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SBC Corporation Berhad: Annual Report 2008 5400kb

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  • 1. SBC CORPORATION BERHAD 199310 P WISMA SIAH BROTHERS, 74 JALAN PAHANG, 53000 KUALA LUMPUR, MALAYSIA t +60 3-4041 8118 f +60 3-4043 5281 e enquiries@sbcgroup.com.my w www.sbcgroup.com.my building partnerships since 1954 Annual Report 2008 SBC CORPORATION BERHAD I Annual Report 2008
  • 2. CORE PURPOSE • To build upon our construction heritage to design and deliver exciting, unique and valuable solutions for buildings and communities. CORE VALUES • Equipping our people to anticipate and respond to the needs of our customers and stakeholders. • Adherence to industry’s highest ethics. • Use of designs and processes that promote standards.
  • 3. Contents 2 • Corporate Information 4 • Directors’ Profile 12 • Corporate Structure 13 • Group Financial Highlights 14 • Executive Chairman’s Statement 18 • Penyata Pengerusi Eksekutif 22 • Statement of Corporate Governance 31 • Statement on Internal Control 33 • Audit Committee Report 38 • Statement of Directors Responsibilities 39 • Financial Statements 101 • Group Properties 104 • Shareholders Information 107 • Notice of Annual General Meeting 108 • Notice of Dividend Payment 108 • Statement Accompanying Notice of Annual General Meeting • Proxy Form
  • 4. 2 SBC CORPORATION BERHAD Corporate Information BOARD OF DIRECTORS REMUNERATION COMMITTEE SIA KWEE MOW @ SIA HOK CHAI DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID JMN, FFB, FCIOB, FAIB LLB (Hons) Executive Chairman Chairman & Non-Executive Director SIA TEONG HENG DATO’ LIM PHAIK GAN B.Sc. (Eng), M.Sc. DPMP, DMPN, M.A.(Law), FCI, ARB Managing Director Independent Non-Executive Director MUN CHONG SHING @ MUN CHONG TIAN DATO’ DR. NORRAESAH BT. HAJI MOHAMAD Non-Executive Director DSPN, DSDK, PhD., B.Sc.(Econ) Independent Non-Executive Director DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID LLB (Hons) SIA TEONG HENG Non-Executive Director B.Sc. (Eng), M.Sc. Managing Director DATO’ LIM PHAIK GAN DPMP, DMPN, M.A.(Law), FCI, ARB Independent Non-Executive Director NOMINATION COMMITTEE DATO’ DR. NORRAESAH BT. HAJI MOHAMAD DATO’ LIM PHAIK GAN DSPN, DSDK, PhD., B.Sc.(Econ) DPMP, DMPN, M.A.(Law), FCI, ARB Independent Non-Executive Director Chairperson & Independent Non-Executive Director AHMAD FIZAL BIN OTHMAN DATO’ DR. NORRAESAH BT. HAJI MOHAMAD B.Acc & Fin. (Hons) DSPN, DSDK, PhD., B.Sc.(Econ) Independent Non-Executive Director Independent Non-Executive Director AHMAD FIZAL BIN OTHMAN AUDIT COMMITTEE B.Acc & Fin. (Hons) Independent Non-Executive Director DATO’ DR. NORRAESAH BT. HAJI MOHAMAD DSPN, DSDK, PhD., B.Sc.(Econ) MUN CHONG SHING @ MUN CHONG TIAN Chairperson & Independent Non-Executive Director Non-Executive Director DATO’ LIM PHAIK GAN DPMP, DMPN, M.A.(Law), FCI, ARB Independent Non-Executive Director AHMAD FIZAL BIN OTHMAN B.Acc & Fin. (Hons) Independent Non-Executive Director
  • 5. ANNUAL REPORT 2008 3 Corporate Information SOLICITORS CHEANG & ARIFF 39 Court 39, Jalan Yap Kwan Seng 50450 Kuala Lumpur FOONG & PARTNERS Suite 21-08, Level 21 Plaza 138, 138, Jalan Ampang 50450 Kuala Lumpur LEE, PERARA & TAN 55, Jalan Thambapillai Off Jalan Tun Sambanthan Brickfields, 50470 Kuala Lumpur LIM & YEOH 145-M Jalan Maharajalela 50150 Kuala Lumpur PRINCIPAL BANKERS REGISTERED OFFICE AUDITORS ALLIANCE BANK MALAYSIA BERHAD WISMA SIAH BROTHERS 74A Jalan Pahang HORWATH AL-RAJHI BANKING & INVESTMENT CORPORATION 53000 Kuala Lumpur Chartered Accountants (MALAYSIA) BERHAD Tel: 03-4041 8118 Fax: 03-4043 5281 Level 16 Tower C, Megan Avenue II 12 Jalan Yap Kwan Seng BANGKOK BANK BERHAD 50450 Kuala Lumpur REGISTRARS BANK MUAMALAT MALAYSIA BERHAD TACS CORPORATE SERVICES SDN. BHD. COMPANY SECRETARIES CIMB BANK BERHAD Unit No. 203, 2nd Floor, Block C Damansara Intan CHONG FOOK SIN MALAYAN BANKING BERHAD No. 1, Jalan SS20/27 ATII, MCCS, AFA 47400 Petaling Jaya MIDF AMANAH INVESTMENT BANK BERHAD Tel: 03-7118 2688 Fax:03-7118 2693 KAN CHEE JING ACIS OCBC BANK (MALAYSIA) BERHAD STOCK EXCHANGE LISTING UNITED OVERSEAS BANK (MALAYSIA) BERHAD MAIN BOARD OF BURSA MALAYSIA SECURITIES BERHAD
  • 6. 4 SBC CORPORATION BERHAD Directors’ Profiles AS AT 31 JULY 2008 SIA KWEE MOW Sia Kwee Mow @ Sia Hok Chai, a Malaysian, aged 75, is the Executive Chairman of SBC @ SIA HOK CHAI Corporation Berhad (“SBC”). He has been a Director of SBC since its incorporation on Malaysian, Aged 75 14th June, 1990. He has over 54 years of experience in building and civil engineering Executive Chairman contracting and not less than 36 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.
  • 7. ANNUAL REPORT 2008 5 Directors’ Profiles AS AT 31 JULY 2008 His holdings in the securities of SBC are as follows – Direct Interest Indirect Interest Ordinary shares 1,480,800(a) 19,498,523(b) (a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares). By virtue of his interest in SBC, he is deemed to have interest 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. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year.
  • 8. 6 SBC CORPORATION BERHAD Directors’ Profiles AS AT 31 JULY 2008 SIA TEONG HENG Sia Teong Heng, a Malaysian, aged 45, is the Managing Director of SBC Corporation Malaysian, Aged 45 Berhad (“SBC”). He was appointed as a Director of SBC on 5th February, 1991. He is a Managing Director member of the Remuneration Committee of SBC. He graduated with a Bachelor of Science degree in Civil Engineering from Loughborough University, United Kingdom (“UK”) and in 1986 earned a post graduate Masters degree in Management Science from Imperial College, University of London, UK. Between 1986 and 1991, prior to his return to Malaysia, he worked in the investment banking industry based in London and 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 4,677,992(a) 19,498,523(b) (a) 4,434,000 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 interest in SBC, he is deemed to have interest 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. He has not been convicted of any offence within the past 10 years. He attended three of the four Board Meetings held during the last financial year.
  • 9. ANNUAL REPORT 2008 7 Directors’ Profiles AS AT 31 JULY 2008 Mun Chong Shing @ Mun Chong Tian, a Malaysian, aged 71, was appointed as an MUN CHONG SHING Executive Director of SBC Corporation Berhad (“SBC”) on 1st April, 1996 when he was @ MUN CHONG TIAN employed as General Manager of Paling Industries Sdn. Bhd. (“Paling”) from 1987 and Malaysian, Aged 71 appointed as a Director in 1991 and remained in both positions until his retirement on Non-Executive Director 31st December, 2001. On 31st December, 2001, he was redesignated as a Non-Executive Director of SBC. He is a member of the Nomination Committee of SBC. He has received training in Sales Management conducted by the National Productive Centre and the Malaysian Institute of Management and a General Management Programme at the National Productivity Board, Singapore. Prior to his involvement with Paling, he was employed as General Manager in Hume Industries (M) Bhd. where he has had extensive exposure to industrial engineering and management. His holdings in the securities of SBC are as follows - Direct Interest Indirect Interest Ordinary shares 21,782 - He does not hold any securities, direct or indirect, in any of SBC’s subsidiaries. He is a brother-in-law to Sia Kwee Mow @ Sia Hok Chai and an uncle to Sia Teong Heng, both are Directors and major shareholders of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year.
  • 10. 8 SBC CORPORATION BERHAD Directors’ Profiles AS AT 31 JULY 2008 DATO’ LIM PHAIK GAN Dato’ Lim Phaik Gan, a Malaysian, aged 88, was appointed as an Independent Non- Malaysian, Aged 88 Executive Director of SBC Corporation Berhad (“SBC”) on 5th February, 1991. She is the Independent Non-Executive Director Senior Independent Non-Executive Director, the Chairperson of the Nomination Committee and a member of the Audit Committee and the Remuneration Committee of SBC. She is an advocate and solicitor and was called to the Bar of England and the Bar of Malaysia. She obtained a Master of Arts degree in Law from the University of Cambridge, United Kingdom and was in active practice at the Bar of Malaysia from 1954 to 1971 and from 1980 until today. Since 1955, she has had a distinguished career in both the private and public sectors. In 1970, she was a member of the National Economic Consultative Council established when Parliament was suspended as a result of riots in 1969. From 1971 to 1980, she served as ambassador and Deputy Permanent Representative of Malaysia to the United Nations, and successively as the Malaysian Ambassador to Yugoslavia, Austria, Belgium and the European Economic Community. She was Malaysia’s Permanent Representative to the United Nations Industrial and Development Organisation and International Atomic Energy Agency in Vienna, and served as chairman in various committees. After her retirement from the Malaysian Foreign Service in 1980, she was appointed by the Government as Director of the Kuala Lumpur Regional Centre for Arbitration, an international organisation involved in the conduct and administration of international commercial arbitration for the settlement of disputes arising out of international commercial contracts and joint ventures, in which capacity she served from 1982 to 2000. She does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. She has no family relationship with any Director and/or major shareholder of SBC. She does not have any conflict of interest with SBC. She has not been convicted of any offence within the past 10 years. She attended all the four Board Meetings held during the last financial year.
  • 11. ANNUAL REPORT 2008 9 Directors’ Profiles AS AT 31 JULY 2008 Dato’ Dr. Norraesah bt. Haji Mohamad, a Malaysian, aged 60, was appointed as an DATO’ DR. NORRAESAH BT. Independent Non-Executive Director of SBC Corporation Berhad (“SBC”) on 8th July, HAJI MOHAMAD 1991. She is the Chairperson of the Audit Committee and a member of the Nomination Malaysian, Aged 60 Committee and the Remuneration Committee of SBC. She holds a Doctorate Degree in Independent Non-Executive Director Economics Science (International Economics and Finance) which she obtained in 1986 from University of Paris 1, Pantheon Sorbonne, France. She has over 36 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, Protasco Berhad, Ya Horng Electronic (M) Berhad, Adventa Berhad, My E.G. Services Berhad and several private limited companies. She was awarded the distinction of Darjah Setia Pangkuan Negeri on 13th July, 2002 by Tuan Yang Terutama Yang di-Pertua Negeri Pulau Pinang on His Excellency’s 64th Birthday and the Dato’ Setia DiRaja Kedah on 21st January, 2007 by Kebawah Duli Yang Maha Mulia Tuanku Sultan Darul Aman on His Excellency’s 79th 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 four Board Meetings held during the last financial year.
  • 12. 10 SBC CORPORATION BERHAD Directors’ Profiles AS AT 31 JULY 2008 DATO’ ZAINOL ABIDIN BIN Dato’ Zainol Abidin bin Haji A. Hamid, a Malaysian, aged 66, was appointed as a HAJI A. HAMID Non-Executive Director of SBC Corporation Berhad (“SBC”) on 10th October, 2003, Malaysian, Aged 66 representing the interest of Permodalan Nasional Berhad. He is the Chairman of the Non-Executive Director Remuneration Committee of SBC. He graduated with LLB (Hons) from the University of London in 1995. He joined the Kedah State Government in 1966 as a civil servant. From 1973 to 1981, he was the District Officer for Sik, then Padang Terap and finally Kubang Pasu. He was General Manager and Director of Kedah Cement Sdn Bhd from 1981 to 1996 and Managing Director of Kedah Cement Marketing Sdn Bhd from 1990 to 1996. He sits on the Board of Paragon Union Berhad. He does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. He has no family relationship with any Director and/or major shareholder of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year.
  • 13. ANNUAL REPORT 2008 11 Directors’ Profiles AS AT 31 JULY 2008 Ahmad Fizal bin Othman, a Malaysian, aged 45, was appointed as an Independent Non- AHMAD FIZAL BIN OTHMAN Executive Director of SBC Corporation Berhad (“SBC”) on 24th February, 2004. He is a Malaysian, Aged 45 member of the Audit Committee and the Nomination Committee of SBC. He graduated with Independent Non-Executive Director a Bachelor in Accounting and Finance (Hons) from the Middlesex University, London. He is a well-rounded and experienced businessman and involved in a multitude of industries. Currently, he immerses himself in retail, multimedia and technology. He does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. He has no family relationship with any Director and/or major shareholder of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year.
  • 14. 12 SBC CORPORATION BERHAD Corporate Structure AS AT 11 AUGUST 2008 Syarikat Siah Brothers 33.3% Sri Berjaya Development Sdn Bhd ★ 100% Trading Sdn Bhd ● 28.5% Sri Rawang Properties Sdn Bhd ★ Syarikat Siah Brothers 100% Construction Sdn Bhd ● Mixwell (Malaysia) 100% Sdn Bhd ★ 50% Ligamas Sdn Bhd ▲ South-East Best 100% Sdn Bhd ★ 100% Gracemart Resources Sdn Bhd ★ Siah Brothers Land 100% Seri Ampangan Realty Sdn Bhd ★ 100% Sdn Bhd ◆ 100% Sinaran Naga Sdn Bhd ★ 100% SBC Towers Sdn Bhd ★ Siah Brothers Properties 100% Sdn Bhd ◆ 100% Aureate Construction Sdn Bhd ★ 100% SBC Leisure Sdn Bhd ★ 100% Masahmura Sdn Bhd ▲ Siah Brothers Industries 100% Sdn Bhd ◆ 50% Varich Industries Sdn Bhd ▲ 100% Masahmura Sales & Service Sdn Bhd ▲ 51% Kiara Amalan Sdn Bhd ★ 50% Tri-Development Co., Ltd ★ 100% Liga Canggih Sdn Bhd ▲ 40% Paling Industries Sdn Bhd ▲ 49% Pasti Bumi Sdn Bhd ▲ 30% Built SBC Co., Ltd ★ ▲ Strategic Investment ★ Residential Property Development 30% Kanyara Co., Ltd ★ ◆ Investment Holding ● Build / Construction
  • 15. ANNUAL REPORT 2008 13 Group Financial Highlights FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 2008 2007 2006 2005 2004 (Restated) RM’000 RM’000 RM’000 RM’000 RM’000 RESULTS Turnover 107,055 77,103 69,927 66,867 86,317 Profit before taxation 4,487 (2,207) 1,369 3,321 6,996 Profit after taxation but before minority interest 3,504 (3,009) 1,047 2,250 2,073 Profit attributable to shareholders 3,514 (3,009) 1,047 2,250 2,073 ASSET EMPLOYED Property, plant and equipment 7,405 8,550 8,243 35,452 36,246 Investments and other assets 190,639 203,129 205,861 192,257 153,703 Net current assets 24,380 8,854 50,881 37,243 73,632 Goodwill and deferred expenditure 27,499 27,499 27,318 27,318 27,318 249,923 248,032 292,303 292,270 290,899 FINANCED BY Share capital 82,435 82,435 82,435 82,435 82,435 Reserves 133,603 130,691 134,294 137,572 135,940 Minority Interests 39 - - - - ABBA bonds - - 43,978 41,752 39,712 Deferred liabilities 33,846 34,906 31,596 30,511 32,812 249,923 248,032 292,303 292,270 290,899 SELECTED RATIOS Net earnings per share (sen) 4.3 (3.7) 1.3 2.7 2.4 Net assets per share (sen) 262 259 263 267 265 Gross dividend (%) 1.5 1.0 1.0 1.0 1.0
  • 16. 14 SBC CORPORATION BERHAD Executive Chairman’s Statement On behalf of the Board of Directors, I am pleased to present the Annual Report and the Audited Financial Statements of the Group and the Company for the financial year ended 31 March 2008. FINANCIAL REVIEW The Group recorded a higher revenue of RM 107.05 million compared to the preceding year of RM 77.10 million; an annual increase of 38.8%, reflecting contributions from larger projects, primarily PJX, Petaling Jaya’s tallest commercial building and Eua Arthron, the industrialized housing complex in Bangkok. OPERATIONS REVIEW During the year, Group successfully launched three projects; two within its ongoing flagship locations of Sabah and Kuantan with the third being a 34 storey commercial building PJX, Petaling Jaya
  • 17. ANNUAL REPORT 2008 15 Executive Chairman’s Statement 51 Blocks - 2,287 Units Walk-up Apartment (Eua Arthron Program, Bangkok) in Petaling Jaya. The Group also delivered two phases (4th and 6th) in Kuantan, Suria Setapak’s mixed development and the industrial housing complex in Bangkok. ECONOMIC AND BUSINESS OUTLOOK With higher oil prices and comprehensive drawback of subsidies, real estate dynamics are expected to operate within a higher cost regime. Such a structural shift in cost base will present both opportunities and threats for industry players, underlying the urgency and indeed reaffirming SBC’s quest to continue innovating well designed and value enhancing building solutions. DIVIDEND The Board is pleased to recommend a first and final dividend of 1.5% per ordinary share less 25% tax for the financial year ended 31 March 2008 subject to the shareholders’ approval at the forthcoming Annual General Meeting of the Company.
  • 18. 16 SBC CORPORATION BERHAD Executive Chairman’s Statement The Peak Vista, Kota Kinabalu APPRECIATION AND ACKNOWLEDGEMENT On behalf of the Board of Directors, I would like to thank our valued shareholders, joint venture partners, business associates, bankers and government authorities for their confidence, understanding and continued support with the Board and the management of the SBC Group. I would also like to add our appreciation to our customers and supporters of SBC’s products and services, all of whom have place much trust with us, as custodian to their home and property investments.
  • 19. ANNUAL REPORT 2008 17 Executive Chairman’s Statement Metpark, Kuala Lumpur Lastly, I would like to thank the SBC management team and employees of the Group. Your effective execution of corporate strategies through sheer hard work, commitment and team work in a demanding and ever-changing business environment have certainly contributed much to the success of the Group. Thank you. SIA KWEE MOW @ SIA HOK CHAI JMN,FFB,FCIOB,FAIB Executive Chairman
  • 20. 18 SBC CORPORATION BERHAD Penyata Pengerusi Eksekutif Bagi pihak Lembaga ULASAN KEWANGAN Pengarah, saya Kumpulan telah merekodkan perolehan yang lebih tinggi iaitu sebanyak RM107.05 juta dengan sukacitanya berbanding RM77.10 juta pada tahun sebelumnya; peningkatan tahunan sebanyak 38.8%, membayangkan sumbangan daripada kerja-kerja projek yang lebih besar, membentangkan Laporan terutamanya PJX, bangunan komersial tertinggi di Petaling Jaya dan Eua Arthron, Tahunan dan Penyata perumahan perindustrian di Bangkok. Kewangan yang telah diaudit untuk Kumpulan ULASAN OPERASI dan Syarikat bagi tahun Sepanjang tahun ini, Kumpulan berjaya melancarkan tiga projek; dua projek merupakan kewangan berakhir 31 sambungan pelancaran di lokasi Sabah dan Kuantan. Sementara projek yang ketiga Mac 2008. adalah sebuah bangunan komersial 34 tingkat di Petaling Jaya. Kumpulan juga telah menyiapserahkan dua fasa (4 dan 6) di Kuantan, pembangunan komersial dan perumahan Suria Setapak serta perumahan perindustrian di Bangkok. The Peak Suites, Kota Kinabalu
  • 21. ANNUAL REPORT 2008 19 Penyata Pengerusi Eksekutif Mastiara Cube, Kuala Lumpur Suria Setapak, Gombak TINJAUAN EKONOMI DAN PERNIAGAAN Dengan peningkatan harga minyak dan pengurangan subsidi oleh kerajaan, sektor harta tanah dijangka akan beroperasi di dalam persekitaran kos tinggi yang mencabar. Perubahan struktur asas kos sedemikian akan menawarkan peluang kepada pelabur- pelabur harta tanah. Dalam keadaan yang genting ini, SBC pasti terus berusaha inovasi ke atas reka bentuk yang terbaik dan penyelesaian yang bermutu tinggi. DIVIDEN Lembaga Pengarah dengan sukacitanya mencadangkan pembayaran dividen pertama dan akhir sebanyak 1.5% sesaham tolak cukai 25% bagi tahun kewangan berakhir 31 Mac 2008. Pembayaran dividen ini adalah tertakluk kepada persetujuan para pemegang saham pada Mesyuarat Agung Tahunan syarikat yang akan datang.
  • 22. 20 SBC CORPORATION BERHAD Penyata Pengerusi Eksekutif Seri Mahkota Aman, Kuantan PENGHARGAAN DAN PENGAKUAN Bagi pihak Lembaga Pengarah, saya ingin mengucapkan ribuan terima kasih kepada para pemegang saham, rakan-rakan bersekutu dan niaga, ahli-ahli bank dan pihak kerajaan di atas keyakinan, persefahaman dan sokongan berterusan mereka terhadap Lembaga Pengarah dan pihak pengurusan Kumpulan SBC. Saya juga ingin mengucapkan terima kasih kepada para pelanggan dan penyokong produk dan perkhidmatan SBC, semua yang telah meletakkan sepenuh kepercayaan kepada kumpulan dalam bidang pelaburan harta dan kediaman.
  • 23. ANNUAL REPORT 2008 21 Penyata Pengerusi Eksekutif Bandar Ligamas, Batang Kali Akhirnya, saya ingin mengucapkan terima kasih kepada pengurusan dan para pekerja SBC. Pelaksanaan strategi korporat yang berkesan melalui usaha bersungguh-sungguh, komitmen dan kerja sama, terutama di dalam persekitaran perniagaan yang mencabar dan sentiasa berubah, tentunya banyak menyumbangkan kepada kejayaan Kumpulan. Terima kasih. Sia Kwee Mow @ Sia Hok Chai JMN,FFB,FCIOB,FAIB Pengerusi Eksekutif
  • 24. 22 SBC CORPORATION BERHAD Statement of Corporate Governance The Board of Directors of SBC Corporation Berhad remains firmly committed towards ensuring the highest standard of corporate governance is maintained throughout the Company and its subsidiaries (“the Group”). Hence, the Board is fully dedicated to continuously evaluating the Group’s corporate governance practices and procedures with a view to ensure the principles and best practices in corporate governance as promulgated by the Malaysian Code on Corporate Governance (“the Code”) is applied and adhered to in the best interests of the stakeholders. This disclosure statement sets out the manner in which the Group has applied and complied with the Principles of the Code and the extent of compliance with Best Practices as set out in Part 1 and 2 of the Code. BOARD OF DIRECTORS Composition and Balance The Board as at the date of this statement has 7 members, comprising 3 Independent Non-Executive Directors, 2 Non-Executive Directors and 2 Executive Directors which satisfies Bursa Malaysia Securities Berhad (“Bursa Securities”) Listing Requirements of having at least 2 Directors or 1/3 of the Board whichever is higher, who are Independent Directors. The Directors have a wide range of experience and skills and are from diverse backgrounds relevant to managing and directing the Group’s operations. The Executive Directors are responsible for implementing policies of the Board, overseeing the Group’s operations and developing the Group’s business strategies. The role of the Independent Non-Executive Directors is to provide objective and independent judgement to the decision making of the Board and as such, provide an effective check and balance to the Board’s decision making process. The Board is satisfied that the current Board composition fairly reflects the investment of minority shareholders in the Company and represents the needed mix of skills and experience required to discharge the Board’s duties and responsibilities. Furthermore, no individual Director or group of Directors can dominate the Board’s decision making process. The profiles of the members of the Board are set out in this Annual Report under the section named 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 orderly conduct and working of the Board whilst the Managing Director is responsible for the day-to-day running of the business and implementation of Board policies and decisions adopted by the Board. Dato’ Lim Phaik Gan is the Senior Independent Non-Executive Director to whom concerns may be conveyed.
  • 25. ANNUAL REPORT 2008 23 Statement of Corporate Governance BOARD OF DIRECTORS (cont’d) Board Meetings The Board meets on a scheduled basis once every quarter with additional meetings held as and when urgent issues and important decisions are required to be taken between the scheduled meetings. During the financial year ended 31 March 2008, the Board met 4 times where it deliberated on and considered matters relating to the Group’s financial performance, significant investments, corporate development, strategic issues and business plan. Details of each Director’s attendance of Board meetings are set out as follows: No. of meetings held during the financial year ended No. of meetings Name of Director 31 March 2008 attended Sia Kwee Mow @ Sia Hok Chai (Executive Chairman) 4 4 Sia Teong Heng (Managing Director) 4 3 Mun Chong Shing @ Mun Chong Tian (Non-Executive Director) 4 4 Dato’ Zainol Abidin bin Haji A. Hamid (Non-Executive Director) 4 4 Dato’ Lim Phaik Gan (Independent Non-Executive Director) 4 4 Dato’ Dr. Norraesah bt. Haji Mohamad (Independent Non-Executive Director) 4 4 Ahmad Fizal bin Othman (Independent Non-Executive Director) 4 4 The Board members have unrestricted and timely access to all information necessary for the discharge of their responsibilities. All Directors are provided with all relevant information and reports on financial, operational, corporate, regulatory, business development by way of Board papers or upon specific request for informed decision making and effective discharge of their duties. These documents are comprehensive and include qualitative and quantitative information to enable the Board members to make informed decisions. Notice of Board Meetings and board papers are provided to Directors in advance so that meaningful deliberation and sound decisions can be made at Board meetings. All proceedings of the Board meetings are minuted by the Company Secretary. There is a formal schedule of matters reserved specifically for Board’s decisions. These include approval of key policies, significant acquisitions and disposals of assets, significant investments and approval of budgets and corporate plans. To assist in the discharge of their responsibilities and duties, all Directors have access to the advice and services of the Company Secretary. If required, the Directors may engage independent professionals at the Group’s expense, in the furtherance of their duties.
  • 26. 24 SBC CORPORATION BERHAD Statement of Corporate Governance BOARD OF DIRECTORS (cont’d) Re-election and Re-appointment of Directors In accordance with the Company’s Articles of Association, one third of the Directors shall retire by rotation from office and be eligible for re-election at the annual general meeting and all Directors appointed by the Board are subject to re-election by shareholders at the first opportunity after their appointment. Furthermore, each Director shall retire from office at least once in every three years. Directors who are of or over the age of seventy years shall also retire from office and be eligible for re-appointment at the annual general meeting pursuant to Section 129 (6) of the Companies Act, 1965. Directors’ Training All members of the Board have attended the Mandatory Accreditation Programme. Pursuant to Paragraph 15.09 of the Bursa Securities Listing Requirements, the Board is responsible to identify the training needs of its Directors which will aid them in the discharge of their duties on a continuous basis. The Board noted that the Nomination Committee is satisfied that the Board comprises qualified people with professional background, expertise in various fields and practical experience. Nevertheless, the Board encourages its Directors to go for training on their own initiative from time to time in order to keep them abreast of the latest developments in the market-place as well as the current changes in the laws, regulations and accounting standards. During the financial year, all the members of the Board attended a half-day training course entitled “Boardroom Briefing for PLC directors / CEO’s”. For new Directors, a familiarisation program will be conducted for them. This includes a presentation of the Group’s operations by senior management and visits to the existing project sites. Board Committees The Board has delegated certain of its responsibilities to the three Committees, namely the Audit, the Nomination and the Remuneration Committees with clearly defined terms of reference in assisting the Board to discharge its duties and responsibilities effectively. AUDIT COMMITTEE The report of the Audit Committee is set out on pages 33 to 37 of this annual report.
  • 27. ANNUAL REPORT 2008 25 Statement of Corporate Governance NOMINATION COMMITTEE (“NC”) The NC has held one meeting during the financial year ended 31 March 2008. The attendance of the members of the NC at the meeting is as follows:- No. of meetings held during the financial year ended No. of meetings Name of members 31 March 2008 attended Dato’ Lim Phaik Gan – Chairperson (Independent Non-Executive Director) 1 1 Dato’ Dr. Norraesah bt Haji Mohamad (Independent Non-Executive Director) 1 1 Ahmad Fizal bin Othman (Independent Non-Executive Director) 1 1 Mun Chong Shing @ Mun Chong Tian (Non-Executive Director) 1 1 The terms of reference of the NC are as follows: (a) Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist exclusively of non- executive Directors, with a minimum of 3, a majority of whom are independent. The members of the Committee shall elect the Chairman from among their number who shall be an independent director. In order to form a quorum in respect of a meeting of the Committee, the members present must be wholly or a majority of whom must be independent directors. (b) Frequency of meetings Meetings shall be held not less than once a year. The Company Secretary shall be the Secretary of the Committee. (c) Authority The Committee is to recommend new nominees for the Board and the board committees and to assess Directors on an on-going basis. The actual decision as to who shall be nominated should be the responsibility of the full Board after considering the recommendations of the Committee.
  • 28. 26 SBC CORPORATION BERHAD Statement of Corporate Governance NOMINATION COMMITTEE (“NC”) (cont’d) (d) Duties The duties of the Committee shall be: (i) to recommend to the Board, candidates for all directorships and in doing so, preference shall be given to shareholders or existing Board members and candidates proposed by the Chief Executive Officer and, within the bounds of practicability, by any other senior executive or any director or shareholder may also be considered. (ii) to recommend to the Board, directors to fill the seats on board committees. (iii) to review annually, on behalf of the Board, the required mix of skills, experience and other qualities, including core competencies, which non-executive directors should bring to the Board. (iv) to carry out annually, on behalf of the Board, the assessment of the effectiveness of the Board as a whole, the board committees and the contribution of each director. (e) Reporting procedures The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. At the meeting of the NC during the financial year ended 31 March 2008, the following matters were considered and resolved: (a) re-appointment and re-election of Directors at the Eighteenth Annual General Meeting; (b) mix of skills, experience and qualities of all Directors; and (c) the effectiveness of the Board and the contribution from each Board member. REMUNERATION COMMITTEE (“RC”) The members of the RC at the date of this report and their attendance at the meeting convened during the financial year ended 31 March 2008 are as follows: No. of meetings held during the financial year ended No. of meetings Name of members 31 March 2008 attended Dato’ Zainol Abidin bin Haji A. Hamid - Chairman (Non-Executive Director) 1 1 Dato’ Lim Phaik Gan (Independent Non-Executive Director) 1 1 Dato’ Dr. Norraesah bt Haji Mohamad (Independent Non-Executive Director) 1 1 Sia Teong Heng (Managing Director) 1 1
  • 29. ANNUAL REPORT 2008 27 Statement of Corporate Governance 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 2008, the RC met once to consider the remuneration of the Executive Chairman and Managing Director for 2008.
  • 30. 28 SBC CORPORATION BERHAD Statement of Corporate Governance DIRECTORS’ REMUNERATION The details of the remuneration of each Director during the financial year ended 31 March 2008 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 555,510 191,520 - 16,925 - 763,955 Sia Teong Heng 487,725 166,320 - - - 654,045 Non-Executive Mun Chong Shing @ Mun Chong Tian - - 24,000 - 1,500 25,500 Dato’ Zainol Abidin bin Haji A. Hamid - - 25,000 - 1,500 26,500 Dato’ Lim Phaik Gan - - 25,000 - 3,000 28,000 Dato’ Dr. Norraesah bt. Haji Mohamad - - 25,000 - 3,000 28,000 Ahmad Fizal bin Othman - - 24,000 - 2,700 26,700 Total 1,043,235 357,840 123,000 16,925 11,700 1,552,700 (b) Directors’ remuneration by bands Executive Non-Executive Total RM1 to RM50,000 - 5 5 RM50,001 to RM100,000 - - - RM100,001 to RM150,000 - - - RM150,001 to RM200,000 - - - RM200,001 to RM250,000 - - - RM250,001 to RM300,000 - - - RM300,001 to RM350,000 - - - RM350,001 to RM400,000 - - - RM400,001 to RM450,000 - - - RM450,001 to RM500,000 - - - RM500,001 to RM550,000 - - - RM550,001 to RM600,000 - - - RM600,001 to RM650,000 - - - RM650,001 to RM700,000 1 - 1 RM700,001 to RM750,000 - - - RM750,001 to RM800,000 1 - 1 Total 2 5 7
  • 31. ANNUAL REPORT 2008 29 Statement of Corporate Governance ACCOUNTABILITY AND AUDIT Financial Reporting The Board aims to convey a balanced and understandable assessment of the Group’s financial position and prospects through the quarterly results and annual reports/financial statements to the Company’s shareholders and regulators. The Responsibility Statement by the Directors pursuant to Bursa Securities Listing Requirements is set out on page 38. Internal Control The Board acknowledges its responsibility for maintaining a sound internal controls system, which provides reasonable assurance in ensuring the effectiveness and efficiency of operations and the safeguard of assets and interest in compliance with laws and regulations as well as with internal financial administration procedures and guidelines. The Group’s Statement on Internal Control is set out on pages 31 to 32. Relationship with Auditors The Board maintains a close and transparent professional relationship with the Group’s internal and external auditors through the Audit Committee. In the course of audit of the Group’s operations, the internal and external auditors have highlighted all important matters to the Audit Committee. The Audit Committee will then bring up the matters for the Board’s attention if it is necessary. The Group has paid RM169,200 of non-audit fees to the external auditors for the financial year ended 31 March 2008. Relationship with Shareholders and Investors The primary tools of communication with the shareholders of the Company are through the annual report, announcements through Bursa Securities and circulars. All queries from shareholders and members of public received through phone calls or letters are handled by the Executive Directors, Group Financial Controller and Company Secretary. At the annual general meeting and extraordinary general meeting, the Chairman gives shareholders ample opportunity to participate through questions on the prospects, performance of the Group and other matters of concern to them with the Board.
  • 32. 30 SBC CORPORATION BERHAD Statement of Corporate Governance ADDITIONAL COMPLIANCE INFORMATION In conformance with the requirements of Bursa Securities, the following compliance information is provided: 1. Revaluation Policy on Landed Properties The Group’s landed properties are stated at cost. There is no policy of regular revaluation of its landed properties as at the end of the financial year ended 31 March 2008. 2. Materials Contracts There were no material contracts entered into by the Company and its subsidiaries which involved the directors’ and major shareholders’ interests subsisting at the end of the financial year ended 31 March 2008 or entered into since the end of the previous financial year. 3. Utilisation of Proceeds There were no proceeds raised from any proposals by the Company during the financial year. 4. Share Buy-backs There were no share buy-backs by the Company during the financial year. 5. Options, Warrants or Convertible Securities There were no options, warrants or convertible securities issued by the Company during the financial year. 6. American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) During the financial year, the Company did not sponsor any ADR or GDR programme. 7. Sanctions and / or Penalties There were no sanctions and / or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year. 8. Variation in Results There was no material variation between the results for the financial year and the unaudited results previously announced. 9. Profit Guarantee There was no profit guarantee given by the Company in respect of the financial year. 10. Corporate Social Responsibility There were no corporate social responsibility activities undertaken by the Company and its subsidiaries during the financial year.
  • 33. ANNUAL REPORT 2008 31 Statement of Internal Control INTRODUCTION The Board of Directors of SBC Corporation Berhad is pleased to present its Statement on Internal Control as a Group, made in compliance with Paragraph 15.27 (b) of the Listing Requirements of Bursa Malaysia Securities Berhad and the Statement on Internal Control: Guidance for Directors of Public Listed Companies. BOARD RESPONSIBILITY The Board has an overall responsibility for the Company’s system of internal controls, which includes the establishment of an appropriate control environment and framework, and the review of its effectiveness, adequacy and integrity. This includes identifying the major business risks faced by the Group and determining the appropriate course of action to manage those risks. In this regard, the Board has delegated such responsibilities to the Audit Committee. Only significant internal control issues are brought to the attention of the Board by the Audit Committee. In view of the inherent limitations in any system of internal controls, the system designed can only manage rather than eliminate all risks of failure to achieve the business objectives of the Group. Accordingly, the established system of internal control can only provide reasonable but not absolute assurance against material misstatement or losses, fraud or breaches of law or regulations. RISK MANAGEMENT FRAMEWORK Risk management is seen as an integral part of the Group’s business operations by the Board. The Group has in place an ongoing process for identifying, evaluating and managing the significant risks faced by the Group, throughout the financial year under review. Senior management will assess and appraise the cost and benefits, impact on the Group, review the financial implications before any investment or significant expenditure is made. This ongoing process is undertaken for all the major subsidiaries of the Group and the processes, findings and actions taken by the Management are all reviewed regularly by the Board. INTERNAL AUDIT The Group’s internal control systems are continually being reviewed and enhanced to ensure that changes in the Group’s business and operating environment are adequately managed. The Board currently obtains regular assurance on the adequacy and effectiveness of the internal control system through independent appraisals performed by the outsourced internal audit function. During the financial year under review, the outsourced internal audit function conducted reviews based on an approved internal audit plan and the results of these reviews are tabled at the Audit Committee’s meetings. In addition, the internal audit function carried out follow-up visits to ensure that recommendations for improving the internal control systems are satisfactorily implemented.
  • 34. 32 SBC CORPORATION BERHAD Statement of Internal Control KEY ELEMENTS OF INTERNAL CONTROL The key processes that the Board has established in reviewing the adequacy and integrity of the Group’s system of internal control include the following:- 1. A well defined organisational structure with proper segregation of duties, clear lines of accountability and which has a documented delegation of authority that sets out the decisions that need to be taken and the appropriate authority levels of management including matters that require Board approval; 2. The Executive Directors are responsible for the daily operations and performances of the respective businesses. Daily operations are monitored through review of reports, attending the scheduled management meetings and have informal discussions on operational issues. Significant issues identified are brought to the attention of Board members, if necessary; 3. Regular and comprehensive information are provided to the Board and Senior Management for performance monitoring; 4. Established internal policies and procedures for key business units within the Group; and 5. Experienced and dedicated team of personnel across the key functional units. ASSURANCE The Board is of the view that the system of internal controls is satisfactory and nothing has come to the attention of the Board which would result in any material losses, contingencies or uncertainties that would require separate disclosure in this annual report. The Board will continue to take active measures to strengthen the existing internal control systems and control environment after taking into consideration the changes in the business environment the Group operates in.
  • 35. ANNUAL REPORT 2008 33 Audit Committee Report The Board of SBC Corporation Berhad is pleased to present the Audit Committee Report for the financial year ended 31 March 2008. COMPOSITION AND MEETINGS The Audit Committee presently comprises three members, all of whom are Independent Non-Executive Directors. The name of the members and their attendance at meetings held during the financial year ended 31 March 2008 are as follows:- No. of meetings held during the financial year ended No. of meetings Name of members 31 March 2008 attended Dato’ Dr. Norraesah bt Haji Mohamad- Chairperson (Independent Non-Executive Director) 4 4 Dato’ Lim Phaik Gan (Independent Non-Executive Director) 4 4 Ahmad Fizal bin Othman (Independent Non-Executive Director) 4 4 Sia Teong Heng (Managing Director – Resigned on 21 February 2008) 4 3 The Audit Committee normally meets four times a year with additional meetings convened between scheduled meetings, if necessary, to deliberate on urgent and significant matters. The Group Financial Controller and the representatives of the outsourced Internal Auditors and the External Auditors attended the meetings at the invitation of the Audit Committee, where considered necessary.The Company Secretary is responsible for distributing the notice of the meetings and relevant papers to the Audit Committee members prior to their meetings and recording the proceedings of the meetings thereat. INTERNAL AUDIT FUNCTION The Company has maintained the engagement of Audex Governance Sdn. Bhd. for the provision of internal audit function to the Group. The principal role of the Internal Auditor is to undertake independent, regular and systematic review of the Group’s systems of internal control so as to provide reasonable assurance that such systems continue to operate efficiently and effectively. It is the responsibility of the Internal Auditor to provide the Audit Committee with independent and objective reports on the state of internal control of various operating units within the Group and the extent of compliance of the units with Group’s established policies and procedures as well as relevant statutory requirements.
  • 36. 34 SBC CORPORATION BERHAD Audit Committee Report SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE In line with the terms of reference of the Audit Committee, the following activities were carried out by the Audit Committee during the financial year ended 31 March 2008:- a) Discussed and reviewed the Audit Planning Memorandum which cover the external auditor’s plan, scope and nature of work. b) Reviewed the Audit Review Memorandum in relation to their findings and accounting issues arising from the audit of the Group’s annual financial results. c) Reviewed the unaudited quarterly report on the consolidated results of the Group for the quarters ended 31 March 2007, 30 June 2007, 30 September 2007 and 31 December 2007. d) Assessed the Group’s financial performance. e) Reviewed related party transactions and conflicts of interest situation that may arise within the Group. f) Reviewed and approved the internal audit plan and the internal audit reports and followed up on the remedial actions implemented by the Management in respect of the internal control weaknesses identified. g) Reviewed the Group’s risk management policy and framework. h) Reviewed the Group’s compliance with the applicable approved accounting standards issued by the Malaysian Accounting Standards Board and other relevant legal and regulatory requirements. SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION During the financial year ended 31 March 2008, the Internal Auditor has:- a) Presented a risk-based annual audit plan and risk assessment policy for the Audit Committee’s review and approval; b) Performed company-wide operation and special audits giving due attention to high and medium risk area of concerns; c) Followed up on the status of rectification with regards to significant issues and kept the Audit Committee abreast of the current status; and d) Furnished internal audit reports to the Audit Committee on quarterly basis as an updates of the internal audit activities.
  • 37. ANNUAL REPORT 2008 35 Audit Committee Report SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION (cont’d) In accordance with the approved audit plan for 2007/2008, the areas reviewed by the internal audit function were as follows:- a) Management and operational review of companies within the Group; b) Projects performance reviews and evaluation; c) Pre-qualification and contractor performance management; d) Progress claims processing; e) Manage the issuance of work orders and variation orders; f) Post construction service and maintenance; g) Review of relevant policies and procedures; h) Related party transactions; i) Human resource management; and j) Property management. A number of minor internal control weaknesses were identified during the year, all of which have been addressed by the Management. None of the weaknesses has resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report. The annual internal audit plan for 2008/2009 was presented to the Audit Committee for review and approval during to the financial year ended 31 March 2008. The activities of the internal audit function cover the following areas:- a) Management and operational review of companies within the Group; b) Projects performance reviews and evaluation; c) Management of progress billing; d) Project status and cost monitoring; e) Credit control collection; f) Sales processing; g) Advertising and promotion; h) Treasury management; i) Management information system; j) Review of relevant policies and procedures; and k) Related party transactions; The above reviews cover all the offices and project sites which are located in Kuala Lumpur, Kuantan and Kota Kinabalu.
  • 38. 36 SBC CORPORATION BERHAD Audit Committee Report 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 members. All the members must be non-executive directors, with a majority of them are independent directors. At least one member of the Committee: (i) must be 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; or (iii) fulfills such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad. The members of the Committee shall elect a Chairman from amongst their number who shall be an independent director. In order to form a quorum in respect of a meeting of the Committee, the majority of the members present must be independent directors. Attendance At Meetings The Group Financial Controller and the representatives of the internal auditors and the external auditors shall normally attend meetings. Other directors and employees of the Company may attend meetings at the Committee’s invitation. The Committee shall be able to convene meetings with external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary. The Company Secretary shall be the secretary of the Committee. Frequency Of Meetings Meetings shall be held not less than four times a year. The external auditors may request a meeting if they consider that one is necessary. Authority The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all the employees are directed to cooperate with any request made by the Committee. The Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of an outsider with relevant experience and expertise, if it considers this necessary. Duties The duties of the 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.
  • 39. ANNUAL REPORT 2008 37 Audit Committee Report TERMS OF REFERENCE OF THE AUDIT COMMITTEE (cont’d) Duties (cont’d) (3) to discuss with the external auditors the evaluation of the system of internal controls, audit report and ensure assistance given by the employees to the external auditors. (4) to review the quarterly and year-end financial statements before submission to the Board, focusing particularly on: • any changes or implementation of changes in accounting policies and practices; • major judgement areas; • significant adjustments arising from the audit; • significant and unusual events; • the going concern assumption; • compliance with accounting standards; and • compliance with stock exchange and legal requirements. (5) to discuss problems and reservations arising from the interim and final audits and any matters the external auditor may wish to discuss (in the absence of management, where necessary). (6) to review the external auditors’ management letter and management’s response. (7) to do the following in respect of the internal audit function: • review the adequacy of the scope, functions, competency 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 the Group including any transaction, procedure or course of conduct that raises questions of management integrity. (9) to consider the major findings of internal investigations and management’s response and ensure co-ordination between internal and external auditors. (10) to consider other topics, as defined by the Board. Reporting The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.
  • 40. 38 SBC CORPORATION BERHAD Statement of Directors’ Responsibilities IN RESPECT OF THE PREPARATION OF THE FINANCIAL STATEMENTS The Directors are responsible for ensuring that the financial statements of the Group are drawn up in accordance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and the Company as of 31 March 2008 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.
  • 41. Financial Statements 40 • Directors’ Report 44 • Statement by Directors 44 • Statutory Declaration 45 • Report of the Auditors 47 • Balance Sheets 49 • Income Statements 50 • Statements of Changes in Equity 52 • Cash Flow Statements 55 • Notes to the Financial Statements
  • 42. 40 SBC CORPORATION BERHAD Directors’ Report The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 March 2008. PRINCIPAL ACTIVITIES The Company is principally engaged in the businesses of investment holding and the provision of management and administrative services to the subsidiaries. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS THE GROUP THE COMPANY RM RM Profit after taxation for the financial year 3,503,533 204,163 Attributable to:- Equity holders of the Company 3,513,519 204,163 Minority interests (9,986) - 3,503,533 204,163 DIVIDENDS Since the end of the previous financial year, the Company paid a first and final dividend of 1% less 27% tax on the ordinary shares amounting to RM601,773 in respect of the previous financial year. For the current financial year, the directors recommend the payment of a first and final dividend of 1.5% less 25% tax on the ordinary shares amounting to RM927,394 to be approved by the shareholders at the forthcoming Annual General Meeting. This dividend will be accounted for as an appropriation of retained profits in the period when it is approved by shareholders. RESERVES AND PROVISIONS All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements. ISSUES OF SHARES AND DEBENTURES During the financial year, (a) there were no changes in the authorised and issued and paid-up share capital of the Company; and (b) there were no issues of debentures by the Company. 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.
  • 43. ANNUAL REPORT 2008 41 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 all known bad debts had been written off and that adequate allowance had been made for doubtful debts. At the date of this report, the directors are not aware of any circumstances that would further require the writing off of bad debts, or the 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 liability of the Company is disclosed in Note 47 to the financial statements. At the date of this report, there does not exist:- (a) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; or (b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year. No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. ITEMS OF AN UNUSUAL NATURE The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year.
  • 44. 42 SBC CORPORATION BERHAD Directors’ Report DIRECTORS The directors who served since the date of the last report are as follows:- SIA KWEE MOW @ SIA HOK CHAI SIA TEONG HENG MUN CHONG SHING @ MUN CHONG TIAN DATO’ LIM PHAIK GAN DATO’ DR. NORRAESAH BT HAJI MOHAMAD DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID AHMAD FIZAL BIN OTHMAN DIRECTORS’ INTERESTS According to the register of directors’ shareholdings, the interests of directors holding office at the end of the financial year in shares in the Company and its related corporations during the financial year are as follows:- NUMBER OF ORDINARY SHARES OF RM1 EACH AT AT 1.4.2007 BOUGHT SOLD 31.3.2008 DIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 1,480,800 - - 1,480,800 SIA TEONG HENG 4,677,992 - - 4,677,992 MUN CHONG SHING @ MUN CHONG TIAN 21,782 - - 21,782 INDIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 19,498,523 - - 19,498,523 SIA TEONG HENG 19,498,523 - - 19,498,523 By virtue of their interests in the Company, Sia Kwee Mow @ Sia Hok Chai and Sia Teong Heng are deemed to have interests in the shares in the subsidiaries to the extent of the Company’s interest, in accordance with Section 6A of the Companies Act, 1965. None of the other directors holding office at the end of the financial year had any interest in shares of the Company or its related corporations during the financial year.
  • 45. ANNUAL REPORT 2008 43 Directors’ Report DIRECTORS’ BENEFITS Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors as shown in the financial statements, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain directors have substantial financial interests as disclosed in Note 45 to the financial statements. Neither during nor at the end of the financial year was the Company or its subsidiaries a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR The significant events during the financial year are disclosed in Note 51 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 DATED 28 JULY 2008 Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian
  • 46. 44 SBC CORPORATION BERHAD Statement By Directors We, Sia Kwee Mow @ Sia Hok Chai and Mun Chong Shing @ Mun Chong Tian, being two of the directors of SBC Corporation Berhad, state that, in the opinion of the directors, the financial statements set out on pages 47 to 100 are drawn up in accordance with applicable approved Financial Reporting 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 2008 and of their results and cash flows for the financial year ended on that date. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 28 JULY 2008 Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian Statutory Declaration I, Lee Yan Yaw, I/C No. 710315-10-5509, being the officer primarily responsible for the financial management of SBC Corporation Berhad, do solemnly and sincerely declare that the financial statements set out on pages 47 to 100 are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by Lee Yan Yaw, I/C No. 710315-10-5509, at Kuala Lumpur in the Federal Territory on this 28 July 2008. Lee Yan Yaw Before me Mohd Radzi Bin Yasin (W327) Commissioner for Oaths
  • 47. ANNUAL REPORT 2008 45 Report of the Auditors TO THE MEMBERS OF SBC CORPORATION BERHAD We have audited the financial statements of SBC Corporation Berhad, which comprise the balance sheets as at 31 March 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 47 to 100. Directors’ Responsibility for the Financial Statements The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 March 2008 and of their financial performance and cash flows for the year then ended. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:- (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act; (b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements; (c) We are satisfied that the accounts 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 financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes; and (d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.
  • 48. 46 SBC CORPORATION BERHAD Report of the Auditors TO THE MEMBERS OF SBC CORPORATION BERHAD Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. Horwath James Chan Kuan Chee Firm No: AF 1018 Approval No: 2271/10/09 (J) Chartered Accountants Partner Kuala Lumpur 28 July 2008
  • 49. ANNUAL REPORT 2008 47 Balance Sheets AS AT 31 MARCH 2008 THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM RM RM RM ASSETS NON-CURRENT ASSETS Investment in subsidiaries 6 - - 210,990,785 210,990,785 Interest in associates 7 113,032,417 112,085,613 3,993,865 2,400,000 Investment in joint venture 8 - - 1,801,128 1,801,128 Property, plant and equipment 9 7,405,096 8,549,543 387,635 2,657 Investment properties 10 - 3,122,452 - - Land held for property development 11 77,385,675 87,700,188 - - Other assets 12 220,300 220,300 - - Goodwill on consolidation 13 27,499,451 27,499,451 - - 225,542,939 239,177,547 217,173,413 215,194,570 CURRENT ASSETS Inventories 14 659,001 726,148 - - Property development costs 15 55,151,791 59,707,257 - - Receivables 16 38,191,784 59,332,215 893,608 479,393 Amount owing by contract customers 17 2,354,585 2,616,779 - - Amount owing by subsidiaries 18 - - 57,297,883 58,919,707 Amount owing by associates 19 6,571,977 5,390,600 237,184 11,434 Amount owing by joint venture 20 72,520 280,727 72,520 552,520 Tax recoverable 21 1,286,456 1,367,292 3,639,260 3,451,474 Short-term deposits with licensed banks 22 985,000 3,334,226 - 1,239,225 Cash and bank balances 23 10,015,198 13,918,913 2,510,961 12,077,309 115,288,312 146,674,157 64,651,416 76,731,062 TOTAL ASSETS 340,831,251 385,851,704 281,824,829 291,925,632 The annexed notes form an integral part of these financial statements.
  • 50. 48 SBC CORPORATION BERHAD Balance Sheets AS AT 31 MARCH 2008 THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM RM RM RM EQUITY AND LIABILITIES EQUITY Share capital 24 82,435,000 82,435,000 82,435,000 82,435,000 Reserves 25 133,602,532 130,690,786 133,338,283 133,735,893 SHAREHOLDERS’ EQUITY 216,037,532 213,125,786 215,773,283 216,170,893 MINORITY INTEREST 39,014 - - - TOTAL EQUITY 216,076,546 213,125,786 215,773,283 216,170,893 LIABILITIES NON-CURRENT LIABILITIES Long-term borrowings 26 32,879,564 33,939,069 24,314,819 - Deferred taxation 29 966,746 966,746 - - 33,846,310 34,905,815 24,314,819 - CURRENT LIABILITIES Amount owing to contract customers 17 4,932,581 2,850,429 - - Payables 30 37,673,403 42,512,894 285,918 371,667 Amount owing to subsidiaries 18 - - 19,397,294 12,375,674 Amount owing to associates 19 78,236 3,378 - - Amount owing to a director 31 1,867,680 1,867,680 1,867,680 1,867,680 Short-term borrowings 32 23,981,994 14,874,442 17,735,306 5,000,000 ABBA Bonds 33 - 48,683,146 - 48,683,146 Bank overdrafts 34 22,374,501 27,028,134 2,450,529 7,456,572 90,908,395 137,820,103 41,736,727 75,754,739 TOTAL LIABILITIES 124,754,705 172,725,918 66,051,546 75,754,739 TOTAL EQUITY AND LIABILITIES 340,831,251 385,851,704 281,824,829 291,925,632 NET ASSETS PER ORDINARY SHARE (RM) 35 2.62 2.59 The annexed notes form an integral part of these financial statements.
  • 51. ANNUAL REPORT 2008 49 Income Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM RM RM RM REVENUE 36 107,054,789 77,102,946 10,296,801 8,338,611 COST OF SALES 37 (87,834,953) (60,499,310) - - GROSS PROFIT 19,219,836 16,603,636 10,296,801 8,338,611 OTHER INCOME 2,202,590 1,324,144 29,999 203,976 ADMINISTRATIVE EXPENSES (8,964,127) (8,315,933) (4,336,804) (1,282,327) OTHER EXPENSES (1,008,602) (5,382,766) (233,310) (407,665) FINANCE COSTS (6,316,002) (6,705,397) (5,054,663) (5,868,501) SHARE OF (LOSS)/PROFIT OF ASSOCIATES (647,061) 269,211 - - PROFIT/(LOSS) BEFORE TAXATION 38 4,486,634 (2,207,105) 702,023 984,094 INCOME TAX EXPENSE 39 (983,101) (802,167) (497,860) (307,203) PROFIT/(LOSS) AFTER TAXATION 3,503,533 (3,009,272) 204,163 676,891 ATTRIBUTABLE TO:- Equity holders of the Company 3,513,519 (3,009,272) 204,163 676,891 Minority interests (9,986) - - - 3,503,533 (3,009,272) 204,163 676,891 Earnings/(Loss) per share - basic 40 4.3 sen (3.7) sen - diluted 40 N/A N/A Dividend per ordinary share - final 41 1 sen 1 sen The annexed notes form an integral part of these financial statements.
  • 52. ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY SHARE SHARE RETAINED CAPITAL MINORITY TOTAL NOTE CAPITAL PREMIUM PROFITS RESERVE TOTAL INTERESTS EQUITY RM RM RM RM RM RM RM THE GROUP Balance at 1.4.2006 82,435,000 111,412,895 21,680,691 1,199,999 216,728,585 - 216,728,585 Loss after taxation for 50 SBC CORPORATION BERHAD the financial year - - (3,009,272) - (3,009,272) - (3,009,272) Dividend 41 - - (593,527) - (593,527) - (593,527) FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 Balance at 31.3.2007/1.4.2007 82,435,000 111,412,895 18,077,892 1,199,999 213,125,786 - 213,125,786 Profit after taxation The annexed notes form an integral part of these financial statements. for the financial year - - 3,513,519 - 3,513,519 (9,986) 3,503,533 Subscription for shares in a subsidiary - - - - - 49,000 49,000 Dividend 41 - - (601,773) - (601,773) - (601,773) Balance at 31.3.2008 82,435,000 111,412,895 20,989,638 1,199,999 216,037,532 39,014 216,076,546 Statements of Changes in Equity
  • 53. ANNUAL REPORT 2008 51 Statements of Changes in Equity FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 SHARE REVALUATION RETAINED CAPITAL RESERVE PROFITS TOTAL NOTE RM RM RM RM THE COMPANY Balance at 1.4.2006 82,435,000 111,412,895 22,239,634 216,087,529 Profit after taxation for the financial year - - 676,891 676,891 Dividend 41 - - (593,527) (593,527) Balance at 31.3.2007/1.4.2007 82,435,000 111,412,895 22,322,998 216,170,893 Profit after taxation for the financial year - - 204,163 204,163 Dividend 41 - - (601,773) (601,773) Balance at 31.3.2008 82,435,000 111,412,895 21,925,388 215,773,283 The annexed notes form an integral part of these financial statements.
  • 54. 52 SBC CORPORATION BERHAD Cash Flow Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM RM RM RM CASH FLOWS (FOR)/FROM OPERATING ACTIVITIES Profit/(Loss) before taxation 4,486,634 (2,207,105) 702,023 984,094 Adjustments for:- Allowance for doubtful debts 214,034 - - - Amortisation of bond expenses 144,265 277,770 144,265 277,770 Bad debts written off 74,922 697,574 4,626 - Depreciation of property, plant and equipment 717,935 580,160 98,804 4,895 Interest expense/finance charges 6,201,668 6,564,396 5,009,169 5,817,195 Impairment loss on investment properties - 2,074,556 - - Impairment loss on land held for property development - 1,858,834 - - Investment in subsidiaries written off - - - 125,000 Property, plant and equipment written off 8,303 - - - Waiver of debts - (211,269) - (203,976) Dividend income - - (6,500,000) (5,000,000) (Gain)/Loss on disposal of investment properties (48,248) 413,987 - - Gain on disposal of land held for future development (383,552) - - - Gain on disposal of property, plant and equipment (71,949) (155,791) (29,999) - Interest income (823,441) (513,693) (206,714) (768,966) Share of loss/(profit) in associates 647,061 (269,211) - - Operating profit/(loss) before working capital changes 11,167,632 9,110,208 (777,826) 1,236,012 Decrease in inventories 67,147 557,274 - - Decrease/(Increase) in property development costs 11,762,574 (4,273,713) - - Increase in receivables (8,217,525) (17,243,790) (418,841) (252,966) (Decrease)/Increase in payables (4,914,691) 10,272,117 (160,949) 126,902 Net decrease in amount owing by contract customers 2,344,346 1,808,200 - - CASH FROM/(FOR) OPERATIONS 12,209,483 230,296 (1,357,616) 1,109,948 Interest paid (4,208,853) (2,077,587) (3,016,354) (1,330,386) Net tax (paid)/refunded (902,265) (618,234) (70,526) 797,450 NET CASH FROM/(FOR) OPERATING ACTIVITIES CARRIED FORWARD 7,098,365 (2,465,525) (4,444,496) 577,012 The annexed notes form an integral part of these financial statements.
  • 55. ANNUAL REPORT 2008 53 Cash Flow Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM RM RM RM NET CASH FROM/(FOR) OPERATING ACTIVITIES BROUGHT FORWARD 7,098,365 (2,465,525) (4,444,496) 577,012 CASH FLOWS (FOR)/FROM INVESTIING ACTIVITIES Acquisition of associates (1,593,865) - (1,593,865) - Acquisition of joint venture - - - (1,088,628) Additional investment in subsidiaries 49,000 (181,811) - (51,000) Repayment from subsidiaries - - 1,621,824 7,254,414 Interest received 823,441 513,693 206,714 369,482 Dividends received from subsidiaries - - 4,810,000 3,650,000 Repayment from/ (Advances to) joint venture 208,207 (280,727) 480,000 (561,454) Incidental cost for investment properties - (117,070) - - Payment for land held for development (2,941,967) (2,468,347) - - Purchase of property, plant and equipment 42 (287,778) (1,204,262) (107,783) - Proceeds from disposal of land held for future development 7,514,910 - - - Proceeds from disposal of property, plant and equipment 71,950 170,264 30,000 - Proceeds from disposal of investment properties 3,170,700 1,374,000 - - Investment in club membership - (134,000) - - Withdrawal/(Placement) of cash in sinking fund account 11,129,109 (3,877,963) 12,001,075 (3,877,963) (Advances to)/Repayment from associates (1,181,377) 8,934 (225,750) 8,934 NET CASH FROM/(FOR) INVESTING ACTIVITIES 16,962,330 (6,197,289) 17,222,215 5,703,785 BALANCE CARRIED FORWARD 24,060,695 (8,662,814) 12,777,719 6,280,797 The annexed notes form an integral part of these financial statements.
  • 56. 54 SBC CORPORATION BERHAD Cash Flow Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM RM RM RM BALANCE BROUGHT FORWARD 24,060,695 (8,662,814) 12,777,719 6,280,797 CASH FLOWS FOR FINANCING ACTIVITIES Payment of bond expenses (12,001) (59,932) (12,001) (59,932) Repayment of bonds 33 (50,808,225) (2,478,450) (50,808,225) (2,478,450) Advances from/(Repayment to) associates 74,858 (13,333) - - Advances from/(Repayment to) subsidiaries - - 8,096,500 (5,503,106) Dividend paid to shareholders of the Company (601,773) (593,527) (601,773) (593,527) Repayment of revolving credit (2,994,400) (1,050,000) - - Drawdown of term loans 44,636,915 6,400,068 40,000,000 - Repayment of term loans (4,698,460) (3,007,129) (3,219,340) - Repayment of hire purchase obligations (127,808) (101,107) (31,335) - NET CASH FOR FINANCING ACTIVITIES (14,530,894) (903,410) (6,576,174) (8,635,015) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 9,529,801 (9,566,224) 6,201,545 (2,354,218) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR (21,776,070) (12,209,846) (6,141,113) (3,786,895) CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 43 (12,246,269) (21,776,070) 60,432 (6,141,113) The annexed notes form an integral part of these financial statements.
  • 57. ANNUAL REPORT 2008 55 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 1. GENERAL INFORMATION The Company is a public company limited by shares and is incorporated under the Malaysian Companies Act, 1965. The domicile of the Company is Malaysia. The registered office, which is also the principal place of business, is at Wisma Siah Brothers, 74A, Jalan Pahang, 53000 Kuala Lumpur. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 28 July 2008. 2. PRINCIPAL ACTIVITIES The Company is principally engaged in the businesses of investment holding and the provision of management and administrative services to the subsidiaries. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. 3. FINANCIAL RISK MANAGEMENT POLICIES The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s business whilst managing its market, credit, liquidity and cash flow risks. The policies in respect of the major areas of treasury activity are as follows:- (a) Market Risk (i) Foreign Currency Risk The Group is exposed to foreign exchange risk on investments and bank balances that are denominated in foreign currencies. The Group’s foreign currency transactions and balances are substantially denominated in Thai Baht. The Group does not seek to hedge this exposure as the Group is of the opinion that the fluctuations of the Thai Baht do not have any significant impact on the financial statements. (ii) Interest Rate Risk The Group obtains financing through bank borrowings and hire purchase facilities. Its policy is to obtain the most favourable interest rates available. Surplus funds are placed with licensed financial institutions at the most favourable interest rates. (iii) Price Risk The Group’s principal exposure to market risks arises mainly from changes in quoted equity prices. The Group does not use derivative instruments to manage equity risk.
  • 58. 56 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 3. FINANCIAL RISK MANAGEMENT POLICIES (cont’d) (b) Credit Risk The Group’s exposure to credit risks, or the risk of counterparties defaulting, arises mainly from receivables. The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet reduced by the effects of any netting arrangements with counterparties. The Group does not have any major concentration of credit risk related to any individual customer or counterparty. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. (c) Liquidity and Cash Flow Risk The Group’s exposure to liquidity and cash flow 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 PREPARATION The financial statements of the Group and of the Company are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with applicable approved Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965. During the current financial year, the Group and the Company have adopted the following new and revised Financial Reporting Standards (“FRSs”) issued by the Malaysian Accounting Standards Board (“MASB”): (a) FRSs issued and effective for financial periods beginning on or after 1 October 2006: FRS 117 Leases FRS 124 Related Party Disclosures (b) FRSs issued and effective for financial periods beginning on or after 1 January 2007: FRS 6 Exploration for and Evaluation of Mineral Resources FRS 1192004 Amendment to FRS 1192004 Employee Benefits - Actuarial Gains and Losses, Group Plans and Disclosures The adoption of FRS 124 only impacts the form and content of disclosures presented in the financial statements. FRS 117, FRS 6 and FRS 1192004 are not relevant to the Group and the Company’s operations. Framework for the Preparation and Presentation of Financial Statements has been issued and is effective immediately. This Framework sets out the concepts that underlie the preparation and presentation of financial statements for external users. It is not a MASB approved accounting standard and hence, does not define standards for any particular measurement or disclosure issue. The Group and the Company have applied this Framework from the financial year ended 31 March 2008 onwards.
  • 59. ANNUAL REPORT 2008 57 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 4. BASIS OF PREPARATION (cont’d) The Group and the Company have not adopted FRS 139 - Financial Instruments: Recognition and Measurement and the consequential amendments resulting from FRS 139 as the effective date is deferred to a date to be announced by the MASB. FRS 139 establishes the principles for the recognition and measurement of financial assets and financial liabilities including circumstances under which hedge accounting is permitted. By virtue of the exemption provided under paragraph 103AB of FRS 139, the impact of applying FRS 139 on its financial statements upon initial application of the standard as required by paragraph 30(b) of FRS 108 is not disclosed. The following FRSs have been issued and are effective for financial periods beginning on or after 1 July 2007 and will be effective for the Group and the Company’s financial statements for the financial year ending 31 March 2009: FRS 107 Cash Flow Statements FRS 111 Construction Contracts FRS 112 Income Taxes FRS 118 Revenue FRS 120 Accounting for Government Grants and Disclosure of Government Assistance FRS 134 Interim Financial Reporting FRS 137 Provisions, Contingent Liabilities and Contingent Assets The above FRSs align the MASB’s FRSs with the equivalent International Accounting Standards (”IASs”), both in terms of form and content. The adoption of these standards will only impact the form and content of disclosures presented in the financial statements. FRS 120 is not relevant to the Group and the Company’s operations. The Group and the Company will apply these FRSs from the financial year ending 31 March 2009 onwards. Amendment to FRS 121 - The Effects of Changes in Foreign Exchange Rates Net Investment in a Foreign Operation has been issued and is effective for financial periods beginning on or after 1 July 2007. This amendment results in exchange differences arising from a monetary item that forms part of the Group’s net investment in a foreign operation to be recognised in equity irrespective of the currency in which the monetary item is denominated and whether the monetary item results from a transaction with the Company or any of its subsidiaries/associates/joint ventures. Previously, exchange differences arising from such transactions between the Company and its subsidiaries/associates/joint ventures would be accounted for in the income statement or in equity depending on the currency of the monetary item. The Group and the Company will apply this amendment from the financial year ending 31 March 2009 onwards. The following IC Interpretations have been issued and are effective for financial periods beginning on or after 1 July 2007 but are not relevant for the Group and the Company’s operations: IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities IC Interpretation 2 Members’ Shares in Co-operative Entities and Similar Instruments IC Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IC Interpretation 6 Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment IC Interpretation 7 Applying the Restatement Approach under FRS 1292004 Financial Reporting in Hyperinflationary Economies IC Interpretation 8 Scope of FRS 2 5. SIGNIFICANT ACCOUNTING POLICIES (a) Critical Accounting Estimates And Judgements Estimates and judgements are continually evaluated by the directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:-
  • 60. 58 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (a) Critical Accounting Estimates And Judgements (cont’d) (i) Depreciation of Property, Plant and Equipment The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions. The Group anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. (ii) Income Taxes There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made. (iii) Impairment of Assets When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the Group is required to make an estimate of the expected future cash flows from the cash- generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows. (iv) Property Development The Group recognises property development revenue and expenses in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that the property development costs incurred for work performed to date bear to the estimated total property development costs. Significant judgement is required in determining the stage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the development projects. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists. (v) Construction Contracts Construction contracts accounting requires reliable estimation of the costs to complete the contract and reliable estimation of the stage of completion. (i) Contract Revenue Construction contracts accounting requires that variation claims and incentive payments only be recognised as contract revenue to the extent that it is probable that they will be accepted by the customers. As the approval process often takes some time, a judgement is required to be made of its probability and revenue recognised accordingly. (ii) Contract Costs Using experience gained on each particular contract and taking into account the expectations of the time and materials required to complete the contract, management estimates the profitability of the contract on an individual basis at any particular time.
  • 61. ANNUAL REPORT 2008 59 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (a) Critical Accounting Estimates And Judgements (cont’d) (vi) Allowance for Doubtful Debts of Receivables The Group makes allowance for doubtful debts based on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management analyses historical bad debt, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the allowance for doubtful debts of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables. (vii) Allowance for Inventories Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories. (b) Financial Instruments Financial instruments are recognised in the balance sheet when the Group and the Company has become a party to the contractual provisions of the instruments. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group and the Company has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. Financial instruments recognised in the balance sheet are disclosed in the individual policy statement associated with each item. (c) Functional and Foreign Currency (i) Functional and Presentation Currency The functional currency of the Group is measured using the currency of the primary economic environment in which the Group operates. The consolidated financial statements are presented in Ringgit Malaysia (“RM”) which is the parent’s functional and presentation currency. (ii) Transactions and Balances Transactions in foreign currency are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the balance sheet date are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are taken to the income statement.
  • 62. 60 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (c) Functional and Foreign Currency (cont’d) (iii) Foreign Operations The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:- (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet; (ii) income and expense for the income statement are translated at the average exchange rates for the year; and (iii) all resulting exchange differences are recognised as a separate component of equity, as a foreign currency translation reserve. On disposal, accumulated translation differences are recognised in the consolidated income statements as part of the gain or loss on sale. (d) Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries made up to 31 March 2008. A subsidiary is defined as an enterprise in which the Company has the power, directly or indirectly, to exercise control over the financial and operating policies so as to obtain benefits from its activities. All subsidiaries are consolidated using the purchase method. Under the purchase method, the results of subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group. (e) Goodwill On Consolidation Goodwill on consolidation represents the excess of the fair value of the purchase consideration over the Group’s share of the fair values of the identifiable net assets of the subsidiaries at the date of acquisition. Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually. The impairment value of goodwill is recognised immediately in the consolidated income statement. An impairment loss recognised for goodwill is not reversed in a subsequent period. If, after reassessments, the Group’s interest in the fair values of the identifiable net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised immediately in the consolidated income statement.
  • 63. ANNUAL REPORT 2008 61 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (f) Investments (i) Investments in Subsidiaries, Associates and Joint Ventures Investments in subsidiaries, associates and joint ventures are stated at cost in the balance sheet of the Company and are reviewed for impairment at the end of the financial year if events or changes in circumstances indicate that their carrying values may not be recoverable. On the disposal of the investments in subsidiaries, associates and joint ventures, the difference between the net disposal proceeds and the carrying amount of the investments is taken to the income statement. (ii) Investments in Club Membership The investment in club membership is stated at cost and is reviewed for impairment at the end of the financial year if events or changes in circumstances indicate that its carrying value may not be recovered. (g) Associates An associate is an entity in which the Company has a long-term equity interest and where it exercises significant influence over the financial and operating policies. The investments in associates in the consolidated financial statements are accounted for under the equity method, based on the financial statements of the associates made up to 31 March 2008. The Company’s share of the post acquisition profits of the associates is included in the consolidated income statement and the Company’s interest in associates is stated at cost plus the Company’s share of the post-acquisition retained profits and reserves. Unrealised gains on transactions between the Company and the associates are eliminated to the extent of the Company’s interest in the associate. Unrealised losses are eliminated unless cost cannot be recovered. (h) Investment in Joint Venture A joint venture represents a business arrangement formed under contract with a third party to undertake specific projects. The investment in the joint venture is accounted for using the proportionate consolidation method whereby assets, liabilities and the income statement of the joint venture are consolidated in the Group’s financial statements in the proportion of the Group’s interest in the venture. (i) Property, Plant and Equipment Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation and impairment loss, if any. Freehold land is stated at cost and is not depreciated. Depreciation is calculated under the straight-line method to write off the cost of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:- Building Remaining useful life of 20 years Plant and machinery, construction machinery and equipment, formwork, scaffoldings and containers 5% - 25% Office renovation, office equipment, computers, furniture and fittings, tools and sales office 5% - 20% Motor vehicles 20%
  • 64. 62 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (i) Property, Plant and Equipment (Cont’d) The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is included in the income statement in the year the asset is derecognised. (j) Land Held for Property Development Land held for property development is carried at cost less any accumulated impairment losses. Where land held for property development had previously been recorded at a revalued amount, the revalued amount is retained as its surrogate cost. Land held for property development is classified as non-current asset where no development activities are carried out or where development activities are not expected to be completed within the normal operating cycle. Costs associated with the acquisition of land include the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. Pre-acquisition costs are charged to the income statement as incurred unless such costs are directly identifiable to the consequent property development activity. Land held for property development is transferred to current asset when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle. (k) Impairment of Assets The carrying values of assets, other than those to which FRS 136 - Impairment of Assets does not apply, are reviewed at each balance sheet date for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets’ net selling price and their value-in-use, which is measured by reference to discounted future cash flow. An impairment loss is charged to the income statement immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset. In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to the revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement. (l) Assets under Hire Purchase Assets acquired under hire purchase are capitalised in the financial statements and are depreciated in accordance with the policy set out in Note 5(i) above. Each hire purchase payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Finance charges are allocated to the income statement over the periods of the respective hire purchase agreements.
  • 65. ANNUAL REPORT 2008 63 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (m) Investment Properties Investment properties are property held either to earn rental income or for capital appreciation or for both. Investment properties are stated at cost less accumulated depreciation and impairment losses, if any, consistent with the accounting policy for property, plant and equipment as stated in the financial statements. Investment properties are derecognised when they have either been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal. On the derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount is charged to the income statement. (n) Inventories Inventories are stated at the lower of cost and net realisable value. The unsold completed properties are stated at the lower of cost and net realisable value. For finished goods and work-in-progress, cost includes direct labour and appropriate production overheads. The cost of unsold completed properties comprises the relevant cost of land, development expenditure and related interest cost incurred during the development period. Where necessary, due allowance is made for all damaged, obsolete and slow-moving items. (o) Property Development Costs Property development costs comprise costs associated with the acquisition of land and all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. Property development costs that are not recognised as an expense are recognised as an asset and carried at the lower of cost and net realisable value. When the financial outcome of a development activity can be reliably estimated, the amount of property revenues and expenses recognised in the income statement are determined by reference to the stage of completion of development activity at the balance sheet date. When the financial outcome of a development activity cannot be reliably estimated, the property development revenue is recognised only to the extent of property development costs incurred that will be recoverable. The property development costs on the development units sold are recognised as an expense in the period in which they are incurred. Where it is probable that property development costs will exceed property development revenue, any expected loss is recognised as an expense in the income statement immediately, including costs to be incurred over the defects liability period. (p) Progress Billings/Accrued Billings In respect of progress billings:- (i) where revenue recognised in the income statement exceeds the billings to purchasers, the balance is shown as accrued billings under current assets; and (ii) where billings to purchasers exceed the revenue recognised to the income statement, the balance is shown as progress billings under current liabilities.
  • 66. 64 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (q) Amount Owing By/To Contract Customers The amount owing by/to contract customers is stated at cost plus profits attributable to contracts in progress less progress billings and allowance for foreseeable losses, if any. Cost includes direct materials, labour and applicable overheads. (r) Receivables Receivables are carried at anticipated realisable value. Bad debts are written off in the period in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date. (s) Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (t) Payables Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. (u) Interest-bearing Borrowings Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs. Borrowing costs directly attributable to the acquisition and construction of development properties and property, plant and equipment are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. Capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted. All other borrowing costs are charged to the income statement as expenses in the period in which they are incurred. (v) Bonds Bonds issued by the Company and the Group are initially recognised based on proceeds received, net of issuance expenses incurred and are adjusted in subsequent years for amortisation of premium and/or accretion of discount to maturity, using the effective yield method. The premium amortised and/or discount accreted is recognised in the income statement over the period of the bonds. (w) Income Taxes Income taxes on the profit or loss for the financial year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantially enacted at the balance sheet date. Deferred taxation is provided in full, using the liability method, on all material temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
  • 67. ANNUAL REPORT 2008 65 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (w) Income Taxes (cont’d) Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised. (x) Equity Instruments Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds. Dividends on ordinary shares are recognised as liabilities when approved for appropriation. (y) Employee Benefits (i) Short-term Benefits Wages, salaries, paid annual leave, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur. (ii) Defined Contribution Plans The Group’s contributions to a defined contribution plan are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plan. A foreign subsidiary of the Group makes contributions to its respective country’s pension schemes. Such contributions are recognised as an expense in the income statement as incurred. (z) Related Parties For the purposes of these financial statements, a party is considered to be related if:- (i) directly, or indirectly through one or more intermediaries, the party:- • controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries); • has an interest in the entity that gives it significant influence over the entity; or • has joint control over the entity;
  • 68. 66 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (z) Related Parties (ii) the party is an associate of the entity; (iii) the party is a joint venture in which the entity is a venturer; (iv) the party is a member of the key management personnel of the entity or its parent; (v) the party is a close member of the family of any individual referred to in (i) or (iv); (vi) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or (vii) the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity. Close members of the family of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity. (aa) Contingent Liabilities and Contingent Assets A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably. A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision. A contingent asset is a probable asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Company. (ab) Revenue Recognition (i) Construction Contracts Revenue on contracts is recognised on the percentage of completion method unless the outcome of the contract cannot be reliably determined, in which case revenue on contracts is only recognised to the extent of contract costs incurred that are recoverable. Foreseeable losses, if any, are provided for in full as and when it can be reasonably ascertained that the contract will result in a loss. The stage of completion is determined based on surveys of work performed. (ii) Property Development Revenue from property development is recognised from the sale of completed and uncompleted development properties. Revenue from the sale of completed properties is recognised when the sale is contracted. Revenue on uncompleted properties contracted for sale is recognised based on the stage of completion method unless the outcome of the development cannot be reliably determined in which case the revenue on the development is only recognised to the extent of development costs incurred that are recoverable.
  • 69. ANNUAL REPORT 2008 67 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (ab) Revenue Recognition (Cont’d) (ii) Property Development (Cont’d) The stage of completion is determined based on the proportion that the development costs incurred for work performed to date bear to the estimated total development costs. (iii) Revenue from Sale of Goods Revenue is recognised upon delivery of goods and customers’ acceptance, and where applicable, net of returns and trade discounts. (iv) Revenue from Services Revenue is recognised upon rendering of services and when the outcome of the transaction can be estimated reliably. In the event the outcome of the transaction could not be estimated reliably, revenue is recognised to the extent of the expenses incurred that are recoverable. (v) Management Fee and Administrative Charges Management fee and administrative charges are recognised on an accrual basis. (vi) Rental Income Rental income is recognised on an accrual basis. (vii) Dividend Income Dividend income from investments is recognised when the right to receive payment is established. (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. (ac) 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.
  • 70. 68 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 6. INVESTMENT IN SUBSIDIARIES THE COMPANY 2008 2007 RM RM Unquoted shares, at cost 210,990,785 210,990,785 Details of the subsidiaries, which are all incorporated in Malaysia, are as follows:- Name of Company Effective Equity Principal Activities Interest 2008 2007 % % Syarikat Siah Brothers Trading Sdn. Bhd. 100 100 General building contractor and investment holding. Syarikat Siah Brothers Construction Sdn. Bhd. 100 100 Building and civil engineering 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. Mixwell (Malaysia) Sdn. Bhd. 100 100 Project development and property development. Siah Brothers Properties Sdn. Bhd.* 100 100 Investment holding. Aureate Construction Sdn. Bhd.* 100 100 Property investment. SBC Leisure Sdn. Bhd.* 100 100 Investment holding. SBC Towers Sdn. Bhd.* 100 100 Investment holding. Siah Brothers Industries Sdn. Bhd. * 100 100 Investment holding. South-East Best Sdn. Bhd. 100 100 Project development and property investment. Gracemart Resources Sdn. Bhd. 100 100 Property development. Masahmura Sdn. Bhd.* 100 100 General building contractor and trading of construction materials. Masahmura Sales & Service Sdn. Bhd. 100 100 Trading in material handling equipment, selling of spare parts and providing general services. Kiara Amalan Sdn. Bhd. 51 51 Dormant. * Not audited by Messrs. Horwath.
  • 71. ANNUAL REPORT 2008 69 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 7. INTEREST IN ASSOCIATES THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Unquoted shares, at cost:- At 1 April 2007/2006 94,338,315 94,338,315 2,400,000 2,400,000 Addition during the financial year 1,593,865 - 1,593,865 - At 31 March 2008/2007 95,932,180 94,338,315 3,993,865 2,400,000 Share of post acquisition reserves 17,100,237 17,747,298 - - 113,032,417 112,085,613 3,993,865 2,400,000 Details of the associates, which are all incorporated in Malaysia, are as follows:- Name of Company Effective Equity Principal Activities Interest 2008 2007 % % Ligamas Sdn. Bhd.# 50.0 50.0 Property development. Varich Industries Sdn. Bhd.* 50.0 50.0 Dormant. Paling Industries Sdn. Bhd.# 40.0 40.0 Manufacturing of plastic building materials. Pasti Bumi Sdn. Bhd.* ## 19.6 19.6 Sale 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. Built SBC Co., Ltd* 30.0 - Investment and selling of properties. Kanyara Co., Ltd* 30.0 - Investment and selling of properties. * The results of these associates have not been equity accounted as the amounts involved are insignificant. # The share of the results of these associates is based on the latest available unaudited management financial statements made up to 31 March 2008. ## Held by Paling Industries Sdn. Bhd.
  • 72. 70 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 7. INTEREST IN ASSOCIATES (cont’d) The summarised financial information of the associates are as follows:- THE GROUP 2008 2007 RM RM Assets and liabilities Total assets 153,334,292 149,845,853 Total liabilities 21,338,289 16,653,116 Results Revenue 45,384,460 54,261,998 (Loss)/Profit for the year (1,690,799) 299,072 8. INVESTMENT IN JOINT VENTURE THE COMPANY 2008 2007 RM RM Unquoted shares, at cost 1,801,128 1,801,128 Details of the joint venture, which is incorporated in Thailand, are as follows:- Name of Company Effective Equity Principal Activities Interest 2008 2007 % % Tri-Development Co., Ltd 50.0 50.0 Property development.
  • 73. ANNUAL REPORT 2008 71 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 8. INVESTMENT IN JOINT VENTURE (cont’d) The share of the results of the joint venture is based on the unaudited financial statements made up to 31 March 2008. The Group’s aggregate share of the non-current assets, current assets, non-current liabilities, current liabilities, income and expenses of the joint venture is as follows:- 2008 2007 RM RM Assets and liabilities Non-current assets 571,737 591,715 Current assets 8,370,086 9,220,742 Total assets 8,941,823 9,812,457 Current liabilities (2,754,628) (4,256,916) Results Revenue 27,283,291 17,761,423 Profit for the financial year 631,654 3,831,196
  • 74. 9. PROPERTY, PLANT AND EQUIPMENT TRANSFER TO AT DEVELOPMENT DEPRECIATION AT 1.4.2007 ADDITIONS DISPOSAL WRITE-OFF COST CHARGE 31.3.2008 RM RM RM RM RM RM RM (Note 15) THE GROUP NET BOOK VALUE 72 SBC CORPORATION BERHAD Freehold land 4,387,621 - - - (1,081,986) - 3,305,635 Building 1,902,963 - - - - (100,156) 1,802,807 Plant and machinery, construction FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 machinery and equipment, formwork, scaffoldings and containers 527,266 94,193 - - - (107,923) 513,536 Office renovation, office equipment, computers, furniture and fittings, tools and sales office 1,253,167 85,802 - (8,303) - (265,315) 1,065,351 Motor vehicles 478,526 483,783 (1) - - (244,541) 717,767 Total 8,549,543 663,778 (1) (8,303) (1,081,986) (717,935) 7,405,096 Notes To Financial Statements
  • 75. ANNUAL REPORT 2008 73 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 9. PROPERTY, PLANT AND EQUIPMENT (cont’d) AT ACCUMULATED NET BOOK COST DEPRECIATION VALUE RM RM RM AT 31.3.2008 Freehold land 3,305,635 - 3,305,635 Building 2,003,119 (200,312) 1,802,807 Plant and machinery, construction machinery and equipment, formwork, scaffoldings and containers 9,296,603 (8,783,067) 513,536 Office renovation, office equipment, computers, furniture and fittings, tools and sales office 5,345,267 (4,279,916) 1,065,351 Motor vehicles 1,619,932 (902,165) 717,767 Total 21,570,556 (14,165,460) 7,405,096 AT 31.3.2007 Freehold land 4,387,621 - 4,387,621 Building 2,003,119 (100,156) 1,902,963 Plant and machinery, construction machinery and equipment, formwork, scaffoldings and containers 9,202,410 (8,675,144) 527,266 Office renovation, office equipment, computers, furniture and fittings, tools and sales office 5,384,005 (4,130,838) 1,253,167 Motor vehicles 2,106,298 (1,627,772) 478,526 Total 23,083,453 (14,533,910) 8,549,543 AT DEPRECIATION AT 1.4.2007 ADDITION DISPOSAL CHARGE 31.3.2008 RM RM RM RM RM THE COMPANY NET BOOK VALUE Office equipment, computers, furniture and fittings 2,656 - - (2,048) 608 Motor vehicles 1 483,783 (1) (96,756) 387,027 2,657 483,783 (1) (98,804) 387,635
  • 76. 74 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 9. PROPERTY, PLANT AND EQUIPMENT (cont’d) AT ACCUMULATED NET BOOK COST DEPRECIATION VALUE RM RM RM AT 31.3.2008 Office equipment, computers, furniture and fittings 370,553 (369,945) 608 Motor vehicles 486,558 (99,531) 387,027 857,111 (469,476) 387,635 AT 31.3.2007 Office equipment, computers, furniture and fittings 370,553 (367,897) 2,656 Motor vehicles 376,950 (376,949) 1 747,503 (744,846) 2,657 The net book value of the motor vehicles of the Group and the Company acquired under hire purchase terms amounted to RM654,420 (2007 - RM341,449) and RM387,026 (2007 - Nil) respectively, at the balance sheet date. 10. INVESTMENT PROPERTIES THE GROUP 2008 2007 RM RM At carrying amount: - Freehold land 106,688 106,688 - Building 5,090,320 6,761,237 5,197,008 6,867,925 Impairment loss (2,074,556) (2,074,556) 3,122,452 4,793,369 Addition during the financial year - 117,070 Disposal during the financial year (3,122,452) (1,787,987) - 3,122,452
  • 77. ANNUAL REPORT 2008 75 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 11. LAND HELD FOR PROPERTY DEVELOPMENT THE GROUP 2008 2007 RM RM At 1 April 2007/2006 87,700,188 87,090,675 Additions during the financial year 2,941,967 2,468,347 Disposal during the financial year (7,131,358) - Impairment loss - (1,858,834) Transfer to property development costs (Note 15) (6,125,122) - At 31 March 2008/2007 77,385,675 87,700,188 Land held for property development comprises:- Freehold land, at cost 23,293,165 30,406,098 Leasehold land, at cost 42,793,104 47,565,800 Development expenditure 11,299,406 9,728,290 77,385,675 87,700,188 Included in land held for property development are leasehold land amounting to Nil (2007 - RM8,620,889) and RM40,079,084 (2007 - RM39,442,632) charged to a financial institution for the issuance of the ABBA Bonds granted to the Company and for the banking facilities granted to the Group, respectively. 12. OTHER ASSETS THE GROUP 2008 2007 RM RM At cost Quoted shares in Malaysia 12,300 12,300 Investment in club membership 208,000 208,000 220,300 220,300 Market value of quoted shares 5,760 10,890 Investments in quoted shares are carried at cost and are written down to market value only when the directors are of the opinion that the diminution in value is permanent.
  • 78. 76 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 13. GOODWILL ON CONSOLIDATION Goodwill arose from the investment in subsidiaries made in prior years. During the financial year, the Group assessed the recoverable amount of purchased goodwill, and determined that goodwill is not impaired. The recoverable amount used is based on fair value less costs to sell and value in use. The fair value less costs to sell has been determined after taking into account the intrinsic value of the land held for development. The land held for development is determined using a valuation carried out by an independent valuer. The recoverable amount of a cash-generating unit is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a period of two years. The key assumptions used for value-in-use calculations are as follows:- Gross margin 21% - 23% Growth rate 6% Discount rate 15% (a) Budgeted gross margin The basis used to determine the value assigned to the budgeted gross margin is the average gross margins achieved in the year immediately before the budgeted year increased for expected efficiency improvements and cost saving measures. (b) Growth rate The growth rates used are based on past years achievement and the expected projects/contracts to be secured. (c) Discount rate The discount rate used is pre-tax and reflect specific risks relating to the relevant segments. 14. INVENTORIES THE GROUP 2008 2007 RM RM Unsold completed properties, at cost 659,001 726,148 None of the inventories is carried at net realisable value.
  • 79. ANNUAL REPORT 2008 77 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 15. PROPERTY DEVELOPMENT COSTS THE GROUP 2008 2007 RM RM At 1 April 2007/2006 - land 37,883,804 37,976,712 - development costs 151,433,073 120,913,208 189,316,877 158,889,920 Costs incurred during the year: - transferred from land held for property development (Note 11) 6,125,122 - - transferred from property, plant and equipment (Note 9) 1,081,986 302,696 - land 1,985,652 200,046 - development costs 39,885,162 38,669,473 Development costs of completed projects during the year: - land - (595,650) - development costs - (8,149,608) - (8,745,258) Sub-total 238,394,799 189,316,877 Cost recognised as an expense in the income statement: - previous year (129,609,620) (103,759,072) - current year (53,633,388) (34,536,432) - cost recognised for completed project - 8,685,884 (183,243,008) (129,609,620) At 31 March 2008/2007 55,151,791 59,707,257 Cumulative revenue recognised in income statement 129,060,077 158,034,674 Cumulative billings to purchasers (129,488,530) (168,857,826) Progress billings (Note 30) (428,453) (10,823,152) 54,723,338 48,884,105 Included in development expenditure is interest expense capitalised during the financial year amounting to RM1,204,188 (2007 - RM1,161,691). Leasehold land of a subsidiary costing RM21,805,269 (2007 - RM8,147,752) is charged to a licensed bank for a term loan facility granted to the subsidiary.
  • 80. 78 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 16. RECEIVABLES THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Trade receivables 43,046,515 62,106,277 - - Retention receivable 2,598,473 2,313,919 - - Total trade receivables 45,644,988 64,420,196 - - Allowance for doubtful debts At 1 April 2007/2006 (13,193,455) (13,466,689) - - Addition (214,034) - - - Written off - 273,234 - - At 31 March 2008/2007 (13,407,489) (13,193,455) - - Net trade receivables 32,237,499 51,226,741 - - Other receivables, deposits and prepayments 9,454,407 11,605,596 3,246,345 2,832,130 Allowance for doubtful debts (3,500,122) (3,500,122) (2,352,737) (2,352,737) Net other receivables, deposits and prepayments 5,954,285 8,105,474 893,608 479,393 Total receivables 38,191,784 59,332,215 893,608 479,393 The foreign currency exposure profile of the receivables is as follows:- THE GROUP 2008 2007 RM RM Thai Baht 5,210,613 6,486,019 Included in the trade receivables at the balance sheet date are the following amounts:- 2008 2007 RM RM Related party, Ligamas Sdn. Bhd. 6,354,059 4,675,505 Sabah State Government - 29,209,378 The amount owing by the Sabah State Government in the previous financial year was in respect of the construction of an office building for the Land and Survey Department (Jabatan Tanah dan Ukur) for a total value of RM29,069,000. The office building has been completed during the financial year and the entire amount due from the Sabah State Government has been set off against an equivalent amount owing to the Sabah State Government, the details of which are disclosed in Note 26 to the financial statements.
  • 81. ANNUAL REPORT 2008 79 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 16. RECEIVABLES (cont’d) Included in other receivables in the previous financial year was an amount of RM1,070,828 due from sub-contractors for the purchase of building materials. The amount owing was unsecured, interest-free, and has been repaid through deductions against claims for work performed by the sub-contractors during the financial year. Credit terms of trade receivables range from 14 to 90 days. 17. AMOUNTS OWING BY/(TO) CONTRACT CUSTOMERS THE GROUP 2008 2007 RM RM Amount owing by contract customers Contract costs incurred to date 92,410,659 92,297,781 Attributable profits 11,629,218 10,857,531 104,039,877 103,155,312 Progress billings (101,685,292) (100,538,533) Amount owing by contract customers 2,354,585 2,616,779 Amount owing to contract customers Contract costs incurred to date 100,580,488 106,690,901 Attributable profits 17,114,669 12,699,528 117,695,157 119,390,429 Progress billings (122,627,738) (122,240,858) Amount owing to contract customers (4,932,581) (2,850,429) 18. AMOUNTS OWING BY/(TO) SUBSIDIARIES The amounts owing are non-trade in nature, unsecured, interest-free and repayable on demand. The amounts owing are to be settled in cash. 19. AMOUNTS OWING BY/(TO) ASSOCIATES The amounts owing are unsecured, interest-free and repayable on demand. The amounts owing are to be settled in cash. 20. AMOUNT OWING BY JOINT VENTURE The amount owing is non-trade in nature, unsecured, interest-free and repayable on demand. The amounts owing are to be settled in cash.
  • 82. 80 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 21. TAX RECOVERABLE Subject to agreement with the tax authorities, the Company has tax recoverable of RM1,514,357 and RM2,124,903 at the balance sheet date in respect of the financial years ended 31 March 1997 to 31 March 2000 and 31 March 2007 to 31 March 2008 respectively. At the date of this report, the amount is still pending agreement with the tax authorities. 22. SHORT-TERM DEPOSITS WITH LICENSED BANKS The weighted average effective interest rates of deposits at the balance sheet date were as follows:- THE GROUP THE COMPANY 2008 2007 2008 2007 % % % % Licensed banks 3.00 4.24 - 2.30 Deposits of the Group and the Company have maturity periods of 30 days (2007 - 30 to 183 days). In the previous financial year, the foreign currency exposure profile of the short-term deposits was as follows:- THE GROUP 2008 2007 RM RM Thai Baht - 2,000,000 23. CASH AND BANK BALANCES THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Cash and bank balances 9,143,232 1,917,838 2,510,961 76,234 Sinking fund account (Note 43) 871,966 12,001,075 - 12,001,075 10,015,198 13,918,913 2,510,961 12,077,309 The foreign currency exposure profile of the cash and bank balances is as follows:- THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Thai Baht 3,166,725 805,933 7,252 71,210
  • 83. ANNUAL REPORT 2008 81 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 23. CASH AND BANK BALANCES (cont’d) Included in the cash and bank balances of the Group is RM176,529 (2007 - RM208,298) maintained under the Housing Development Accounts pursuant to Section 7A of the Housing Development (Control and Licensing) Act, 1966. Included in cash and bank balances is an amount of RM993,983 (2007 - RM397,094) held under the Housing Development Account pursuant to Section 8A of the Housing Developer (Control and Licensing) Enactment, 1978 and is restricted from use in other operations. The sinking fund account is maintained with a licensed bank, and forms part of the security for the repayment of the bank borrowings of a subsidiary. 24. SHARE CAPITAL THE COMPANY 2008 2007 2008 2007 NUMBER OF SHARES RM RM AUTHORISED Ordinary shares of RM1 each 193,167,000 193,167,000 193,167,000 193,167,000 5.5% ICCPS of RM1 each 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 82,435,000 82,435,000 82,435,000 82,435,000 25. RESERVES THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Share premium (Note a) 111,412,895 111,412,895 111,412,895 111,412,895 Capital reserve (Note b) 1,199,999 1,199,999 - - Retained profits (Note c) 20,989,638 18,077,892 21,925,388 22,322,998 133,602,532 130,690,786 133,338,283 133,735,893 (a) The share premium is not available for distribution by way of cash dividends. (b) The capital reserve arose from a bonus issue of ordinary shares on 21 August 1992 by a former subsidiary, and is not available for distribution by way of dividends.
  • 84. 82 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 25. RESERVES (cont’d) (c) Subject to agreement with the tax authorities, at the balance sheet date, the Company has:- (i) tax-exempt income of approximately RM823,000 (2007 - RM823,000) available for the purpose of paying tax-exempt dividends; and (ii) tax credits under Section 108 of the Income Tax Act, 1967 to frank the payment of dividends of approximately RM15,244,000 (2007 - RM15,456,000) out of its retained profits without incurring any additional tax liabilities. The balance of the retained profits, if distributed as dividends, will be taxed at the statutory tax rate. Effective from 1 January 2008, the Company is allowed an irrevocable option to elect for the single tier tax system or continue with the use of the tax credit balance for the purpose of dividend distribution. When the tax credit balance is fully utilised, or by 31 December 2013 at the latest, the Company will automatically move to the single tier tax system. 26. LONG-TERM BORROWINGS THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Term loans (Note 27) 32,446,779 4,610,276 24,045,354 - Hire purchase payables (Note 28) 432,785 259,793 269,465 - Amount owing to the Sabah State Government (Note a) - 29,069,000 - - 32,879,564 33,939,069 24,314,819 - (a) Amount owing to the Sabah State Government The amount represents the purchase consideration for the development land located on Signal Hill, Tanjung Lipat, Kota Kinabalu, Sabah, which was being developed by one of the Company’s subsidiaries, i.e. South-East Best Sdn. Bhd. (“SEB”). Under the terms of the agreement between SEB and the Sabah State Government dated 5 September 1994, the amount owing to the Sabah State Government shall be paid in the form of 130 completed units of the property under development to be completed within a period of five years from the commencement of their construction as consideration in kind. On 16 July 2002, the Sabah State Government agreed to execute a change of their entitlement to the outstanding amount of RM29,069,000. The change of entitlement was in the form of the construction by SEB of an office building for the Land and Survey Department (Jabatan Tanah dan Ukur) and part of a building for the Ministry of Finance at a value equivalent to the amount outstanding of RM29,069,000. On 21 October 2002, SEB was requested to prepare the Contract Document and Estimation for the above project. On 17 December 2004, SEB entered into a supplemental agreement with the Sabah State Government and agreed to execute a change of their entitlement. The change of entitlement is in the form of the construction by SEB of an office building for the Land and Survey Department (Jabatan Tanah dan Ukur) at a value equivalent to the amount outstanding of RM29,069,000. The Company completed the construction of the office building in May 2007 and handed over the office building in June 2007. The contract value was increased to RM30.3 million as a result of variation order works. The amount owing to Sabah State Government has been set off against the amount owing by the Sabah State Government which was included in trade receivables in the previous financial year, as detailed in Note 16 to the financial statements.
  • 85. ANNUAL REPORT 2008 83 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 27. TERM LOANS THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Current portion: - repayable within one year (Note 32) 14,681,994 2,580,042 12,735,306 - Non-current portion: - repayable between one to two years 16,535,327 1,983,119 15,305,518 - - repayable between two to five years 15,911,452 2,627,157 8,739,836 - Total non-current portion (Note 26) 32,446,779 4,610,276 24,045,354 - 47,128,773 7,190,318 36,780,660 - Details of the term loans outstanding at the balance sheet date are as follows:- THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Term loan I 36,780,660 - 36,780,660 - II - 800,000 - - III 4,365,296 4,900,068 - - IV 811,130 1,490,250 - - V 4,938,518 - - - VI 233,169 - - - 47,128,773 7,190,318 36,780,660 - Number of Monthly Interest Rate Date of Term loan Monthly Instalment Per Annum Commencement Instalments Amount % of Repayment RM I * * 7.75% September 2007 II 9 400,000 8.50% October 2006 III 48 120,312 8.00% November 2007 IV ** ** 7.80% March 2007 V 24 625,000 8.00% January 2010 VI 60 6,024 6.85% Upon full drawdown * Term loan I has a tenure of five years and is repayable in 11 half-yearly instalments ranging from RM76,680 to RM8,250,000. ** Term loan IV is the Islamic financing facility of Al-Bai Bithaman Ajil (“ABBA”) Scheme which is repayable in 3 monthly instalments of RM9,750 commencing March 2007 and 21 monthly instalments of RM76,646 commencing June 2007. It carries a financing charge of 7.80% per annum.
  • 86. 84 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 27. TERM LOANS (cont’d) (a) Term loan I is secured:- (i) by way of a third party legal charge over two pieces of freehold land and one piece of leasehold land of the subsidiaries; (ii) by way of a first party legal charge over 100% equity share in Mixwell (M) Sdn. Bhd.; (iii) by way of a first party legal charge over a security deposit; (iv) by way of corporate guarantees from Seri Ampangan Realty Sdn. Bhd. (“SAR”) and South-East Best Sdn. Bhd. (“SEB”) ; and (v) by way of a negative pledge from SAR and SEB respectively. (b) Term loan II is secured:- (i) by way of a specific debenture on the project land of a subsidiary; (ii) by way of a second legal charge on the three parcels of adjoining land of a subsidiary; and (iii) by way of corporate guarantees of the Company and SEB. (c) Term loan III is secured:- (i) by way of a Facility Agreement of RM28,000,000 to cover all the facilities as the principal instrument; (ii) by way of a first party legal charge over four pieces of development land of the subsidiaries; and (iii) by way of a corporate guarantee of the Company. (d) Term loan IV is secured:- (i) by way of a Lien Holders’ Caveat on a property of the subsidiary; (ii) by way of a legal charge over a sinking fund; and (iii) by way of a corporate guarantee of the Company. (e) Term loan V is secured:- (i) by way of a third party charge over two parcels of land and a building of the subsidiaries; and (ii) by way of a corporate guarantee of the Company. (f) Term loan VI is secured:- (i) by way of a first party legal charge over a property of the subsidiary; and (ii) by way of a corporate guarantee of the Company.
  • 87. ANNUAL REPORT 2008 85 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 28. HIRE PURCHASE PAYABLES THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Future minimum hire purchase payments: - repayable not later than one year 191,328 107,664 83,664 - - repayable later than one year and not later than five years 482,027 289,917 299,776 - 673,355 397,581 383,440 - Future finance charges (68,900) (41,318) (38,775) - Present value of hire purchase payables 604,455 356,263 344,665 - Present value of hire purchase payables is as follows:- Not later than one year (Note 30) 171,670 96,470 75,200 - Later than one year and not later than five years (Note 26) 432,785 259,793 269,465 - 604,455 356,263 344,665 - The hire purchase payables at the balance sheet date were subject to interest at rates ranging from 4.33% to 5.28% (2007 - 4.33% to 4.55%) per annum. 29. DEFERRED TAXATION The deferred tax relates to the revaluation of land held for property development. 30. PAYABLES THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Trade payables 25,173,627 19,160,408 - - Retention payable 7,050,816 6,957,999 - - Total trade payables 32,224,443 26,118,407 - - Other payables and accruals 4,848,837 5,474,865 210,718 371,667 Progress billings (Note 15) 428,453 10,823,152 - - Hire purchase payables (Note 28) 171,670 96,470 75,200 - 37,673,403 42,512,894 285,918 371,667
  • 88. 86 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 30. PAYABLES (cont’d) The foreign currency exposure profile of the payables is as follows:- THE GROUP 2008 2007 RM RM Thai Baht 2,754,628 3,813,987 Credit terms of trade payables range from 30 to 60 days. Included in other payables is an amount owing to a related party of RM169,237 (2007 - RM169,367). The details of the transaction and the balance are disclosed in Note 45 to the financial statements. 31. AMOUNT OWING TO A DIRECTOR The amount owing is unsecured, bore interest at 5.5% (2007 - 5.5%) per annum and repayable on demand. The amount is to be settled in cash. 32. SHORT-TERM BORROWINGS 2008 2007 SECURED UNSECURED TOTAL SECURED UNSECURED TOTAL RM RM RM RM RM RM THE GROUP Term loans (Note 27) 14,681,994 - 14,681,994 2,580,042 - 2,580,042 Revolving credits 3,300,000 6,000,000 9,300,000 5,294,400 7,000,000 12,294,400 17,981,994 6,000,000 23,981,994 7,874,442 7,000,000 14,874,442 THE COMPANY Term loans (Note 27) 12,735,306 - 12,735,306 - - - Revolving credits - 5,000,000 5,000,000 - 5,000,000 5,000,000 12,735,306 5,000,000 17,735,306 - 5,000,000 5,000,000 The weighted average effective interest rates at the balance sheet date for borrowings which bore interest at floating rates, were as follows:- THE GROUP THE COMPANY 2008 2007 2008 2007 % % % % Term loans 7.80 8.01 7.75 - Revolving credits 6.80 6.57 7.60 7.65
  • 89. ANNUAL REPORT 2008 87 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 32. SHORT-TERM BORROWINGS (cont’d) The revolving credits are secured by way of:- (i) corporate guarantees of the Company; (ii) negative pledges against the plant and equipment of a subsidiary ranking pari passu amongst the bankers; (iii) a Lien Holders Caveat on a property of a subsidiary; (iv) a legal charge over a sinking fund; (v) a third party legal charge over a piece of land of a subsidiary; and (vi) a first party legal charge over two pieces of land of a subsidiary. 33. ABBA BONDS THE GROUP/THE COMPANY 2008 2007 RM RM Al-Bai Bithaman Ajil Bonds (nominal value) 61,961,250 61,961,250 Less: ABBA Bonds issuance expenses (1,403,087) (1,343,155) Finance charges on bonds issue (21,961,250) (21,961,250) Net proceeds 38,596,913 38,656,845 Additional ABBA Bonds issuance expenses (12,001) (59,932) 38,584,912 38,596,913 Cumulation of amortisation of ABBA Bonds issuance expenses 1,415,088 1,270,823 Cumulation of amortisation of finance charges on ABBA Bonds issue 21,961,250 19,968,435 61,961,250 59,836,171 Cumulative repayments:- At 1 April 2007/2006 (11,153,025) (8,674,575) Repayment made during the year (50,808,225) (2,478,450) At 31 March 2008/2007 (61,961,250) (11,153,025) - 48,683,146 On 13 September 2002, the Company issued RM61,961,250 nominal value Al-Bai Bithaman Ajil Bonds (“ABBA Bonds”) comprising RM49,569,000 nominal value Primary Bonds and 10 equal tranches of Secondary Bonds with RM12,392,250 nominal value. The Primary Bonds are redeemable at maturity. Each Primary Bond is supported by 10 Secondary Bonds which are redeemable in semi- annual instalments commencing 6 months from the date of the first issue of the Secondary Bonds. The ABBA Bonds were placed out to a licensed financial institution via a private placement. The tenure of the ABBA Bonds is 5 years from the date of issue. The profit margin on the ABBA Bonds was fixed at 5% per annum, payable in arrears on a semi-annual basis represented by the Secondary Bonds. The ABBA Bonds were issued based on a 10% per annum yield to maturity. The ABBA Bonds were fully redeemed during the financial year.
  • 90. 88 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 34. BANK OVERDRAFTS The weighted average effective interest rates at the balance sheet date for bank overdrafts were as follows:- THE GROUP THE COMPANY 2008 2007 2008 2007 % % % % Bank overdrafts 8.67 8.73 8.90 8.97 The bank overdrafts are secured by way of:- (i) a letter of negative pledge of the Company; (ii) corporate guarantees from the Company; (iii) negative pledges against the plant and equipment of a subsidiary ranking pari passu amongst the bankers; (iv) a third party charge over two parcels of land and a building of the subsidiaries; (v) a Lien Holders Caveat on a property of a subsidiary; (vi) a legal charge over a sinking fund; and (vii) a guarantee by a director of the Company. 35. NET ASSETS PER ORDINARY SHARE The net assets per ordinary share is calculated based on the net assets value of RM216,037,532 (2007 - RM213,125,786) attributable to ordinary shares divided by the number of ordinary shares in issue at the balance sheet date of 82,435,000 (2007 - 82,435,000) shares. 36. REVENUE THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Revenue from construction contracts 10,729,823 18,493,025 - - Proportionate sales value of development properties 91,961,391 57,660,017 - - Dividend income - - 6,500,000 5,000,000 Interest income 206,714 369,482 206,714 768,966 Management and administrative charges 40,644 580,422 3,590,087 2,569,645 Sale of goods 4,116,217 - - - 107,054,789 77,102,946 10,296,801 8,338,611
  • 91. ANNUAL REPORT 2008 89 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 37. COST OF SALES THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Construction costs 4,959,405 16,123,032 - - Land and development expenditure 79,623,723 43,480,502 - - Direct costs 3,251,825 809,939 - - Management and administrative charges - 85,837 - - 87,834,953 60,499,310 - - 38. PROFIT/(LOSS) BEFORE TAXATION THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Profit/(Loss) before taxation is arrived at after charging/(crediting):- Allowance for doubtful debts 214,034 - - - Amortisation of bond expenses 144,265 277,770 144,265 277,770 Auditors’ remuneration - for the financial year 84,495 73,575 16,500 15,000 - underprovision in the previous financial year 1,450 4,525 1,500 2,000 Bad debts written off 74,922 697,574 4,626 - Depreciation of property, plant and equipment 717,935 580,160 98,804 4,895 Directors’ benefits-in-kind 16,925 16,925 16,925 16,925 Directors’ fees 123,000 100,500 123,000 100,500 Directors’ remuneration 1,412,775 1,166,900 1,412,775 683,060 Finance charges on bonds 1,992,814 4,486,809 1,992,814 4,486,809 Interest expense: - bank borrowings 2,119,308 1,796,915 1,052,766 1,227,664 - hire purchase 14,718 12,442 3,525 - - loans 2,074,827 268,230 1,960,063 102,722 Impairment loss on investment properties - 2,074,556 - - Investment in subsidiaries written off - - - 125,000 Impairment loss on land held for property development - 1,858,834 - - Property, plant and equipment written off 8,303 - - - Rental expense - premises 720 - 12,000 12,000 - machinery and equipment 112,051 9,975 - - Staff costs 4,635,207 3,530,728 2,129,312 47,240 Waiver of debts - (211,269) - (203,976) Gain on disposal of land held for future development (383,552) - - - Gain on disposal of property, plant and equipment (71,949) (155,791) (29,999) -
  • 92. 90 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 38. PROFIT/(LOSS) BEFORE TAXATION (cont’d) THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Gross dividend income from subsidiaries - - (6,500,000) (5,000,000) (Gain)/Loss on disposal of investment properties (48,248) 413,987 - - (Gain)/Loss on foreign exchange - realised (14,386) 2,617 (14,386) - Interest income: - licensed financial institutions (774,912) (389,710) (206,714) (369,482) - subsidiaries - - - (399,484) - others (48,529) (123,983) - - Rental income (92,667) (85,884) - - 39. INCOME TAX EXPENSE THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Current:- - for the financial year 1,126,475 1,022,984 696,554 576,211 - (over)/underprovision in previous financial years (100,964) (319,947) (198,694) (269,008) 1,025,511 703,037 497,860 307,203 Real property gains tax:- - for the financial year 541 99,130 - - - overprovision in the previous financial year (42,951) - - - (42,410) 99,130 - - 983,101 802,167 497,860 307,203 During the financial year, the statutory tax rate was reduced from 27% to 26%, as announced in the Malaysian Budget 2007. Subject to agreement with the tax authorities, the Group has unutilised tax losses and unabsorbed capital allowances of approximately RM4,235,000 (2007 - RM5,789,000) and RM536,000 (2007 - RM540,800) respectively available at the balance sheet date to be carried forward for offset against future taxable business income. No deferred tax asset is recognised on these items.
  • 93. ANNUAL REPORT 2008 91 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 39. INCOME TAX EXPENSE (cont’d) A reconciliation of the income tax expense applicable to the profit/(loss) 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 2008 2007 2008 2007 RM RM RM RM Profit/(Loss) before taxation 4,486,634 (2,207,105) 702,023 984,094 Tax at statutory tax rate of 26% (2007 - 27%) 1,166,525 (595,918) 182,526 265,706 Tax effects of: Non-deductible expenses 983,780 1,905,717 464,208 222,058 Non-taxable gains (511,611) (895,784) - Difference in tax rate in other country 70,527 88,447 70,527 88,447 Deferred tax assets not recognised during the financial year 107,105 1,319,329 - - Utilisation of deferred tax assets previously not recognised (576,176) (25,445) - - Utilisation of tax losses brought forward - (566,350) - (Over)/Underprovision in previous financial years (100,964) (319,947) (198,694) (269,008) Differential in tax rates (53,500) (133,305) - - Real property gains tax (42,410) - - - Others (60,175) 25,423 (20,707) - 983,101 802,167 497,860 307,203 40. EARNINGS/(LOSS) PER SHARE Basic earnings/(loss) per share is arrived at by dividing the profit/(loss) after taxation attributable to shareholders to the number of ordinary shares in issue at the balance sheet date of 82,435,000 (2007 - 82,435,000). 41. DIVIDEND THE COMPANY 2008 2007 RM RM Paid:- Final dividend of 1% per ordinary share less 27% tax (2007 - 1% per ordinary share less 28% tax) 601,773 593,527 At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 March 2008 of 1.5 sen per ordinary share of RM1 each less 25% tax (2007 - 1 sen per ordinary share of RM1 each less 27% tax) amounting to RM927,394 (2007 - RM601,773) will be tabled for shareholders’ approval. These financial statements do not reflect the final dividend which will be accrued as a liability only upon approval by shareholders.
  • 94. 92 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 42. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Cost of property, plant and equipment purchased 663,778 1,204,262 483,783 - Amount financed through hire purchase (376,000) - (376,000) - Cash disbursed for the purchase of property, plant and equipment 287,778 1,204,262 107,783 - 43. CASH AND CASH EQUIVALENTS For the purpose of the cash flow statements, cash and cash equivalents comprise the following:- THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Short-term deposits (Note 22) 985,000 3,334,226 - 1,239,225 Cash and bank balances (Note 23) 10,015,198 13,918,913 2,510,961 12,077,309 Bank overdrafts (Note 34) (22,374,501) (27,028,134) (2,450,529) (7,456,572) (11,374,303) (9,774,995) 60,432 5,859,962 Less: Cash placed in sinking fund account (Note 23) (871,966) (12,001,075) - (12,001,075) (12,246,269) (21,776,070) 60,432 (6,141,113) 44. 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 2008 2007 2008 2007 RM RM RM RM DIRECTORS’ FEES:- 1. Mun Chong Shing @ Mun Chong Tian 24,000 19,500 24,000 19,500 2. Dato’ Zainol Abidin bin Haji A. Hamid 25,000 20,500 25,000 20,500 3. Dato’ Lim Phaik Gan 25,000 20,500 25,000 20,500 4. Dato’ Dr. Norraesah bt Haji Mohamad 25,000 20,500 25,000 20,500 5. Ahmad Fizal bin Othman 24,000 19,500 24,000 19,500 123,000 100,500 123,000 100,500
  • 95. ANNUAL REPORT 2008 93 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 44. DIRECTORS’ REMUNERATION (cont’d) THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM DIRECTORS’ NON-FEE EMOLUMENTS:- 1. Sia Kwee Mow @ Sia Hok Chai 747,030 618,800 747,030 618,800 2. Sia Teong Heng 654,045 537,600 654,045 537,600 3. Mun Chong Shing @ Mun Chong Tian 1,500 1,200 1,500 1,200 4. Dato’ Zainol Abidin bin Haji A. Hamid 1,500 1,200 1,500 1,200 5. Dato’ Lim Phaik Gan 3,000 2,400 3,000 2,400 6. Dato’ Dr. Norraesah bt Haji Mohamad 3,000 3,000 3,000 3,000 7. Ahmad Fizal bin Othman 2,700 2,700 2,700 2,700 1,412,775 1,166,900 1,412,775 1,166,900 Apart from the amounts disclosed under directors’ remuneration above, the estimated monetary value of other benefits-in-kind received by the following director during the financial year, otherwise than in cash is as follows:- THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM Sia Kwee Mow @ Sia Hok Chai 16,925 16,925 16,925 16,925 45. RELATED PARTY DISCLOSURES (a) For the purpose of the financial statements, the Group and the Company have related party relationships with :- (i) its subsidiaries, associates, directors and joint venture; (ii) the directors who are the key management personnel; and (iii) an entity controlled by certain key management personnel.
  • 96. 94 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 45. RELATED PARTY DISCLOSURES (cont’d) (b) In addition to the information disclosed elsewhere in the financial statements, the Group and the Company carried out the following transactions with its related parties during the financial year: THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM (i) Subsidiaries Rental paid - - 12,000 12,000 Dividend income receivable - - 6,500,000 5,000,000 Interest receivable - - - 399,484 Management fee receivable - - 3,600,000 1,500,000 (ii) Associates Progress billing received/receivable 6,837,555 15,523,240 - - (iii) Directors Interest paid/payable 102,722 102,722 102,722 102,722 (iii) Joint venture Management fee receivable - - - 1,069,645 (iv) Key management personnel Short-term employee benefits 2,075,488 1,577,980 1,767,487 1,046,500 In the opinion of the directors, the above transactions have been entered into in the ordinary course of business on terms mutually agreed between the parties. 46. CAPITAL COMMITMENT THE GROUP 2008 2007 RM RM Approved and contracted for:- - Purchase of property, plant and equipment 77,704 - 47. CONTINGENT LIABILITY THE COMPANY 2008 2007 RM RM Corporate guarantee (unsecured) given to banks and other licensed financial institutions for credit facilities granted to subsidiaries 47,429,688 37,556,180
  • 97. ANNUAL REPORT 2008 95 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 48. SEGMENTAL REPORTING (i) By Business Segment:- THE GROUP 2008 MANU- FACTURING CONS- PROPERTY INVESTMENT AND TRUCTION DEVELOPMENT HOLDING TRADING ELIMINATIONS GROUP RM RM RM RM RM RM REVENUE: External revenue 10,729,824 91,961,391 247,357 4,116,217 - 107,054,789 Intersegment revenue 33,739,947 - 10,095,043 52,222 (43,887,212) - Total revenue 44,469,771 91,961,391 10,342,400 4,168,439 (43,887,212) 107,054,789 Results: Segment results 2,976,490 8,685,578 5,728,782 878,059 (6,819,212) 11,449,697 Finance costs (6,316,002) Share of results of associates - 146,293 - (793,354) - (647,061) Profit from ordinary activities before taxation 4,486,634 Income tax expense (983,101) Profit from ordinary activities after taxation 3,503,533 Minority interests 9,986 Net profit attributable to shareholders 3,513,519
  • 98. 96 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 48. SEGMENTAL REPORTING (cont’d) (i) By Business Segment:- (Cont’d) THE GROUP 2008 MANU- FACTURING CONS- PROPERTY INVESTMENT AND TRUCTION DEVELOPMENT HOLDING TRADING GROUP RM RM RM RM RM Other information Segment assets 13,848,720 303,576,094 9,979,986 12,139,995 339,544,795 Unallocated assets 1,286,456 340,831,251 Segment liabilities 40,579,429 36,095,484 46,666,318 446,728 123,787,959 Unallocated liabilities 966,746 124,754,705 Capital expenditure - Property, plant and equipment 8,339 171,656 483,783 - 663,778 - Land held for property development - 2,941,967 - - 2,941,967 Depreciation 282,077 337,054 98,804 - 717,935 Amortisation of bonds expenses 144,265
  • 99. ANNUAL REPORT 2008 97 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 48. SEGMENTAL REPORTING (cont’d) (i) By Business Segment:- (Cont’d) THE GROUP 2007 MANU- FACTURING CONS- PROPERTY INVESTMENT AND TRUCTION DEVELOPMENT HOLDING TRADING ELIMINATIONS GROUP RM RM RM RM RM RM REVENUE: External revenue 18,493,025 57,660,017 949,904 - - 77,102,946 Intersegment revenue 33,834,846 - 7,506,307 940,058 (42,281,211) - Total revenue 52,327,871 57,660,017 8,456,211 940,058 (42,281,211) 77,102,946 Results: Segment results 4,014,199 (1,073,977) 6,739,974 123,863 (5,574,978) 4,229,081 Finance costs (6,705,397) Share of results of associates - 747,908 - (478,697) - 269,211 Loss from ordinary activities before taxation (2,207,105) Income tax expense (802,167) Loss from ordinary activities after taxation (3,009,272)
  • 100. 98 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 48. SEGMENTAL REPORTING (cont’d) (i) By Business Segment:- (Cont’d) THE GROUP 2007 MANU- FACTURING CONS- PROPERTY INVESTMENT AND TRUCTION DEVELOPMENT HOLDING TRADING GROUP RM RM RM RM RM Other information Segment assets 15,765,944 338,469,983 19,474,432 10,774,053 384,484,412 Unallocated assets 1,367,292 385,851,704 Segment liabilities 38,983,630 69,379,694 14,709,691 3,011 123,076,026 Unallocated liabilities 49,644,892 172,725,918 Capital expenditure - Property, plant and equipment 90,142 1,114,120 - - 1,204,262 - Land held for property development - 2,468,347 - - 2,468,347 Depreciation 292,058 282,948 5,154 - 580,160 Impairment loss on investment properties - 2,074,556 - - 2,074,556 Impairment loss on land held for property development - 1,858,834 - - 1,858,834 Amortisation of bonds expenses 277,770 (ii) By geographical market:- SEGMENT REVENUE SEGMENT ASSETS CAPITAL EXPENDITURE 2008 2007 2008 2007 2008 2007 Malaysia 79,771,498 59,341,523 331,889,428 378,734,947 3,500,994 3,046,318 Thailand 27,283,291 17,761,423 8,941,823 9,812,457 104,751 626,291 107,054,789 77,102,946 340,831,251 388,547,404 3,605,745 3,672,609
  • 101. ANNUAL REPORT 2008 99 Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 49. FOREIGN EXCHANGE RATE The principal closing foreign exchange rate used (expressed on the basis of one unit of foreign currency to Ringgit Malaysia equivalent) for the translation of the foreign currency balances at the balance sheet date is as follows:- THE GROUP 2008 2007 RM RM Thai Baht 0.100 0.100 50. FAIR VALUES OF FINANCIAL INSTRUMENTS Fair value is defined as the amount at which the financial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation. The following methods and assumptions are used to estimate the fair value of each class of financial instruments:- (i) Bank balances and other liquid funds and short-term receivables/payables The carrying amounts approximated their fair values due to the relatively short-term maturity of these instruments. (ii) Quoted and unquoted investments The fair values of the 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) Long-term bank loans The carrying amounts approximated their fair values as these instruments bear interest at variable rates. (iv) 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.
  • 102. 100 SBC CORPORATION BERHAD Notes To Financial Statements FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 50. FAIR VALUES OF FINANCIAL INSTRUMENTS (cont’d) (v) Contingent liability The nominal amount and the net fair value of financial instruments not recognised in the balance sheets of the Company are as follows: 2008 2007 Nominal Net Nominal Net Amount Fair Value Amount Fair Value Note RM RM RM RM Corporate guarantees 47 47,429,688 * 37,556,180 * * - The fair value of the contingent liabilities is expected to be minimal as the subsidiaries are expected to be able to repay the banking facilities. 51. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR The significant events during the financial year are as follows:- (a) On 21 December 2007, Syarikat Siah Brothers Trading Sdn. Bhd. (“SSBT”), a wholly-owned subsidiary of the Company entered into a Share Sale Agreement with a third party to acquire an additional 28,250 ordinary shares of RM1 each representing 6.28% of the issued and paid-up share capital of Sri Rawang Properties Sdn. Bhd. for a total cash consideration of RM310,750. The total number of shares held by SSBT after the acquisition would be 128,250 ordinary shares of RM1 each representing 28.50% of the issued and paid-up capital of Sri Rawang Properties Sdn. Bhd. The acquisition has yet to be completed as at the date of the financial statements; (b) On 7 March 2008, the Company acquired:- (i) 90,000 ordinary shares of 100 Bahts each representing 30% of the issued and paid-up share capital of Built SBC Co., Ltd (“BSL”) for a cash consideration of RM956,319; and (ii) 60,000 ordinary shares of 100 Bahts each representing 30% of the issued and paid-up share capital of Kanyara Co., Ltd (“KCL”) for a cash consideration of RM637,546.
  • 103. ANNUAL REPORT 2008 101 Group Properties AS AT 31 MARCH 2008 Location Tenure/ Land/ Net Book Value Description Date of (Age of (Built-Up) As At Acquisition */ building or Area 31. 03. 2008 Revaluation date of expiry) Sq. Ft. RM 74, 74A-E, Wisma Siah Brothers, Freehold 5,513/ 3,739,156 6 I/2 storey 28/03/2000 Jalan Pahang, (28-30 years) (38,238) commercial 53000 Kuala Lumpur. building for office headquarters and for rental GM 2414, Lot No. 9332, Freehold 8,902 483,523 Vacant land 28/03/2000 Mukim Batu, Daerah and (12 years) for future Negeri Wilayah Persekutuan. development P.T. 8995, 8997, 9077 Leasehold 683,762 473,197 Vacant land 28/03/2000 & Part of P.T. 9006, expiring for future Mukim Batu, Daerah and on development Negeri Wilayah Persekutuan. 22/4/2086 Part of P.T. 9005 & Part of P.T. 9006, Leasehold 119,372 3,424,629 Land currently 28/03/2000 Mukim Batu, Daerah and expiring under Negeri Wilayah Persekutuan. on development 22/4/2086 P.T. 42031, 42042, 42052-42054, Freehold 574,518 1,285,434 Vacant land 16/12/1993* Mukim Kuala Kuantan, for future District of Kuantan, development Pahang Darul Makmur. P.T. 42029, Freehold 49,052 206,088 Land currently 16/12/1993* Mukim Kuala Kuantan under District of Kuantan, development Pahang Darul Makmur. P.T. 42043, 42045-42046 & 42050, Freehold 560,535 1,697,954 Land currently 16/12/1993* Mukim Kuala Kuantan, under District of Kuantan, development Pahang Darul Makmur P.T. 9076 & Part of P.T. 9005, Leasehold 457,918 16,007,311 Vacant land 28/03/2000 Mukim Batu, Daerah and expiring on for future Negeri Wilayah Persekutuan. 22/4/2086 development Part of CT No. 10166 for Freehold 1,132,637 13,510,000 Vacant land 05/04/1999 * Lot No. 2398, Mukim of Batang Kali, for future District of Ulu Selangor, development Selangor Darul Ehsan.
  • 104. 102 SBC CORPORATION BERHAD Group Properties AS AT 31 MARCH 2008 Location Tenure/ Land/ Net Book Value Description Date of (Age of (Built-Up) As At Acquisition */ building or Area 31. 03. 2008 Revaluation date of expiry) Sq. Ft. RM Lot 2 (TL017546495) Leasehold 232,163 9,942,632 Land currently 30/04/2002* Signal Hill, Tanjung Lipat, expiring on under District of Kota Kinabalu, 31/12/2093 development State of Sabah. 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 Lot 4 (TL017546511) Leasehold 96,263 4,123,169 Land currently 30/04/2002* Signal Hill, Tanjung Lipat, expiring on under District of Kota Kinabalu, 31/12/2093 development State of Sabah. H.S.(D) No. 7727, Lot 438, Freehold 48,846 732,690 Vacant land 24/08/1998* Mukim of Serendah, Ulu Selangor, for future Selangor Darul Ehsan. development Part of CT No. 10140 for Freehold 1,306,890 11,100,000 Vacant land 16/04/2004* Lot No. 2396, Mukim of Batang Kali, for future District of Ulu Selangor, development Selangor Darul Ehsan. Part of CT No. 10166 for Freehold 1,045,512 11,500,000 Vacant land 16/04/2004* Lot No. 2398, Mukim of Batang Kali, for future District of Ulu Selangor, development Selangor Darul Ehsan. HS(M) 2220 PT 6726, Freehold 23,111 3,467,000 Land currently 16/04/2004* HS(M) 2221 PT 6727, under HS(M) 2222 PT 6728, development HS(M) 2223 PT 6729, HS(M) 2224 PT 6730, HS(M) 2225 PT 6731, HS(M) 2226 PT 6732, HS(M) 2227 PT 6733, HS(M) 2228 PT 6734 & HS(M) 2229 PT 6735, Mukim of Setapak, District of State of Wilayah Persekutuan.
  • 105. ANNUAL REPORT 2008 103 Group Properties AS AT 31 MARCH 2008 Location Tenure/ Land/ Net Book Value Description Date of (Age of (Built-Up) As At Acquisition */ building or Area 31. 03. 2008 Revaluation date of expiry) Sq. Ft. RM 2 units 3 storeys terrace houses Freehold 9,348 1,933,372 Units for sale 16/04/2004* (Lot D & H) and 1 unit 2 storeys bungalow (Lot L) at Taman Suria Setapak Jalan Gombak, Mukim Setapak, Wilayah Persekutuan HS(M) 1622 PT 2186, Leasehold 236,983 829,000 Vacant land 16/04/2004* Pekan Ulu Yam Lama, expiring on for future Mukim of Hulu Yam, 16/05/2055 development District of Hulu Selangor, Selangor Darul Ehsan. 9 units 2 1/2 storey Leasehold 27,276 6,016,393 Units for sale 30/04/2002* semi-detached houses (B3, B5, B6, expiring on B14, B38, B39, B40, B44 & B45) 16/09/2911 and 2 units double storey link bungalow (C28 & C30) at Signal Hill Park, Tanjung Lipat, District of Kota Kinabalu, State of Sabah.
  • 106. 104 SBC CORPORATION BERHAD Shareholders’ Information AS AT 31 JULY, 2008 Authorised Shares Capital : RM200,000,000 Issued and Fully Paid Up Capital : RM82,435,000 Class of Shares : Ordinary shares of RM1 each fully paid Voting Right : 1 vote per ordinary share DISTRIBUTION SCHEDULE No. of % of No. of % of Shareholding Category Shareholders Shareholders Shares Issued Capital 1 - 99 287 8.12 9,771 0.01 100 - 1,000 976 27.63 813,394 0.99 1,001 - 10,000 1,898 53.72 6,879,467 8.35 10,001 - 100,000 324 9.17 9,372,139 11.37 100,001 - 4,121,749 43 1.22 26,018,706 31.56 4,121,750 and above 5 0.14 39,341,523 47.72 Total 3,533 100.00 82,435,000 100.00 THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors) Name of Shareholders No. of Shares Held % of Issued Capital 1. LOM Holdings Sdn Bhd 14,317,500 17.37 2. Amanah Raya Nominees (Tempatan) Sdn Bhd - Skim Amanah Saham Bumiputera 8,542,000 10.36 3. Permodalan Nasional Berhad 6,867,000 8.33 4. Evergreen Legacy Sdn Bhd 5,181,023 6.28 5. Amsec Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Sia Teong Heng 4,434,000 5.38 6. Meer Sadik bin Habib Mohamed 3,780,528 4.59 7. DB (Malaysia) Nominee (Asing) Sdn Bhd - Exempt An For Deutsche Bank AG Singapore (PWM Asing) 2,170,400 2.63 8. Mayban Securities Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Ong Huey Peng (REM 650) 2,000,000 2.43 9. RHB Capital Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Sia Kwee Mow @ Sia Hok Chai (STH 981069) 1,480,800 1.80 10. Mun Oi @ Mun Oi Lin 1,473,800 1.79 11. Poo Choo @ Ong Poo Choi 1,282,400 1.56 12. Choong Sake Mee 1,235,200 1.50
  • 107. ANNUAL REPORT 2008 105 Shareholders’ Information AS AT 31 JULY, 2008 THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors) (cont’d) Name of Shareholders No. of Shares Held % of Issued Capital 13. Southwark Limited 1,191,300 1.44 14. Nican Asia Limited 1,106,478 1.34 15. Southwark Limited 1,101,800 1.34 16. Chan Wan Moi 881,100 1.07 17. Siah Teong Teck 880,830 1.07 18. Siah Teong Woei 877,711 1.06 19. Siah Chong Hock 722,000 0.88 20. Wong Chee Choon 492,800 0.60 21. Penfold Holdings Limited 400,000 0.48 22. Sin Len Moi 363,100 0.44 23. United Overseas Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Siah Teong Chein (MKL) 341,723 0.41 24. Siah Teong Yin 328,723 0.40 25. Siah Chong Ong 298,000 0.36 26. ABB Nominee (Tempatan) Sdn. Bhd. - Pledged Securities Account for Siow Sing Heng 277,000 0.34 27. Pua Kim Kian 265,695 0.32 28. Sia Tzu Lung 230,092 0.28 29. Chew Siew Ying 199,000 0.24 30. Mayban Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Yong Chew Keat 175,000 0.21 TOTAL 62,897,003 76.30 The thirty largest shareholders refer to the thirty securities account holders having the largest number of securities according to the Record of Depositors (without aggregating the securities from different securities accounts belonging to the same depositor).
  • 108. 106 SBC CORPORATION BERHAD Shareholders’ Information AS AT 31 JULY, 2008 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 4,677,992(c) 5.67 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) 4,434,000 shares are held in bare trust by Amsec Nominees (Tempatan) Sdn. Bhd. 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 Amanah Raya Nominees (Tempatan) Sdn. Bhd. - Skim Amanah Saham Bumiputera 8,542,000 - 10.36 - Sia Kwee Mow @ Sia Hok Chai 1,480,800(a) 19,498,523(b) 1.80 23.65 Sia Teong Heng 4,677,992(c) 19,498,523(b) 5.67 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 - 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) 4,434,000 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
  • 109. ANNUAL REPORT 2008 107 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the Eighteenth Annual General Meeting of SBC Corporation Berhad will be held at the Ground Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpur on Tuesday, 23 September, 2008 at 11.00 a.m. to transact the following business - AGENDA 1. To receive and adopt the Directors’ Report and the Audited Financial Statements for the year Resolution 1 ended 31 March, 2008 together with the Auditors’ Report thereon. 2. To declare a first and final dividend of 1.5% less 25% income tax for the year ended 31 March, Resolution 2 2008. 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 (c) Mr. Mun Chong Shing @ Mun Chong Tian Resolution 6 5. To re-elect YBhg. Dato’ Dr. Norraesah bt. Haji Mohamad as a Director retiring by rotation pursuant Resolution 7 to Article 77 of the Articles of Association of the Company. 6. To re-appoint Messrs. Horwath as Auditors of the Company and to authorise the Directors to fix Resolution 8 their remuneration. 7. As Special Business, to consider and, if thought fit, to pass the following Ordinary Resolution – AUTHORITY TO DIRECTORS TO ALLOT AND ISSUE SHARES Resolution 9 “THAT subject always to the Companies Act, 1965, the Articles of Association of the Company and the approval from the Bursa Malaysia Securities Berhad and other governmental/regulatory bodies, where such approval shall be necessary, the Directors be and are hereby authorised pursuant to Section 132D of the Companies Act, 1965, to allot and issue shares in the Company, at any time and upon such terms and conditions and for such purposes as they may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per cent (10%) of the issued capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company. ” 8. To consider any other business for which due notice shall have been given.
  • 110. 108 SBC CORPORATION BERHAD Notice of Dividend Payment NOTICE IS HEREBY GIVEN that subject to the approval of the shareholders at the Eighteenth Annual General Meeting of the Company, the first and final dividend of 1.5% less 25% income tax for the year ended 31 March, 2008 will be paid on 31 October, 2008 to Depositors registered in the Record of Depositors on 17 October, 2008. A Depositor shall qualify for entitlement only in respect of : a) shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 17 October, 2008 in respect of ordinary transfers; and b) shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad. By Order of the Board CHONG FOOK SIN KAN CHEE JING Company Secretaries Kuala Lumpur 29 August, 2008 NOTES - 1) Proxy - A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote instead of him. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. To be valid, the proxy form duly completed must be deposited at the Registered Office of the Company not less than forty-eight (48) hours before the time for holding the meeting. If the appointor is a corporation, this form must be executed under its common seal or under the hand of its attorney. 2) Resolution 9 - The Company is actively pursuing business opportunities in prospective areas so as to broaden the operating base and earnings potential of the Company. Such expansion plans may require the issue of new shares not exceeding 10 per cent (10%) of the Company’s issued share capital. With the passing of the resolution by the shareholders of the Company at the forthcoming Annual General Meeting, the Directors would avoid delay and cost of convening further general meetings to approve the issue of shares for such purposes. Statement Accompanying Notice of Annual General Meeting PURSUANT TO PARAGRAPH 8.28 (2) OF THE LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD (1) The following are the Directors standing for re-appointment or re-election at the Eighteenth Annual General Meeting - (i) Re-appointment of the following Directors pursuant to Section 129(6) of the Companies Act, 1965 - (a) YBhg. Dato’ Lim Phaik Gan (b) Mr. Sia Kwee Mow @ Sia Hok Chai (c) Mr. Mun Chong Shing @ Mun Chong Tian (ii) Re-election of YBhg. Dato’ Dr. Norraesah bt. Haji Mohamad as a Director pursuant to Article 77 of the Articles of Association of the Company. (2) The profile of Directors standing for re-appointment or re-election as mentioned in paragraph 1 above at the Eighteenth Annual General Meeting are set out in page 4 to 9 of this Annual Report.
  • 111. NOTES
  • 112. NOTES
  • 113. PROXY FORM SBC CORPORATION BERHAD (199310-P) (Incorporated in Malaysia) I/We, __________________________________________________________________________________________________________________ of ______________________________________________________________________________________________________________________ being a member/ members of the abovenamed Company do hereby appoint _____________________________________________________ of __________________________________________________________ or failing whom, ___________________________________________ of ___________________________________________________________ as my/our proxy to attend and vote for me/us and on my/our behalf at the Eighteenth Annual General Meeting of the Company to be held at the Ground Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpur on Tuesday, 23 September, 2008 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-appointment of Director : Mr. Mun Chong Shing @ Mun Chong Tian 7. Re-election of Director : YBhg. Dato’ Dr. Norraesah bt. Haji Mohamad 8. Re-appointment of Auditors 9. Authority to Directors to allot and issue shares (Please indicate with an ‘X’ in the appropriate box against each resolution how you wish your proxy to vote. If no instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion.) Dated this _______ day of _____________ , 2008 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.
  • 114. Fold this flap for sealing Then fold here Affix Stamp The Company Secretaries SBC CORPORATION BERHAD (199310-P) Wisma Siah Brothers, 74A, Jalan Pahang, 53000 Kuala Lumpur. First fold here