Taxation for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantially enacted at the balance sheet date. Previously, deferred taxation was provided using the liability method on all material timing differences except where no liability was expected to arise in the foreseeable future. Deferred tax benefit was only recognised when there was reasonable expectation of realisation in the foreseeable future. During the financial year, the accounting policy for deferred taxation has been changed to comply with MASB 25 - Income Taxes. Deferred taxation is now provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax assets to be utilised. The financial effect on the change in accounting policy with respect to the treatment of deferred taxation is considered not material. P A G E 58
    • NOTES TO THE FINANCIAL STATEMENTS 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (p) Foreign Currencies Transactions in foreign currencies are converted into Ringgit Malaysia at the approximate rates of exchange ruling at the transaction dates. Monetary assets and liabilities in foreign currencies at the balance sheet date are translated at the rates ruling as of that date. All exchange differences are taken to the income statement. (q) Assets under Hire Purchase Equipment acquired under hire purchase are capitalised in the financial statements and are depreciated in accordance with the policy set out in Note 5(d) above. Each hire purchase payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Finance charges are allocated to the income statement over the periods of the respective hire purchase agreements. (r) Equity Instruments Ordinary shares and convertible preference shares are classified as equity. (s) Dividends Dividends on equity are recognised as liabilities when declared and approved. (t) Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (u) Financial Instruments Financial instruments are recognised in the balance sheet when the Company has become a party to the contractual provisions of the instruments. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Company has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. Financial instruments recognised in the balance sheet are disclosed in the individual policy statement associated with each item. P A G E 59
    • NOTES TO THE FINANCIAL STATEMENTS 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (v) Income Recognition (i) Construction Contracts Revenue on contracts is recognised on the percentage of completion method unless the outcome of the contract cannot be reliably determined, in which case revenue on contracts is only recognised to the extent of contract costs incurred that are recoverable. Foreseeable losses, if any, are provided for in full as and when it can be reasonably ascertained that the contract will result in a loss. The stage of completion is determined based on surveys of work performed. (ii) Property Development Revenue from property development is recognised from the sale of completed and uncompleted development properties. Revenue from the sale of completed properties is recognised when the sale is contracted. Revenue on uncompleted properties contracted for sale is recognised based on the stage of completion method unless the outcome of the development cannot be reliably determined in which case the revenue on the development is only recognised to the extent of development costs incurred that are recoverable. The stage of completion is determined based on the proportion that the development costs incurred for work performed to date bear to the estimated total development costs. Foreseeable losses, if any, are recognised immediately in the income statement. Foreseeable losses, if any, are provided for in full as and when it can be reasonably ascertained that the development will result in a loss. (iii) Revenue from Sales of Goods Sales are recognised upon delivery of goods and customers’ acceptance, and where applicable, net of returns and trade discounts. (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. P A G E 60
    • NOTES TO THE FINANCIAL STATEMENTS 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (v) Income Recognition (Cont’d) (vi) Rental Income Rental income is recognised on an accrual basis. (vii) Dividend Income Dividend income from investments is recognised when the right to receive payment is established. (viii) Interest Income Interest income is recognised on an accrual basis, based on the effective yield on the investment. Interest income on late payment is recognised on a receipt basis. (w) Segmental Information Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of property, plant and equipment (net of accumulated depreciation, where applicable), other investments, inventories, receivables, and cash and bank balances. Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets and liabilities do not include income tax assets and liabilities respectively. Segment revenues, expenses and results include transfers between segments. The prices charged on intersegment transactions are based on normal commercial terms. These transfers are eliminated on consolidation. 6. INVESTMENT IN SUBSIDIARIES THE COMPANY 2004 2003 RM RM Unquoted shares, at cost At 1 April 2003/2002 211,064,785 167,370,110 Additions during the financial year - 43,694,675 At 31 March 211,064,785 211,064,785 P A G E 61
    • NOTES TO THE FINANCIAL STATEMENTS 6. INVESTMENT IN SUBSIDIARIES (CONT’D) Details of the subsidiaries, which are all incorporated in Malaysia, are as follows: Effective Equity Interest 2004 2003 Name of Company % % Principal Activities Syarikat Siah Brothers Trading 100 100 General building contractor and Sdn. Bhd. investment holding Syarikat Siah Brothers 100 100 Building and civil engineering Construction Sdn. Bhd. works Lifeplus - Siah Brothers Trading 100 100 Project management and its related JV Sdn. Bhd. technical services Siah Brothers Enterprise Sdn. Bhd. * 100 100 Building contractor Siah Brothers Land Sdn. Bhd. 100 100 Investment holding Seri Ampangan Realty Sdn. Bhd. 100 100 Property development Sinaran Naga Sdn. Bhd. 100 100 Property development Siah Brothers Development Sdn. Bhd. * 100 100 Proposed property development Tiara Development Sdn. Bhd.* 100 100 Proposed property development SBC Homes Sdn. Bhd.* 100 100 Proposed property development Mixwell (Malaysia) Sdn. Bhd. 100 100 Project management and property development Winsome Ventures Sdn. Bhd. 100 100 Proposed property management Siah Brothers Properties Sdn. Bhd.* 100 100 Investment holding Aureate Construction Sdn. Bhd.* 100 100 Property investment SBC Leisure Sdn. Bhd.* 100 100 Property development SBC Towers Sdn. Bhd.* 100 100 Property development Siah Brothers Project Management 100 100 Provision of management services Sdn. Bhd.* Siah Brothers Industries Sdn. Bhd. * 100 100 Investment holding South-East Best Sdn. Bhd. 100 100 Property development Gracemart Resources Sdn. Bhd. 100 100 Property development Sutrati Development Sdn. Bhd. 100 100 Dormant Masahmura Sdn. Bhd.* 51 51 Manufacturing of material handling equipment and metal frames Masahmura Sales & Service Sdn. Bhd. 51 51 Trading of light industrial handling P equipment and metal frames A G E 62 * Not audited by Horwath
    • NOTES TO THE FINANCIAL STATEMENTS 7. INTEREST IN ASSOCIATES THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Unquoted shares, at cost 3,600,001 3,600,001 2,400,000 2,400,000 Unquoted shares, at Group cost 91,618,314 91,618,314 - - Share of post acquisition reserves 16,846,341 15,481,860 - - 112,064,656 110,700,175 2,400,000 2,400,000 THE GROUP 2004 2003 RM RM The interest in associates comprises: Group’s share of net tangible assets - at cost 66,048,686 64,684,205 - at fair value 45,952,003 45,952,003 Group’s share of intangible assets 63,967 63,967 112,064,656 110,700,175 Details of the associates, which are all incorporated in Malaysia, are as follows: Effective Equity Interest 2004 2003 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 Sri Berjaya Development Sdn. Bhd.* 33.3 33.3 Investment and development of landed properties Sri Rawang Properties Sdn. Bhd.* 22.2 22.2 Investment in properties and rubber estates Sam & Lau Plantation Sdn. Bhd.*### 50.0 50.0 Tree plantation and nursery operators * The results of these associates have not been equity accounted as the amounts involved are insignificant. P # The share of results of these associates is based on the latest available unaudited management financial statements A made up to 31 March 2004. G ## Held by Paling Industries Sdn. Bhd. E ### Held by South-East Best Sdn. Bhd. (“SEB”) 63
    • NOTES TO THE FINANCIAL STATEMENTS 8. PROPERTY, PLANT AND EQUIPMENT THE GROUP AT WRITTEN DEPRECIATION AT 1.4.2003 ADDITIONS DISPOSALS OFF CHARGE 31.3.2004 NET BOOK VALUE RM RM RM RM RM RM Freehold land 4,738,833 - - (11,000) - 4,727,833 Land and hotel development expenditure 29,876,765 147,589 - - - 30,024,354 Sales office - 148,676 - - (29,883) 118,793 Plant and machinery, construction machinery and equipment 63,352 1,700 (1) - (14,109) 50,942 Formwork, scaffoldings and containers 10,462 - - - (4,014) 6,448 Office renovation, office equipment, computers, furniture and fittings, tools and fittings 838,577 536,911 (31,676) (2,663) (273,882) 1,067,267 Motor vehicles 284,650 90,000 (1) - (124,172) 250,477 Total 35,812,639 924,876 (31,678) (13,663) (446,060) 36,246,114 ACCUMULATED NET BOOK AT COST DEPRECIATION VALUE RM RM RM AT 31.3.2004 Freehold land 4,727,833 - 4,727,833 Land and hotel development expenditure 30,024,354 - 30,024,354 Sales office 148,676 (29,883) 118,793 Plant and machinery, construction machinery and equipment 4,343,457 (4,292,515) 50,942 Formwork, scaffoldings and containers 4,316,916 (4,310,468) 6,448 Office renovation, office equipment, computers, furniture and fittings, tools and fittings 4,633,477 (3,566,210) 1,067,267 Motor vehicles 2,005,751 (1,755,274) 250,477 50,200,464 (13,954,350) 36,246,114 AT 31.3.2003 Freehold land 4,738,833 - 4,738,833 Land and hotel development expenditure 29,876,765 - 29,876,765 Plant and machinery, construction machinery and equipment 4,374,257 (4,310,905) 63,352 Formwork, scaffoldings and containers 4,316,916 (4,306,454) 10,462 Office renovation, office equipment, computers furniture and fittings, tools and fittings 4,161,954 (3,323,377) 838,577 Motor vehicles 1,946,651 (1,662,001) 284,650 49,415,376 (13,602,737) 35,812,639 Land and hotel development expenditure consists of: 2004 2003 P RM RM A G Long leasehold land, at cost 27,691,066 27,691,066 E Hotel development expenditure 2,333,288 2,185,699 64 30,024,354 29,876,765
    • NOTES TO THE FINANCIAL STATEMENTS 8. PROPERTY, PLANT AND EQUIPMENT (CONT’D) THE COMPANY AT DEPRECIATION AT 1.4.2003 ADDITIONS CHARGE 31.3.2004 NET BOOK VALUE RM RM RM RM Office equipment, computers, furniture and fittings 53,151 5,750 (23,474) 35,427 Motor vehicles 1 - - 1 53,152 5,750 (23,474) 35,428 AT ACCUMULATED NET BOOK COST DEPRECIATION VALUE RM RM RM AT 31.3.2004 Office equipment, computers, furniture and fittings 376,551 (341,124) 35,427 Motor vehicles 376,950 (376,949) 1 753,501 (718,073) 35,428 AT 31.3.2003 Office equipment, computers, furniture and fittings 370,801 (317,650) 53,151 Motor vehicles 376,950 (376,949) 1 747,751 (694,599) 53,152 The motor vehicles of the Group acquired under hire purchase terms were carried at net book value of RM125,997 (2003 - RM231,384) at the balance sheet date. The carrying value of certain property, plant and equipment charged to financial institutions to secure banking facilities granted to the Group are as follows: THE GROUP 2004 2003 RM RM Sales office 118,793 - Furniture and fittings 137,332 107,183 Office and other equipment 102,092 4,951 Land and hotel development expenditure 30,024,354 29,876,765 Office renovation 5,664 9,976 30,388,235 29,998,875 P A G E 65
    • NOTES TO THE FINANCIAL STATEMENTS 9. INVESTMENT PROPERTIES THE GROUP 2004 2003 RM RM Leasehold land, at cost 19,778,424 19,778,424 Expenditure on land 4,500,413 4,202,191 24,278,837 23,980,615 Freehold land and buildings, at cost 15,213,507 15,812,472 Leasehold land and buildings, at cost 5,366,522 3,041,025 20,580,029 18,853,497 Disposed during the financial year (3,467,400) (1,059,565) 17,112,629 17,793,932 41,391,466 41,774,547 Certain investment properties are charged to financial institutions for banking facilities granted to the company. 10. OTHER ASSETS THE GROUP 2004 2003 RM RM Other assets 189,807 189,807 Other investments Quoted shares in Malaysia, at cost 12,300 12,300 Unquoted shares, at cost 45,000 180,000 57,300 192,300 247,107 382,107 Market value of quoted shares 4,590 4,455 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 ON CONSOLIDATION THE GROUP 2004 2003 RM RM At 1 April 2003/2002 27,271,844 10,245,527 P Goodwill arising from the acquisition of equity interest in a subsidiary - 17,026,317 A Goodwill arising from the acquisition of equity interest in a subsidiary G E in the previous financial year not accounted for 45,796 - 66 At 31 March 27,317,640 27,271,844
    • NOTES TO THE FINANCIAL STATEMENTS 12. INVENTORIES THE GROUP 2004 2003 RM RM Unsold completed properties, at cost 8,604,731 14,109,911 In the previous financial year, certain inventories costing RM1,423,220 were charged to a third party for the procurement of bonds issued by the Company. In the previous financial year, certain inventories costing RM11,528,558 were charged to licensed banks and financial institutions for banking facilities granted to a subsidiary. None of the inventories are carried at net realisable value. 13. PROPERTY DEVELOPMENT COST THE GROUP 2004 2003 RM RM Balance at beginning of the financial year: - land 31,209,528 24,624,246 - development costs 34,259,753 45,015,434 65,469,281 69,639,680 Cost incurred during the year: - land - 6,400,000 - development costs 19,138,472 27,255,572 84,607,753 103,295,252 Development cost for completed projects - (5,683,038) 84,607,753 97,612,214 Cost recognised as an expense in the income statement: - previous year (10,731,119) (30,643,740) - current year (23,019,919) (12,163,165) (33,751,038) (42,806,905) Sub-total 50,856,715 54,805,309 Transfer to inventories (407,415) (67,146) 50,449,300 54,738,163 Included in development expenditure is interest expense capitalised during the financial year amounting to RM423,298 (2003 - RM856,723). Leasehold land of a subsidiary costing RM7,674,555 (2003 - RM7,674,555) is charged to a licensed bank for a P term loan facility granted to the subsidiary. A G E 67
    • NOTES TO THE FINANCIAL STATEMENTS 14. RECEIVABLES THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Trade receivables 69,536,316 69,665,907 - - Retention receivable 5,547,621 5,709,953 - - Total trade receivables 75,083,937 75,375,860 - - Allowance for doubtful debts At 1 April 2003/2002 (13,054,487) (6,803,879) - - Acquisition of subsidiary - (22,819) - - Additions (419,708) (8,216,602) - - Write-back - 1,988,813 - - At 31 March (13,474,195) (13,054,487) - - Net trade receivables 61,609,742 62,321,373 - - Other receivables, deposits and prepayments 8,483,606 8,849,878 2,561,787 2,476,699 Allowance for doubtful debts At 1 April 2003/2002 (3,091,277) (2,682,432) (2,352,737) (2,352,737) Additions (408,845) (408,845) - - At 31 March (3,500,122) (3,091,277) (2,352,737) (2,352,737) Net other receivables, deposits and prepayments 4,983,484 5,758,601 209,050 123,962 Total receivables 66,593,226 68,079,974 209,050 123,962 Included in trade receivables at the balance sheet date are RM37,720,372 (2003 - RM37,720,372) and RM11,021,388 (2003 - RM9,886,903) owing by Smart Home Sdn. Bhd. (“SH”) and Ligamas Sdn. Bhd. respectively, both of which are related parties. Details of the related party relationship and the nature of the transactions and balances are set out in Note 42 to the financial statements. The amount owing by SH has been outstanding since 1996. During the financial year, SH proposed to settle the amount owing through the transfer of six parcels of development land for a total consideration of RM37,828,242. The proposed debt settlement was approved by the shareholders of the Company at an extraordinary general meeting convened on 16 April 2004, and this is elaborated in Note 45 to the financial statements. Included in other receivables is RM1,552,059 (2003 - RM2,647,103) 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 to be performed by the sub-contractors. Also included in other receivables in the previous financial year, was an amount owing by a related party of RM500,000. The details of the transaction and the balance are disclosed in Note 42 to the financial statements. Credit terms of trade receivables, other than the amount owed by SH, range from 14 days to 90 days. P A G E 68
    • NOTES TO THE FINANCIAL STATEMENTS 15. AMOUNT OWING BY/(TO) CONTRACT CUSTOMERS THE GROUP 2004 2003 RM RM Amount owing by contract customers Contract costs incurred to date 45,035,273 8,090,361 Attributable profits 7,522,655 241,371 52,557,928 8,331,732 Progress billings (47,781,936) (7,646,476) Amount owing by contract customers 4,775,992 685,256 Amount owing to contract customers Contract costs incurred to date 211,960,362 184,168,929 Attributable profits 8,757,050 8,802,347 220,717,412 192,971,276 Progress billings (222,318,465) (197,740,843) Amount owing to contract customers (1,601,053) (4,769,567) 16. AMOUNTS OWING BY/(TO) SUBSIDIARIES THE COMPANY 2004 2003 RM RM Amounts owing by: Non-trade - Interest-bearing 6,272,445 6,582,470 - Interest-free 49,646,646 46,061,895 55,919,091 52,644,365 Amounts owing to: Non-trade - Interest-bearing 2,677,629 3,797,629 - Interest-free 9,885,694 8,837,554 12,563,323 12,635,183 The above amounts owing are unsecured and not subject to fixed terms of repayment. The interest-bearing amounts are subject to interest at 3.20% to 8.50% (2003 - 8.40% to 8.65%) per annum. 17. AMOUNTS OWING BY/(TO) ASSOCIATES P A The amounts owing are unsecured, interest-free and not subject to fixed terms of repayment. G E 69
    • NOTES TO THE FINANCIAL STATEMENTS 18. TAX RECOVERABLE Subject to agreement with the tax authorities, the Company has tax recoverable of RM11,823,151 at the balance sheet date in respect of the financial years ended 31 March 1997 to 31 March 2004. 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 rate of deposits at the balance sheet date was as follows: THE GROUP THE COMPANY 2004 2003 2004 2003 % % % % Licensed bank 2.81 2.84 2.77 2.77 Deposits of the Group and the Company have an average maturity period of 30 days (2003 - 30 days). The deposits of the Company have 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 2004 2003 2004 2003 RM RM RM RM Cash and bank balances 1,464,278 885,696 2,100 2,733 Sinking fund account (Note 39) 2,010,000 5,198,398 2,010,000 5,198,398 3,474,278 6,084,094 2,012,100 5,201,131 Included in the cash and bank balances of the Group is RM1,158,751 (2003 – RM518,922) 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. 21. PAYABLES THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Trade payables 19,943,924 20,217,451 - - Retention payable 8,228,498 5,680,103 - - Total trade payables 28,172,422 25,897,554 - - Other payables and accruals 458,594 632,977 230,925 331,492 Hire purchase payables (Note 27a) 87,784 87,784 - - P 28,718,800 26,618,315 230,925 331,492 A G Credit terms of trade payables range from 30 days to 60 days. E 70 Included in other payables is an amount owing to a related party of RM108,519 (2003 - RM108,222). The details of the transaction and the balance are disclosed in Note 42 to the financial statements.
    • NOTES TO THE FINANCIAL STATEMENTS 22. AMOUNTS OWING TO DIRECTORS THE GROUP THE COMPANY 2004 2003 2004 2003 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 482,801 482,801 - - 2,450,481 2,450,481 1,967,680 1,967,680 The above amounts owing are interest free, unsecured and not subject to fixed terms of repayment except for the amount owing to Sia Kwee Mow @ Sia Hok Chai which bears interest at 5.5% (2003 - 5.5%) per annum. 23. SHORT TERM BORROWINGS 2004 2003 SECURED UNSECURED TOTAL SECURED UNSECURED TOTAL RM RM RM RM RM RM THE GROUP Bridging loan (Note 29) 2,993,580 - 2,993,580 8,167,060 - 8,167,060 Term loans (Note 28) 13,147 - 13,147 1,568,480 - 1,568,480 Revolving credits - 16,294,400 16,294,400 - 16,794,400 16,794,400 Bank overdrafts (Note 39) - 20,640,185 20,640,185 - 21,177,916 21,177,916 3,006,727 36,934,585 39,941,312 9,735,540 37,972,316 47,707,856 THE COMPANY Bridging loan (Note 29) - - - - - - Term loans (Note 28) - - - - - - Revolving credits - 5,000,000 5,000,000 - 5,000,000 5,000,000 Bank overdrafts (Note 39) - 6,580,169 6,580,169 - 6,413,736 6,413,736 - 11,580,169 11,580,169 - 11,413,736 11,413,736 The weighted average effective interest rates at the balance sheet date for borrowings which bear interest at floating rates, were as follows: THE GROUP THE COMPANY 2004 2003 2004 2003 % % % % Bridging loan 7.76 7.87 - - Term loans 7.55 7.94 - - Revolving credits 6.03 6.05 7.55 7.55 Bank overdrafts 8.21 8.45 8.28 8.68 P A G E 71
    • NOTES TO THE FINANCIAL STATEMENTS 24. ABBA BONDS THE GROUP/THE COMPANY 2004 2003 RM RM Al-Bai Bithaman Ajil Bonds (nominal value) 61,961,250 61,961,250 Less: ABBA Bonds issuance expenses (1,151,690) (1,151,690) Finance charges on bonds issue (21,961,250) (21,961,250) Net proceeds 38,848,310 38,848,310 Additional ABBA Bonds issuance expenses (71,722) - 38,776,588 38,848,310 Cumulation of amortisation of ABBA Bonds issuance expenses 437,636 134,364 Cumulation of amortisation of finance charges on ABBA Bonds issue 6,693,434 2,562,145 Net proceeds 45,907,658 41,544,819 Repayment made in previous financial year (1,239,225) - Repayment made during the year (2,478,450) (1,239,225) Total repayments (3,717,675) (1,239,225) 42,189,983 40,305,594 Analysis of the ABBA Bonds: - Not later than one year 2,478,450 2,478,450 - Later than one year and not later than five years 39,711,533 37,827,144 42,189,983 40,305,594 In the previous 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 the first issue of the Secondary Bonds. The ABBA Bonds were placed out to a licensed financial institutions via a private placement. The tenure of the ABBA Bonds is 5 years from the date of issue. The profit margin on the ABBA Bonds is fixed at 5% per annum, payable in arrears on a semi-annual basis represented by the Secondary Bonds. The ABBA Bonds are issued based on a 10% per annum yield to maturity. The ABBA Bonds are secured in the following manner: (i) by a third party first legal charge over certain properties of a subsidiary; (ii) by a third party first legal charge over all the shares held by a wholly owned subsidiary in an associate; (iii) by a first party charge over a reserve account which is an Islamic banking account has been opened for the placement of all monies received from dividends, unappropriated profits and bonus shares accruing to a subsidiary; and P (iv) by a first party charge over a sinking fund account and a Mudharabah Account of the Company. A G E 72
    • NOTES TO THE FINANCIAL STATEMENTS 25. SHARE CAPITAL THE COMPANY 2004 2003 2004 2003 NUMBER OF SHARES RM RM AUTHORISED Ordinary Shares of RM1 each At 1 April/31 March 193,167,000 193,167,000 193,167,000 193,167,000 5.5% ICCPS of RM1 each At 1 April/31 March 6,833,000 6,833,000 6,833,000 6,833,000 Total authorised share capital 200,000,000 200,000,000 200,000,000 200,000,000 ISSUED AND FULLY PAID-UP Ordinary Shares of RM1 each At 1 April/31 March 75,602,000 50,468,943 75,602,000 50,468,943 Allotment during the financial year - 25,133,057 - 25,133,057 At 31 March 75,602,000 75,602,000 75,602,000 75,602,000 5.5% ICCPS of RM1 each At 1 April/31 March 6,833,000 6,833,000 6,833,000 6,833,000 Total issued and fully paid-up share capital 82,435,000 82,435,000 82,435,000 82,435,000 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 on 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 liquidation or otherwise for the par value of the ICCPS plus any dividends in arrears, 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. P A G E 73
    • NOTES TO THE FINANCIAL STATEMENTS 26. RESERVES THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Share premium (Note a) At 1 April 2003/2002 111,412,895 20,995,752 111,412,895 20,995,752 Arising from issuance of shares - 90,471,143 - 90,471,143 Set-off against expenses incurred on conversion of ICULS - (54,000) - (54,000) At 31 March 111,412,895 111,412,895 111,412,895 111,412,895 Capital reserve (Note b) 1,199,999 1,199,999 - - Retained profits (Note c) 23,327,060 22,068,982 22,063,702 23,231,053 135,939,954 134,681,876 133,476,597 134,643,948 (a) The share premium 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 (2003 - 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 (2003 - RM11,366,000) out of its entire retained profits without incurring any additional tax liability. 27. DEFERRED LIABILITIES THE GROUP 2004 2003 RM RM Term loans (Note 28) 2,728,699 2,460,155 Hire purchase payables (Note a) 47,700 135,484 Deferred taxation (Note 30) 966,746 966,746 Amount owing to the Sabah State Government (Note b) 29,069,000 29,069,000 32,812,145 32,631,385 (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 60,342 171,258 P A 171,258 282,174 G Future finance charges (35,774) (58,906) E 74 Present value of hire purchase liabilities 135,484 223,268
    • NOTES TO THE FINANCIAL STATEMENTS 27. DEFERRED LIABILITIES (CONT’D) THE GROUP 2004 2003 RM RM (a) Hire purchase payables (Cont’d) 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 47,700 135,484 135,484 223,268 The hire purchase liabilities at the balance sheet date were subject to interest at rates ranging from 5.25% to 5.35% (2003 - 5.25% to 5.35%) per annum. (b) Amount owing to the Sabah State Government The amount owing arose from the acquisition of a subsidiary, South-East Best Sdn. Bhd. (“SEB”) and 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 for the outstanding amount of RM29,069,000. The change of entitlement is in the form of the construction of an office building for the Land and Survey Department (Jabatan Tanah dan Ukur) and part of a building for the Ministry of Finance at a value equivalent to the amount outstanding of RM29,069,000. On 21 October 2002, 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. 28. TERM LOANS THE GROUP 2004 2003 RM RM Term loans 2,741,846 4,028,635 Less: Portion repayable within twelve months (Note 23) (13,147) (1,568,480) Portion repayable after twelve months (Note 27) 2,728,699 2,460,155 The long term loans are repayable as follows: Not later than one year 13,147 1,568,480 P Later than one year and not later than five years 2,329,435 2,029,475 A Later than five years 399,264 430,680 G E 2,741,846 4,028,635 75
    • NOTES TO THE FINANCIAL STATEMENTS 28. TERM LOANS (CONT’D) Details of the term loans outstanding at the balance sheet date are as follows: THE GROUP 2004 2003 Term loan RM RM 1 2,267,272 3,541,663 2 474,574 486,972 2,741,846 4,028,635 Monthly Number of Instalment Interest Rate Date of Monthly Amount Per Annum Commencement Term loan Instalments RM % of Repayment 1 25 141,667 7.75% May 2003 * 2 264 3,673 6.60% January 2003 * The bank has agreed to defer seventeen monthly principal installments of RM141,667 each for eighteen months commencing 1 May 2004 and the subsequent installments shall commence from 1 November 2005. 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 of one of the directors of the Company. 29. BRIDGING LOAN THE GROUP 2004 2003 RM RM Not later than one year (Note 23) 2,993,580 8,167,060 The syndicated bridging loan from three licensed financial institutions is subject to interest at rates disclosed in Note 23 to the financial statements 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 P A (iv) the joint and several guarantee of a director of a subsidiary and the Company. G E The loan is repayable by way of redemption of the individual units of a subsidiary’s development property, or 76 in 7 quarterly instalments commencing July 2003, whichever is earlier.
    • NOTES TO THE FINANCIAL STATEMENTS 30. DEFERRED TAXATION THE GROUP 2004 2003 RM RM At 1 April 2003/2002 966,746 - Addition through the revaluation surplus on leasehold land of a subsidiary - 966,746 966,746 966,746 31. NET TANGIBLE ASSETS PER SHARE The actual net tangible assets per share is calculated based on the net tangible assets value of RM184,224,314 (2003 - RM183,012,032) attributable to ordinary shares divided by the number of ordinary shares in issue at the balance sheet date of 75,602,000 (2003 - 75,602,000) shares. 32. TURNOVER THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Revenue from construction contracts 49,919,830 35,362,729 - - Proportionate sales value of development properties 36,270,464 34,366,715 - - Rental income 73,600 64,200 - - Dividend income - - 4,928,000 8,090,000 Interest income 52,745 35,275 52,745 35,275 Other interest income - - 559,943 587,338 Management and administrative charges - - 1,680,049 270,000 86,316,639 69,828,919 7,220,737 8,982,613 Continuing operations: - existing 86,316,639 65,260,219 7,220,737 8,982,613 - new acquisition - 4,568,700 - - 86,316,639 69,828,919 7,220,737 8,982,613 33. COST OF SALES THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Construction costs 56,131,953 37,647,813 - - Land and development expenditure 12,625,057 10,913,140 - - Direct costs 88,062 88,062 - - P A G Management and administrative charges 55,707 50,525 - - E 77 68,900,779 48,699,540 - -
    • NOTES TO THE FINANCIAL STATEMENTS 34. PROFIT BEFORE TAXATION THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Profit before taxation is arrived at after charging/(crediting): Allowance for doubtful debts 828,553 8,625,447 - - Amortisation of bond expenses 303,272 134,364 303,272 134,364 Auditors’ remuneration - for the financial year 67,600 59,700 13,000 13,000 - underprovision in the previous financial year 4,200 2,000 - 2,000 Bad debts written off - 110,965 - - Contract costs 56,131,953 37,647,813 - - Depreciation of property, plant and equipment 446,060 406,603 23,474 22,351 Directors’ benefits-in-kind 16,925 16,925 16,925 16,925 Directors’ fees 52,000 67,000 52,000 67,000 Directors’ remuneration 791,520 752,400 489,120 516,900 Finance charges on bonds 4,131,289 2,562,145 4,131,289 2,562,145 Interest expense - bank borrowings 2,845,495 3,178,494 1,042,298 1,093,069 - hire purchase 23,132 23,132 - - - loans 108,519 113,476 333,408 787,029 - others 2,000 530,474 - - Loss on disposal of investment properties 1,557,400 150,154 - - Plant and equipment written off 13,663 - - - Rental expense - premises 3,600 - 12,000 60,000 - machinery and equipment 8,207 15,651 - - Staff costs 3,069,674 2,598,056 160,107 72,786 Gross dividend income - subsidiaries (unquoted) - - (3,200,000) (5,300,000) - associate - - (1,728,000) (2,790,000) Interest income - licensed financial institutions (59,137) (36,891) (52,745) (35,275) - subsidiaries - - (559,943) (587,338) - others (48,185) (73,713) - - Gain on disposal of property, plant and equipment (313,882) (7,302) - - Rental of premises (316,621) (315,672) - - Writeback of allowance for doubtful debts - (1,988,813) - - Writeback of diminution in value of inventory - (6,527) - - P A G E 78
    • NOTES TO THE FINANCIAL STATEMENTS 35. TAXATION THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Current 2,000,589 982,916 228,520 913,324 Share of associates’ taxation 1,014,472 1,100,935 - - 3,015,061 2,083,851 228,520 913,324 Underprovision in the previous financial years 1,908,093 1,054,742 593,335 - 4,923,154 3,138,593 821,855 913,324 Subject to agreement with the tax authorities, the Group has unutilised tax losses and unabsorbed capital allowances of approximately RM2,308,400 (2003 – RM5,834,000) and RM317,000 (2003 – RM725,000) respectively available at the balance sheet date to be carried forward for offset against future taxable business income. A reconciliation of the income tax expense applicable to the profit before taxation at the statutory tax rate to the income tax expense at the effective tax rate of the Group and of the Company is as follows: THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Profit before taxation 6,996,149 5,149,486 469,421 3,291,496 Tax at applicable tax rates 1,958,921 1,441,856 131,438 921,619 Tax effects of: Non-deductible expenses 1,119,212 692,513 251,606 61,352 Non-taxable gains (1,835) (557,000) - - Deferred tax assets not recognised during the financial year 358,834 806,161 - 5,953 Underprovision in the previous financial years 1,908,093 1,054,742 593,335 - Reversal of deferred tax assets not recognised in the previous financial year (510,880) - (154,524) - Tax losses disallowed during the financial year 1,016 2,810 - - Others 89,793 (302,489) - (75,600) 4,923,154 3,138,593 821,855 913,324 36. EARNINGS PER SHARE Basic earnings per share (“EPS”) is arrived at by dividing the profit after taxation attributable to shareholders after deducting the preference dividend of RM270,587 (2003 - RM270,587) by the weighted average number of ordinary shares in issue at the balance sheet date of 75,602,000 (2003 - 73,507,579). The computation of diluted EPS is not applicable as the effects of conversion of each class of potential ordinary P shares are anti-dilutive. A G E 79
    • NOTES TO THE FINANCIAL STATEMENTS 37. DIVIDENDS 2004 2003 RM RM Declared - dividend of 5.5% per ICCPS less 28% tax 270,587 270,587 (2003 - 5.5% per ICCPS less 28% tax) Paid - dividend of 1% per ordinary share less 28% tax (2003 - Nil) 544,330 - 814,917 270,587 At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 March 2004 of 1 sen per ordinary share of RM1 each less 28% tax (2003 - 1 sen per ordinary share of RM1 each less 28% tax) amounting to RM593,532 (2003 - RM544,330) will be tabled for shareholders’ approval. These financial statements do not reflect this final dividend which will be accrued as a liability only upon approval by shareholders. 38. SUMMARY OF EFFECTS OF ACQUISITION OF A SUBSIDIARY In the previous 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 2004 2003 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) P A G E 80
    • NOTES TO THE FINANCIAL STATEMENTS 38. SUMMARY OF EFFECTS OF ACQUISITION OF A SUBSIDIARY (CONT’D) 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 2004 2003 RM RM Investment in associate - 880,000 Property, plant and equipment - 29,998,876 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 details of net assets acquired and cashflow arising from the acquisition of the subsidiaries are as follows: THE GROUP THE COMPANY 2004 2003 2004 2003 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 - - 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 P A G E 81
    • NOTES TO THE FINANCIAL STATEMENTS 39. CASH AND CASH EQUIVALENTS For the purpose of the cash flow statements, cash and cash equivalents comprise the following: THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Short term deposits (Note 19) 1,407,125 1,422,125 1,239,225 1,239,225 Cash and bank balances (Note 20) 3,474,278 6,084,094 2,012,100 5,201,131 Bank overdrafts (20,640,185) (21,177,916) (6,580,169) (6,413,736) (15,758,782) (13,671,697) (3,328,844) 26,620 Less: Cash placed in sinking fund account (Note 20) (2,010,000) (5,198,398) (2,010,000) (5,198,398) (17,768,782) (18,870,095) (5,338,844) (5,171,778) 40. DIRECTORS’ REMUNERATION The aggregate amount of emoluments received and receivable by the directors of the Company during the financial year are as follows: THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM DIRECTORS’ FEES: 1. Mun Chong Shing @ Mun Chong Tian 12,000 12,000 12,000 12,000 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 5,000 12,000 5,000 12,000 5. Vincent Koh Kok Kee 2,000 12,000 2,000 12,000 6. Dato’ Zainol Abidin Bin Haji A. Hamid 6,000 - 6,000 - 7. Ahmad Fizal Bin Othman 2,000 - 2,000 - 8. Tan Sri Dato’ Ir Muhammad Yusuff Bin Haji Muhammad Yunus - 6,000 - 6,000 52,000 67,000 52,000 67,000 DIRECTORS’ NON-FEES EMOLUMENTS: 1. Sia Kwee Mow @ Sia Hok Chai 443,520 486,000 443,520 486,000 2. Sia Teong Heng 336,000 255,000 33,600 19,500 3. Mun Chong Shing @ Mun Chong Tian 2,400 1,200 2,400 1,200 4. Dato’ Lim Phaik Gan 3,600 1,200 3,600 1,200 5. Dato’ Dr. Norraesah Bt Haji Mohamad 3,900 2,400 3,900 2,400 6. Datuk Sim Peng Choon 600 3,000 600 3,000 7. Vincent Koh Kok Kee 900 3,000 900 3,000 P 8. Tan Sri Dato’ Ir Muhammad Yusuff Bin A Haji Muhammad Yunus - 600 - 600 G 9. Dato’ Zainol Abidin Bin Haji A. Hamid 600 - 600 - E 82 791,520 752,400 489,120 516,900
    • NOTES TO THE FINANCIAL STATEMENTS 40. DIRECTORS’ REMUNERATION (CONT’D) 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 2004 2003 2004 2003 RM RM RM RM 1. Sia Kwee Mow @ Sia Hok Chai 16,925 16,925 16,925 16,925 41. RELATED COMPANY TRANSACTIONS THE COMPANY 2004 2003 RM RM Interest paid to subsidiaries 224,889 678,807 Rental paid to a subsidiary 12,000 60,000 Dividend income received/receivable from subsidiaries 3,200,000 5,300,000 Interest received from subsidiaries 559,943 587,338 Management fee received from subsidiaries 1,680,049 270,000 42. RELATED PARTY TRANSACTIONS/BALANCES GROUP 2004 2003 NAME OF RELATED PARTY NOTE NATURE OF TRANSACTION RM RM Ligamas Sdn. Bhd. (a) Progress billings received/ receivable 49,919,830 19,114,882 Paling Industries Sdn. Bhd. (a) Purchase of materials 93,652 58,873 Gross dividend income 1,728,000 2,790,000 received Sri Rawang Properties Sdn. Bhd. (a) Gross dividend income 150,005 150,000 received Sri Berjaya Development Sdn. Bhd. (a) Gross dividend income 242,666 - received LOM Holdings Sdn. Bhd. (e) Acquisition of a motor 90,000 - vehicle Sia Poh Eng (c) Property sold - 550,000 Sia Kwee Mow @ Sia Hok Chai (d) Interest paid/payable 108,519 108,222 P A G E 83
    • NOTES TO THE FINANCIAL STATEMENTS 42. RELATED PARTY TRANSACTIONS/BALANCES (CONT’D) RECEIVABLE PAYABLE GROUP GROUP 2004 2003 2004 2003 NAME OF RELATED PARTIES NOTE RM RM RM RM Ligamas Sdn. Bhd. (a) 12,021,388 9,886,903 - - Smart Home Sdn. Bhd. (b) 37,720,372 37,720,372 - - Sia Poh Eng (c) - 500,000 - - Sia Kwee Mow @ Sia Hok Chai (d) - - 108,519 108,222 Peak Marketing Sdn. Bhd. (f) - - 66,645 66,645 (a) Associates (b) A company in which Sia Kwee Mow @ Sia Hok Chai, who is a director of the Company, has a direct interest. (c) A person connected to Sia Kwee Mow @ Sia Hok Chai and Sia Teong Heng (d) A director of the Company (e) A substantial shareholder of the Company (f) A company in which Sia Teong Heng, who is a director of the company, has a direct interest. In the opinion of the directors, the above transactions have been entered into in the ordinary course of business on terms established by arm’s length negotiations between the parties. 43. CONTINGENT LIABILITIES THE COMPANY 2004 2003 RM RM Corporate guarantee (unsecured) given to banks and other licensed financial institutions for credit facilities granted to subsidiaries 49,444,912 30,523,000 P A G E 84
    • NOTES TO THE FINANCIAL STATEMENTS 44. SEGMENTAL REPORTING THE GROUP 2004 PROPERTY MANUFACTURING CONS- DEVELOP- AND TRUCTION MENT INVESTMENT TRADING ELIMINATIONS GROUP RM RM RM RM RM RM REVENUE: External revenue 49,919,830 36,270,464 126,345 - - 86,316,639 Intersegment revenue 16,693,194 - 7,746,381 - (24,439,575) - Total revenue 66,613,024 36,270,464 7,872,726 - (24,439,575) 86,316,639 Results: Segment results 8,288,220 2,590,585 6,291,718 (7,987) (6,525,882) 10,636,654 Finance costs (7,263,617) Share of results of associates - 2,512,271 - 1,110,841 - 3,623,112 Profit from ordinary activities before taxation 6,996,149 Taxation (4,923,154) Profit from ordinary activities after taxation 2,072,995 PROPERTY MANUFACTURING CONS- DEVELOP- AND TRUCTION MENT INVESTMENT TRADING GROUP RM RM RM RM RM Other information Segment assets 31,821,441 290,967,684 23,771,453 11,544,983 358,105,561 Unallocated assets 8,331,990 366,437,551 Segment liabilities 42,636,445 48,802,170 14,355,639 78,360 105,872,614 Unallocated liabilities 42,189,983 148,062,597 Capital expenditure 333,977 584,399 6,500 - 924,876 Depreciation 172,645 239,203 33,535 677 446,060 P A G E 85
    • NOTES TO THE FINANCIAL STATEMENTS 44. SEGMENTAL REPORTING (CONT’D) THE GROUP 2003 PROPERTY MANUFACTURING CONS- DEVELOP- AND TRUCTION MENT INVESTMENT TRADING ELIMINATIONS GROUP 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 TRUCTION MENT INVESTMENT TRADING GROUP 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 Depreciation 142,474 229,114 32,016 2,999 406,603 No geographical analysis has been prepared as the Group operates wholly in Malaysia. 45. SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE P During the financial year, Smart Home Sdn. Bhd. proposed to settle its debts owing to Mixwell (Malaysia) Sdn. A Bhd. and Syarikat Siah Brothers Construction Sdn. Bhd. amounting to RM37,720,372 in aggregate, through the G transfer of six parcels of development land with an aggregate market value of RM37,828,242 (“The Proposed E Debt Settlement”). On 16 April 2004, the Proposed Debt Settlement was approved by the shareholders of the 86 Company at an extraordinary general meeting.
    • NOTES TO THE FINANCIAL STATEMENTS 46. NUMBER OF EMPLOYEES THE GROUP THE COMPANY 2004 2003 2004 2003 Number of employees at the balance sheet date 100 90 9 9 47. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES Fair value is defined as the amount at which the financial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation. 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 values due to the relatively short term maturity of these instruments. (ii) Quoted and unquoted investments The fair values of quoted investments are estimated based on quoted market prices for these investments. For unquoted investments, it is not practicable to determine the fair values because of the lack of quoted market prices and the assumptions used in valuation models to value these investments cannot be reasonably determined. (iii) 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) Hire purchase obligations The fair value of hire purchase obligations is determined by discounting the relevant cash flow using current interest rates for similar instruments at the balance sheet date. There is no disclosure of fair value for investments in subsidiaries and associates, and borrowings under the basis of Islamic banking principles as these are excluded from MASB 24 - Financial Instruments: Disclosure and Presentation. P A G E 87
    • group properties GROUP PROPERTIES as at 31 March 2004 Location Tenure/ Land/ Net Book Value (Age of (Built-Up) As At Date of building or Area 31. 03. 2004 Acquisition */ date of expiry) Sq. Ft. RM Description Revaluation 1. Lot 172, Section 85 Freehold 2,102/ 426,750 4 storey 29/03/2000 Town & District of Kuala Lumpur (29 years) (6,404) Shophouse Wilayah Persekutuan for rental (Nos. 422, 422A, 422B & 422C Jalan Pahang, Kuala Lumpur) 2. Lot 128, 129, 130, Freehold 5,513/ 3,739,156 6 I/2 storey 28/03/2000 Section 47 (24-26 years) (38,238) commercial Town of Kuala Lumpur building for Wilayah Persekutuan office (Wisma Siah Brothers headquarters No. 74, Jalan Pahang and for rental Kuala Lumpur) 3. Lot 31 & 32, Freehold 4,792/ 400,000 3 storey 29/03/2000 Village of Ulu Klang, (16 years) (5,340) commercial District of Gombak building for Selangor Darul Ehsan factory 4. No. B4-3, Freehold (1,672) 635,360 Condominium 27/03/2000 Sri Bukit Tunku (11 years) units for rental Kuala Lumpur 5. Unit B2, B3, C1, C3, C5, C6 Freehold (11,290) 2,792,737 Condominium 27/03/2000 Intan Kenny Condominiums (10 years) units for rental 29 Persiaran Bukit Tunku, Bukit Tunku, 50480 Kuala Lumpur 6. GM 2414, Lot No. 9332 Freehold 8,902 483,523 Vacant land 28/03/2000 Mukim Batu, Daerah and (8 years) for future Negeri Wilayah Persekutuan development 7. 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 8 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 9 P.T. 42029 Freehold 49,051 156,321 Vacant land 30/03/2000 Mukim Kuala Kuantan for future District of Kuantan, Pahang development 10 P.T. 42051 Freehold 465,672 1,365,622 Land currently 30/03/2000 Mukim Kuala Kuantan under District of Kuantan, Pahang development 11 P.T. 9076 & 9005 Leasehold 519,164 18,150,000 Vacant land 28/03/2000 Mukim Batu Daerah and expiring on for future P Negeri Wilayah Persekutuan 22/4/2086 development A G E 12 Lot No. 2398, Freehold 1,132,637 13,510,000 Vacant land 05/04/1999 * Mukim of Batang Kali for future 88 District of Hulu Selangor development
    • GROUP PROPERTIES Location Tenure/ Land/ Net Book Value (Age of (Built-Up) As At Date of building or Area 31. 03. 2004 Acquisition */ date of expiry) Sq. Ft. RM Description Revaluation 13 Lot 2 (TL017546495) Leasehold 232,163 9,942,632 Vacant land 30/04/2002* Signal Hill, Tanjung Lipat, expiring on for future District of Kota Kinabalu 31/12/2093 development State of Sabah 14 Lot 3 (TL017546486) Leasehold 195,139 29,500,000 Vacant land 30/04/2002* Signal Hill, Tanjung Lipat, expiring on for future District of Kota Kinabalu 31/12/2093 development State of Sabah of hotel 15 Lot 4 (TL017546511) Leasehold 96,263 4,123,169 Vacant land 30/04/2002* Signal Hill, Tanjung Lipat, expiring on for future District of Kota Kinabalu 31/12/2093 development State of Sabah 16 CL015162026 Leasehold 104,103 2,687,670 Vacant land 30/04/2002* Signal Hill/Likas Bay expiring on for future District of Kota Kinabalu 16/09/2911 development State of Sabah 17 CL015162035 Leasehold 85,809 2,223,079 Vacant land 30/04/2002* Signal Hill/Likas Bay expiring on for future District of Kota Kinabalu 16/09/2911 development State of Sabah 18 CL015162044 Leasehold 104,539 2,763,806 Vacant land 30/04/2002* Signal Hill/Likas Bay expiring on for future District of Kota Kinabalu 16/09/2911 development State of Sabah 19 3 units at Block K, Leasehold (3,591) 908,400 Condominium 02/12/1999* The Peak Condominium expiring on units for sale Signal Hill, Tanjung Lipat, Likas 31/12/2093 and for rental District of Kota Kinabalu State of Sabah 20 A24, Ground Floor, Desa Kudalari, Freehold (800) 300,000 Condominium 26/09/2002* Sec 63, Town of Kuala Lumpur (2 years) unit Wilayah Persekutuan 21 H.S.(D) No. 7727, Lot 438, Freehold 48,846 732,690 Vacant land 24/08/1998* Mukim of Serendah, for future Ulu Selangor, Selangor development 22 Parcel C1 Storey 24, C1 25, Freehold (2,824) 857,000 Condominium 12/12/2003* C2 27 & A1 7 Phase 2A (1 year) units Geran 56704, Lot 547, Mukim 17, Daerah Timur Laut Negeri Pulau Pinang P A G E 89
    • shareholders’ information SHAREHOLDERS’ INFORMATION as at 30 July 2004 Authorised Shares Capital : RM200,000,000 Issued and Fully Paid Up Capital : RM 82,435,000 Class of Shares - Ordinary shares of RM1 each : 82,435,000 Voting Right : 1 vote per ordinary share DISTRIBUTION SCHEDULE No. of % of % of Shareholding Category Shareholders Shareholders No. of Shares Issued Capital 1 - 99 131 3.31 5,303 0.01 100 - 1,000 1,241 31.42 1,058,356 1.28 1,001 - 10,000 2,189 55.42 7,697,346 9.34 10,001 - 100,000 347 8.78 9,892,244 12.00 100,001 - 4,121,749 37 0.94 16,405,400 19.90 4,121,750 - 82,435,000 5 0.13 47,376,351 57.47 Total 3,950 100.00 82,435,000 100.00 THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors) No. of % of Name of Shareholders Shares Held Issued Capital 1. LOM Holdings Sdn Bhd 14,317,500 17.37 2. Mayban Nominees (Tempatan) Sdn. Bhd. 12,468,828 15.13 - Mayban Investment Management Sdn. Bhd. for Malayan Banking Berhad (GRM-230592) 3. Amanah Raya Nominees (Tempatan) Sdn Bhd 8,542,000 10.36 - Skim Amanah Saham Bumiputera 4. Permodalan Nasional Berhad 6,867,000 8.33 5. Evergreen Legacy Sdn Bhd 5,181,023 6.28 6. DB (Malaysia) Nominee (Asing) Sdn Bhd 2,170,400 2.63 - Deutsche Bank AG Singapore PBD for Penfold Holdings Limited 7. Amsec Nominees (Tempatan) Sdn Bhd 1,774,000 2.15 - Pledged Securities Account for Sia Teong Heng 8. RHB Capital Nominees (Tempatan) Sdn Bhd 1,480,800 1.80 - Pledged Securities Account for Sia Kwee Mow @ Sia Hok Chai (STH 981069) 9. Nican Asia Limited 1,106,478 1.34 10. Siah Teong Weoi 877,711 1.06 11. Chay Kwai Gong @ Siah Kwee Swee 757,830 0.92 12. Mun Oi @ Mun Oi Lin 755,800 0.92 13. Siah Chong Hock 722,000 0.88 14. Southwark Limited 607,000 0.74 15. Amsec Nominees (Tempatan) Sdn Bhd 500,000 0.61 - Pledged Securities Account for Pua Kim Kian 16. Penfold Holdings Limited 400,000 0.49 17. Siah Chong Ong 372,400 0.45 18. Siah Teong Yin 328,723 0.40 P 19. Poo Choo @ Ong Poo Choi 324,100 0.39 A G 20. Sia Tzu Lung 314,592 0.38 E 90
    • SHAREHOLDERS’ INFORMATION THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors) (Cont’d) No. of % of Name of Shareholders Shares Held Issued Capital 21. United Overseas Nominees (Tempatan) Sdn Bhd 307,723 0.37 - Pledged Securities Account for Siah Teong Chein (KL) 22. Affin-ACF Nominees (Tempatan) Sdn Bhd 290,000 0.35 - Pledged Securities Account for Siow Sing Heng 23. Chan Wan Moi 275,000 0.33 24. Siah Chong Guan 257,400 0.31 25. Chew Siew Ying 244,000 0.30 26. Wong Chee Choon 213,200 0.26 27. Lem Kim Seong 200,000 0.24 28. Sia Poh Choo @ Sia Swee Choo 179,700 0.22 29. Goh Chye Keat 175,000 0.21 30. Sia Teong Heng 171,891 0.21 TOTAL 62,182,099 75.43 DIRECTORS’ SHAREHOLDINGS (As per Register of Directors’ Shareholdings) Direct Interest Indirect Interest Name of Directors Shareholdings % Shareholdings % Sia Kwee Mow @ Sia Hok Chai 1,480,800 (a) 1.80 19,498,523 (b) 23.65 Sia Teong Heng 2,017,992 (c) 2.45 19,498,523 (b) 23.65 Mun Chong Shing @ Mun Chong Tian 21,782 0.03 - - Dato’ Lim Phaik Gan - - - - Dato’ Dr. Norraesah Bt. Haji Mohamad - - - - Dato’ Zainol Abidin Bin Haji A. Hamid - - - - Ahmad Fizal Bin Othman - - - - Notes: (a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares). (c) 1,774,000 shares are held in bare trust by Amsec Nominees (Tempatan) Sdn. Bhd. P A G E 91
    • SHAREHOLDERS’ INFORMATION SUBSTANTIAL SHAREHOLDERS (excluding bare trustees) (As per Register of Substantial Shareholders) No. of shares held or % of beneficially interested in Issued Capital Name of Substantial Shareholders Direct Indirect Direct Indirect Pemegang Amanah Raya Malaysia 8,542,000 - 10.36 - - Skim Amanah Saham Bumiputera Sia Kwee Mow @ Sia Hok Chai 1,480,800 (a) 19,498,523 (b) 1.80 23.65 Sia Teong Heng 2,017,992 (c) 19,498,523 (b) 2.45 23.65 LOM Holdings Sdn. Bhd. 14,317,500 5,181,023 (d) 17.37 6.28 Evergreen Legacy Sdn. Bhd. 5,181,023 - 6.28 - Malayan Banking Berhad 12,468,828 - 15.13 - Permodalan Nasional Berhad 6,867,000 - 8.33 - Yayasan Pelaburan Bumiputra - 6,867,000 (e) - 8.33 Notes: (a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares) (c) 1,774,000 shares are held in bare trust by Amsec Nominees (Tempatan) Sdn. Bhd. (d) Deemed interest by virtue of its shareholding in Evergreen Legacy Sdn. Bhd. (e) Deemed interest by virtue of its shareholding in Permodalan Nasional Berhad P A G E 92
    • proxy form SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad)(199310-P) (Incorporated in Malaysia) I/We, ______________________________________________________________________________________ of ________________________________________________________________________________________ being a member/ members of the abovenamed Company do hereby appoint ______________________________ ___________________________________________ of ___________________________________________ ______________________________________ or failing whom, ______________________________________ of ________________________________________________________________________________________ as my/our proxy to vote for me/us and on my/our behalf at the Fourteenth Annual General Meeting of the Company to be held at the Penthouse, 5th Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpur on Thursday, 23 September 2004 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 : Mr Sia Teong Heng [ ] [ ] 7. Re-election of Director : YBhg. Dato’ Zainol Abidin Bin Haji A. Hamid [ ] [ ] 8. Re-election of Director : En. Ahmad Fizal Bin Othman [ ] [ ] 9. Re-appointment of Auditors [ ] [ ] 10. Authority to Directors to allot and issue shares [ ] [ ] (Please indicate with an ‘X’ in the appropriate box against each resolution how you wish your proxy to vote. If no instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion.) Dated this _____________________________ day of _____________________________, 2004 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.
    • FOLD THIS FLAP FOR SEALING THEN FOLD HERE Affix Stamp The Company Secretaries SBC CORPORATION BERHAD (199310-P) (Formerly known as Siah Brothers Corporation Berhad) Wisma Siah Brothers, 74A, Jalan Pahang, 53000 Kuala Lumpur. FIRST FOLD HERE