Annual Report 2005 965kb

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Wisma Siah Brothers, 74A Jalan Pahang, 53000 Kuala Lumpur. Tel: 03 4041 8118 Fax: 03 4043 5281

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C O R E P U R P O S E

• To build upon our construction heritage to design and deliver exciting, unique and valuable solutions for buildings and communities.

C O R E V A L U E S

• 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.

C O N T E N T S

2 NOTICE OF ANNUAL GENERAL MEETING

NOTICE OF DIVIDEND PAYMENT 3

DIRECTORS’ PROFILES 6 - 11

CORPORATE STRUCTURE 14

EXECUTIVE CHAIRMAN’S STATEMENT 16 - 19

STATEMENT OF CORPORATE GOVERNANCE 24 - 31

AUDIT COMMITTEE REPORT 34 - 38

GROUP PROPERTIES 99 - 102

PROXY FORM

4 - 5 CORPORATE INFORMATION

12 - 13 GROUP FINANCIAL HIGHLIGHTS

15 STATEMENT OF DIRECTORS’ RESPONSIBIL IT IES

20 - 23 PENYATA PENGERUSI EKSEKUTIF

32 - 33 STATEMENT ON INTERNAL CONTROL

103 - 106 SHAREHOLDERS’ INFORMATION

39 - 98 FINANCIAL STATEMENTS

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

3

2

NOTICE OF ANNUAL GENERAL MEETING

AGENDA

NOTICE IS HEREBY GIVEN that the Fifteenth Annual General Meeting of SBC Corporation Berhad will be held at the Penthouse, 5th Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpur on Thursday, 22 September 2005 at 11.00 a.m. to transact the following business:

1. To receive and adopt the Directors’ Report and the Audited Financial Statements for theyear ended 31 March 2005 together with the Auditors’ Report thereon.

2. To declare a first and final dividend of 1% less 28% income tax for the year ended 31 March 2005.

3. To approve the payment of Directors’ fees.

4. To re-appoint the following Directors pursuant to Section 129(6) of the Companies Act,1965:

(a) YBhg. Dato’ Lim Phaik Gan

(b) Mr Sia Kwee Mow @ Sia Hok Chai

5. To re-elect the following Directors retiring by rotation pursuant to Article 77 of the Articlesof Association of the Company:

(a) YBhg. Dato’ Dr. Norraesah Bt. Haji Mohamad

(b) Mr Mun Chong Shing @ Mun Chong Tian

6. To re-appoint Messrs. Horwath as Auditors of the Company and to authorise theDirectors to fix their remuneration.

7. As Special Business, to consider and, if thought fit, to pass the following OrdinaryResolution:

AUTHORITY TO DIRECTORS TO ALLOT AND ISSUE SHARES

“THAT subject always to the Companies Act, 1965, the Articles of Association of theCompany and the approval from the Bursa Malaysia Securities Berhad and othergovernmental/regulatory bodies, where such approval shall be necessary, the Directors beand are hereby authorised pursuant to Section 132D of the Companies Act, 1965, to allotand issue shares in the Company, at any time and upon such terms and conditions and forsuch purposes as they may in their absolute discretion deem fit, provided that theaggregate number of shares issued pursuant to this resolution does not exceed ten percent (10%) of the issued capital of the Company for the time being and that suchauthority shall continue in force until the conclusion of the next Annual General Meetingof the Company.”

8. To consider any other business for which due notice shall have been given.

(RESOLUTION 1)

(RESOLUTION 2)

(RESOLUTION 3)

(RESOLUTION 4)

(RESOLUTION 5)

(RESOLUTION 6)

(RESOLUTION 7)

(RESOLUTION 8)

(RESOLUTION 9)

3

NOTICE OF DIVIDEND PAYMENT

NOTICE IS HEREBY GIVEN that subject to the approval of the shareholders at the Fifteenth Annual General Meeting of the Company, the first and final dividend of 1% less 28% income tax for the year ended 31 March 2005 will be paid on 31 October 2005 to Depositors registered in the Record of Depositors on 18 October 2005.

A Depositor shall qualify for entitlement only in respect of:

a) shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 18 October 2005 in respect of ordinarytransfers; and

b) shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.

By Order of the Board

CHONG FOOK SINKAN CHEE JINGCompany Secretaries

Kuala Lumpur29 August 2005

NOTES:1) Proxy:

A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote instead of him. Where a member appoints more thanone (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. To be valid, the proxy formduly completed must be deposited at the Registered Office of the Company not less than forty-eight (48) hours before the time for holding the meeting. Ifthe appointor is a corporation, this form must be executed under its common seal or under the hand of its attorney.

2) Resolution 9:The Company is actively pursuing business opportunities in prospective areas so as to broaden the operating base and earnings potential of the Company.Such expansion plans may require the issue of new shares not exceeding 10 per cent (10%) of the Company’s issued share capital. With the passing of theresolution by the shareholders of the Company at the forthcoming Annual General Meeting, the Directors would avoid delay and cost of convening furthergeneral meetings to approve the issue of shares for such purposes.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETINGpursuant to paragraph 8.28 (2) of the listing requirements of Bursa Malaysia Securities Berhad

(1) The following are the Directors standing for re-appointment and re-election at the Fifteenth Annual General Meeting:

(a) Re-appointment of the following Directors pursuant to Section 129(6) of the Companies Act, 1965:

(i) YBhg. Dato’ Lim Phaik Gan

(ii) Mr Sia Kwee Mow @ Sia Hok Chai

(b) Re-election of the following Directors pursuant to Article 77 of the Articles of Association of the Company:

(i) YBhg. Dato’ Dr. Norraesah Bt. Haji Mohamad

(ii) Mr Mun Chong Shing @ Mun Chong Tian

(2) There were four (4) Directors’ Meetings held during the financial year ended 31 March 2005. Details of attendance ofthe Directors are set out in the Statement of Corporate Governance appearing on page 25 of this Annual Report.

(3) The Fifteenth Annual General Meeting will be held at the Penthouse, 5th Floor, Wisma Siah Brothers, 74, Jalan Pahang,53000 Kuala Lumpur on Thursday, 22 September 2005 at 11.00 a.m.

(4) The profile of Directors standing for re-appointment and re-election as mentioned in paragraph 1 above at the FifteenthAnnual General Meeting are set out in page 6 to 10 of this Annual Report.

4

CORPORATE INFORMATION as at 8 August 2005

BOARD OF DIRECTORS

Sia Kwee Mow @ Sia Hok ChaiJMN, FFB, FCIOB, FAIBExecutive Chairman

Sia Teong HengB.Sc. (Eng), M.Sc.Managing Director

Mun Chong Shing @ Mun Chong TianNon-Executive Director

Dato' Zainol Abidin Bin Haji A. HamidLLB (Hons)Non-Executive Director

Dato' Lim Phaik GanDPMP, DMPN, M.A.(Law), FCI, ARBIndependent Non-Executive Director

Dato' Dr. Norraesah Bt. Haji MohamadDSPN, PhD., B.Sc.(Econ)Independent Non-Executive Director

Ahmad Fizal Bin OthmanB.Acc & Fin. (Hons)Independent Non-Executive Director

AUDIT COMMITTEE

Dato' Dr. Norraesah Bt. Haji MohamadDSPN, PhD., B.Sc.(Econ)Chairperson & Independent Non-Executive Director




REMUNERATION COMMITTEE

Dato' Zainol Abidin Bin Haji A. HamidLLB (Hons)Chairman & Non-Executive Director




NOMINATION COMMITTEE

Dato' Lim Phaik GanDPMP, DMPN, M.A.(Law), FCI, ARBChairperson & Independent Non-Executive Director



Mun Chong Shing @ Mun Chong TianNon-Executive Director

EXECUTIVE MANAGEMENT

Sia Teong HengB.Sc. (Eng), M.Sc.Chairman & Managing Director

Sia Teong LengB.A. (Hons) (Law & Econs), M.B.A.Corporate Director

Ng Kee ChyeCA., B.Acc (Hons)Group Chief Financial Officer

Teh Kai ChuaB.Sc. (Eng)General Manager - Technical

5

SOLICITORS

Cheang & Ariff39 Court39, Jalan Yap Kwan Seng, 50450 Kuala Lumpur

Lim & Yeoh145-M Jalan Maharajalela, 50150 Kuala Lumpur

Lee, Perara & Tan55, Jalan Thambapillai, Off Jalan Tun SambanthanBrickfields, 50470 Kuala Lumpur

Foong & PartnersSuite 21-08, Level 21Plaza 138, 138, Jalan Ampang, 50450 Kuala Lumpur

AUDITORS

HorwathChartered AccountantsLevel 16 Tower C, Megan Avenue II12 Jalan Yap Kwan Seng, 50450 Kuala Lumpur

COMPANY SECRETARIES

Chong Fook SinATII, MCCS, AFA

Kan Chee JingACIS

PRINCIPAL BANKERS

Alliance Bank Malaysia BerhadAseambankers Malaysia BerhadBangkok Bank BerhadBumiputra Commerce Bank BerhadMalayan Banking BerhadUnited Overseas Bank (Malaysia) BerhadUtama Merchant Bank Berhad

REGISTERED OFFICE

Wisma Siah Brothers74A Jalan Pahang, 53000 Kuala LumpurTel: 03-4041 8118 Fax: 03-4043 5281

REGISTRARS

Tacs Corporate Services Sdn. Bhd.Unit No. 203, 2nd Floor, Block C, Damansara IntanNo. 1, Jalan SS 20/27, 47400 Petaling JayaTel: 03-7118 2688 Fax: 03-7118 2693

STOCK EXCHANGE LISTING

Main Board ofBursa Malaysia Securities Berhad

6

DIRECTORS’ PROFILES as at 29 Ju ly 2005

Sia Kwee Mow @ Sia Hok Chai, a Malaysian, aged 72, is the Executive Chairman of SBCCorporation Berhad (“SBC”). He has been a Director of SBC since its incorporation on 14 June 1990. He has over 51 years of experience in building and civil engineeringcontracting and not less than 33 years of experience in plastic engineering since theincorporation of Paling Industries Sdn. Bhd. in 1971. He was actively involved in MasterBuilders Association Malaysia (“MBAM”) and had served in various capacities including thepost of President (1988 to 1994). He was elected as the 29th President (1994 to 1996) ofthe International Federation of Asian and Western Pacific Contractors’ Associations(“IFAWPCA”) during which he led the IFAWPCA delegation to a meeting between the WorldBank 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 tothe 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 SelangorChinese Plumbing and Sanitary Association.

He also sits on the board of several private limited companies in Malaysia, including severalsubsidiaries of SBC.

His holdings in the securities of SBC are as follows:

Direct Interest Indirect Interest

Ordinary shares 1,480,800 (a) 19,498,523 (b)

(a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd.(b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500

shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares).

By virtue of his interests in SBC, he is deemed to have interests in the securities of SBC’ssubsidiaries to the extent of SBC’s interest in accordance with Section 6A of the CompaniesAct, 1965.

He is the father of Sia Teong Heng, the Managing Director and a major shareholder of SBC.

He does not have any conflict of interest with SBC except for those transactions disclosed inNote 42 to the financial statements.

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.

SIA KWEE MOW @ SIA HOK CHAI

7

Sia Teong Heng, a Malaysian, aged 42, is the Managing Director of SBC Corporation Berhad(“SBC”). He was appointed as a Director of SBC on 5 February 1991. He is a member of theAudit Committee and the Remuneration Committee of SBC. He graduated in 1985 with adegree in Bachelor of Science in Civil Engineering from Loughborough University, UnitedKingdom ("UK") and a Master degree in Management Science from Imperial College, Universityof London, UK in 1986.

His career began in investment banking in 1987 with Morgan Grenfell (Asia) Ltd., Singapore.He joined SBC in 1991. Presently, he also sits on the boards of several subsidiaries of SBC.



Ordinary shares 2,517,992 (a) 19,498,523 (b)

(a) 2,274,000 shares are held in bare trust by Amsec Nominees (Tempatan) Sdn. Bhd.(b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500

shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares).

By virtue of his interests in SBC, he is deemed to have interests in the securities of SBC’ssubsidiaries 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 shareholderof SBC.

He does not have any conflict of interest with SBC except for those transactions disclosed inNote 42 to the financial statements.


He attended all the four Board Meetings held during the last financial year.

SIA TEONG HENG

8

Mun Chong Shing @ Mun Chong Tian, a Malaysian, aged 68, was appointed as an ExecutiveDirector of SBC Corporation Berhad ("SBC") on 1 April 1996 when he was employed asGeneral Manager of Paling Industries Sdn. Bhd. (“Paling”) from 1987 and appointed as aDirector in 1991 and remained in both positions until his retirement on 31 December 2001.

On 31 December 2001, he was redesignated as a Non-Executive Director of SBC. He is amember of the Nomination Committee of SBC.

He has received training in Sales Management conducted by the National Productive Centreand the Malaysian Institute of Management and a General Management Programme at theNational Productivity Board, Singapore.

Prior to his involvement with Paling, he was employed as General Manager in HumeIndustries (M) Bhd. where he has had extensive exposure to industrial engineering andmanagement.



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.



MUN CHONG SHING @ MUN CHONG TIAN

9

Dato' Lim Phaik Gan, a Malaysian, aged 85, was appointed as an Independent Non-Executive Director of SBC Corporation Berhad ("SBC") on 5 February 1991. She is theSenior Independent Non-Executive Director, the Chairperson of the Nomination Committeeand a member of the Audit Committee and the Remuneration Committee of SBC. She is anadvocate and solicitor and was called to the Bar of England and the Bar of Malaysia. Sheobtained a Master of Arts degree in Law from the University of Cambridge, United Kingdomand was in active practice at the Bar of Malaysia from 1954 to 1971 and from 1980 untiltoday.

Since 1955, she has had a distinguished career in both the private and public sectors. In1970, she was a member of the National Economic Consultative Council established whenParliament was suspended as a result of riots in 1969. From 1971 to 1980, she served asambassador and the Deputy Permanent Representative of Malaysia to the United Nationsand successively as the Malaysian Ambassador to Yugoslavia, Austria, Belgium and theEuropean Economic Community. She was Malaysia's Permanent Representative to theUnited Nations Industrial and Development Organisation and International Atomic EnergyAgency in Vienna, and served as chairman in various committees.

After her retirement from the Malaysian Foreign Service in 1980, she was appointed by theGovernment as Director of the Kuala Lumpur Regional Centre for Arbitration, aninternational organisation involved in the conduct and administration of internationalcommercial arbitration for the settlement of disputes arising out of international commercialcontracts and joint ventures, in which capacity she served from 1982 to 2000. She iscurrently a member of the Board of Trustees of the Institute of Strategic and InternationalStudies.

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 three of the four Board Meetings held during the last financial year.

DATO' LIM PHAIK GAN

10

Dato’ Dr. Norraesah Bt. Haji Mohamad, a Malaysian, aged 57, was appointed as anIndependent Non-Executive Director of SBC Corporation Berhad ("SBC") on 8 July1991. She is the Chairperson of the Audit Committee and a member of the NominationCommittee and the Remuneration Committee of SBC. She holds a Doctorate Degree inEconomics Science (International Economics and Finance) which she obtained in 1986from University of Paris 1, Pantheon Sorbonne, France.

She has over 32 years of working experience in banking, consultancy and internationaltrade and commerce. She worked with the International Trade Division of the Ministryof 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 ofFinance holding the post of Principal Assistant Secretary dealing with privatisation anddebt management.

In 1988, she joined ESSO Production Malaysia, Inc. as Communications Manager andsubsequently, in 1990, took the position of Managing Director with a consultant firmproviding financial advisory services. From 1991 to 1998 she was appointed as the ChiefRepresentative of Credit Lyonnais Bank in Malaysia.

She sits on the board of KESM Industries Berhad, Malaysian Oxygen Berhad and severalprivate limited companies.

She was awarded the distinction of Darjah Setia Pangkuan Negeri on 13 July 2002 byTuan Yang Terutama Yang di-Pertua Negeri Pulau Pinang on His Excellency’s 64thBirthday.

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.

DATO’ DR. NORRAESAH BT. HAJI MOHAMAD

11

Dato’ Zainol Abidin Bin Haji A. Hamid, a Malaysian, aged 63, was appointed as aNon-Executive Director of SBC Corporation Berhad ("SBC") on 10 October 2003,representing the interest of Permodalan Nasional Berhad. He is the Chairman of theRemuneration Committee of SBC. He graduated with LLB (Hons) from the Universityof London in 1995.

He joined the Kedah State Government in 1966 as a civil servant. From 1973 to1981, 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 1996and 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 attended three of the four Board Meetings held during the last financial year.

DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID

Ahmad Fizal Bin Othman, a Malaysian, aged 42, was appointed as an IndependentNon-Executive Director of SBC Corporation Berhad ("SBC") on 24 February 2004.He is a member of the Audit Committee and the Nomination Committee of SBC. Hegraduated with a Bachelor in Accounting and Finance (Hons) from the MiddlesexUniversity, London.

He is a well-rounded and experienced businessman and involved in a multitude ofindustries. 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.




AHMAD FIZAL BIN OTHMAN

12

GROUP FINANCIAL HIGHLIGHTS for the f inanc ia l year ended 31 March 2005

2005 2004 2003 2002 2001(Restated)

RM’000 RM’000 RM’000 RM’000 RM’000

RESULTSTurnover 66,867 86,317 69,829 81,645 92,411 Profit before taxation 3,321 6,996 5,149 1,618 1,421 Profit after taxation but

before minority interest 2,250 2,073 2,011 1,174 1,071 Profit attributable to shareholders 2,250 2,073 2,011 1,174 1,071

ASSET EMPLOYEDProperty, plant and equipment 35,452 36,246 35,813 7,047 7,586 Investments and other assets 192,257 153,703 152,856 141,705 140,323 Net current assets 37,243 73,632 71,634 56,867 58,346 Goodwill and deferred expenditure 27,318 27,318 27,272 10,246 10,246

292,270 290,899 287,575 215,865 216,501

FINANCED BYShare capital 82,435 82,435 82,435 57,302 57,302 Share application account - - - 115,600 - Reserves 137,572 135,940 134,682 42,524 43,087 Irredeemable Convertible

Unsecured Loan Stocks - - - - 115,600 ABBA Bonds 41,752 39,712 37,827 - - Deferred Liabilities 30,511 32,812 32,631 439 512

292,270 290,899 287,575 215,865 216,501

SELECTED RATIOSNet earnings per share (sen) 2.7 2.4 2.4 1.8 1.6 Net tangible assets per share (sen) 234 244 242 393 165 Gross dividend (%) 1.0 1.0 1.0 - 1.5

PROFIT BEFORE TAXATIONRM'000

ASSETS EMPLOYEDRM'000

SHAREHOLDERS' FUNDRM'000

TURNOVERRM'000

0

20,000

40,000

60,000

80,000

100,000

2001 2002 2003 2004 2005

0

50,000

100,000

150,000

200,000

250,000

2001 2002 2003 2004 2005

0

50,000

100,000

150,000

200,000

250,000

300,000

2001 2002 2003 2004 2005

2001 2002 2003 2004 20050

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

13

14

CORPORATE STRUCTURE as at 8 August 2005

INVESTMENT HOLDINGSiah Brothers Land Sdn Bhd 100%Siah Brothers Properties Sdn Bhd 100%Siah Brothers Industries Sdn Bhd 100%

BUILD / CONSTRUCTIONSyarikat Siah Brothers Trading Sdn Bhd 100%Syarikat Siah Brothers Construction Sdn Bhd 100%Siah Brothers Enterprise Sdn Bhd 100%Lifeplus - Siah Brothers Trading JV Sdn Bhd 100%

STRATEGIC INVESTMENTMasahmura Sdn Bhd 51%Masahmura Sales & Service Sdn Bhd 51%Ligamas Sdn Bhd 50%Varich Industries Sdn Bhd 50%Sam & Lau Plantation Sdn Bhd 50%Paling Industries Sdn Bhd 40%Liga Canggih Sdn Bhd 40%Pasti Bumi Sdn Bhd 19.6%

RESIDENTIAL PROPERTY DEVELOPMENTSeri Ampangan Realty Sdn Bhd 100%Sinaran Naga Sdn Bhd 100%Mixwell (Malaysia) Sdn Bhd 100%South-East Best Sdn Bhd 100%Gracemart Resources Sdn Bhd 100%Aureate Construction Sdn Bhd 100%Sutrati Development Sdn Bhd 100%Siah Brothers Development Sdn Bhd 100%Tiara Development Sdn Bhd 100%SBC Homes Sdn Bhd 100%Winsome Ventures Sdn Bhd 100%SBC Leisure Sdn Bhd 100%SBC Towers Sdn Bhd 100%Siah Brothers Project Management Sdn Bhd 100%Sri Berjaya Development Sdn Bhd 33.3%Sri Rawang Properties Sdn Bhd 22.2%

15

STATEMENT OF DIRECTORS’ RESPONSIBIL IT IES 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 withapplicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give atrue and fair view of the state of affairs of the Group and the Company as of 31 March 2005 and of the results andcash 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 accuracyat 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’sassets and to prevent and detect fraud and other irregularities.

EXECUTIVE CHAIRMAN’S STATEMENT

On behalf of

the Board of Directors,

I am pleased to present

the Annual Report and

the Financial Statements

of the Group and the Company

for the financial year ended

31 March 2005.

FINANCIAL REVIEW

The Group has recorded an after tax profit of RM2.250 million, representing an increase of

8.6% increase over the previous year's results. This pattern towards better margins continues

on account of our focus on cost management and migration towards more value added

projects.

OPERATIONS REVIEW

As the industry continues to evolve to a higher level of sophistication and in order to stay

ahead of the competition, we are continuously retooling our delivery processes and

researching into product designs to meet with greater consumer awareness. The Group's

strategy of maintaining a geographical mix of projects also assists to achieve a better risk

adjusted return and broaden revenue base. New projects and fresh launches in Kuantan,

Kota Kinabalu, Kuala Lumpur, Kuching and Selangor continue to affirm this strategy.

SERI MAHKOTA AMAN, KUANTAN

METROPOLITAN PARK, KUALA LUMPUR

16

In Klang, a turnkey building partnership is near completion with its delivery of 700 units of

affordable homes in partnership with landowner, TA Enterprise Bhd. In Selangor, during the

fourth quarter of year 2004, we handed over 293 units of luxury homes at Kota Damansara,

Selangor for landowner Perbadanan Kemajuan Negeri Selangor (PKNS). The Group's delivery

track record and its construction know-how, such as for the aforementioned projects, continue

to demonstrably prove pivotal in securing turnkey building partnerships particularly with

institutional landowners.

On our own landbank, the Kuantan project, currently still the largest private mixed township in

East Coast Malaysia, "Seri Mahkota Aman" continues to do well, having just handed over a total

of 200 units of terrace houses this year alone; with its location being fortuitously located at the

main toll exit of the new East West Highway, it is expected to continue its reliable performance.

At the premium end, "The Peak" project in Kota Kinabalu, having completed the now fully

occupied condominium tower, we have embarked our second phase of gated garden homes,

"Signal Hill Park" @ The Peak.

KOTA DAMANSARA, PETALING JAYA

BANDAR LIGAMAS

17

18

Meanwhile, our flagship development adjacent to Kuala Lumpur's north Metropolitan Park located

at the gentrified axis of Jalan Kuching and Jalan Ipoh, now in its sixth phase with the commercial

component launched in the fourth quarter of year 2004. Our equity joint venture with PKNS,

located at the foothills of Genting Highlands, colloquially known as “Bandar Ligamas” continues to

bring affordable landed living in serene surroundings to KL suburbanites. To-date more than 5,000

mixed commercial and residential units have been completed and delivered.

Paling Industries Sdn Bhd, the Group's manufacturing associate in the water and waste water

transmission industry continues to lead the domestic plumbing market volume with its brand

franchise and has also been increasing its penetration into the key regional export markets.

ECONOMIC AND BUSINESS OUTLOOK

With the country's foreign exchange policy now firmly reworked back within the international

framework, thus checking inflation and enabling the continuance of accommodative monetary

policies, we expect further expansion in investment demand and an outlook for the property sector

that should reflect the country's strong fundamentals. The Group is optimistic of its ability to

continue offering sophisticated building solutions to its clients, partners and customers in line with

their increasing wish for better lifestyles both for living and working.

SURIA SETAPAK, KUALA LUMPUR

THE CUBE, KUALA LUMPUR

19

APPRECIATION AND ACKNOWLEDGEMENT

On behalf of the Board, I would like to thank the management team and all employees of the Group

for their unstinting efforts, personal commitments and invaluable contributions made through out the

year to ensure the success of the Group. The achievement of the Group's vision and mission through

the spirit of hand in hand adopted by all the individuals in the Group has led to every confident of many

more years of satisfactory performance.

My sincere thanks also to our shareholders, customers, joint venture partners, human associates,

bankers and government authorities for their confidence in the Board and the management.

Thank you.

Sia Kwee Mow @ Sia Hok Chai

JMN, FFB, FCIOB, FAIB

Executive Chairman

8 August 2005

SIGNAL HILL PARK @ THE PEAK

SURIA PENDAMAR, KLANG

PALING'S PRODUCTS

PENYATA PENGERUSI EKSEKUTIF

Bagi pihak Lembaga Pengarah,

saya dengan sukacitanya

membentangkan Laporan Tahunan

serta Penyata Kewangan

Kumpulan dan Syarikat

bagi tahun kewangan berakhir

31 Mac 2005.

ULASAN KEWANGAN

Kumpulan telah mencatatkan keuntungan selepas cukai sebanyak RM2.250 juta, peningkatan

sebanyak 8.6% dari keuntungan yang dicatat pada tahun sebelum ini. Corak pertumbuhan ke

arah margin yang lebih baik ini adalah berpandukan fokus kami terhadap pengurusan kos serta

peralihan kepada projek-projek yang bernilai lebih tinggi.

ULASAN OPERASI

Memandangkan industri ini terus berkembang ke tahap yang lebih sofistikated, seiringan

dengan keinginan untuk sentiasa berada di hadapan pasaran persaingan, maka kami akan terus

mengubahsuai dan memperlengkapi kembali proses serahan serta mengkajiselidik rekabentuk

produk agar kesemuanya dapat memenuhi kehendak pengguna secara meluas. Strategi

Kumpulan untuk terus mengendali projek-projek di pelbagai lokasi geografikal yang baik turut

menyumbang kepada pulangan penyelarasan risiko yang lebih tinggi di samping

memperluaskan pangkal perolehan. Projek-projek baru dan pelancaran terkini di Kuantan, Kota

Kinabalu, Kuala Lumpur, Kuching dan Selangor turut mengukuhkan strategi ini.

SERI MAHKOTA AMAN, KUANTAN

TAMAN METROPOLITAN, KUALA LUMPUR

20

Projek usahasama pembangunan turnkey di Kelang dengan pemilik tanah, TA Enterprise Bhd.,

telah hampir siap dengan penyerahan sebanyak 700 unit rumah mampu milik. Pada sukuan

keempat tahun 2004, kami telah berjaya siapserahkan sebanyak 293 unit rumah mewah di Kota

Damansara, Selangor kepada pemilik tanah, Perbadanan Kemajuan Negeri Selangor (PKNS).

Rekod penyerahan Kumpulan yang baik berserta kearifannya dalam bidang pembinaan,

sepertimana dalam projek-projek yang disebutkan tadi, akan terus memainkan peranan yang

penting dalam menjamin keupayaan Kumpulan untuk memperolehi projek usahasama

pembinaan turnkey terutamanya dengan pemilik-pemilik tanah institusi.

Tanah simpanan kami di Kuantan yang dikenali sebagai “Seri Mahkota Aman” yang pada ketika

ini masih merupakan projek perbandaran campuran swasta yang terbesar di Pantai Timur

Semenanjung Malaysia telah terus menunjukkan prestasi yang baik. Dalam tahun ini sahaja, ia

telah berjaya menyiapserahkan sebanyak 200 unit rumah teres. Lokasinya yang terletak secara

kebetulannya di tol utama keluar masuk Lebuhraya Timur Barat dijangka akan terus

menyumbang terhadap prestasi yang memuaskan bagi projek ini.

Di peringkat premium pula, projek menara kondominium “The Peak” di Kota Kinabalu telah pun

siap dibina dan kini penuh diduduki. Malahan, kini kami juga telah memulakan projek fasa

kedua berciri taman kediaman berpagar yang dikenali sebagai “Signal Hill Park” @ The Peak.

Sementara itu, projek pembangunan utama kami di utara bandaraya Kuala Lumpur yang

terletak bersebelahan dengan Taman Metropolitan dan di persimpangan Jalan Kuching dan Jalan

Ipoh kini telah memasuki peringkat fasa keenam dengan komponen komersialnya dilancarkan

pada sukuan keempat tahun 2004.

KOTA DAMANSARA, PETALING JAYA

BANDAR LIGAMAS

21

Projek usahasama ekuiti kami bersama PKNS yang lebih dikenali sebagai “Bandar Ligamas” di

kaki bukit Genting Highlands terus mempamerkan gaya hidup berkemampuan di persekitaran

yang indah dan damai kepada para penduduk Kuala Lumpur yang menghuni di pinggiran kota.

Sehingga ke hari ini, lebih daripada 5,000 unit komersial dan unit kediaman telah siap dibina dan

diserahkan.

Syarikat bersekutu Kumpulan dalam sektor pembuatan, Paling Industries Sdn Bhd, yang

tertumpu pada industri pengairan dan penularan air pembuangan terus mengetuai dalam

pasaran domestik pempaipan melalui milikan jenama secara francais. Malahan, ia juga terus

meningkatkan usahanya untuk menerajui pasaran ekspot utama di rantau ini.

ULASAN EKONOMI

Memandangkan polisi tukaran mata wang asing negara kini telah diserasikan dengan corak

rangka antarabangsa serta penyesuaian terhadap kadar inflasi dan polisi kewangan, kami

menjangkakan perkembangan yang lebih tinggi dalam permintaan pelaburan dan juga tinjauan

ke atas sektor perumahan yang mampu menggambarkan kekukuhan dasar negara ini.

Kumpulan ini amat optimistik atas keupayaannya untuk terus menawarkan cara penyelesaian

pembangunan yang canggih kepada para pembeli, rakan sekutu dan pelanggannya, selaras

dengan keinginannya untuk membentuk gaya hidup yang lebih baik dalam aspek kediaman dan

juga pekerjaan.

SURIA SETAPAK, KUALA LUMPUR

THE CUBE, KUALA LUMPUR

22

PENGHARGAAN DAN PENGAKUAN

Bagi pihak Lembaga Pengarah, saya ingin mengucapkan ribuan terima kasih kepada pihak pengurusan

dan kakitangan Kumpulan ini yang telah menyumbangkan usaha yang tidak berbelah bagi, komitmen

peribadi dan sumbangan yang tidak ternilai di sepanjang tahun demi memastikan kejayaan terus

dikecapi oleh Kumpulan. Kejayaan visi dan misi Kumpulan yang tercapai melalui sumbangan jiwa

sesama diri oleh setiap insan dalam Kumpulan telah mencetuskan kepercayaan untuk terus

membuahkan hasil yang memuaskan dalam tahun tahun akan datang.

Saya juga ingin merakamkan ucapan terima kasih secara ikhlasnya kepada para pemegang saham,

pelanggan, rakan sekutu, rakan perniagaan, pihak bank dan pihak kerajaan atas sokongan mereka

terhadap Lembaga Pengarah and pihak pengurusan Kumpulan ini.

Sekian, terima kasih.


JMN, FFB, FCIOB, FAIB

Pengerusi Eksekutif

8 Ogos 2005

SIGNAL HILL PARK @ THE PEAK

SURIA PENDAMAR, KELANG

PRODUK PALING

23

24

The Board of Directors of SBC Corporation Berhad remains firmly committed towards ensuring the higheststandard 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 andprocedures with a view to ensure the principles and best practices in corporate governance as promulgated bythe Malaysian Code on Corporate Governance (“the Code”) is applied and adhered to in the best interests ofthe stakeholders.

This disclosure statement sets out the manner in which the Group has applied and complied with the Principlesof the Code and the extent of compliance with Best Practices as set out in Part 1 and 2 of the Code.

BOARD OF DIRECTORS

Composi t ion 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 (“BursaSecurities”) Listing Requirements of having at least 2 Directors or 1/3 of the Board whichever is higher, whoare Independent Directors.

The Directors have a wide range of experience and skills and are from diverse backgrounds relevant tomanaging and directing the Group’s operations. The Executive Directors are responsible for implementingpolicies of the Board, overseeing the Group’s operations and developing the Group’s business strategies. Therole of the Independent Non-Executive Directors is to provide objective and independent judgement to thedecision making of the Board and as such, provide an effective check and balance to the Board’s decisionmaking process.

The Board is satisfied that the current Board composition fairly reflects the investment of minority shareholdersin the Company and represents the needed mix of skills and experience required to discharge the Board’s dutiesand responsibilities. Furthermore, no individual Director or group of Directors can dominate the Board’s decisionmaking process.

The profiles of the members of the Board are set out in this Annual Report under the section named Directors’Profiles.

Duties and Responsibi l i t ies

The Board recognises its key role in charting the strategic direction, development and control of the Group andhas adopted the specific responsibilities that are listed in the Code, which facilitates the discharge of the Board’sstewardship responsibilities.

The roles of the Chairman and Managing Director are clearly distinct to ensure that there is a balance of powerand authority. The Chairman is primarily responsible for the orderly conduct and working of the Board whilstthe Managing Director is responsible for the day-to-day running of the business and implementation of Boardpolicies and decisions adopted by the Board.

Dato’ Lim Phaik Gan is the Senior Independent Non-Executive Director to whom concerns may be conveyed.

STATEMENT OF CORPORATE GOVERNANCE as at 8 August 2005

25

BOARD OF DIRECTORS (CONT’D)

Board Meet ings

The Board meets on a scheduled basis once every quarter with additional meetings held as and when urgentissues and important decisions are required to be taken between the scheduled meetings. During the financialyear ended 31 March 2005, the Board met 4 times where it deliberated on and considered matters relating tothe Group’s financial performance, significant investments, corporate development, strategic issues andbusiness plan.

Details of each Director’s attendance of Board meetings are set out as follows:

No. ofmeetings

held duringthe financial No. ofyear ended meetings

Name of director Designation 31 March 2005 attended

Sia Kwee Mow @ Sia Hok Chai Executive Chairman 4 3

Sia Teong Heng Managing Director 4 4

Mun Chong Shing Non-Executive Director 4 4@ Mun Chong Tian

Dato’ Zainol Abidin Non-Executive Director 4 3Bin Haji A. Hamid

Dato’ Lim Phaik Gan Independent Non-Executive Director 4 3

Dato’ Dr. Norraesah Independent Non-Executive Director 4 4Bt. Haji Mohamad

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 theirresponsibilities. 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 informeddecision making and effective discharge of their duties. These documents are comprehensive and includequalitative and quantitative information to enable the Board members to make informed decisions. Notices ofBoard Meetings and board papers are provided to Directors in advance so that meaningful deliberation andsound decisions can be made at Board meetings. All proceedings of the Board meetings are minuted by theCompany Secretary.

There is a formal schedule of matters reserved specifically for Board’s decisions. These include approval of keypolicies, significant acquisitions and disposals of assets, significant investments and approval of budgets andcorporate plans.

To assist in the discharge of their responsibilities and duties, all Directors have access to the advice and servicesof the Company Secretary. If required, the Directors may engage independent professionals at the Group’sexpense, in the furtherance of their duties.

26

BOARD OF DIRECTORS (CONT’D)

Re-elect ion and Re-appointment of Di rectors

In accordance with the Company’s Articles of Association, one third of the Directors shall retire by rotation fromoffice and be eligible for re-election at the annual general meeting and all Directors appointed by the Board aresubject to re-election by shareholders at the first opportunity after their appointment. Furthermore, eachDirector shall retire from office at least once in every three years. Directors who are of or over the age ofseventy years shall also retire from office and be eligible for re-appointment at the annual general meetingpursuant to Section 129 (6) of the Companies Act, 1965.

Directors ’ Tra in ing

All members of the Board have attended the Mandatory Accrediation Programme. The Board will ensure thatall its members continue to attend training programmes and seminars to keep abreast with the relevantdevelopments on a continuous basis in compliance with the Bursa Securities Listing Requirements.

For new Directors, a familiarisation program will be conducted for them. This includes a presentation of theGroup’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, theNomination and the Remuneration Committees with clearly defined terms of reference in assisting the Boardto discharge its duties and responsibilities effectively.

AUDIT COMMITTEE

The report of the Audit Committee is set out on pages 34 to 38 of this annual report.

NOMINATION COMMITTEE (“NC”)

The NC has held two meetings during the financial year ended 31 March 2005. The attendance of themembers of the NC at the meetings is as follows:

No. of meetings heldduring the financial year No. of

Name of members ended 31 March 2005 meetings attended

Dato’ Lim Phaik Gan - Chairperson 2 1(Independent Non-Executive Director)

Dato’ Dr. Norraesah Bt. Haji Mohamad 2 2(Independent Non-Executive Director)

Ahmad Fizal Bin Othman 2 2(Independent Non-Executive Director)

Mun Chong Shing @ Mun Chong Tian 2 2(Non-Executive Director)

27

NOMINATION COMMITTEE (“NC”) (CONT’D)

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 shallconsist exclusively of non-executive Directors, with a minimum of 3, a majority of whom areindependent.

The members of the Committee shall elect the Chairman from among their number who shall be anindependent director.

In order to form a quorum in respect of a meeting of the Committee, the members present must bewholly 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 theCommittee.

(c) Authority

The Committee is to recommend new nominees for the Board and the board committees and to assessDirectors on an on-going basis. The actual decision as to who shall be nominated should be theresponsibility of the full Board after considering the recommendations of the Committee.

(d) Duties

The duties of the Committee shall be:

(i) to recommend to the Board, candidates for all directorships and in doing so, preference shall begiven to shareholders or existing Board members and candidates proposed by the Chief ExecutiveOfficer and, within the bounds of practicability, by any other senior executive or any director orshareholder 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 asa 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 theBoard.

At the meetings of the NC during the financial year ended 31 March 2005, the following matters wereconsidered and resolved:

- re-appointment and re-election of Directors at the Fifteenth Annual General Meeting;- mix of skills, experience and qualities of all Directors; and- the effectiveness of the Board and the contribution from each Board member.

28

REMUNERATION COMMITTEE (“RC”)

The members of the RC at the date of this report and their attendance at the meetings convened during thefinancial year ended 31 March 2005 are as follows:



Dato’ Zainol Abidin Bin Haji A. Hamid - Chairman 2 2(Non-Executive Director)

Dato’ Lim Phaik Gan 2 1(Independent Non-Executive Director)

Dato’ Dr. Norraesah Bt. Haji Mohamad 2 2(Independent Non-Executive Director)

Sia Teong Heng 2 2(Managing Director)

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 shallconsist 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 bewholly 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 theCommittee.

(c) Authority

The Committee is authorised to draw from outside advice as and when necessary in forming itsrecommendation to the Board on the remuneration of the executive directors in all its forms. Executivedirectors should play no part in decisions on their own remuneration and should abstain from discussionof their own remuneration.

The determination of the remuneration packages of the non-executive directors, including non-executivechairman, should be a matter for the Board as a whole. The individuals concerned should abstain fromdiscussion of their own remuneration.

29

REMUNERATION COMMITTEE (“RC”) (CONT’D)

(d) Duties

The duty of the Committee is to recommend to the Board the structure and level of remuneration ofexecutive directors.

(e) Reporting procedures

The Company Secretary shall circulate the minutes of meetings of the Committee to all members of theBoard.

During the financial year ended 31 March 2005, the RC met two times to consider the remuneration of theExecutive Chairman and Managing Director for 2004 and 2005.

DIRECTORS’ REMUNERATION

The details of the remuneration of each Director during the financial year ended 31 March 2005 are as follows:

(a) Total Remuneration

Basic Benefits- AttendanceSalary Bonuses Fees in-kind Fee Total

Name of directors RM RM RM RM RM RM

Executive

Sia Kwee Mow 460,320 252,000 - 16,925 - 729,245@ Sia Hok Chai

Sia Teong Heng 403,200 210,000 - - - 613,200

Non-Executive

Mun Chong Shing - - 18,000 - 2,100 20,100@ Mun Chong Tian

Dato’ Zainol Abidin - - 19,000 - 1,800 20,800Bin Haji A. Hamid

Dato’ Lim Phaik Gan - - 19,000 - 2,700 21,700Dato’ Dr. Norraesah - - 19,000 - 3,600 22,600

Bt. Haji MohamadAhmad Fizal - - 18,000 - 3,300 21,300

Bin Othman

Total 863,520 462,000 93,000 16,925 13,500 1,448,945

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DIRECTORS’ REMUNERATION (CONT’D)

(b) Directors’ remuneration by bands

Executive Non-Executive Total

Nil - - -RM1 to RM50,000 - 5 5RM50,001 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 - - -RM451,000 to RM500,000 - - -RM501,000 to RM550,000 - - -RM551,000 to RM600,000 - - -RM601,000 to RM650,000 1 - 1RM651,000 to RM700,000 - - -RM701,000 to RM750,000 1 - 1

Total 2 5 7

ACCOUNTABILITY AND AUDIT

Financia l Report ing

The Board aims to convey a balanced and understandable assessment of the Group’s financial position andprospects through the quarterly results and annual reports/financial statements to the Company’s shareholdersand regulators.

The Responsibility Statement by the Directors pursuant to Bursa Securities Listing Requirements is set out onpage 15.

Internal Control

The Board acknowledges its responsibility for maintaining a sound internal controls system, which providesreasonable assurance in ensuring the effectiveness and efficiency of operations and the safeguard of assets andinterest in compliance with laws and regulations as well as with internal financial administration procedures andguidelines.

The Group’s Statement on Internal Control is set out on pages 32 to 33.

31

ACCOUNTABILITY AND AUDIT (CONT’D)

Relat ionship with Auditors

The Board maintains a close and transparent professional relationship with the Group’s internal and externalauditors through the Audit Committee. In the course of audit of the Group’s operations, the internal andexternal auditors have highlighted all important matters to the Audit Committee. The Audit Committee willthen bring up the matters for the Board’s attention if it is necessary.

The Group has paid RM17,000 of non-audit fees to the external auditors for the financial year ended 31 March2005.

Relat ionship 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 publicreceived through phone calls or letters are handled by the Executive Directors, Group Chief Financial Officerand Company Secretary.

At the annual general meeting and extraordinary general meeting, the Chairman gives shareholders ampleopportunity to participate through questions on the prospects, performance of the Group and other matters ofconcern to them with the Board.

ADDITIONAL COMPLIANCE INFORMATION

In conformance with the requirements of Bursa Securities, the following compliance information is provided:

Revaluat ion Pol icy on Landed Propert ies

The Group’s landed properties are stated at cost. There is no policy of regular revaluation of its landedproperties as at the end of the financial year ended 31 March 2005.

Mater ia l Contracts

There were no material contracts entered into by the Company and its subsidiaries which involved the directors’and substantial shareholders’ interests subsisting at the end of the financial year ended 31 March 2005 orentered into since the end of the previous financial year.

32

INTRODUCTION

In accordance with paragraph 15.27 (b) of the Listing Requirements of Bursa Malaysia Securities Berhad(“Bursa Securities”), the Board of SBC Corporation Berhad (“herein known as the Company”) is pleased toinclude a statement on the state of the Company’s internal controls as guided by the Bursa Securities’Statement on Internal Control: Guidance for Directors of Public Listed Companies (“the Guidance”). Thestatement below outlines the nature and scope of the internal controls of the Group during the financial yearended 31 March 2005.

BOARD RESPONSIBIL ITY

The Board recognizes the importance of maintaining a sound system of internal control and risk managementpractices to safeguard shareholders’ investment and the Company’s assets. Therefore, the Board affirms itsresponsibility for Group’s approach to assessing risk and the systems of internal control and for reviewing theadequacy and effectiveness of the Group’s internal control systems and management information systems,including systems for compliance with applicable laws, regulations, rules, directives and guidelines. The reviewcovers financial, operational and compliance controls, and risk management procedures of the Group.However, such procedures are designed to manage rather than to eliminate the risk of failure to achievebusiness objectives and can only provide reasonable assurance and not absolute assurance against materialerrors, misstatement, losses or fraud.

RISK MANAGEMENT FRAMEWORK

The Board maintains an ongoing commitment to strengthen the Group’s control environment and processes.Key risks relating to the Group’s operations and strategic and business plans are addressed at daily / weekly /monthly meetings attended by Senior Management and key staff. The responsibility of managing the risks ofeach department lies with the respective Heads of Department and it is during these meetings, significant risksidentified and the corresponding internal controls implemented are communicated to Senior Management.

Management with the existence of internal audit function has updated risk profile of the Group. The updatedrisk profile was presented to the Audit Committee on 27 May 2005. The above is the description of theprocesses adopted by Management to identify and manage the Group’s risks. Steps are being taken to embedinternal control and risks management further into the operations of the business and to deal with areas ofimprovement which come to the attention of the Management and the Board.

STATEMENT ON INTERNAL CONTROL

33

KEY ELEMENTS OF INTERNAL CONTROLS

Internal controls are embedded in the Group’s operations as follows:

• Clear organisation structure with defined reporting lines.

• Defined level of authorities and lines of responsibilities from operating units up to the Board to ensureaccountabilities for risk management and control activities.

• Monthly management meetings convened to discuss the Group’s operations and performance. Thisincludes the monthly monitoring of results against budget, with significant variance explained andappropriate action taken.

• Daily/weekly staff meetings convened to discuss the progress of projects to allow Management to focuson areas of concern.

• Tender Committee approves the involvement of the Group in any property development andconstruction projects. A minimum number of three quotations are called for and tenders are awardedbased on factors such as track record, quality and speed of delivery.

• Tender Committee comprises members of Senior Management which ensures transparency in the awardof projects.

• A sound financial system that captures every single financial transaction. From this data captured, theGroup produces consolidated monthly management accounts and quarterly performances, which allowthe Management to focus on areas of concern.

• Regular site visits by members of the Senior Management team.

• Review of internal audit reports and follow-up on findings by Audit Committee.

The Board is of the view that the system of internal control in place for the year under review is sound andsufficient to safeguard shareholders’ investment, customers’ interests and the Group’s assets.

34

The Board of SBC Corporation Berhad is pleased to present the Audit Committee Report for the financial yearended 31 March 2005.

COMPOSITION AND MEETINGS

The Audit Committee comprises four members, three of whom are Independent Non-Executive Directors andone is the Managing Director. The name of the members and their attendance at meetings held during thefinancial year are as follows:



Dato’ Dr. Norraesah Bt. Haji Mohamad - Chairperson 4 4(Independent Non-Executive Director)

Dato’ Lim Phaik Gan 4 3(Independent Non-Executive Director)

Ahmad Fizal Bin Othman 4 4(Independent Non-Executive Director)

Sia Teong Heng 4 4(Managing Director)

The Audit Committee normally meets four times a year with additional meetings convened between scheduledmeetings, if necessary, to deliberate on urgent and significant matters.

The Group Chief Financial Officer, the Internal Auditor and representatives of the External Auditors attendedthe meetings at the invitation of the Audit Committee, where considered necessary.

The Company Secretary is responsible for distributing the notices of the meetings and relevant papers to theAudit Committee members prior to their meetings and recording the proceedings of the meetings thereat.

INTERNAL AUDIT FUNCTION

The Company has set up a new Internal Audit Department in place of the outsourced internal auditors duringthe financial year. The Internal Audit Department is independent from the activities or operations of otheroperating units. The principal role of the Department is to undertake independent, regular and systematicreview of the Group’s systems of internal control so as to provide reasonable assurance that such systemscontinue to operate efficiently and effectively. It is the responsibility of the Internal Audit Department toprovide the Audit Committee with independent and objective reports on the state of internal control of variousoperating units within the Group and the extent of compliance of the units with Group’s established policiesand procedures as well as relevant statutory requirements.

AUDIT COMMITTEE REPORT

35

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 theAudit Committee during the financial year ended 31 March 2005:

a) Discussed and reviewed the Audit Planning Memorandum which cover the external auditor’s plan, scopeand nature of work.

b) Reviewed the Audit Review Memorandum in relation to their findings and accounting issues arising fromthe audit of the Group’s annual financial results.

c) Reviewed the unaudited quarterly report on the consolidated results of the Group for the quarters ended31 March 2004, 30 June 2004, 30 September 2004 and 31 December 2004.

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 theremedial actions implemented by the Management in respect of the internal control weaknessesidentified.

g) Reviewed the Group’s risk management policy and framework.

h) Reviewed the Group’s compliance with the applicable approved accounting standards issued by theMalaysian 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 2005, the Internal Auditor has:

a) Presented a risk-based annual audit plan and risk assessment policy for the Audit Committee’s review andapproval;

b) Performed company-wide operation and special audits giving due attention to high and medium risk areaof concerns;

c) Followed up on the status of rectification with regards to significant issues and kept the Audit Committeeabreast of the current status; and

d) Furnished internal audit reports to the Audit Committee on a quarterly basis as updates of the internalaudit activities.

36

SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION (CONT’D)

In accordance with the approved audit plan for 2004/2005, the areas reviewed by the internal audit functionwere as follows:

a) Documentation maintenance and custodian;

b) Launch of projects;

c) Sales administration processing;

d) Progress of construction;

e) Processing of collections;

f) Property management;

g) Reviewed and updated the risk profile of the Group;

h) Cash flow management; and

i) Implementation and reviewing of standard operational procedures to ensure compliance.

A number of minor internal control weaknesses were identified during the year, all of which have beenaddressed by the Management. None of the weaknesses has resulted in any material losses, contingencies oruncertainties that would require disclosure in the Group’s annual report.

The annual internal audit plan for 2005/2006 was presented to the Audit Committee for review and approvalsubsequent to the financial year ended 31 March 2005. The activities of the internal audit function cover thefollowing areas:

a) Management and operational review of companies within the Group;

b) Procurement of services;

c) Pre-development processes;

d) Sales administration processes;

e) Monitoring of the progress of construction;

f) Handover procedures and complaint management;

g) Billings and collection procedures;

h) Related party transactions;

i) Property management; and

j) Update of the risk profile.

The above reviews cover head office in Kuala Lumpur and all the offices and project sites which are located inKuala Lumpur, Klang, Kuantan and Kota Kinabalu.

37

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 consistof at least 3 directors, a majority of whom are independent. At least one member of the Committee must be:

(i) a member of the Malaysian Institute of Accountants (“MIA”); or

(ii) if he is not a member of the MIA, he must have at least 3 years working experience and

• he must have passed the examinations specified in Part I of the 1st Schedule to the Accountant Act,1967; or

• he must be a member of one of the associations of accountants specified in Part II of the 1stSchedule to the Accountants Act, 1967.

The members of the Committee shall elect a Chairman from amongst their number who shall be anindependent director. In order to form a quorum in respect of a meeting of the Committee, the majority of themembers present must be independent directors.

Attendance At Meet ing

The Group Chief Financial Officer, the Internal Auditor and a representative of the external auditors shallnormally attend meetings. Other directors and employees of the Company may attend meetings at theCommittee’s invitation. However, at least once a year the Committee shall meet with the external auditorswithout any executive director present.

The Company Secretary shall be the secretary of the Committee.

Frequency Of Meet ings

Meetings shall be held not less than four times a year. The external auditors may request a meeting if theyconsider that one is necessary.

Author i ty

The Committee is authorised by the Board to investigate any activity within its terms of reference. It isauthorised to seek any information it requires from any employee and all the employees are directed tocooperate with any request made by the Committee.

The Committee is authorised by the Board to obtain outside legal or other independent professional advice andto secure the attendance of an outsider with relevant experience and expertise, if it considers this necessary.

Duties

The duties of the Audit Committee shall be:

(1) to consider the appointment of the external auditors, the audit fees and any questions of nomination,resignation or dismissal.

(2) to discuss with the external auditors before the audit commences the nature and scope of the audit andensure co-ordination where more than one audit firm is involved.

(3) to discuss with the external auditors the evaluation of the system of internal controls, audit report andensure assistance given by the employees to the external auditors.

38

TERMS OF REFERENCE OF THE AUDIT COMMITTEE (CONT’D)

Dut ies (Cont ’d)

(4) to review the quarterly and year-end financial statements before submission to the Board, focusingparticularly 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 externalauditor may wish to discuss in the absence of management, where necessary.

(6) to review the external auditors’ management letter and management’s response.

(7) to do the following where an internal audit function exists:

• review the adequacy of the scope, functions and resources of the internal audit function and thatit 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 therecommendations of the internal audit function.

• review any appraisal or assessment of the performance of the members of the internal auditfunction.

• 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 memberan opportunity to submit his reasons for resigning.

(8) to consider any related party transactions and conflict of interest situations that may arise within theCompany or Group including any transaction, procedure or course of conduct that raises questions ofmanagement integrity.

(9) to consider the findings of internal investigations and management’s response and ensure co-ordinationbetween internal and external auditors.

(10) to consider other topics, as defined by the Board.

Report ing

The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.

F I N A N C I A LTS A T E M E N T S

40 - 45 DIRECTORS’ REPORT

STATEMENT BY DIRECTORS 46

BALANCE SHEETS 48 - 49

STATEMENTS OF CHANGES IN EQUITY 51

NOTES TO THE F INANCIAL STATEMENTS 55 - 98

47 REPORT OF THE AUDITORS

50 INCOME STATEMENTS

52 - 54 CASH FLOW STATEMENTS

46 STATUTORY DECLARATION

40

The directors hereby submit their report and the audited financial statements of the Group and of the Companyfor the financial year ended 31 March 2005.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the businesses of investment holding and the provision of managementand 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 activitiesduring the financial year.

RESULTS

THE GROUP THE COMPANYRM RM

Profit after taxation for the financial year 2,250,429 1,237,629

DIVIDENDS

Since the end of the previous financial year, the Company paid a dividend of 5.5% per IrredeemableConvertible Cumulative Preference Share (“ICCPS”) less 28% tax amounting to RM270,587 in respect of theprevious financial year, in accordance with the terms of issue of the ICCPS and a first and final dividend of 1% per ordinary share less 28% tax amounting to RM593,527 in respect of the previous financial year.

For the current financial year,

(a) the directors have declared the payment of a dividend of 5.5% per ICCPS less 28% tax amounting toRM24,463, in accordance with the terms of issue of the ICCPS; and

(b) the directors recommend the payment of first and final dividend of 1% per ordinary shares less 28% taxamounting to RM593,527.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year except as disclosedin the financial statements.

DIRECTORS’ REPORT

41

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 exceptthat the ICCPS were converted into 6,833,000 ordinary shares of RM1 each of the Company on theirmaturity date on 4 May 2004. The new shares which arose from the conversion of the ICCPS rank paripassu in all respects with the existing shares of the Company; and

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

EMPLOYEE SHARE OPTION SCHEME (“ESOS”)

Pursuant to the ESOS which was implemented on 14 July 2000, the movement in the options to subscribe fornew shares of RM1 each in the Company at an exercise price of RM1.40 per share is as follows:

NUMBER OF ORDINARY SHARES OFRM1 EACH UNDER OPTION

At 1 April 2004 1,490,000Exercised during the financial year -Lapsed during the financial year due to staff resignation (79,000)

At 31 March 2005 1,411,000

The salient features of the ESOS are as follows:

(i) eligible employees are employees who have served in the employment of any company within the Groupfor at least one year of continuous service;

(ii) the total number of new ordinary shares to be offered under the ESOS shall not exceed 10% of the totalissued and paid-up ordinary share capital of the Company at any point of time during the existence ofthe ESOS which shall be in force for a period of 5 years from the date of offer;

(iii) the possible allocation for any single eligible employee during the existence of the ESOS shall not be lessthan 1,000 or more than 450,000 shares subject to the maximum allowable allocation according to theirrespective categories;

(iv) the subscription price was based on the weighted average market price of the shares as shown in theDaily Official List of the Bursa Malaysia Securities Berhad for the 5 market days prior to the date of offerwith an allowance for a discount of not more than 10% therefrom or at par value, whichever is higher;and

(v) the shares to be allotted upon any exercise of an option will, upon allotment, rank pari passu in allrespects with the existing issued and paid-up ordinary shares of the Company.

The ESOS was expired on 13 July 2005.

42

OPTIONS GRANTED OVER UNISSUED SHARES

During the financial year, no options were granted by the Company to any person to take up any unissuedshares in the Company, other than the existing options under the ESOS.

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonablesteps to ascertain that action had been taken in relation to the writing off of bad debts and the making ofallowance for doubtful debts, and satisfied themselves that there are no known bad debts and that adequateallowance 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 offof bad debts, or additional allowance for doubtful debts in the financial statements of the Group and of theCompany.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took reasonablesteps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinarycourse 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 valuesattributed 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 renderadherence to the existing methods of valuation of assets or liabilities of the Group and of the Companymisleading or inappropriate.

CONTINGENT AND OTHER LIABIL ITIES

The contingent liability of the Company is disclosed in Note 43 to the financial statements. At the date of thisreport, 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 financialyear 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 financialyear.

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

43

CHANGE OF CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in thisreport or the financial statements of the Group and of the Company which would render any amount statedin 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 theopinion of the directors, substantially affected by any item, transaction or event of a material and unusualnature.

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 affectsubstantially the results of the operations of the Group and of the Company for the financial year.

DIRECTORS

The directors who served since the date of the last report are as follows:

SIA KWEE MOW @ SIA HOK CHAISIA TEONG HENGMUN CHONG SHING @ MUN CHONG TIANDATO’ LIM PHAIK GANDATO’ DR. NORRAESAH BT. HAJI MOHAMADDATO’ ZAINOL ABIDIN BIN HAJI A. HAMIDAHMAD FIZAL BIN OTHMAN

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

Pursuant to Article 77 of the Articles of Association of the Company, Mun Chong Shing @ Mun Chong Tianand Dato’ Dr. Norraesah Bt. Haji Mohamad retire by rotation at the forthcoming Annual General Meeting and,being eligible, offer themselves for re-election.

44

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors holding office at the end of thefinancial year in shares and options under the ESOS in the Company during the financial year are as follows:

NUMBER OF ORDINARY SHARES OF RM1 EACHAT AT

1.4.2004 BOUGHT SOLD 31.3.2005

DIRECT INTERESTS

SIA KWEE MOW @ SIA HOK CHAI 1,480,800 - - 1,480,800SIA TEONG HENG 1,327,992 1,190,000 - 2,517,992MUN CHONG SHING @ MUN CHONG TIAN 21,782 - - 21,782

INDIRECT INTERESTS

SIA KWEE MOW @ SIA HOK CHAI 19,498,523 - - 19,498,523SIA TEONG HENG 19,498,523 - - 19,498,523

NUMBER OF ORDINARY SHARES OF RM1 EACHUNDER OPTION

AT AT1.4.2004 GRANTED EXERCISED 31.3.2005

DIRECT INTERESTS

SIA KWEE MOW @ SIA HOK CHAI 450,000 - - 450,000SIA TEONG HENG 350,000 - - 350,000

By virtue of their interests in the Company, Sia Kwee Mow @ Sia Hok Chai and Sia Teong Heng are deemedto have interests in the shares in the subsidiaries to the extent of the Company’s interest, in accordance withSection 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 or optionsunder the ESOS of the Company or its related corporations during the financial year.

45

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 bydirectors as shown in the financial statements, or the fixed salary of a full-time employee of the Company) byreason of a contract made by the Company or a related corporation with the director or with a firm of whichthe director is a member, or with a company in which the director has a substantial financial interest except forany benefits which may be deemed to arise from transactions entered into in the ordinary course of businesswith companies in which certain directors have substantial financial interests as disclosed in Note 42 to thefinancial statements.

Neither during nor at the end of the financial year was the Company or its subsidiaries a party to anyarrangements whose object is to enable the directors to acquire benefits by means for the acquisition of sharesin or debentures of the Company or any other body corporate except for the share options granted pursuantto the ESOS.

SIGNIFICANT EVENT DURING THE F INANCIAL YEAR

The significant event during the financial year of the Company is disclosed in Note 47 to the financialstatements.

AUDITORS

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

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS


Mun Chong Shing @ Mun Chong Tian

Kuala Lumpur20 July 2005

46

We, Sia Kwee Mow @ Sia Hok Chai and Mun Chong Shing @ Mun Chong Tian, being two of the directors ofSBC Corporation Berhad, state that, in the opinion of the directors, the financial statements set out on pages48 to 98 are drawn up in accordance with applicable approved accounting standards in Malaysia and theprovisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Groupand of the Company at 31 March 2005 and of their results and cash flows for the financial year ended on thatdate.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS

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


STATEMENT BY DIRECTORS

I, Ng Kee Chye, I/C No. 640324-06-5691, being the officer primarily responsible for the financial managementof SBC Corporation Berhad, do solemnly and sincerely declare that the financial statements set out on pages48 to 98 are, to the best of my knowledge and belief, correct, and I make this solemn declarationconscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act,1960.

Subscribed and solemnly declared byNg Kee Chye, I/C No. 640324-06-5691,at Kuala Lumpur in the Federal Territoryon this 20 July 2005

Ng Kee Chye

Before me

Datin Hajah Raihela Wanchik (W275)Commissioner for Oaths


STATUTORY DECLARATION

47

We have audited the financial statements set out on pages 48 to 98. The preparation of the financialstatements 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 toreport our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for noother 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 standardsrequire that we plan and perform the audit to obtain reasonable assurance that the financial statements arefree of material misstatement. Our audit included examining, on a test basis, evidence relevant to the amountsand disclosures in the financial statements. Our audit also included an assessment of the accounting principlesused and significant estimates made by the directors as well as evaluating the overall adequacy of thepresentation of information in the financial statements. We believe our audit provides a reasonable basis forour 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 2005 and their results and cashflows 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 financialstatements 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 bythe Company and by the subsidiaries of which we have acted as auditors have been properly kept inaccordance with the provisions of the said Act.

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

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

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

Horwath Onn Kien HoeFirm No: AF 1018 Approval No: 1772/11/06 (J/PH)Chartered Accountants Partner


REPORT OF THE AUDITORS to the members of SBC Corporat ion Berhad

48

THE GROUP THE COMPANY2005 2004 2005 2004

NOTE RM RM RM RM

NON-CURRENT ASSETS

Investment in subsidiaries 6 - - 211,064,785 211,064,785Interest in associates 7 112,262,828 112,064,656 2,400,000 2,400,000Property, plant and equipment 8 35,452,368 36,246,114 17,636 35,428Investment properties 9 79,718,099 41,391,466 - -Other assets 10 276,107 247,107 - -Goodwill on consolidation 11 27,317,640 27,317,640 - -

255,027,042 217,266,983 213,482,421 213,500,213

CURRENT ASSETS

Inventories 12 4,359,492 8,604,731 - -Property development costs 13 54,745,687 50,449,300 - -Receivables 14 28,150,859 66,593,226 143,077 209,050Amount owing by

contract customers 15 969,629 4,775,992 - -Amounts owing by subsidiaries 16 - - 61,299,355 55,919,091Amount owing by associates 17 5,399,534 5,533,926 11,434 11,434Tax recoverable 18 6,607,700 8,331,990 8,597,916 11,823,151Short term deposits

with licensed banks 19 1,364,225 1,407,125 1,239,225 1,239,225Cash and bank balances 20 5,612,658 3,474,278 4,027,843 2,012,100

107,209,784 149,170,568 75,318,850 71,214,051

CURRENT LIABILITIES

Amount owing to contract customers 15 8,194 1,601,053 - -

Payables 21 29,491,952 28,718,800 256,127 230,925Amounts owing to subsidiaries 16 - - 15,155,558 12,563,323Amounts owing to associates 17 547,586 78,236 - -Amounts owing to directors 22 1,867,680 2,450,481 1,867,680 1,967,680Dividend payable - 270,587 - 270,587Short term borrowings 23 16,749,403 19,301,127 5,000,000 5,000,000ABBA Bonds 24 2,478,450 2,478,450 2,478,450 2,478,450Bank overdrafts 25 18,824,019 20,640,185 5,760,593 6,580,169

69,967,284 75,538,919 30,518,408 29,091,134

NET CURRENT ASSETS 37,242,500 73,631,649 44,800,442 42,122,917

292,269,542 290,898,632 258,282,863 255,623,130

BALANCE SHEETS at 31 March 2005

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

49


NOTE RM RM RM RM

FINANCED BY:

Share capital 26 82,435,000 82,435,000 82,435,000 82,435,000Reserves 27 137,572,393 135,939,954 134,096,236 133,476,597

Shareholders’ equity 220,007,393 218,374,954 216,531,236 215,911,597ABBA Bonds 24 41,751,627 39,711,533 41,751,627 39,711,533Non-current liabilities 28 29,543,776 31,845,399 - -Deferred taxation 31 966,746 966,746 - -

292,269,542 290,898,632 258,282,863 255,623,130

NET TANGIBLE ASSETS PER ORDINARY SHARE (RM) 32 2.34 2.44


50


NOTE RM RM RM RM

TURNOVER 33 66,867,133 86,316,639 8,905,128 7,220,737

COST OF SALES 34 (52,428,581) (68,900,779) - -

GROSS PROFIT 14,438,552 17,415,860 8,905,128 7,220,737

OTHER OPERATINGINCOME 1,026,365 3,911,925 50,850 -

ADMINISTRATIVE EXPENSES (7,541,549) (7,420,741) (1,200,429) (891,180)

OTHER OPERATINGEXPENSES (1,215,804) (3,270,390) (293,501) (326,746)

PROFIT FROM OPERATIONS 6,707,564 10,636,654 7,462,048 6,002,811

FINANCE COSTS (4,953,038) (7,263,617) (5,602,597) (5,533,390)

SHARE OF PROFITS OFASSOCIATES 1,566,728 3,623,112 - -

PROFIT BEFORE TAXATION 35 3,321,254 6,996,149 1,859,451 469,421

TAXATION 36 (1,070,825) (4,923,154) (621,822) (821,855)

PROFIT/(LOSS) AFTER TAXATION 2,250,429 2,072,995 1,237,629 (352,434)

Earnings per share- basic 37 2.7 sen 2.4 sen- diluted 37 N/A N/A

Dividend per ordinary share- final 38 - 1 sen

INCOME STATEMENTS for the f inanc ia l year ended 31 March 2005


51

SHARE SHARE RETAINED CAPITALCAPITAL PREMIUM PROFITS RESERVE TOTAL

NOTE RM RM RM RM RM

THE GROUP

Balance at 1.4.2003 82,435,000 111,412,895 22,068,982 1,199,999 217,116,876Profit after taxation

for the financial year - - 2,072,995 - 2,072,995Dividends 38 - - (814,917) - (814,917)

Balance at 31.3.2004/1.4.2004 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

THE COMPANY

Balance at 1.4.2003 82,435,000 111,412,895 23,231,053 - 217,078,948Loss after taxation

for the financial year - - (352,434) - (352,434)Dividends 38 - - (814,917) - (814,917)

Balance at 31.3.2004/1.4.2004 82,435,000 111,412,895 22,063,702 - 215,911,597

Profit after taxation for the financial year - - 1,237,629 - 1,237,629

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

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

The retained profits of the Group are attributable to/(absorbed by):

2005 2004RM RM

The Company 22,683,341 22,063,702Subsidiaries (15,098,921) (15,582,983)Associates 17,375,079 16,846,341

24,959,499 23,327,060

STATEMENTS OF CHANGES IN EQUITY for the f inanc ia l year ended 31 March 2005


52


NOTE RM RM RM RM

CASH FLOWS FROM/(FOR) OPERATING ACTIVITIES

Profit before taxation 3,321,254 6,996,149 1,859,451 469,421

Adjustments for:Allowance for doubtful debts - 828,553 - -Amortisation of bonds expenses 275,709 303,272 275,709 303,272Depreciation of property,

plant and equipment 459,128 446,060 17,792 23,474Interest expense/finance charges 4,844,740 7,110,435 5,583,651 5,506,995Impairment loss on interest

in an associate 330,565 - - -Plant and equipment written off - 13,663 - -Other investment written off 45,000 135,000 - -Dividend income - - (5,404,800) (4,928,000)Loss/(Gain) on disposal of

property, plant and equipment 19,177 (313,882) - -(Gain)/Loss on disposal of

investment properties (15,082) 1,557,400 - -Interest income (203,425) (107,322) (1,389,168) (612,688)Write-back of allowance for

doubtful debts (58,356) - (50,850) -Share of profits in associates (1,566,728) (3,623,112) - -

Operating profit before working capital changes 7,451,982 13,346,216 891,785 762,474

Decrease in inventories 4,245,239 5,505,180 - -(Increase)/Decrease in property

development costs (3,028,141) 4,712,161 - -Decrease/(Increase) in receivables 598,481 658,195 116,823 (85,088)Increase/(Decrease) in payables 1,291,820 1,707,814 25,202 (100,567)Net decrease/(increase) in amount

owing by contract customers 2,213,504 (7,259,250) - -

CASH FROM OPERATIONS 12,772,885 18,670,316 1,033,810 576,819

Interest paid (544,034) (3,402,444) (1,282,945) (1,375,706)Tax refundable/(paid) 1,256,001 (6,780,583) 4,116,757 -

NET CASH FROM/(FOR) OPERATING ACTIVITIES 13,484,852 8,487,289 3,867,622 (798,887)

CASH FLOW STATEMENTS for the f inanc ia l year ended 31 March 2005


53


NOTE RM RM RM RM

CASH FLOWS (FOR)/ FROMINVESTIING ACTIVITIES

Interest received 203,425 107,322 1,389,168 612,688Dividends received

from subsidiaries - - 3,456,000 2,304,000Dividends received

from associates 435,456 1,526,883 435,456 1,244,160Purchase of property,

plant and equipment (408,819) (924,876) - (5,750)Purchase of

investment properties (1,640,541) (3,110,115) - -Proceeds from disposal of

property, plant and equipment 7,700 345,560 - -

Proceeds from disposal of investment properties 556,200 1,910,000 - -

Incidental expenses on investment properties (424,603) (20,000) - -

(Placement)/Withdrawal of cash in sinking fund account (2,015,883) 3,188,398 (2,015,883) 3,188,398

NET CASH (FOR)/FROMINVESTING ACTIVITIES (3,287,065) 3,023,172 3,264,741 7,343,496

CASH FLOWS FORFINANCING ACTIVITIES

Payment of bonds expenses (57,871) (71,722) (57,871) (71,722)Repayment of bonds 24 (2,478,450) (2,478,450) (2,478,450) (2,478,450)Repayment to directors (582,801) - (100,000) -Net repayment by associates 603,742 3,994 - -Net advances to subsidiaries - - (2,788,029) (3,346,586)Dividend paid to shareholders

of the company (593,527) (544,330) (593,527) (544,330)Dividend paid to holders

of ICCPS (295,050) (270,587) (295,050) (270,587)Repayment of revolving credit (1,350,000) (500,000) - -Repayment of loans (3,460,283) (6,460,269) - -Repayment to hire purchase

payables (87,784) (87,784) - -

NET CASH FORFINANCING ACTIVITIES (8,302,024) (10,409,148) (6,312,927) (6,711,675)


54


NOTE RM RM RM RM

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,895,763 1,101,313 819,436 (167,066)

CASH AND CASH EQUIVALENTS ATBEGINNING OF FINANCIAL YEAR (17,768,782) (18,870,095) (5,338,844) (5,171,778)

CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 39 (15,873,019) (17,768,782) (4,519,408) (5,338,844)


55

1. GENERAL INFORMATION

The Company is a public company limited by shares and is incorporated under the Malaysian CompaniesAct, 1965. The domicile of the Company is Malaysia. The registered office, which is also the principalplace 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 aresolution of the directors dated 20 July 2005.

2. PRINCIPAL ACTIVITIES

The Company is principally engaged in the businesses of investment holding and the provision ofmanagement and administrative services to the subsidiaries. The principal activities of the subsidiaries aredisclosed in Note 6 to the financial statements. There have been no significant changes in the nature ofthese activities during the financial year.

3. FINANCIAL RISK MANAGEMENT POLICIES

The Group's financial risk management policy seeks to ensure that adequate financial resources areavailable 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 activityare as follows:

(a) Foreign Currency Risk

The Group does not have material foreign currency transactions, assets or liabilities and hence isnot exposed to any significant or material currency risks.

(b) Interest Rate Risk

The Group obtains financing through bank borrowings and hire purchase facilities. Its policy is toobtain the most favourable interest rates available.

Surplus funds are placed with licensed financial institutions at the most favourable interest rates.

(c) Market Risk

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

NOTES TO THE F INANCIAL STATEMENTS for the f inanc ia l year ended 31 March 2005

56

3. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(d) Credit Risk

The Group's exposure to credit risks, or the risk of counterparties defaulting, arises mainly fromreceivables. The maximum exposure to credit risks is represented by the total carrying amount ofthese financial assets in the balance sheet reduced by the effects of any netting arrangements withcounterparties.

The Group does not have any major concentration of credit risk related to any individual customeror counterparty.

The Group manages its exposure to credit risk by investing its cash assets safely and profitably, andby 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 andbusiness activities.

It practises prudent liquidity risk management by maintaining sufficient cash balances and theavailability 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 otherbases of valuation as disclosed in other sections under significant accounting policies, and in compliancewith applicable approved accounting standards in Malaysia and the provisions of the Companies Act,1965.

5. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and allits subsidiaries made up to 31 March 2005.

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 itsactivities.

All subsidiaries are consolidated using the acquisition method of accounting. Under the acquisitionmethod of accounting, the results of subsidiaries acquired or disposed off are included from thedate of acquisition or up to the date of disposal. At the date of acquisition, the fair value of thesubsidiaries’ net assets are determined and these values are reflected in the consolidated financialstatements.

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

57

5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(b) Goodwill or Negative Goodwill On Consolidation

Goodwill represents the excess of the fair value of the purchase consideration over the Group’sshare 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 netassets 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 reviewedannually, and is written down for impairment where it is considered necessary. The impairmentvalue of goodwill is taken to the consolidated income statement.

(c) Associates

Associates are enterprises in which the Group exercises significant influence. Significant influence isthe power to participate in the financial and operating policy decisions of the associates but notcontrol over those policies. Interest in associates are accounted for in the consolidated financialstatements by the equity method of accounting.

Equity accounting involves recognising in the income statement the Group’s share of the results ofthe associates for the period. The Group’s interest in associates is carried in the balance sheet at anamount 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 thesevalues are reflected in the consolidated financial statements. Equity accounting is discontinuedwhen the carrying amount of the interest in an associate reaches zero, unless the Group hasincurred obligations or guaranteed obligations in respect of the associate.

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

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

(d) Property, Plant and Equipment

Property, plant and equipment, other than freehold land, are stated at cost less accumulateddepreciation 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 financialstatements.

Depreciation is calculated under the straight-line method to write off the cost of the assets overtheir estimated useful lives. The principal annual rates used for this purpose are:

Sales office 20%Plant and machinery, construction machinery and equipment 5% - 20%Formwork, scaffoldings and containers 10% - 25%Office renovation, office equipment, computers,

furniture and fittings, tools and fittings 5% - 20%Motor vehicles 20%

58


(e) Land and Hotel Development Expenditure

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

(f) Impairment of Assets

The carrying amounts of assets, other than those to which MASB 23 - Impairment of Assets doesnot apply, are reviewed at each balance sheet date for impairment when there is an indication thatthe assets might be impaired. Impairment is measured by comparing the carrying values of theassets with their recoverable amounts.

An impairment loss is charged to the income statement immediately unless the asset is carried atits revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decreaseto the extent of a previously recognised revaluation surplus for the same asset.

In respect of assets other than goodwill, and when there is a change in the estimates used todetermine the recoverable amount, a subsequent increase in the recoverable amount of an asset istreated as a reversal of the previous impairment loss and is recognised to the extent of the carryingamount of the asset that would have been determined (net of amortisation and depreciation) hadno impairment loss been recognised. The reversal is recognised in the income statementimmediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss ona revalued asset is credited directly to the revaluation surplus. However, to the extent that animpairment loss on the same revalued asset was previously recognised as an expense in the incomestatement, a reversal of that impairment loss is recognised as income in the income statement.

(g) Investments

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

59


(h) Investment Properties

Investment properties consist of investments in land and buildings that are not substantiallyoccupied 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 aresubject to revaluations which are carried out by an independent valuer on a regular basis. Anyrevaluation increase is recognised in equity as a revaluation surplus; any decrease is first offsetagainst any unutilised previously recognised revaluation surplus in respect of the same investmentproperty, and the balance is thereafter recognised as an expense. A revaluation increase isrecognised as income to the extent that it reverses a revaluation decrease of the same propertypreviously recognised as an expense.

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

(i) Inventories

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

The cost of unsold completed properties comprise the relevant cost of land, developmentexpenditure 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.

(j) Property Development Costs

Property development costs comprise costs associated with the acquisition of land and all costs thatare directly attributable to development activities or that can be allocated on a reasonable basis tosuch activities.

Property development costs that are not recognised as an expense are recognised as an asset andcarried at the lower of cost and net realisable value.

When the financial outcome of a development activity can be reliably estimated, the amount ofproperty revenues and expenses recognised in the income statement are determined by referenceto 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 propertydevelopment revenue is recognised only to the extent of property development costs incurred thatwill be recoverable. The property development costs on the development units sold are recognisedas an expense in the period in which they are incurred.

Where it is probable that property development costs will exceed property development revenue,any expected loss is recognised as an expense immediately, including costs to be incurred over thedefects liability period.

60


(k) Progress Billings/Accrued Billings

In respect of progress billings:

(i) where revenue recognised in the income statement exceeds the billings to purchasers, thebalance is shown as accrued billings under current assets; and

(ii) where billings to purchasers exceed the revenue recognised to the income statement, thebalance is shown as progress billings under current liabilities.

(l) Amount Owing By/To Contract Customers

The amount owing by/to contract customers is stated at cost plus profits attributable to contractsin progress less progress billings and allowance for foreseeable losses, if any. Cost includes directmaterials, labour and applicable overheads.

(m) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the period inwhich they are identified. An estimate is made for doubtful debts based on a review of alloutstanding amounts at the balance sheet date.

(n) Payables

Payables are stated at cost which is the fair value of the consideration to be paid in the future forgoods and services received.

(o) Interest-bearing Borrowings

Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net oftransaction costs.

Borrowing costs directly attributable to the acquisition and construction of development propertiesand property, plant and equipment are capitalised as part of the cost of those assets, until such timeas 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 whichthey are incurred.

(p) 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 ofpremium and/or accretion of discount to maturity, using the effective yield method. The premiumamortised and/or discount accreted is recognised in the income statement over the period of thebonds.

61


(q) 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 theyear and is measured using the tax rates that have been enacted or substantially enacted at thebalance sheet date.

Deferred taxation is provided in full, using the liability method, on temporary differences arisingbetween the tax bases of assets and liabilities and their carrying amounts in the financialstatements.

Deferred tax liabilities are recognised for all taxable temporary differences other than those thatarise from goodwill or negative goodwill or from the initial recognition of an asset or liability in atransaction which is not a business combination and at the time of the transaction, affects neitheraccounting profit nor taxable profit.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses andunused tax credits to the extent that it is probable that taxable profit will be available against whichthe 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 theperiod when the asset is realised or the liability is settled, based on the tax rates that have beenenacted or substantially enacted at the balance sheet date.

Deferred tax is recognised in the income statement, except when it arises from a transaction whichis recognised directly in equity, in which case the deferred tax is also charged or credited directly inequity, or when it arises from a business combination that is an acquisition, in which case thedeferred tax is included in the resulting goodwill or negative goodwill. The carrying amounts ofdeferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is nolonger probable that sufficient taxable profits will be available to allow all or part of the deferredtax assets to be utilised.

(r) Foreign Currencies

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

(s) Assets under Hire Purchase

Equipment acquired under hire purchase are capitalised in the financial statements and aredepreciated in accordance with the policy set out in Note 5(d) above. Each hire purchase paymentis allocated between the liability and finance charges so as to achieve a constant rate on the financebalance outstanding. Finance charges are allocated to the income statement over the periods of therespective hire purchase agreements.

62


(t) Equity Instruments

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

(u) Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, depositspledged with financial institutions, bank overdrafts and short term, highly liquid investments thatare readily convertible to known amounts of cash and which are subject to an insignificant risk ofchanges in value.

(v) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group and the Company hasbecome a party to the contractual provisions of the instruments.

Financial instruments are classified as liabilities or equity in accordance with the substance of thecontractual arrangement. Interest, dividends, gains and losses relating to a financial instrumentclassified as a liability, are reported as expense or income. Distributions to holders of financialinstruments classified as equity are charged directly to equity.

Financial instruments are offset when the Group and the Company has a legally enforceable rightto offset and intends to settle either on a net basis or to realise the asset and settle the liabilitysimultaneously.

Financial instruments recognised in the balance sheet are disclosed in the individual policystatement associated with each item.

(w) Employee Benefits

(i) Short-term Benefits

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

(ii) Defined Contribution Plans

The Company’s contributions to defined contribution plans are charged to the incomestatement in the period to which they relate. Once the contributions have been paid, theCompany has no further liability in respect of the defined contribution plans.

63


(x) Income Recognition

(i) Construction Contracts

Revenue on contracts is recognised on the percentage of completion method unless theoutcome of the contract cannot be reliably determined, in which case revenue on contractsis only recognised to the extent of contract costs incurred that are recoverable. Foreseeablelosses, if any, are provided for in full as and when it can be reasonably ascertained that thecontract 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 anduncompleted 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 ofcompletion method unless the outcome of the development cannot be reliably determined inwhich case the revenue on the development is only recognised to the extent of developmentcosts incurred that are recoverable.

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

Foreseeable losses, if any, are recognised immediately in the income statement.

Foreseeable losses, if any, are provided for in full as and when it can be reasonablyascertained that the development will result in a loss.

(iii) Revenue from Sales of Goods

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

(iv) Revenue from Services

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

64


(x) Income Recognition (Cont’d)

(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 isestablished.

(viii) Interest Income

Interest income is recognised on an accrual basis, based on the effective yield on theinvestment.

Interest income on late payment is recognised on a receipt basis.

(y) Segmental Information

Segment revenues and expenses are those directly attributable to the segments and include anyjoint revenue and expenses where a reasonable basis of allocation exists. Segment assets include allassets used by a segment and consist principally of property, plant and equipment (net ofaccumulated depreciation, where applicable), other investments, inventories, receivables, and cashand bank balances.

Most segment assets can be directly attributed to the segments on a reasonable basis. Segmentassets and liabilities do not include income tax assets and liabilities respectively.

Segment revenues, expenses and results include transfers between segments. The prices chargedon intersegment transactions are based on normal commercial terms. These transfers are eliminatedon consolidation.

65

6. INVESTMENT IN SUBSIDIARIES

THE COMPANY2005 2004RM RM

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

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

Effective Equity Interest2005 2004

Name of Company % % Principal Activities

Syarikat Siah Brothers Trading Sdn. Bhd. 100 100 General building contractor andinvestment holding.

Syarikat Siah Brothers Construction 100 100 Building and civil engineering works.Sdn. Bhd.

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

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

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

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

Sinaran Naga Sdn. Bhd. 100 100 Property development.

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

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

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

Mixwell (Malaysia) Sdn. Bhd. 100 100 Project management and propertydevelopment.

Winsome Ventures Sdn. Bhd. 100 100 Proposed property management.

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

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

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

66

6. INVESTMENT IN SUBSIDIARIES (CONT’D)



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

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

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

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

Gracemart Resources Sdn. Bhd. 100 100 Property development.

Sutrati Development Sdn. Bhd. 100 100 Dormant.

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

Masahmura Sales & Service Sdn. Bhd. 51 51 Trading of light industrial handlingequipment and metal frames.

* Not audited by Messrs. Horwath

7. INTEREST IN ASSOCIATES

THE GROUP THE COMPANY2005 2004 2005 2004RM RM RM RM

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

3,269,435 3,600,001 2,400,000 2,400,000

Unquoted shares, at Group cost 91,618,314 91,618,314 - -Share of post acquisition reserves 17,375,079 16,846,341 - -

112,262,828 112,064,656 2,400,000 2,400,000

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7. INTEREST IN ASSOCIATES (CONT’D)

THE GROUP2005 2004RM RM

The interest in associates comprises:

Group’s share of net tangible assets- at cost 66,246,858 66,048,686- at fair value 45,952,003 45,952,003Group’s share of intangible assets 63,967 63,967

112,262,828 112,064,656

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



Ligamas Sdn. Bhd.# 50.0 50.0 Property development.

Varich Industries Sdn. Bhd.* 50.0 50.0 Dormant.

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

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

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

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

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

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

# The share of results of these associates is based on the latest available unaudited managementfinancial statements made up to 31 March 2005.

## Held by Paling Industries Sdn. Bhd.

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

68

8. PROPERTY, PLANT AND EQUIPMENT

THE GROUP

TRANSFER TO DEPRE-

AT DEVELOPMENT CIATION AT

1.4.2004 ADDITIONS DISPOSALS COST CHARGE 31.3.2005

NET BOOK VALUE RM RM RM RM RM RM

Freehold land 4,727,833 - - (716,560) - 4,011,273

Land and hotel

development expenditure 30,024,354 119,190 - - - 30,143,544

Sales office 118,793 34,081 - - (37,004) 115,870

Plant and machinery,

construction machinery

and equipment 50,942 270 - - (13,223) 37,989

Formwork, scaffoldings

and containers 6,448 - - - (2,503) 3,945

Office renovation,

office equipment,

computers, furniture

and fittings, tools

and fittings 1,067,267 200,770 (26,877) - (272,106) 969,054

Motor vehicles 250,477 54,508 - - (134,292) 170,693

Total 36,246,114 408,819 (26,877) (716,560) (459,128) 35,452,368

NETAT ACCUMULATED BOOK

COST DEPRECIATION VALUERM RM RM

AT 31.3.2005

Freehold land 4,011,273 - 4,011,273Land and hotel development expenditure 30,143,544 - 30,143,544Sales office 182,757 (66,887) 115,870Plant and machinery, construction machinery

and equipment 4,343,727 (4,305,738) 37,989Formwork, scaffoldings and containers 4,316,916 (4,312,971) 3,945Office renovation, office equipment, computers,

furniture and fittings, tools and fittings 4,576,896 (3,607,842) 969,054Motor vehicles 2,020,927 (1,850,234) 170,693

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

69

8. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

NETAT ACCUMULATED BOOK

COST DEPRECIATION VALUERM RM RM

AT 31.3.2004

Freehold land 4,727,833 - 4,727,833Land and hotel development expenditure 30,024,354 - 30,024,354Sales office 148,676 (29,883) 118,793Plant and machinery, construction machinery

and equipment 4,343,457 (4,292,515) 50,942Formwork, scaffoldings and containers 4,316,916 (4,310,468) 6,448Office renovation, office equipment, computers,

furniture and fittings, tools and fittings 4,633,477 (3,566,210) 1,067,267Motor vehicles 2,005,751 (1,755,274) 250,477

Total 50,200,464 (13,954,350) 36,246,114

Land and hotel development expenditure consists of:

2005 2004RM RM

Long leasehold land, at cost 27,691,066 27,691,066Hotel development expenditure, at cost 2,452,478 2,333,288

30,143,544 30,024,354

70

8. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

THE COMPANY

AT DEPRECIATION AT1.4.2004 CHARGE 31.3.2005

NET BOOK VALUE RM RM RM

Office equipment, computers, furniture and fittings 35,427 (17,792) 17,635Motor vehicles 1 - 1

35,428 (17,792) 17,636

AT ACCUMULATED NET BOOKCOST DEPRECIATION VALUERM RM RM

AT 31.3.2005

Office equipment, computers, furniture and fittings 376,551 (358,916) 17,635Motor vehicles 376,950 (376,949) 1

753,501 (735,865) 17,636

AT 31.3.2004

Office equipment, computers, furniture and fittings 376,551 (341,124) 35,427Motor vehicles 376,950 (376,949) 1

753,501 (718,073) 35,428

The motor vehicles of the Group acquired under hire purchase terms were carried at a total net bookvalue of RM20,602 (2004 - RM125,997) at the balance sheet date.

The carrying values of certain property, plant and equipment charged to financial institutions to securebanking facilities granted to the Group are as follows:


Sales office - 118,793Furniture and fittings - 137,332Office and other equipment - 102,092Land and hotel development expenditure - 30,024,354Office renovation - 5,664

- 30,388,235

71

9. INVESTMENT PROPERTIES


Leasehold land, at cost 20,607,424 19,778,424Expenditure on land 4,710,272 4,500,413

25,317,696 24,278,837

Freehold land and buildings, at cost 52,810,544 16,070,507Leasehold land and buildings, at cost 2,803,145 4,509,522

55,613,689 20,580,029

Disposed of during the financial year (661,600) (3,467,400)Transfer to property development costs (551,686) -

54,400,403 17,112,629

79,718,099 41,391,466

Included in investment properties is a leasehold land amounting to RM8,486,514 (2004 - RM8,422,970)which are charged to a financial institution for the issuance of ABBA Bonds granted to the Company.

10. OTHER ASSETS


Other assets 189,807 189,807

Other investments, at costQuoted shares in Malaysia 12,300 12,300Unquoted shares - 45,000Investment in club membership 74,000 -

86,300 57,300

276,107 247,107

Market value of quoted shares 5,400 4,590

Other assets are retention monies relating to amounts which are due and receivable after twelve monthsfrom the balance sheet date, upon expiry of the warranty period of the relevant contracts.

72

11. GOODWILL ON CONSOLIDATION


At 1 April 2004/2003 27,317,640 27,271,844Goodwill arising from the acquisition of equity interest

in a subsidiary in the previous financial year not accounted for - 45,796

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

12. INVENTORIES


Unsold completed properties, at cost 4,359,492 8,604,731

None of the inventories are carried at net realisable value.

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13. PROPERTY DEVELOPMENT COSTS


Balance at beginning of the financial year:- land 30,903,465 31,209,528- development costs 43,978,441 34,259,753

74,881,906 65,469,281Cost incurred during the year:

- transferred from investment properties 551,686 -- transferred from property, plant and equipment 716,560 -- land 151,034 -- development costs 41,773,802 19,138,472

118,074,988 84,607,753Disposal of land during the year (315,040) -

117,759,948 84,607,753

Reversal in development costs of completed project during the year:- land - (306,063)- development costs - (9,012,369)

- (9,318,432)

Cost recognised as an expense in the income statement:- previous year (24,432,606) (10,731,119)- current year (38,581,655) (23,019,919)- adjustment to completed project during the year - 9,318,432

(63,014,261) (24,432,606)

Sub-total 54,745,687 50,856,715Transfer to inventories - (407,415)

54,745,687 50,449,300

Included in development expenditure is interest expense capitalised during the financial year amountingto RM1,846,203 (2004 - RM585,454).

Leasehold land of a subsidiary costing RM7,674,555 (2004 - RM7,674,555) is charged to a licensed bankfor a term loan facility granted to the subsidiary.

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14. RECEIVABLES


Trade receivables 35,127,293 69,536,316 - -Retention receivable 1,387,398 5,547,621 - -

Total trade receivables 36,514,691 75,083,937 - -

Allowance for doubtful debtsAt 1 April 2004/2003 (13,474,195) (13,054,487) - -Additions - (419,708) - -Write-back 7,506 - - -

At 31 March (13,466,689) (13,474,195) - -

Net trade receivables 23,048,002 61,609,742 - -

Other receivables, deposits and prepayments 8,602,979 8,483,606 2,495,814 2,561,787

Allowance for doubtful debtsAt 1 April 2004/2003 (3,500,122) (3,091,277) (2,352,737) (2,352,737)Additions - (408,845) - -

At 31 March (3,500,122) (3,500,122) (2,352,737) (2,352,737)

Net other receivables, deposits and prepayments 5,102,857 4,983,484 143,077 209,050

Total receivables 28,150,859 66,593,226 143,077 209,050

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14. RECEIVABLES (CONT’D)

Included in trade receivables at the balance sheet date are the amount owing by the following relatedparties:

2005 2004RM RM

Smart Home Sdn. Bhd. (“SH”) - 37,720,372Ligamas Sdn. Bhd. * 4,774,941 * 14,126,889

* relates to retention receivable

Details of the related party relationship and the nature of the transactions and balances are set out inNote 42 to the financial statements. The amount owing by SH has been outstanding since 1996. Duringthe financial year, SH settled the amount owing through the transfer of six parcels of development landfor a total consideration of RM37,828,242, which was approved by the shareholders of the Company atan extraordinary general meeting held on 16 April 2004.

Included in other receivables is an amount of RM1,517,957 (2004 - RM1,552,059) 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.

15. AMOUNT OWING BY/(TO) CONTRACT CUSTOMERS


Amount owing by contract customersContract costs incurred to date 96,138,039 45,035,273Attributable profits 19,419,469 7,522,655

115,557,508 52,557,928Progress billings (114,587,879) (47,781,936)

Amount owing by contract customers 969,629 4,775,992

Amount owing to contract customersContract costs incurred to date 43,414,193 211,960,362Attributable profits 1,311,336 8,757,050

44,725,529 220,717,412Progress billings (44,733,723) (222,318,465)

Amount owing to contract customers (8,194) (1,601,053)

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16. AMOUNTS OWING BY/(TO) SUBSIDIARIES


Amounts owing by:

Non-trade- Interest-bearing 7,904,141 6,272,445- Interest-free 53,395,214 49,646,646

61,299,355 55,919,091

Amounts owing to:

Non-trade- Interest-bearing - 2,677,629- Interest-free 15,155,558 9,885,694

15,155,558 12,563,323

The above amounts owing are unsecured and not subject to fixed terms of repayment. The interest-bearing amounts are subject to interest at 8.50% (2004 - 3.20% to 8.50%) per annum.

17. AMOUNTS OWING BY/(TO) ASSOCIATES

The amounts owing are unsecured, interest-free and not subject to fixed terms of repayment.

18. TAX RECOVERABLE

Subject to agreement with the tax authorities, the Company has tax recoverable of RM5,375,200 andRM3,222,716 at the balance sheet date in respect of the financial years ended 31 March 1997 to 31 March 2000 and 31 March 2003 to 31 March 2005 respectively. At the date of this report, theamount is still pending agreement with the tax authorities.

77

19. SHORT TERM DEPOSITS WITH LICENSED BANKS

The weighted average effective interest rates of deposits at the balance sheet date were as follows:


% % % %

Licensed bank 2.80 2.81 2.77 2.77

Deposits of the Group and the Company have an average maturity period of 30 days (2004 - 30 days).

The deposits of the Company have been pledged as security for the ABBA Bonds as disclosed in Note 24to the financial statements.

20. CASH AND BANK BALANCES


Cash and bank balances 1,586,775 1,464,278 1,960 2,100Sinking fund account (Note 39) 4,025,883 2,010,000 4,025,883 2,010,000

5,612,658 3,474,278 4,027,843 2,012,100

Included in the cash and bank balances of the Group is RM1,380,169 (2004 - RM1,158,751) maintainedunder the Housing Development Accounts pursuant to Section 7A of the Housing Development (Control and Licensing ) Act, 1966.

The sinking fund account is maintained with a financial institution and has been maintained as securityfor the repayment of the ABBA Bonds.

78

21. PAYABLES


Trade payables 23,344,850 19,943,924 - -Retention payable 4,267,934 8,228,498 - -

Total trade payables 27,612,784 28,172,422 - -

Other payables and accruals 1,836,104 458,594 256,127 230,925Hire purchase payables (Note 28a) 43,064 87,784 - -

29,491,952 28,718,800 256,127 230,925

Credit terms of trade payables range from 30 to 60 days.

Included in other payables is an amount owing to a related party of RM103,174 (2004 - RM108,519).The details of the transaction and the balance are disclosed in Note 42 to the financial statements.

22. AMOUNTS OWING TO DIRECTORS


Sia Kwee Mow @ Sia Hok Chai 1,867,680 1,967,680 1,867,680 1,967,680Sia Teong Heng - 482,801 - -

1,867,680 2,450,481 1,867,680 1,967,680

The above amounts owing are interest-free, unsecured and not subject to fixed terms of repaymentexcept for the amount owing to Sia Kwee Mow @ Sia Hok Chai which bears interest at 5.5% (2004 - 5.5%) per annum.

79

23. SHORT TERM BORROWINGS

2005 2004SECURED UNSECURED TOTAL SECURED UNSECURED TOTAL

RM RM RM RM RM RM

THE GROUP

Bridging loan(Note 30) - - - 2,993,580 - 2,993,580

Term loans (Note 29) 1,805,003 - 1,805,003 13,147 - 13,147

Revolving credits - 14,944,400 14,944,400 - 16,294,400 16,294,400

1,805,003 14,944,400 16,749,403 3,006,727 16,294,400 19,301,127

THE COMPANY

Revolving credits - 5,000,000 5,000,000 - 5,000,000 5,000,000

The weighted average effective interest rates at the balance sheet date for borrowings which bear interestat floating rates, were as follows:


% % % %

Bridging loan - 7.76 - -Term loans 7.92 7.55 - -Revolving credits 6.07 6.03 7.65 7.55

80

24. ABBA BONDS

THE GROUP/THE COMPANY2005 2004RM RM

Al-Bai Bithaman Ajil Bonds (nominal value) 61,961,250 61,961,250Less: ABBA Bonds issuance expenses (1,223,412) (1,151,690)

Finance charges on bonds issue (21,961,250) (21,961,250)

Net proceeds 38,776,588 38,848,310Additional ABBA Bonds issuance expenses (57,871) (71,722)

38,718,717 38,776,588

Cumulation of amortisation of ABBA Bonds issuance expenses 713,345 437,636Cumulation of amortisation of finance charges on ABBA Bonds issue 10,994,140 6,693,434

50,426,202 45,907,658

Cumulative repayments:At 1 April (3,717,675) (1,239,225)Repayment made during the year (2,478,450) (2,478,450)

At 31 March (6,196,125) (3,717,675)

44,230,077 42,189,983

Analysis of the ABBA Bonds:- Not later than one year 2,478,450 2,478,450- Later than one year and not later than five years 41,751,627 39,711,533

44,230,077 42,189,983

81

24. ABBA BONDS (CONT’D)

On 13 September 2002, the Company issued RM61,961,250 nominal value Al-Bai Bithaman Ajil Bonds(“ABBA Bonds”) comprising RM49,569,000 nominal value Primary Bonds and 10 equal tranches ofSecondary Bonds with RM12,392,250 nominal value. The Primary Bonds are redeemable at maturity.Each Primary Bond is supported by 10 Secondary Bonds which are redeemable in semi-annual instalmentscommencing 6 months from the date of the first issue of the Secondary Bonds. The ABBA Bonds wereplaced out to a licensed financial institution via a private placement. The tenure of the ABBA Bonds is 5 years from the date of issue. The profit margin on the ABBA Bonds is fixed at 5% per annum, payablein arrears on a semi-annual basis represented by the Secondary Bonds. The ABBA Bonds are issued basedon a 10% per annum yield to maturity.

The ABBA Bonds are secured in the following manner:

(i) by a third party first legal charge over certain properties of a subsidiary;

(ii) by a third party first legal charge over all the shares held by a wholly owned subsidiary in anassociate;

(iii) by a first party charge over a reserve account which is an Islamic banking account opened for theplacement of all monies received from dividends, unappropriated profits and bonus shares accruingto a subsidiary; and

(iv) by a first party charge over a sinking fund account and a Mudharabah Account of the Company.

25. BANK OVERDRAFTS


Bank overdrafts (unsecured) (Note 39) 18,824,019 20,640,185 5,760,593 6,580,169

The weighted average effective interest rates at the balance sheet date for bank overdrafts were asfollows:


% % % %

Bank overdrafts 8.19 8.21 8.22 8.28

82

26. SHARE CAPITAL

THE COMPANY2005 2004 2005 2004NUMBER OF SHARES RM RM

AUTHORISED

Ordinary shares of RM1 each:At 1 April/31 March 193,167,000 193,167,000 193,167,000 193,167,000

5.5% ICCPS of RM1 each:At 1 April/31 March 6,833,000 6,833,000 6,833,000 6,833,000

Total authorised share capital 200,000,000 200,000,000 200,000,000 200,000,000

ISSUED AND FULLY PAID-UP

Ordinary shares of RM1 each:At 1 April 75,602,000 75,602,000 75,602,000 75,602,000Issuance of new shares arising

from conversion of ICCPS 6,833,000 - 6,833,000 -

At 31 March 82,435,000 75,602,000 82,435,000 75,602,000

5.5% ICCPS of RM1 each:At 1 April 6,833,000 6,833,000 6,833,000 6,833,000Conversion into ordinary shares

during the year (6,833,000) - (6,833,000) -

At 31 March - 6,833,000 - 6,833,000

Total issued and fully paid-up share capital 82,435,000 82,435,000 82,435,000 82,435,000

During the financial year, the ICCPS were converted into 6,833,000 ordinary shares of RM1 each of theCompany on their maturity date on 4 May 2004. The new shares which arose from the conversion of theICCPS rank pari passu in all respects with the existing shares of the Company.

83

27. RESERVES


Share premium (Note a) 111,412,895 111,412,895 111,412,895 111,412,895Capital reserve (Note b) 1,199,999 1,199,999 - -Retained profits (Note c) 24,959,499 23,327,060 22,683,341 22,063,702

137,572,393 135,939,954 134,096,236 133,476,597

(a) The share premium is not available for distribution by way of cash dividends.

(b) The capital reserve arose from a bonus issue of ordinary shares on 21 August 1992 by a formersubsidiary, and is not available for distribution by way of dividends.

(c) Subject to agreement with the tax authorities, at the balance sheet date, the Company has:

(i) tax-exempt income of approximately RM233,000 (2004 - RM233,000) available for thepurpose of paying tax-exempt dividends; and

(ii) tax credits under Section 108 of the Income Tax Act, 1967 to frank the payment of dividendsof approximately RM13,114,000 (2004 - RM13,732,000) out of its entire retained profitswithout incurring any additional tax liabilities.

84

28. NON-CURRENT LIABILITIES


Term loans (Note 29) 470,140 2,728,699Hire purchase payables (Note a) 4,636 47,700Amount owing to the Sabah State Government (Note b) 29,069,000 29,069,000

29,543,776 31,845,399

(a) Hire purchase payables

Future minimum hire purchase payments:- repayable not later than one year 54,458 110,916- repayable later than one year and not later than five years 5,885 60,342

60,343 171,258Future finance charges (12,643) (35,774)

Present value of hire purchase liabilities 47,700 135,484

Present value of hire purchase liabilities are payable as follows:

Not later than one year (Note 21) 43,064 87,784Later than one year and not later than five years 4,636 47,700

47,700 135,484

The hire purchase liabilities at the balance sheet date were subject to interest at rates ranging from 5.25%to 5.35% (2004 - 5.25% to 5.35%) per annum.

85

28. NON-CURRENT LIABILITIES (CONT’D)

(b) Amount owing to the Sabah State Government

The amount owing arose from the acquisition of a subsidiary, South-East Best Sdn. Bhd. (“SEB”).The amount owing shall be paid in the form of 130 units of properties to be developed andcompleted within a period of five years from the commencement of their construction asconsideration in kind pursuant to a joint venture contract entered into by SEB with the StateGovernment.

The contract, dated 5 September 1994, stated that the subsidiary is committed to jointly developwith the Sabah State Government a parcel of state land covering an area of approximately 26 acresinto residential apartments, townhouses, condominiums and a hotel.

On 16 July 2002, the Sabah State Government agreed to execute the change of their entitlementfor the outstanding amount of RM29,069,000. The change of entitlement is in the form of theconstruction of an office building for the Land and Survey Department (Jabatan Tanah dan Ukur)and part of a building for the Ministry of Finance at a value equivalent to the amount outstandingof RM29,069,000.

On 21 October 2002, the subsidiary was requested to prepare the Contract Document andEstimation for the above project.

On 17 December 2004, the Company entered into an supplemental agreement with the SabahState Government to execute a change of the former’s entitlement. The change of entitlement isin the form of the construction by the Company of an office building for the Land and SurveyDepartment (Jabatan Tanah dan Ukur) at a value equivalent to the amount outstanding ofRM29,069,000.

The Company had commenced the construction work during the financial year.

86

29. TERM LOANS


The long term loans are repayable as follows:

Not later than one year (Note 23) 1,805,003 13,147Later than one year and not later than five years 470,140 2,329,435Later than five years - 399,264Portion repayable after twelve months (Note 28) 470,140 2,728,699

2,275,143 2,741,846

Details of the term loans outstanding at the balance sheet date are as follows:

THE GROUP2005 2004

Term loan RM RM

1 1,745,143 2,267,2722 530,000 -3 - 474,574

2,275,143 2,741,846

MonthlyNumber of Instalment Interest Rate Date ofMonthly Amount Per Annum Commencement

Term loan Instalments RM % of Repayment

1 25 141,667 7.75% May 2004 *2 15 130,000 to 180,000 8.50% April 20043 264 3,673 6.60% January 2003

* The bank has agreed to defer seventeen monthly principal installments of RM141,667 each foreighteen months commencing 1 May 2004 and the subsequent installments shall commence from 1 July 2005.

The term loans are secured as follows:

(a) by way of a first legal charge over 3 pieces of converted residential land of a subsidiary;

(b) by way of negative pledges against the plant and equipment of a subsidiary ranking pari passuamongst the bankers; and

(c) by the personal guarantee of one of the directors of the Company.

The borrowings of the subsidiaries are further secured by corporate guarantees from the Company.

87

30. BRIDGING LOAN


Not later than one year (Note 23) - 2,993,580

In the previous financial year, the syndicated bridging loan from three licensed financial institutions wassubject to interest at rates disclosed in Note 23 to the financial statements and was secured by way of:

(i) a first fixed charge over the properties of a subsidiary;

(ii) a debenture incorporating a fixed and floating charge over all present and future assets of asubsidiary;

(iii) an assignment of all present and future rights, title and interest under a construction contract andconstruction guarantees from a related company of a subsidiary; and

(iv) the joint and several guarantee of a director of a subsidiary and the Company.

31. DEFERRED TAXATION

The deferred taxation is in respect of the revaluation surplus on leasehold land of a subsidiary.

32. NET TANGIBLE ASSETS PER SHARE

The net tangible assets per share is calculated based on the net tangible assets value of RM192,689,753(2004 - RM184,224,314) attributable to ordinary shares divided by the number of ordinary shares inissue at the balance sheet date of 82,435,000 (2004 - 75,602,000) shares.

88

33. TURNOVER


Revenue from construction contracts 15,383,973 49,919,830 - -Proportionate sales value of

development properties 51,370,658 36,270,464 - -Rental income - 73,600 - -Dividend income - - 5,404,800 4,928,000Interest income 112,502 52,745 112,502 52,745Other interest income - - 1,276,666 559,943Management and administrative

charges - - 2,111,160 1,680,049

66,867,133 86,316,639 8,905,128 7,220,737

34. COST OF SALES


Construction costs 46,727,012 56,131,953 - -Land and development expenditure 5,081,343 12,625,057 - -Direct costs 552,048 88,062 - -Management and administrative

charges 68,178 55,707 - -

52,428,581 68,900,779 - -

89

35. PROFIT BEFORE TAXATION


Profit before taxation is arrivedat after charging/(crediting):

Allowance for doubtful debts - 828,553 - -Amortisation of bonds expenses 275,709 303,272 275,709 303,272Auditors’ remuneration

- for the financial year 70,100 67,600 13,000 13,000- underprovision in the previous

financial year 29,109 4,200 - -Depreciation of property,

plant and equipment 459,128 446,060 17,792 23,474Directors’ benefits-in-kind 16,925 16,925 16,925 16,925Directors’ fees 93,000 52,000 93,000 52,000Directors’ remuneration 1,339,020 791,520 787,140 489,120Finance charges on bonds 4,300,706 4,131,289 4,300,706 4,131,289Interest expense

- bank borrowings 290,761 2,845,495 1,179,770 1,042,298- hire purchase 126,307 23,132 - -- loans 126,966 108,519 103,175 333,408- others - 2,000 - -

Impairment loss on interest in associate 330,565 - - -

Loss/(Gain) on disposal of property,plant and equipment 19,177 (313,882) - -

Plant and equipment written off - 13,663 - -Rental expense

- premises 15,329 3,600 12,000 12,000- machinery and equipment 8,315 8,207 - -

Staff costs 3,748,567 3,069,674 96,282 160,107Unquoted shares written off 45,000 - - -(Gain)/Loss on disposal of

investment properties (15,082) 1,557,400 - -Gross dividend income

- subsidiaries (unquoted) - - (4,800,000) (3,200,000)- associates - - (604,800) (1,728,000)

Interest income- licensed financial institutions (138,190) (59,137) (112,502) (52,745)- subsidiaries - - (1,276,666) (559,943)- others (65,235) (48,185) - -

Rental of premises (327,616) (316,621) - -Writeback of allowance for

doubtful debts (58,356) - (50,850) -

90

36. TAXATION


Current 666,736 2,000,589 621,822 228,520Share of associates’ taxation 602,535 1,014,472 - -

1,269,271 3,015,061 621,822 228,520(Over)/Underprovision in previous

financial years (198,446) 1,908,093 - 593,335

1,070,825 4,923,154 621,822 821,855

Subject to agreement with the tax authorities, the Group has unutilised tax losses and unabsorbed capital allowances of approximately RM3,838,700 (2004 - RM2,308,000) and RM481,000 (2004 - RM317,000) respectively available at the balance sheet date to be carried forward for offsetagainst future taxable business income. No deferred tax assets are recognised on these items.

A reconciliation of the income tax expense applicable to the profit before taxation at the statutory taxrate to the income tax expense at the effective tax rate of the Group and of the Company is as follows:


Profit before taxation 3,321,254 6,996,149 1,859,451 469,421

Tax at statutory tax rate 929,951 1,958,921 520,646 131,438

Tax effects of:Non-deductible expenses 658,281 1,119,212 97,182 251,606Non-taxable gains (2,060) (1,835) - -Reversal of deferred tax assets

not recognised (203,757) (152,046) - (154,524)Utilisation of tax losses

brought forward (131,070) - - -(Over)/Underprovision in previous

financial years (198,446) 1,908,093 - 593,335Others 17,926 90,809 3,994 -

1,070,825 4,923,154 621,822 821,855

91

37. EARNINGS PER SHARE

Basic earnings per share (“EPS”) is arrived at by dividing the profit after taxation attributable toshareholders after deducting the preference dividend of RM24,463 (2004 - RM270,587) by the weightedaverage number of ordinary shares in issue at the balance sheet date of 81,798,501 (2004 - 75,602,000).

The computation of diluted EPS is not applicable as the effects of conversion of each class of potentialordinary shares are anti-dilutive.

38. DIVIDENDS

2005 2004RM RM

Declared - dividend of 5.5% per ICCPS less 28% tax 24,463 270,587(2004 - 5.5% per ICCPS less 28% tax)

Paid - dividend of 1% per ordinary share less 28% tax(2004 - 1% per ordinary share less 28% tax) 593,527 544,330

617,990 814,917

At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 March 2005 of 1 sen per ordinary share of RM1 each less 28% tax (2004 - 1 sen per ordinary shareof RM1 each less 28% tax) amounting to RM593,527 (2004 - RM593,527) will be tabled forshareholders’ approval. These financial statements do not reflect this final dividend which will be accruedas a liability only upon approval by shareholders.

39. CASH AND CASH EQUIVALENTS

For the purpose of the cash flow statements, cash and cash equivalents comprise the following:


Short term deposits (Note 19) 1,364,225 1,407,125 1,239,225 1,239,225Cash and bank balances (Note 20) 5,612,658 3,474,278 4,027,843 2,012,100Bank overdrafts (Note 25) (18,824,019) (20,640,185) (5,760,593) (6,580,169)

(11,847,136) (15,758,782) (493,525) (3,328,844)Less: Cash placed in sinking

fund account (Note 20) (4,025,883) (2,010,000) (4,025,883) (2,010,000)

(15,873,019) (17,768,782) (4,519,408) (5,338,844)

92

40. DIRECTORS’ REMUNERATION

The aggregate amount of emoluments received and receivable by the directors of the Company duringthe financial year are as follows:


DIRECTORS’ FEES:

1. Mun Chong Shing @ Mun Chong Tian 18,000 12,000 18,000 12,000

2. Dato’ Lim Phaik Gan 19,000 12,000 19,000 12,0003. Dato’ Dr. Norraesah

Bt. Haji Mohamad 19,000 13,000 19,000 13,0004. Datuk Sim Peng Choon - 5,000 - 5,0005. Vincent Koh Kok Kee - 2,000 - 2,0006. Dato’ Zainol Abidin

Bin Haji A. Hamid 19,000 6,000 19,000 6,0007. Ahmad Fizal Bin Othman 18,000 2,000 18,000 2,000

93,000 52,000 93,000 52,000

DIRECTORS’ NON-FEES EMOLUMENTS:

1. Sia Kwee Mow @ Sia Hok Chai 712,320 443,520 712,320 443,5202. Sia Teong Heng 613,200 336,000 61,320 33,6003. Mun Chong Shing @

Mun Chong Tian 2,100 2,400 2,100 2,4004. Dato’ Lim Phaik Gan 2,700 3,600 2,700 3,6005. Dato’ Dr. Norraesah

Bt. Haji Mohamad 3,600 3,900 3,600 3,9006. Datuk Sim Peng Choon - 600 - 6007. Vincent Koh Kok Kee - 900 - 9008. Dato’ Zainol Abidin

Bin Haji A. Hamid 1,800 600 1,800 6009. Ahmad Fizal Bin Othman 3,300 - 3,300 -

1,339,020 791,520 787,140 489,120

93

40. DIRECTORS’ REMUNERATION (CONT’D)

Apart from the amounts disclosed under directors’ remuneration above, the estimated monetary value ofother benefits-in-kind received by the following director during the financial year, otherwise than in cashare as follows:


Sia Kwee Mow @ Sia Hok Chai 16,925 16,925 16,925 16,925

41. RELATED COMPANY TRANSACTIONS


Interest paid to subsidiaries - 224,889Rental paid to a subsidiary 12,000 12,000Dividend income received/receivable from subsidiaries 4,800,000 3,200,000Interest received from subsidiaries 1,276,666 559,943Management fee received from subsidiaries 2,111,160 1,680,049

42. RELATED PARTY TRANSACTIONS/BALANCES

GROUP2005 2004

NAME OF RELATED PARTY NOTE NATURE OF TRANSACTION RM RM

Ligamas Sdn. Bhd (a) Progress billings received/ 12,591,593 49,919,830receivable

Paling Industries Sdn. Bhd. (a) Purchase of materials 156,912 93,652

Gross dividend income 604,800 1,728,000received

Sri Rawang Properties (a) Gross dividend income - 150,005Sdn. Bhd. received

Sri Berjaya Development (a) Gross dividend income - 242,666Sdn. Bhd. received

Smart Home Sdn. Bhd. (b) Debt settlement * 37,828,242 -

LOM Holdings Sdn. Bhd. (d) Acquisition of a motor vehicle - 90,000

Sia Kwee Mow @ Sia Hok Chai (c) Interest paid/payable 103,174 108,519

94

42. RELATED PARTY TRANSACTIONS/BALANCES (CONT’D)

RECEIVABLE PAYABLEGROUP GROUP

NAME OF 2005 2004 2005 2004RELATED PARTIES NOTE RM RM RM RM

Ligamas Sdn Bhd. (a) 4,774,941 14,126,889 - -

Smart Home Sdn. Bhd. (b) - 37,720,372 - -

Sia Kwee Mow @ Sia Hok Chai (c) - - 103,174 108,519

Peak Marketing Sdn. Bhd. (e) - - 66,645 66,645

(a) Associates.

(b) A company in which Sia Kwee Mow @ Sia Hok Chai, who is a director of the Company, has a directinterest.

(c) A director of the Company.

(d) A substantial shareholder of the Company.

(e) A company in which Sia Teong Heng, who is a director of the Company, has a direct interest.

* Details of the debt settlement are set out in Note 47 to the financial statements.

In the opinion of the directors, the above transactions have been entered into in the ordinary course ofbusiness on terms mutually agreed between the parties.

43. CONTINGENT LIABILITY


Corporate guarantee (unsecured) given to banks and other licensed financial institutions for credit facilities granted to subsidiaries 27,040,401 49,444,912

95

44. SEGMENTAL REPORTING

THE GROUP2005

PROPERTY MANUFACTURING

CONS- DEVELOP- INVESTMENT AND

TRUCTION MENT HOLDING TRADING ELIMINATIONS GROUP

RM RM RM RM RM RM

REVENUE:

External revenue 15,383,973 51,370,658 112,502 - - 66,867,133

Intersegment revenue 36,502,043 - 13,835,025 - (50,337,068) -

Total revenue 51,886,016 51,370,658 13,947,527 - (50,337,068) 66,867,133

Results:

Segment results 3,707,234 3,572,497 12,386,681 7,221 (12,966,069) 6,707,564

Finance costs (4,953,038)

Share of results of

associates - 2,151,912 - (585,184) - 1,566,728

Profit from ordinary

activities before

taxation 3,321,254

Taxation (1,070,825)


activities after taxation 2,250,429



TRUCTION MENT HOLDING TRADING GROUP

RM RM RM RM RM

Other information

Segment assets 18,159,410 306,751,573 20,261,994 10,456,149 355,629,126

Unallocated assets 6,607,700

362,236,826

Segment liabilities 41,049,469 44,042,754 12,902,797 4,336 97,999,356

Unallocated liabilities 44,230,077

142,229,433

Capital expenditure 79,951 328,868 - - 408,819

Depreciation 156,070 283,387 19,671 - 459,128

96

44. SEGMENTAL REPORTING (CONT’D)

THE GROUP2004



TRUCTION MENT HOLDING TRADING ELIMINATIONS GROUP

RM RM RM RM RM RM

REVENUE:

External revenue 49,919,830 36,270,464 126,345 - - 86,316,639

Intersegment revenue 16,693,194 - 7,746,381 - (24,439,575) -

Total revenue 66,613,024 36,270,464 7,872,726 - (24,439,575) 86,316,639

Results:

Segment results 8,288,220 2,590,585 6,291,718 (7,987) (6,525,882) 10,636,654

Finance costs (7,263,617)

Share of results of

associates - 2,512,271 - 1,110,841 - 3,623,112


activities before

taxation 6,996,149

Taxation (4,923,154)


activities after taxation 2,072,995



TRUCTION MENT HOLDING TRADING GROUP

RM RM RM RM RM

Other information

Segment assets 31,821,441 290,967,684 23,771,453 11,544,983 358,105,561

Unallocated assets 8,331,990

366,437,551

Segment liabilities 42,636,445 48,802,170 14,355,639 78,360 105,872,614

Unallocated liabilities 42,189,983

148,062,597

Capital expenditure 333,977 584,399 6,500 - 924,876

Depreciation 172,645 239,203 33,535 677 446,060

The Group operates wholly in Malaysia.

97

45. NUMBER OF EMPLOYEES


Number of employees at the balance sheet date 101 100 10 9

46. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

Fair value is defined as the amount at which the financial instrument could be exchanged in a currenttransaction between knowledgeable willing parties in an arm’s length transaction, other than in a forcedsale or liquidation.

The following methods and assumptions are used to estimate the fair value of each class of financialinstruments:

(i) Bank balances and other liquid funds and short term receivables

The carrying amounts approximated their fair values due to the relatively short term maturity ofthese instruments.

(ii) Quoted and unquoted investments

The fair values of quoted investments are estimated based on quoted market prices for theseinvestments.

For unquoted investments, it is not practicable to determine the fair values because of the lack ofquoted market prices and the assumptions used in valuation models to value these investmentscannot be reasonably determined.

(iii) Short term borrowings and other current liabilities

The carrying amounts approximated their fair values because of the short period to maturity ofthese instruments.

(iv) Long term bank loans

The carrying amounts approximated their fair values as these instruments bear interest at variablerates.

(v) Hire purchase obligations

The fair value of hire purchase obligations is determined by discounting the relevant cash flow usingcurrent interest rates for similar instruments at the balance sheet date.

There is no disclosure of fair value for investments in subsidiaries and associates, and borrowings underthe basis of Islamic banking principles as these are excluded from MASB 24 - Financial Instruments:Disclosure and Presentation.

98

47. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

During the financial year, Smart Home Sdn. Bhd. settled its debts owing to Mixwell (Malaysia) Sdn. Bhd.and Syarikat Siah Brothers Construction Sdn. Bhd., amounting to RM37,720,372 in aggregate, throughthe transfer of six parcels of development land with an aggregate market value of RM37,828,242. Thissettlement was approved by the shareholders of the Company at an extraordinary general meeting heldon 16 April 2004.

48. COMPARATIVE FIGURES

The following comparative figures have been reclassified to conform with the presentation of the currentfinancial year:

THE GROUP THE COMPANYAS AS

AS PREVIOUSLY AS PREVIOUSLYRESTATED REPORTED RESTATED REPORTED

RM RM RM RM

Balance Sheets (Extract):

Short term borrowings 19,301,127 39,941,312 5,000,000 11,580,169Bank overdrafts 20,640,185 - 6,580,169 -Non-current liabilities 31,845,399 32,812,145 - -Deferred taxation 966,746 - - -

99

GROUP PROPERTIES as at 31 March 2005

Location Tenure/ Land/ Net Book Value

(Age of (Built-Up) As At Date of

building or Area 31. 03. 2005 Acquisition*/

date of expiry) Sq. Ft. RM Description Revaluation

1. 422, 422A-C, Freehold 2,102/ 426,750 4-storey 29/03/2000

Jalan Pahang, (30 years) (6,404) Shophouse

53000 Kuala Lumpur. for rental

2. 74, 74A-E, Wisma Siah Brothers, Freehold 5,513/ 3,739,156 6 I/2-storey 28/03/2000

Jalan Pahang, (25-27 years) (38,238) commercial

53000 Kuala Lumpur. building for

office

headquarters

and for rental

3. Lot 31 & 32, 7th Mile, Freehold 4,792/ 400,000 3-storey 29/03/2000

Jalan Hulu Kelang, (17 years) (5,340) commercial

68000 Ampang, building for

Selangor Darul Ehsan. factory

4. B4-3, Sri Bukit Tunku Condominium, Freehold (1,672) 635,360 Condominium 27/03/2000

Lorong Tun Ismail, (12 years) unit for sale

50480 Kuala Lumpur. and for rental

5. 5 units at Intan Kenny Condominium, Freehold (9,374) 2,341,288 Condominium 27/03/2000

Unit no. 29-2-1, 31-0-2, (11 years) units for sale

31-0-3, 31-1-1 & 31-1-2, and for rental

Intan Kenny Condominium,

Persiaran Bukit Tunku,

50480 Kuala Lumpur.

6. GM 2414, Lot No. 9332, Freehold 8,902 483,523 Vacant land 28/03/2000

Mukim Batu, Daerah and (9 years) for future

Negeri Wilayah Persekutuan. development

7. P.T. 8995, 8997, 9006, 9077, Leasehold 683,762 473,197 Vacant land 28/03/2000

Mukim Batu, Daerah and expiring on for future

Negeri Wilayah Persekutuan. 22/4/2086 development

8. P.T. 42031, 42042-42049, Freehold 1,515,593 3,592,909 Vacant land 16/12/1993*

42052-42056, for future

Mukim Kuala Kuantan, development

District of Kuantan,

Pahang Darul Makmur.

100





9. P.T. 42050, Freehold 490,774 716,559 Land currently 16/12/1993*

Mukim Kuala Kuantan, under

District of Kuantan, development


10. P.T. 42029, Freehold 24,526 156,321 Vacant land 30/03/2000

Mukim Kuala Kuantan, for future



11. P.T. 42051, Freehold 465,672 1,365,622 Land currently 30/03/2000

Mukim Kuala Kuantan, under



12. P.T. 9076 & 9005, Leasehold 519,164 18,150,000 Vacant land 28/03/2000

Mukim Batu, Daerah and expiring on for future

Negeri Wilayah Persekutuan. 22/4/2086 development

13. Part of CT No. 10166, Freehold 1,132,637 13,510,000 Vacant land 05/04/1999 *

for Lot No. 2398, for future

Mukim of Batang Kali, development

District of Ulu Selangor,

Selangor Darul Ehsan.

14. Lot 2 (TL017546495), Leasehold 232,163 9,942,632 Vacant land 30/04/2002*

Signal Hill, Tanjung Lipat, expiring on for future

District of Kota Kinabalu, 31/12/2093 development

State of Sabah.




State of Sabah. of hotel




State of Sabah.

101





17. CL015162026, Leasehold 104,103 2,687,670 Land currently 30/04/2002*

Signal Hill/Likas Bay, expiring on under


State of Sabah.




State of Sabah.




State of Sabah.

20. 1-1-7, The Peak Condominium, Leasehold (973) 246,800 Condominium 02/12/1999*

Lorong Puncak I, Signal Hill, expiring on unit for sale

Tanjong Lipat, 31/12/2093 and for rental

88400 Kota Kinabalu, Sabah.

21. A24, Desa Kudalari, Freehold (800) 300,000 Condominium 26/09/2002*

Lorong Kuda, Off Jalan Tun Razak, (3 years) unit for sale

50400 Kuala Lumpur. and for rental

22. H.S.(D) No. 7727, Lot 438, Freehold 48,846 732,690 Vacant land 24/08/1998*

Mukim of Serendah, for future

Ulu Selangor, development


23. 4 units at Coastal Towers, Freehold (2,824) 857,000 Condominium 12/12/2003*

Unit no. 9-7-3, 9-24-1, (2 years) units for sale

9-25-1 & 9-27-6, and for rental

Coastal Towers,

Persiaran Tanjung Bungah,

11200 Penang.

24. 5 units at Damansara Emas, Leasehold 8,818/ 1,640,541 Double-Storey 07/10/2004*

Unit no. 27, Jalan Sepah Puteri 5/20, expiring on (10,851) Terrace Houses

Unit no. 46, Jalan Sepah Puteri 5/24, 11/17/2102 for sale

Unit no. 58, Jalan Sepah Puteri 5/24, and for rental

Unit no. 63, Jalan Sepah Puteri 5/25,

Unit no. 65, Jalan Sepah Puteri 5/25,

Damansara Emas, Seksyen 5, PJU 5,

47810 Kota Damansara,


102





25. Part of CT No. 10140, Freehold 1,306,890 11,100,000 Vacant land 16/04/2004*





26. Part of CT No. 10166, Freehold 1,045,512 11,500,000 Vacant land 16/04/2004*





27. HS(M) 2220 PT 6726, Freehold 65,746 5,467,000 Vacant land 16/04/2004*

HS(M) 2221 PT 6727, for future

HS(M) 2222 PT 6728, development

HS(M) 2223 PT 6729,

HS(M) 2224 PT 6730,

HS(M) 2225 PT 6731,

HS(M) 2226 PT 6732,

HS(M) 2227 PT 6733,

HS(M) 2228 PT 6734,

HS(M) 2229 PT 6735,

HS(M) 2232 PT 6737,

Mukim of Setapak,

District of State

of Wilayah Persekutuan.

28. Undivided 2,725/4,125 Freehold 169,460 5,932,242 Vacant land 16/04/2004*

share in Geran 40871, for future

Lot 10244, Mukim of Batu, development

District of Gombak,


29. HS(M) 1622 PT 2186, Leasehold 236,983 829,000 Vacant land 16/04/2004*

Pekan Ulu Yam Lama, expiring on for future

Mukim of Hulu Yam, 16/05/2055 development

District of Hulu Selangor,


30. GM 1216, Lot No. 1589 Freehold 79,023 3,000,000 Vacant land 16/04/2004*

and GM 1217, Lot No. 1590, for future

Mukim of Petaling, development

District of State

of Wilayah Persekutuan.

103

SHAREHOLDERS’ INFORMATION as at 29 Ju ly 2005

Authorised Shares Capital : RM200,000,000Issued and Fully Paid Up Capital : RM82,435,000Class of Shares : Ordinary shares of RM1 each fully paidVoting Right : 1 vote per ordinary share

DISTRIBUTION SCHEDULE

No. of % of % ofShareholding Category Shareholders Shareholders No. of Shares Issued Capital

1 - 99 171 4.60 6,596 0.01100 - 1,000 1,164 31.28 985,907 1.20

1,001 - 10,000 2,060 55.36 7,167,508 8.6910,001 - 100,000 283 7.61 7,682,655 9.32

100,001 - 4,121,749 38 1.02 19,215,983 23.314,121,750 and above 5 0.13 47,376,351 57.47

Total 3,721 100.00 82,435,000 100.00

THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors)

No. of % ofName of Shareholders Shares Held Issued Capital

1. LOM Holdings Sdn Bhd 14,317,500 17.37

2. Mayban Nominees (Tempatan) Sdn. Bhd. 12,468,828 15.13- Mayban Investment Management Sdn. Bhd.

for Malayan Banking Berhad (GRM-230592)

3. Amanah Raya Nominees (Tempatan) Sdn Bhd 8,542,000 10.36- Skim Amanah Saham Bumiputera

4. Permodalan Nasional Berhad 6,867,000 8.33

5. Evergreen Legacy Sdn Bhd 5,181,023 6.28

6. Amsec Nominees (Tempatan) Sdn Bhd 2,274,000 2.76- Pledged Securities Account for Sia Teong Heng

7. DB (Malaysia) Nominee (Asing) Sdn Bhd 2,170,400 2.63- Deutsche Bank AG Singapore PBD for Penfold Holdings Limited

8. RHB Capital Nominees (Tempatan) Sdn Bhd 1,480,800 1.80- Pledged Securities Account for Sia Kwee Mow

@ Sia Hok Chai (STH 981069)

104

THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors) (Cont’d)

No. of % ofName of Shareholders Shares Held Issued Capital

9. Nican Asia Limited 1,106,478 1.34

10. Pua Kim Kian 1,101,800 1.33

11. Mun Oi @ Mun Oi Lin 1,015,800 1.23

12. Siah Teong Woei 877,711 1.06

13. Chan Wan Moi 822,000 1.00

14. Chay Kwai Gong @ Siah Kwee Swee 752,830 0.91

15. Siah Chong Hock 722,000 0.88

16. Southwark Limited 607,000 0.74

17. Pua Kim Kian 551,900 0.67

18. Poo Choo @ Ong Poo Choi 539,000 0.65

19. OSK Nominees (Tempatan) Sdn Berhad 468,300 0.57- Pledged Securities Account For Ng Kok Hin

20. Penfold Holdings Limited 400,000 0.49

21. Siah Chong Ong 362,000 0.44

22. Siah Teong Yin 328,723 0.40

23. Sia Tzu Lung 314,592 0.38

24. Affin-ACF Nominees (Tempatan) Sdn Bhd 312,000 0.38- Pledged Securities Account for Siow Sing Heng

25. United Overseas Nominees (Tempatan) Sdn Bhd 307,723 0.37- Pledged Securities Account for Siah Teong Chein (KL)

26. Siah Chong Guan 257,400 0.31

27. Chew Siew Ying 229,000 0.28

28. Wong Chee Choon 213,200 0.26

29. Sia Poh Choo @ Sia Swee Choo 179,700 0.22

30. Sia Teong Heng 171,891 0.21

TOTAL 64,942,599 78.78

105

DIRECTORS’ SHAREHOLDINGS (As per Register of Directors’ Shareholdings)

Direct Interest Indirect InterestName of Directors Shareholdings % Shareholdings %

Sia Kwee Mow @ Sia Hok Chai 1,480,800 (a) 1.80 19,498,523 (b) 23.65

Sia Teong Heng 2,517,992 (c) 3.05 19,498,523 (b) 23.65

Mun Chong Shing @ Mun Chong Tian 21,782 0.03 - -

Dato’ Lim Phaik Gan - - - -

Dato’ Dr. Norraesah Bt. Haji Mohamad - - - -

Dato’ Zainol Abidin Bin Haji A. Hamid - - - -

Ahmad Fizal Bin Othman - - - -

Notes:

(a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd.

(b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) andEvergreen Legacy Sdn. Bhd. (5,181,023 shares).

(c) 2,274,000 shares are held in bare trust by Amsec Nominees (Tempatan) Sdn. Bhd.

106

SUBSTANTIAL SHAREHOLDERS (excluding bare trustees) (As per Register of Substantial Shareholders)

No. of shares held or % ofbeneficially interested in Issued Capital

Name of Substantial Shareholders Direct Indirect Direct Indirect

Pemegang Amanah Raya Malaysia 8,542,000 - 10.36 -- Skim Amanah Saham Bumiputera

Sia Kwee Mow @ Sia Hok Chai 1,480,800 (a) 19,498,523 (b) 1.80 23.65

Sia Teong Heng 2,517,992 (c) 19,498,523 (b) 3.05 23.65

LOM Holdings Sdn. Bhd. 14,317,500 5,181,023 (d) 17.37 6.28

Evergreen Legacy Sdn. Bhd. 5,181,023 - 6.28 -

Malayan Banking Berhad 12,468,828 - 15.13 -

Permodalan Nasional Berhad 6,867,000 - 8.33 -

Yayasan Pelaburan Bumiputra - 6,867,000 (e) - 8.33

Notes:

(a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd.

(b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) andEvergreen Legacy Sdn. Bhd. (5,181,023 shares)

(c) 2,274,000 shares are held in bare trust by Amsec Nominees (Tempatan) Sdn. Bhd.

(d) Deemed interest by virtue of its shareholding in Evergreen Legacy Sdn. Bhd.

(e) Deemed interest by virtue of its shareholding in Permodalan Nasional Berhad

PROXY FORM

SBC CORPORATION BERHAD(199310-P) (Incorporated in Malaysia)

I/We, _________________________________________________________________________________________

of ____________________________________________________________________________________________

being a member/ members of the abovenamed Company do hereby appoint ____________________________

__________________________________________ of _________________________________________________

____________________________________or failing whom, ____________________________________________

of ____________________________________________________________________________________________

as my/our proxy to vote for me/us and on my/our behalf at the Fifteenth Annual General Meeting of theCompany to be held at the Penthouse, 5th Floor, Wisma Siah Brothers, 74, Jalan Pahang, 53000 Kuala Lumpuron Thursday, 22 September 2005 at 11.00 a.m. and at any adjournment thereof in the manner indicatedbelow:

No. Resolution For Against

1. Adoption of Reports and Audited Financial Statements

2. Declaration of a first and final dividend

3. Payment of Directors’ fees

4. Re-appointment of Director : YBhg. Dato’ Lim Phaik Gan

5. Re-appointment of Director : Mr Sia Kwee Mow @ Sia Hok Chai

6. Re-election of Director : YBhg. Dato’ Dr. Norraesah Bt. Haji Mohamad

7. Re-election of Director : Mr Mun Chong Shing @ Mun Chong Tian

8. Re-appointment of Auditors

9. Authority to Directors to allot and issue shares

(Please indicate with an ‘X’ in the appropriate box against each resolution how you wish your proxy to vote.If no instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion.)

Dated this _____________________ day of _____________________ 2005

Number of Shares heldSignature of Member(s)

NOTES:

A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote instead of him.

To be valid, this form duly completed must be deposited at the Registered Office of the Company not less than forty-eight(48) hours before the time for holding the meeting. Where a member appoints more than one (1) proxy, the appointmentshall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

If the appointor is a corporation, this form must be executed under its common seal or under the hand of the attorney.

Fold this flap for sealing

Then fold here

First fold here

The Company Secretaries

SBC CORPORATION BERHAD (199310-P)

Wisma Siah Brothers,74A, Jalan Pahang,53000 Kuala Lumpur.

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