SBC DIRECTORS' REPORT

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

DIRECTORS’ REPORT

The directors hereby submit their report and the audited financial statements of the Group and of
the Company for the financial year ended 31 March 2006.

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 1,047,197 149,820

DIVIDENDS
Since the end of the previous financial year, the Company paid the following dividends:-

(a) a dividend of 5.5% less 28% tax on the Irredeemable Convertible Cumulative Preference
Shares (“ICCPS”) amounting to RM24,463 in respect of the previous financial year, in
accordance with the terms of issue of the ICCPS; and

(b) a first and final dividend of 1% less 28% tax on the ordinary shares amounting to
RM593,527 in respect of the previous financial year.

For the current financial year, the directors recommend the payment of a first and final dividend of
1% less 28% tax on the ordinary shares amounting to RM593,527.

RESERVES AND PROVISIONS
All material transfers to or from reserves or provisions during the financial year are disclosed in the
financial statements.

ISSUES OF SHARES AND DEBENTURES
During the financial year,
(a) there were no changes in the authorised and issued and paid-up share capital of the
Company; and

(b) there were no issues of debentures by the Company.

Page 1


DIRECTORS’ REPORT

OPTIONS GRANTED OVER UNISSUED SHARES
During the financial year, no options were granted by the Company to any person to take up any
unissued shares in the Company.

BAD AND DOUBTFUL DEBTS
Before the financial statements of the Group and of the Company were made out, the directors
took reasonable steps to ascertain that action had been taken in relation to the writing off of bad
debts and the making of allowance for doubtful debts, and satisfied themselves that there are no
known bad debts and that adequate allowance had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances that would require the
writing off of bad debts, or additional allowance for doubtful debts in the financial statements of the
Group and of the Company.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors
took reasonable steps to ascertain that any current assets other than debts, which were unlikely to
be realised in the ordinary course of business, including their values as shown in the accounting
records of the Group and of the Company, have been written down to an amount which they might
be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would render the
values attributed to the current assets in the financial statements of the Group and of the Company
misleading.

VALUATION METHODS

At the date of this report, the directors are not aware of any circumstances which have arisen which
render adherence to the existing methods of valuation of assets or liabilities of the Group and of
the Company misleading or inappropriate.

Page 2


DIRECTORS’ REPORT

CONTINGENT AND OTHER LIABILITIES
The contingent liability of the Company is disclosed in Note 44 to the financial statements. At the
date of this report, there does not exist:-

(a) any charge on the assets of the Group and of the Company that has arisen since the end of
the financial year which secures the liabilities of any other person; or

(b) any contingent liability of the Group and of the Company which has arisen since the end of
the financial year.

No contingent or other liability of the Group and of the Company has become enforceable or is
likely to become enforceable within the period of twelve months after the end of the financial year
which, in the opinion of the directors, will or may substantially affect the ability of the Group and of
the Company to meet their obligations when they fall due.

CHANGE OF CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with
in this report or the financial statements of the Group and of the Company which would render any
amount stated in the financial statements misleading.

ITEMS OF AN UNUSUAL NATURE
The results of the operations of the Group and of the Company during the financial year were not,
in the opinion of the directors, substantially affected by any item, transaction or event of a material
and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report
any item, transaction or event of a material and unusual nature likely, in the opinion of the directors,
to affect substantially the results of the operations of the Group and of the Company for the
financial year.

Page 3


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’ ZAINOL ABIDIN BIN HAJI A. HAMID
DATO’ LIM PHAIK GAN
DATO’ DR. NORRAESAH BT HAJI MOHAMAD
AHMAD FIZAL BIN OTHMAN

Pursuant to Section 129 of the Companies Act, 1965, Sia Kwee Mow @ Sia Hok Chai and Dato’
Lim Phaik Gan retire at the forthcoming Annual General Meeting and offer themselves for re-
appointment under the provisions of Section 129(6) of the said Act to hold office until the next
Annual General Meeting of the Company.

Pursuant to Article 77 of the Articles of Association of the Company, Sia Teong Heng and Dato’
Zainol Abidin Bin Haji A. Hamid retire by rotation at the forthcoming Annual General Meeting and,
being eligible, offer themselves for re-election.

DIRECTORS’ INTERESTS
According to the register of directors’ shareholdings, the interests of directors holding office at the
end of the financial year in shares and options under the Employee Share Option Scheme in the
Company during the financial year are as follows:-

NUMBER OF ORDINARY SHARES OF RM1 EACH
AT AT
1.4.2005 BOUGHT SOLD 31.3.2006
DIRECT INTERESTS
SIA KWEE MOW @ SIA HOK CHAI 1,480,800 - - 1,480,800
SIA TEONG HENG 2,517,992 - - 2,517,992
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

NUMBER OF ORDINARY SHARES OF RM1 EACH
UNDER OPTION
AT AT
1.4.2005 GRANTED EXPIRED 31.3.2006
DIRECT INTERESTS
SIA KWEE MOW @ SIA HOK CHAI 450,000 - (450,000) -
SIA TEONG HENG 350,000 - (350,000) -

Page 4


DIRECTORS’ REPORT

DIRECTORS’ INTERESTS (CONT’D)
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.

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 43 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 for the
acquisition of shares in or debentures of the Company or any other body corporate.

SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

The significant event during the financial year of the Company is disclosed in Note 49 to the

SIGNIFICANT EVENT SUBSEQUENT TO BALANCE SHEET DATE

The significant event subsequent to the balance sheet date of the Company is disclosed in Note 50
to the financial statements.

Page 5


DIRECTORS’ REPORT

AUDITORS
The auditors, Messrs. Horwath, have expressed their willingness to continue in office.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS
DATED 20 JULY 2006

Sia Kwee Mow @ Sia Hok Chai

Mun Chong Shing @ Mun Chong Tian

Page 6


STATEMENT BY DIRECTORS

We, Sia Kwee Mow @ Sia Hok Chai and Mun Chong Shing @ Mun Chong Tian, being two of the
directors of SBC Corporation Berhad, state that, in the opinion of the directors, the financial
statements set out on pages 10 to 66 are drawn up in accordance with applicable approved
accounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a
true and fair view of the state of affairs of the Group and of the Company at 31 March 2006 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 20 JULY 2006

Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian

STATUTORY DECLARATION

I, Lee Yan Yaw, I/C No. 710315-10-5509, being the officer primarily responsible for the financial
management of SBC Corporation Berhad, do solemnly and sincerely declare that the financial
statements set out on pages 10 to 66 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 20 July 2006

Lee Yan Yaw

Before me

Datin Hajah Raihela Wanchik (W275)
Commissioner for Oaths

Page 7

REPORT OF THE AUDITORS TO THE MEMBERS OF
(Incorporated In Malaysia)

We have audited the financial statements set out on pages 10 to 66. The preparation of the
financial statements is the responsibility of the Company’s directors.

It is our responsibility to form an independent opinion, based on our audit, on the financial
statements and to report our opinion to you, as a body, in accordance with Section 174 of the
Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other
person for the content of this report.

We conducted our audit in accordance with approved standards on auditing in Malaysia. These
standards require that we plan and perform the audit to obtain reasonable assurance that the
financial statements are free of material misstatement. Our audit included examining, on a test
basis, evidence relevant to the amounts and disclosures in the financial statements. Our audit
also included an assessment of the accounting principles used and significant estimates made
by the directors as well as evaluating the overall adequacy of the presentation of information in
the financial statements. We believe our audit provides a reasonable basis for our opinion.

In our opinion,

(a) the financial statements are properly drawn up in accordance with the provisions of the
Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to
give a true and fair view of:-

(i) the state of affairs of the Group and of the Company at 31 March 2006 and their
results and cash flows for the financial year ended on that date; and

(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with
in the financial statements of the Group and of the Company; and

(b) the accounting and other records and the registers required by the Companies Act, 1965
to be kept by the Company and by the subsidiaries of which we have acted as auditors
have been properly kept in accordance with the provisions of the said Act.

We have considered the financial statements and the auditors’ reports thereon of the
subsidiaries for which we have not acted as auditors, as indicated in Note 6 to the financial
statements.

Page 8

REPORT OF THE AUDITORS TO THE MEMBERS OF
SBC CORPORATION BERHAD (CONT’D)

We are satisfied that the financial statements of the subsidiaries that have been consolidated
with the Company’s financial statements are in form and content appropriate and proper for the
purposes of the preparation of the consolidated financial statements and we have received
satisfactory information and explanations required by us for those purposes.

The audit reports on the financial statements of the subsidiaries were not subject to any
qualification and did not include any comments made under Section 174(3) of the said Act.

Horwath Mok Yuen Lok
Firm No: AF 1018 Approval No: 1408/11/07 (J/PH)
Chartered Accountants Partner

Kuala Lumpur
20 July 2006

Page 9


BALANCE SHEETS AT 31 MARCH 2006
THE GROUP THE COMPANY
2006 2005 2006 2005
NOTE RM RM RM RM
NON-CURRENT
ASSETS
Investment in
subsidiaries 6 - - 211,064,785 211,064,785
Interest in associates 7 111,816,402 112,262,828 2,400,000 2,400,000
Investment in joint
venture 8 - - 712,500 -
Property, plant and
equipment 9 34,771,188 35,452,368 7,552 17,636
Investment properties 10 71,162,500 79,718,099 - -
Other assets 11 86,300 276,107 - -
Goodwill on
consolidation 12 27,317,640 27,317,640 - -

245,154,030 255,027,042 214,184,837 213,482,421

CURRENT ASSETS
Inventories 13 1,283,422 4,359,492 - -
Property development
costs 14 55,130,848 54,745,687 - -
Receivables 15 42,574,730 28,150,859 226,427 143,077
Amount owing by
contract customers 16 3,114,994 969,629 - -
Amount owing by
subsidiaries 17 - - 65,774,637 61,299,355
Amount owing by
associates 18 5,399,534 5,399,534 11,434 11,434
Tax recoverable 19 1,551,225 6,607,700 3,206,127 8,597,916
Short term deposits
with licensed banks 20 1,364,225 1,364,225 1,239,225 1,239,225
Cash and bank
balances 21 9,205,230 5,612,658 8,150,432 4,027,843

119,624,208 107,209,784 78,608,282 75,318,850

CURRENT LIABILITIES
Amount owing to
contract customers 16 1,540,444 8,194 - -
Payables 22 32,241,497 29,491,952 244,765 256,127
Amount owing to
subsidiaries 17 - - 18,082,756 15,155,558
Amount owing to
associates 18 16,711 547,586 - -
Amount owing to a
director 23 1,867,680 1,867,680 1,867,680 1,867,680
Short term borrowings 24 15,941,779 16,749,403 5,000,000 5,000,000
ABBA Bonds 25 2,478,450 2,478,450 2,478,450 2,478,450
Bank overdrafts 26 14,656,189 18,824,019 5,053,440 5,760,593

68,742,750 69,967,284 32,727,091 30,518,408

NET CURRENT ASSETS 50,881,458 37,242,500 45,881,191 44,800,442

296,035,488 292,269,542 260,066,028 258,282,863

The annexed notes form an integral part of these financial statements. Page 10


BALANCE SHEETS AT 31 MARCH 2006 (CONT’D)

2006 2005 2006 2005
NOTE RM RM RM RM

FINANCED BY:-
Share capital 27 82,435,000 82,435,000 82,435,000 82,435,000
Reserves 28 138,026,063 137,572,393 133,652,529 134,096,236

Shareholders’ equity 220,461,063 220,007,393 216,087,529 216,531,236
ABBA Bonds 25 43,978,499 41,751,627 43,978,499 41,751,627
Non-current liabilities 29 30,629,180 29,543,776 - -
Deferred taxation 31 966,746 966,746 - -

296,035,488 292,269,542 260,066,028 258,282,863

NET ASSETS
PER ORDINARY
SHARE (RM) 32 2.67 2.67



INCOME STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2006

2006 2005 2006 2005
NOTE RM RM RM RM

REVENUE 33 69,926,734 66,867,133 7,641,913 8,905,128

COST OF SALES 34 (56,847,233) (52,428,581) - -

GROSS PROFIT 13,079,501 14,438,552 7,641,913 8,905,128

OTHER OPERATING
INCOME 1,751,359 1,026,365 - 50,850

ADMINISTRATIVE
EXPENSES (7,142,456) (7,541,549) (1,154,115) (1,200,429)

OTHER OPERATING
EXPENSES (1,262,033) (1,215,804) (289,792) (293,501)

PROFIT FROM
OPERATIONS 6,426,371 6,707,564 6,198,006 7,462,048

FINANCE COSTS (5,160,442) (4,953,038) (5,697,750) (5,602,597)

SHARE OF PROFITS
OF ASSOCIATES 266,591 1,566,728 - -

PROFIT BEFORE
TAXATION 35 1,532,520 3,321,254 500,256 1,859,451

TAXATION 36 (485,323) (1,070,825) (350,436) (621,822)

PROFIT AFTER
TAXATION 1,047,197 2,250,429 149,820 1,237,629

Earnings per share
- basic 37 1.3 sen 2.7 sen
- diluted 37 N/A N/A

Dividend per ordinary
share
- final 38 1 sen 1 sen



STATEMENTS OF CHANGES IN EQUITY

SHARE SHARE RETAINED CAPITAL
CAPITAL PREMIUM PROFITS RESERVE TOTAL
NOTE RM RM RM RM RM
THE GROUP

Balance at 1.4.2004 82,435,000 111,412,895 23,327,060 1,199,999 218,374,954

Profit after taxation for the
financial year - - 2,250,429 - 2,250,429

Dividends 38 - - (617,990) - (617,990)

Balance at 31.3.2005/ 82,435,000 111,412,895 24,959,499 1,199,999 220,007,393
1.4.2005

financial year - - 1,047,197 - 1,047,197

Dividend 38 - - (593,527) - (593,527)

Balance at 31.3.2006 82,435,000 111,412,895 25,413,169 1,199,999 220,461,063

THE COMPANY

Balance at 1.4.2004 82,435,000 111,412,895 22,063,702 - 215,911,597

financial year - - 1,237,629 - 1,237,629

Dividends 38 - - (617,990) - (617,990)

Balance at 82,435,000 111,412,895 22,683,341 - 216,531,236
31.3.2005/1.4.2005

financial year - - 149,820 - 149,820

Dividend 38 - - (593,527) - (593,527)

Balance at 31.3.2006 82,435,000 111,412,895 22,239,634 - 216,087,529



CASH FLOW STATEMENTS

2006 2005 2006 2005
NOTE RM RM RM RM
CASH FLOWS FROM
OPERATING ACTIVITIES
Profit before taxation 1,532,520 3,321,254 500,256 1,859,451

Adjustments for:-
Amortisation of bonds
expenses 279,708 275,709 279,708 275,709
Depreciation of
property, plant
and equipment 424,695 459,128 10,084 17,792
Interest expense/
finance charges 5,058,620 4,844,740 5,671,876 5,583,651
Impairment loss on
interest in an
associate 549,434 330,565 - -
Other investment
written off - 45,000 - -
Dividend income - - (5,000,000) (5,404,800)
(Gain)/Loss on disposal
of property, plant and
equipment (132,283) 19,177 - -
Gain on disposal of
investment properties (812,642) (15,082) - -
Interest income (261,016) (203,425) (204,859) (1,389,168)
Write-back of allowance
for doubtful debts - (7,506) - -
Share of profits in
associates (266,591) (1,566,728) - -

Operating profit before
working capital
changes 6,372,445 7,502,832 1,257,065 942,635
Decrease in inventories 3,076,070 4,245,239 - -
Decrease/(Increase) in property
development costs 6,171,242 (3,028,141) - -
(Increase)/Decrease in
receivables (14,234,064) 547,631 (83,350) 65,973
Increase/(Decrease) in
payables 2,695,419 1,291,820 (11,362) 25,202
Net (increase)/decrease in amount
owing by contract customers (613,115) 2,213,504 - -

CASH FROM OPERATIONS 3,467,997 12,772,885 1,162,353 1,033,810
Interest paid (571,134) (544,034) (1,184,390) (1,282,945)
Tax refunded 4,734,735 1,256,001 6,441,353 4,116,757

NET CASH FROM
CARRIED FORWARD 7,631,598 13,484,852 6,419,316 3,867,622



FOR THE FINANCIAL YEAR ENDED 31 MARCH 2006 (CONT’D)

2006 2005 2006 2005
NOTE RM RM RM RM

NET CASH FROM
BROUGHT FORWARD 7,631,598 13,484,852 6,419,316 3,867,622

CASH FLOWS FOR
INVESTIING ACTIVITIES
Acquisition of joint venture - - (712,500) -
Advances to subsidiaries - - (4,475,282) (5,380,264)
Interest received 261,016 203,425 204,859 1,389,168
Dividends received
from subsidiaries - - 3,600,000 3,456,000
Dividends received
from associates - 435,456 - 435,456
Purchase of property,
plant and equipment 39 (318,295) (408,819) - -
Purchase of
investment properties - (1,640,541) - -
Proceeds from
disposal of property,
plant and equipment 132,370 7,700 - -
Proceeds from
disposal of investment
properties 4,211,187 556,200 - -
Incidental expenses
on investment
properties (342,356) (424,603) - -
Placement of cash in
sinking fund account (4,097,229) (2,015,883) (4,097,229) (2,015,883)

NET CASH FOR
INVESTING ACTIVITIES (153,307) (3,287,065) (5,480,152) (2,115,523)

BALANCE CARRIED
FORWARD 7,478,291 10,197,787 939,164 1,752,099



FOR THE FINANCIAL YEAR ENDED 31 MARCH 2006 (CONT’D)

2006 2005 2006 2005
Note RM RM RM RM

BALANCE BROUGHT
FORWARD 7,478,291 10,197,787 939,164 1,752,099

CASH FLOWS FOR
FINANCING ACTIVITIES
Payment of bonds
expenses (61,872) (57,871) (61,872) (57,871)
Repayment of bonds 25 (2,478,450) (2,478,450) (2,478,450) (2,478,450)
Repayment to directors - (582,801) - (100,000)
Net repayment by
associates (530,875) 603,742 - -
Advances from subsidiaries - - 2,927,198 2,592,235
Dividend paid to
shareholders of the
company (593,527) (593,527) (593,527) (593,527)
Dividend paid to
holders of ICCPS - (295,050) - (295,050)
Repayment of revolving credit (1,600,000) (1,350,000) - -
Drawdown of term loans 3,600,000 - - -
Repayment of term loans (2,077,764) (3,460,283) - -
Repayment of hire
purchase obligations (72,630) (87,784) - -

NET CASH FOR
FINANCING ACTIVITIES (3,815,118) (8,302,024) (206,651) (932,663)

NET INCREASE
IN CASH AND CASH
EQUIVALENTS 3,663,173 1,895,763 732,513 819,436

CASH AND CASH
EQUIVALENTS AT
BEGINNING OF FINANCIAL
YEAR (15,873,019) (17,768,782) (4,519,408) (5,338,844)

CASH AND CASH
EQUIVALENTS AT
END OF THE
FINANCIAL YEAR 40 (12,209,846) (15,873,019) (3,786,895) (4,519,408)



NOTES TO FINANCIAL STATEMENTS

1. GENERAL INFORMATION
The Company is a public company limited by shares and is incorporated under the
Malaysian Companies Act, 1965. The domicile of the Company is Malaysia. The registered
office, which is also the principal place of business, is at Wisma Siah Brothers, 74A, Jalan
Pahang, 53000 Kuala Lumpur.

The financial statements were authorised for issue by the Board of Directors in
accordance with a resolution of the directors dated 20 July 2006.

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
foreign currency, interest rate, market, credit, liquidity and cash flow risks. The policies in
respect of the major areas of treasury activity are as follows:-

(a) Foreign Currency Risk

The Group is exposed to foreign exchange risk on investments and bank
balances that are denominated in foreign currencies.

The Group’s foreign currency transactions and balances are substantially
denominated in Thai Baht.

The Group does not seek to hedge this exposure as the Group is of the opinion
that the fluctuations of the Thai Baht do not have a significant impact on the

(b) 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.

Page 17



3. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Market Risk

The Group’s principal exposure to market risks arises mainly from changes in
quoted equity prices. The Group does not use derivative instruments to manage
equity risk.

(d) Credit Risk

The Group's exposure to credit risks, or the risk of counterparties defaulting,
arises mainly from 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.

(e) Liquidity and Cash Flow Risk
The Group's exposure to liquidity and cashflow risks arises mainly from general
funding and business activities.
It practises prudent liquidity risk management by maintaining sufficient cash
balances and the availability of funding through certain committed credit facilities.

4. BASIS OF ACCOUNTING
The financial statements are prepared under the historical cost convention and modified to
include other bases of valuation as disclosed in other sections under significant accounting
policies, and in compliance with applicable approved accounting standards in Malaysia and
the provisions of the Companies Act, 1965.

The MASB standards nomenclature has been changed to Financial Reporting Standards
(“FRS”) nomenclature for financial periods beginning on or after 1 January 2005. This
change to the new nomenclature did not result in any significant change in the accounting
policies adopted by the Group and has no financial effects on the financial statements of
the Group and of the Company for the financial year ended 31 March 2006.

Page 18



5. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the
Company and all its subsidiaries made up to 31 March 2006.

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 acquisition method of accounting. Under
the acquisition method of accounting, the results of subsidiaries acquired or
disposed of are included from the date of acquisition or up to the date of disposal.
At the date of acquisition, the fair value of the subsidiaries’ net assets are
determined and these values are reflected in the consolidated financial statements.

Intragroup transactions, balances and unrealised gains on transactions are
eliminated; unrealised losses are also eliminated unless cost cannot be recovered.
Where necessary, adjustments are made to the financial statements of subsidiaries
to ensure consistency of accounting policies with those of the Group.

(b) Goodwill or Negative Goodwill On Consolidation

Goodwill represents the excess of the fair value of the purchase consideration over
the Group’s share of the fair values of the separable net assets of subsidiaries at
the date of acquisition. Negative goodwill represents the excess of the Group’s
share of the fair values of the separable net assets of subsidiaries at the date of
acquisition over the fair value of the purchase consideration.

Goodwill is stated net of negative goodwill. The net carrying amount of goodwill is
reviewed annually, and is written down for impairment where it is considered
necessary. The impairment value of goodwill is taken to the consolidated income
statement.

Page 19



5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(c) Associates

Associates are enterprises in which the Group exercises significant influence.
Significant influence is the power to participate in the financial and operating policy
decisions of the associates but not control over those policies. Interest in associates
are accounted for in the consolidated financial statements by the equity method of
accounting.

Equity accounting involves recognising in the income statement the Group’s share
of the results of the associates for the period. The Group’s interest in associates is
carried in the balance sheet at an amount that reflects its share of the assets of the
associates and includes goodwill on acquisition. At the date of acquisition, the fair
values of the associates’ net assets are determined and these values are reflected
in the consolidated financial statements. Equity accounting is discontinued when the
carrying amount of the interest in an associate reaches zero, unless the Group has
incurred obligations or guaranteed obligations in respect of the associate.

Unrealised gains on transactions between the Group and its associates are
eliminated to the extent of the Group’s interest in the associates; unrealised losses
are also eliminated unless the transaction provides evidence on impairment of the
asset transferred.

Where necessary, in applying the equity method, adjustments are made to the
financial statements of associates to ensure consistency of accounting policies with
those of the Group.

(d) 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
to the Group's interest in the venture.

Page 20



(e) 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.
The long term leasehold land has an unexpired term of more than fifty years and is
not amortised. The non-amortisation of the long term leasehold land has no material
effect on the financial statements.
Depreciation is calculated under the straight-line method to write off the cost of the
assets over their estimated useful lives. The principal annual rates used for this
purpose are:-

Plant and machinery, construction machinery and
equipment, formwork, scaffoldings and containers 5% - 25%
Office renovation, office equipment, computers,
furniture and fittings, tools and sales office 5% - 20%
Motor vehicles 20%

(f) Land and Hotel Development Expenditure

Land is stated at cost or revalued amount less impairment losses, if any.
Development expenditure comprises construction and other related development
costs and administrative overheads relating to the property development. Interest
costs on borrowings taken to finance the relevant development projects are
included in the development expenditure from commencement to the completion of
the development projects.

(g) Impairment of Assets

The carrying amounts 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.

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.

Page 21



(g) Impairment of Assets (Cont’d)

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.

(h) Investments

The investments in subsidiaries, associates and joint ventures are initially stated at
cost in the balance sheet of the Company, and are reviewed for impairment at the
end of the financial year if events or changes in circumstances indicate that their
carrying values may not be recoverable.

(i) Investment Properties

Investment properties consist of investments in land and buildings that are not
substantially occupied for use by, or in the operations, of the Company/Group.

Investment properties are treated as long term investments. They are initially stated
at cost and are subject to revaluations which are carried out by an independent
valuer on a regular basis. Any revaluation increase is recognised in equity as a
revaluation surplus; any decrease is first offset against any unutilised previously
recognised revaluation surplus in respect of the same investment property, and the
balance is thereafter recognised as an expense. A revaluation increase is
recognised as income to the extent that it reverses a revaluation decrease of the
same property previously recognised as an expense.

On the disposal of an investment, the difference between the net disposal proceeds
and the carrying amount is charged to the income statement; any amount in
revaluation reserve relating to that investment property is transferred to retained
earnings.

Page 22



(j) Inventories

Inventories are stated at the lower of cost and net realisable value. The unsold
completed properties are stated at the lower of cost and net realisable value. For
finished goods and work-in-progress, cost includes direct labour and appropriate
production overheads.

The cost of unsold completed properties comprises the relevant cost of land,
development expenditure and related interest cost incurred during the development
period.

In arriving at net realisable value, due allowance is made for all damaged, obsolete
and slow-moving items.

(k) 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.

Page 23



(l) 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.

(m) 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.

(n) 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.

(o) 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.

(p) 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.

All other borrowing costs are charged to the income statement as an expense in the
period in which they are incurred.

Page 24



(q) 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.

(r) Taxation

Taxation for the year comprises current and deferred tax.
Current tax is the expected amount of income taxes payable in respect of the
taxable profit for the year and is measured using the tax rates that have been
enacted or substantially enacted at the balance sheet date.

Deferred taxation is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements.
Deferred tax liabilities are recognised for all taxable temporary differences other
than those that arise from goodwill or negative goodwill or from the initial recognition
of an asset or liability in a transaction which is not a business combination and at
the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax assets are recognised for all deductible temporary differences, unused
tax losses and unused tax credits to the extent that it is probable that taxable profit
will be available against which the deductible temporary differences, unused tax
losses and unused tax credits can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply in the period when the asset is realised or the liability is settled, based on the
tax rates that have been enacted or substantially enacted at the balance sheet date.

Deferred tax is recognised in the income statement, except when it arises from a
transaction which is recognised directly in equity, in which case the deferred tax is
also charged or credited directly in equity, or when it arises from a business
combination that is an acquisition, in which case the deferred tax is included in the
resulting goodwill or negative goodwill. The carrying amounts of deferred tax assets
are reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of
the deferred tax assets to be utilised.

Page 25



(s) Foreign Currencies

Transactions in foreign currencies are converted into Ringgit Malaysia at the
approximate rates of exchange ruling at the transaction dates. Monetary assets and
liabilities in foreign currencies at the balance sheet date are translated at the rates
ruling as of that date. All exchange differences are taken to the income statement.

The financial statements of the foreign joint venture are translated into Ringgit
Malaysia using the closing rate for the balance sheet whilst the average rate is used
for the translation of the income statement for consolidation purposes. All exchange
differences arising from the retranslation are taken directly to equity as a movement
in the foreign exchange fluctuation reserve. On the disposal of the foreign joint
venture, such translation differences are recognised in the income statement as
part of the gain or loss on disposal.

(t) Assets under Hire Purchase

Equipment acquired under hire purchase are capitalised in the financial
statements and are depreciated in accordance with the policy set out in Note 5(e)
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.

(u) Equity Instruments

Ordinary shares are classified as equity. Dividends on ordinary shares are
recognised as liabilities when declared before the balance sheet date. A dividend
proposed or declared after the balance sheet date, but before the financial
statements are authorised for issue, is not recognised as a liability at the balance
sheet date but as an appropriation from retained earnings and treated as a
separate component of equity. Upon the approval of the proposed dividend, it will
be accounted for as a liability.

(v) 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.

Page 26



(w) 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 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.

(x) Employee Benefits

(i) Short-term Benefits

Wages, salaries, paid annual leave, bonuses and non-monetary benefits are
accrued in the period in which the associated services are rendered by
employees of the Group.

(ii) Defined Contribution Plans

The Group’s contributions to defined contribution plans 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 plans.

Page 27



(y) Income Recognition

(i) Construction Contracts

Revenue on contracts is recognised on the percentage of completion
method unless the outcome of the contract cannot be reliably determined,
in which case revenue on contracts is only recognised to the extent of
contract costs incurred that are recoverable. Foreseeable losses, if any,
are provided for in full as and when it can be reasonably ascertained that
the contract will result in a loss.

The stage of completion is determined based on surveys of work performed.

(ii) Property Development

Revenue from property development is recognised from the sale of
completed and uncompleted development properties.
Revenue from the sale of completed properties is recognised when the sale
is contracted.
Revenue on uncompleted properties contracted for sale is recognised based
on the stage of completion method unless the outcome of the development
cannot be reliably determined in which case the revenue on the
development is only recognised to the extent of development costs incurred
that are recoverable.

The stage of completion is determined based on the proportion that the
development costs incurred for work performed to date bear to the
estimated total development costs.

(iii) Revenue from Sales of Goods

Sales are recognised upon delivery of goods and customers’ acceptance,
and where applicable, net of returns and trade discounts.

Page 28



(y) Income Recognition (Cont’d)

(iv) Revenue from Services

Revenue is recognised upon rendering of services and when the outcome of
the transaction can be estimated reliably. In the event the outcome of the
transaction could not be estimated reliably, revenue is recognised to the
extent of the expenses incurred that are recoverable.

(v) Management Fee and Administrative Charges

Management fee and administrative charges are recognised on an accrual
basis.

(vi) Rental Income

Rental income is recognised on an accrual basis.

(vii) Dividend Income

Dividend income from investments is recognised when the right to receive
payment is established.
(viii) Interest Income
Interest income is recognised on an accrual basis, based on the effective
yield on the investment.
Interest income on late payment is recognised on a receipt basis.

(z) Segmental Information

Segment revenues and expenses are those directly attributable to the segments
and include any joint revenue and expenses where a reasonable basis of allocation
exists. Segment assets include all assets used by a segment and consist principally
of property, plant and equipment (net of accumulated depreciation, where
applicable), other investments, inventories, receivables, and cash and bank
balances.
Most segment assets can be directly attributed to the segments on a reasonable
basis. Segment assets and liabilities do not include income tax assets and liabilities
respectively.
Segment revenues, expenses and results include transfers between segments. The
prices charged on intersegment transactions are based on normal commercial
terms. These transfers are eliminated on consolidation.

Page 29



6. INVESTMENT IN SUBSIDIARIES
THE COMPANY
2006 2005
RM RM

Unquoted shares, at cost 211,064,785 211,064,785

Details of the subsidiaries, which are all incorporated in Malaysia, are as follows:-

Name of Company Effective Equity Interest Principal
2006 2005 Activities
% %
Syarikat Siah Brothers 100 100 General building
Trading Sdn. Bhd. contractor and
investment holding.
Syarikat Siah Brothers 100 100 Building and civil
Construction Sdn. Bhd. engineering works.

Lifeplus - Siah Brothers Trading 100 100 Project management
JV Sdn. Bhd. and its related
technical services.

Siah Brothers Enterprise 100 100 Building contractor.
Sdn. Bhd. *

Siah Brothers Land 100 100 Investment holding.
Sdn. Bhd.

Seri Ampangan Realty 100 100 Property development.
Sdn. Bhd.

Sinaran Naga Sdn. Bhd. 100 100 Property development.

Siah Brothers Development 100 100 Proposed property
Sdn. Bhd. * development.

Tiara Development 100 100 Proposed property
Sdn. Bhd.* development.

SBC Homes Sdn. Bhd.* 100 100 Proposed property
development.

Page 30



6. INVESTMENT IN SUBSIDIARIES (CONT’D)
% %
Mixwell (Malaysia) 100 100 Project management
Sdn. Bhd. and property
development.
Winsome Ventures 100 100 Proposed property
Sdn. Bhd. management.

Siah Brothers Properties 100 100 Investment holding.
Sdn. Bhd.*

Aureate Construction 100 100 Property investment.
Sdn. Bhd.*

SBC Leisure Sdn. Bhd.* 100 100 Property development.

SBC Towers Sdn. Bhd.* 100 100 Property development.

Siah Brothers Project 100 100 Provision of
Management Sdn. Bhd.* management
services.

Siah Brothers Industries 100 100 Investment holding.
Sdn. Bhd. *

South-East Best 100 100 Property development.
Sdn. Bhd.

Gracemart Resources 100 100 Property development.
Sdn. Bhd.

Sutrati Development Sdn. Bhd. 100 100 Dormant.

Masahmura Sdn. Bhd.* 51 51 Manufacturing of
material handling
equipment and
metal frames.

Masahmura Sales & 51 51 Trading of light
Service Sdn. Bhd. industrial handling
equipment and
metal frames.
* Not audited by Messrs. Horwath.

Page 31



7. INTEREST IN ASSOCIATES
2006 2005 2006 2005
RM RM RM RM

Unquoted shares,
at cost 3,600,001 3,600,001 2,400,000 2,400,000
Impairment loss (880,000) (330,566) - -

2,720,001 3,269,435 2,400,000 2,400,000
Unquoted shares, at
Group cost 91,618,314 91,618,314 - -
Share of post
acquisition reserves 17,478,087 17,375,079 - -

111,816,402 112,262,828 2,400,000 2,400,000

THE GROUP
2006 2005
RM RM
The interest in associates comprises:-

Group’s share of net tangible assets
- at cost 65,800,432 66,246,858
- at fair value 45,952,003 45,952,003
Group’s share of intangible assets 63,967 63,967

111,816,402 112,262,828

Details of the associates, which are all incorporated in Malaysia, are as follows:-

Effective Equity Principal
Name of Company Interest Activities
2006 2005
% %

Ligamas Sdn. Bhd.# 50.0 50.0 Property development.

Varich Industries 50.0 50.0 Dormant.
Sdn. Bhd.*

Paling Industries Sdn. Bhd.# 40.0 40.0 Manufacturing of
plastic building
materials.

Pasti Bumi Sdn. Bhd.* ## 19.6 - Sales of plastic
building materials.

Page 32



7. INTEREST IN ASSOCIATES (CONT’D)
Effective Equity Principal
Name of Company Interest Activities
2006 2005
% %

Liga Canggih Sdn. Bhd.*## 40.0 40.0 Dormant.

Sri Berjaya Development 33.3 33.3 Investment and
Sdn. Bhd.* development of
landed properties.

Sri Rawang Properties 22.2 22.2 Investment in properties
Sdn. Bhd.* and rubber estates.

Sam & Lau Plantation 50.0 50.0 Tree plantation and
Sdn. Bhd.*### nursery operators.

* The results of these associates have not been equity accounted as the amounts
involved are insignificant.

# The share of results of these associates is based on the latest available unaudited
management financial statements made up to 31 March 2006.

## Held by Paling Industries Sdn. Bhd.

### Held by South-East Best Sdn. Bhd. (“SEB”).

8. INVESTMENT IN JOINT VENTURE
THE COMPANY
2006 2005
RM RM
Unquoted shares, at cost 712,500 -

Details of the joint venture, which is incorporated in Thailand, are as follows:-
% %
Tri-Development Co., Ltd 50 - Property development.
The share of results of the joint venture is based on the latest available unaudited
management financial statements made up to 31 March 2006.

Page 33



9. PROPERTY, PLANT AND EQUIPMENT
TRANSFER TO
AT DEVELOPMENT DEPRECIATION AT
1.4.2005 ADDITIONS DISPOSALS COST CHARGE 31.3.2006
RM RM RM RM RM RM
THE GROUP

NET BOOK VALUE

Freehold land 4,011,273 - (1,056,993) - 2,954,280
Land and hotel
development expenditure 30,143,544 124,190 - - - 30,267,734
Plant and machinery,
construction machinery
and equipment, formwork,
scaffoldings and
containers 41,934 3,350 - - (16,556) 28,728
Office renovation, office
equipment, computers,
furniture and fittings, tools
and sales office 1,084,924 134,641 (81) - (269,353) 950,131
Motor vehicles 170,693 538,414 (6) - (138,786) 570,315

Total 35,452,368 800,595 (87) (1,056,993) (424,695) 34,771,188

AT ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
RM RM RM
AT 31.3.2006

Freehold land 2,954,280 - 2,954,280
Land and hotel development expenditure 30,267,734 - 30,267,734
Plant and machinery, construction machinery
and equipment, formwork, scaffoldings and containers 8,663,993 (8,635,265) 28,728
Office renovation, office equipment, computers, furniture
and fittings, tools and sales office 4,886,531 (3,936,400) 950,131
Motor vehicles 2,145,096 (1,574,781) 570,315

Total 48,917,634 (14,146,446) 34,771,188

AT 31.3.2005

Freehold land 4,011,273 - 4,011,273
Land and hotel development expenditure 30,143,544 - 30,143,544
Plant and machinery, construction machinery
and equipment, formwork, scaffoldings and containers 8,660,643 (8,618,709) 41,934
Office renovation, office equipment, computers, furniture
and fittings, tools and sales office 4,759,653 (3,674,729) 1,084,924
Motor vehicles 2,020,927 (1,850,234) 170,693

Total 49,596,040 (14,143,672) 35,452,368

Page 34



9. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Land and hotel development expenditure consists of:-
2006 2005
RM RM

At cost:-
Long leasehold land 27,691,066 27,691,066

Hotel development expenditure 2,576,668 2,452,478

30,267,734 30,143,544

AT DEPRECIATION AT
1.4.2005 CHARGE 31.3.2006
RM RM RM
THE COMPANY

NET BOOK VALUE

Office equipment, computers, furniture
and fittings 17,635 (10,084) 7,551
Motor vehicles 1 - 1

17,636 (10,084) 7,552

AT ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
RM RM RM
AT 31.3.2006
and fittings 370,553 (363,002) 7,551
Motor vehicles 376,950 (376,949) 1

747,503 (739,951) 7,552

AT 31.3.2005
and fittings 376,551 (358,916) 17,635
Motor vehicles 376,950 (376,949) 1

753,501 (735,865) 17,636

The motor vehicles of the Group acquired under hire purchase terms were carried at a total
net book value of RM449,135 (2005 - RM20,602) at the balance sheet date.

Page 35



10. INVESTMENT PROPERTIES
THE GROUP
2006 2005
RM RM

Leasehold land, at cost 20,607,424 20,607,424
Expenditure on land 4,499,249 4,710,272

25,106,673 25,317,696

Freehold land and buildings, at cost 52,501,437 52,810,544
Leasehold land and buildings, at cost 2,498,141 2,803,145

54,999,578 55,613,689
Disposed of during the financial year (3,444,341) (661,600)
Transfer to property development costs (Note 14) (5,499,410) (551,686)

46,055,827 54,400,403

71,162,500 79,718,099

Included in investment properties is a leasehold land amounting to RM8,550,889 (2005 -
RM8,486,514) which is charged to a financial institution for the issuance of the ABBA
Bonds granted to the Company.

11. OTHER ASSETS
THE GROUP
2006 2005
RM RM

Other assets - 189,807

Other investments, at cost
Quoted shares in Malaysia 12,300 12,300
Unquoted shares - -
Investment in club membership 74,000 74,000

86,300 86,300

86,300 276,107

Market value of quoted shares 8,370 5,400

Page 36



11. OTHER ASSETS (CONT’D)
Other assets are retention monies relating to amounts which are due and receivable after
twelve months from the balance sheet date, upon expiry of the warranty period of the
relevant contracts.

12. GOODWILL ON CONSOLIDATION
THE GROUP
2006 2005
RM RM

At 31 March 27,317,640 27,317,640

13. INVENTORIES
THE GROUP
2006 2005
RM RM

Unsold completed properties, at cost 1,283,422 4,359,492

None of the inventories is carried at net realisable value.

Page 37



14. PROPERTY DEVELOPMENT COSTS
THE GROUP
2006 2005
RM RM
Balance at beginning of the financial year:
- land 31,334,481 30,903,465
- development costs 77,920,310 43,978,441

109,254,791 74,881,906
Costs incurred during the year:
- transferred from investment properties (Note 10) 5,499,410 551,686
- transferred from property, plant and equipment 1,056,993 716,560
- land - 151,034
- development costs 43,078,726 41,773,802

158,889,920 118,074,988
Disposal of land during the year - (315,040)

158,889,920 117,759,948
Reversal of development costs of completed
projects during the year:
- land - (673,224)
- development costs - (7,831,933)

- (8,505,157)

158,889,920 109,254,791
Cost recognised as an expense in the income
statement:
- previous year (54,509,104) (24,432,606)
- current year (49,249,968) (38,581,655)
- adjustment to completed project during the year - 8,505,157

(103,759,072) (54,509,104)

55,130,848 54,745,687

Included in development expenditure is interest expense capitalised during the financial
year amounting to RM1,820,090 (2005 - RM1,846,203).

Leasehold land of a subsidiary costing RM7,674,555 (2005 - RM7,674,555) is charged to a
licensed bank for a term loan facility granted to the subsidiary.

Page 38



14. PROPERTY DEVELOPMENT COSTS (CONT’D)
The foreign currency exposure profile of the property development costs is as follows:-

THE GROUP
2006 2005
RM RM

Thai Baht 131,603 -

15. RECEIVABLES
2006 2005 2006 2005
RM RM RM RM

Trade receivables 46,168,072 35,127,293 - -
Retention receivable 2,376,762 1,387,398 - -

Total trade receivables 48,544,834 36,514,691 - -
Allowance for
doubtful debts
At 1 April 2005/2004 (13,466,689) (13,474,195) - -
Write-back - 7,506 - -

At 31 March (13,466,689) (13,466,689) - -

Net trade receivables 35,078,145 23,048,002 - -

Other receivables,
deposits and
prepayments 10,996,707 8,602,979 2,579,164 2,495,814
Allowance for
doubtful debts (3,500,122) (3,500,122) (2,352,737) (2,352,737)

Net other receivables,
deposits and
prepayments 7,496,585 5,102,857 226,427 143,077

Total receivables 42,574,730 28,150,859 226,427 143,077

Page 39



15. RECEIVABLES (CONT’D)
The foreign currency exposure profile of the receivables is as follows:-

THE GROUP
2006 2005
RM RM

Thai Baht 430,725 -

Included in trade receivables at the balance sheet date are the following amounts:-

2006 2005
RM RM
Related party:
- Ligamas Sdn. Bhd. 4,923,055 * 4,774,941 *

Sabah State Government 18,054,059 5,997,229

* relates to retention receivable.

The amount owing by the Sabah State Government is in respect of the construction of an
office building for the Land and Survey Department (Jabatan Tanah dan Ukur) for a value
of RM29,069,000. Upon the completion of the office building, the entire trade receivables
due from the Sabah State Government will be set off against an equivalent amount owing
to the Sabah State Government, the details of which are disclosed in Note 29 to the

Details of the related party relationship and the nature of the transactions and balances are
set out in Note 43 to the financial statements.

Included in other receivables is an amount of RM1,070,828 (2005 - RM1,517,957) due from
sub-contractors for the purchase of building materials. The amount owing is unsecured,
interest-free, and is to be repaid through deductions against future claims for work to be
performed by the sub-contractors.

Credit terms of trade receivables range from 14 to 90 days.

Page 40

SBC DIRECTORS' REPORT

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SBC DIRECTORS' REPORT