SBC CORPORATION BERHAD 199310 P
WISMA SIAH BROTHERS, 74 JALAN PAHANG, 53000 KUALA LUMPUR, MALAYSIA
t +60 3-4041 8118 f +60...
CORE PURPOSE
• To build upon our construction heritage
 to design and deliver exciting, unique
   and valuable solutions f...
Contents




 2 •    Corporate Information
 4 •    Directors’ Profile
12 •    Corporate Structure
13 •    Group Financial H...
2 SBC CORPORATION BERHAD




  Corporate Information

                       BOARD OF DIRECTORS                           ...
ANNUAL REPORT 2008         3




                                                       Corporate Information

SOLICITORS
...
4 SBC CORPORATION BERHAD




  Directors’ Profiles
  AS AT 31 JULY 2008




  SIA KWEE MOW             Sia Kwee Mow @ Sia H...
ANNUAL REPORT 2008         5




                                                                               Directors’...
6 SBC CORPORATION BERHAD




  Directors’ Profiles
  AS AT 31 JULY 2008




  SIA TEONG HENG           Sia Teong Heng, a Ma...
ANNUAL REPORT 2008           7




                                                                               Director...
8 SBC CORPORATION BERHAD




  Directors’ Profiles
  AS AT 31 JULY 2008




  DATO’ LIM PHAIK GAN                  Dato’ Li...
ANNUAL REPORT 2008               9




                                                                               Dire...
10 SBC CORPORATION BERHAD




    Directors’ Profiles
    AS AT 31 JULY 2008




    DATO’ ZAINOL ABIDIN BIN   Dato’ Zainol...
ANNUAL REPORT 2008               11




                                                                                Di...
12 SBC CORPORATION BERHAD




    Corporate Structure
    AS AT 11 AUGUST 2008




                                    Sya...
ANNUAL REPORT 2008          13




                                                Group Financial Highlights
            ...
14 SBC CORPORATION BERHAD




    Executive Chairman’s Statement

                            On behalf of the Board of Di...
ANNUAL REPORT 2008   15




                           Executive Chairman’s Statement




51 Blocks - 2,287 Units Walk-up ...
16 SBC CORPORATION BERHAD




    Executive Chairman’s Statement




    The Peak Vista, Kota Kinabalu



                ...
ANNUAL REPORT 2008   17




                         Executive Chairman’s Statement




Metpark, Kuala Lumpur



Lastly, I...
18 SBC CORPORATION BERHAD




    Penyata Pengerusi Eksekutif

    Bagi pihak Lembaga               ULASAN KEWANGAN

    P...
ANNUAL REPORT 2008   19




                                    Penyata Pengerusi Eksekutif




Mastiara Cube, Kuala Lumpu...
20 SBC CORPORATION BERHAD




     Penyata Pengerusi Eksekutif




   Seri Mahkota Aman, Kuantan




                     ...
ANNUAL REPORT 2008   21




                                   Penyata Pengerusi Eksekutif




  Bandar Ligamas, Batang Ka...
22 SBC CORPORATION BERHAD
    Statement of Corporate Governance


    The Board of Directors of SBC Corporation Berhad rem...
ANNUAL REPORT 2008                  23
                       Statement of Corporate Governance


BOARD OF DIRECTORS (cont...
24 SBC CORPORATION BERHAD
    Statement of Corporate Governance


    BOARD OF DIRECTORS (cont’d)

    Re-election and Re-...
ANNUAL REPORT 2008                 25
                      Statement of Corporate Governance


NOMINATION COMMITTEE (“NC”...
26 SBC CORPORATION BERHAD
    Statement of Corporate Governance


    NOMINATION COMMITTEE (“NC”) (cont’d)

    (d) Duties...
ANNUAL REPORT 2008                 27
                      Statement of Corporate Governance


The terms of reference of ...
28 SBC CORPORATION BERHAD
    Statement of Corporate Governance


    DIRECTORS’ REMUNERATION

    The details of the remu...
ANNUAL REPORT 2008                 29
                      Statement of Corporate Governance


ACCOUNTABILITY AND AUDIT

...
30 SBC CORPORATION BERHAD
    Statement of Corporate Governance


    ADDITIONAL COMPLIANCE INFORMATION

    In conformanc...
ANNUAL REPORT 2008                  31
                                              Statement of Internal Control


INTRO...
32 SBC CORPORATION BERHAD
    Statement of Internal Control


    KEY ELEMENTS OF INTERNAL CONTROL

    The key processes ...
ANNUAL REPORT 2008                  33
                                                               Audit Committee Repo...
34 SBC CORPORATION BERHAD
    Audit Committee Report


    SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

    In line with ...
ANNUAL REPORT 2008                35
                                                            Audit Committee Report


...
36 SBC CORPORATION BERHAD
    Audit Committee Report


    TERMS OF REFERENCE OF THE AUDIT COMMITTEE

    Membership


   ...
ANNUAL REPORT 2008                 37
                                                                Audit Committee Repo...
38 SBC CORPORATION BERHAD
    Statement of Directors’ Responsibilities
    IN RESPECT OF THE PREPARATION OF THE FINANCIAL ...
Financial Statements
40 •   Directors’ Report
44 •   Statement by Directors
44 •   Statutory Declaration
45 •   Report of ...
40 SBC CORPORATION BERHAD
    Directors’ Report


    The directors hereby submit their report and the audited financial st...
ANNUAL REPORT 2008                   41
                                                                                  ...
42 SBC CORPORATION BERHAD
    Directors’ Report


    DIRECTORS

    The directors who served since the date of the last r...
ANNUAL REPORT 2008                 43
                                                                                    ...
44 SBC CORPORATION BERHAD
    Statement By Directors


    We, Sia Kwee Mow @ Sia Hok Chai and Mun Chong Shing @ Mun Chong...
ANNUAL REPORT 2008                  45
                                                                     Report of the ...
46 SBC CORPORATION BERHAD
    Report of the Auditors
    TO THE MEMBERS OF SBC CORPORATION BERHAD




    Other Matters

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Annual Report 2008 5 4mb

  1. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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
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