sbc corporation berhad, annual audited accounts 2003

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

FINANCIAL REPORTfor the financial year ended 31 March 2003

CONTENTS

Page

Directors’ Report .................................................................................................. 1

Statement by Directors......................................................................................... 9

Statutory Declaration ............................................................................................ 9

Auditors’ Report ....................................................................................................10

Balance Sheets ....................................................................................................12

Income Statements ..............................................................................................13

Statements of Changes in Equity.........................................................................14

Cash Flow Statements .........................................................................................16

Notes to the Financial Statements .......................................................................18


DIRECTORS’ REPORT

Page 1

The directors hereby submit their report and the audited financial statements of the Group and of theCompany for the financial year ended 31 March 2003.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding and the provision of managementand administrative services to the subsidiaries. The principal activities of the subsidiaries are disclosed inNote 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 2,010,893 2,378,172

DIVIDENDS

Since the end of the previous financial year, the Company paid a dividend of 5.5% per IrredeemableCumulative Convertible Preference Share (“ICCPS”) less 28% tax amounting to RM270,587 in respect ofthe previous financial year, in accordance with the terms of issue of the ICCPS.

For the financial year,

(i) the directors have declared the payment of a dividend of 5.5% per ICCPS less 28% tax amounting toRM270,587, in accordance with the terms of issue of the ICCPS; and

(ii) the directors recommend the payment of a first and final dividend of 1% per ordinary share less 28%tax amounting to RM544,334.

RESERVES AND PROVISIONS

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


DIRECTORS’ REPORT

Page 2

ISSUES OF SHARES AND DEBENTURES

During the financial year,

(a) there were no changes in the authorised capital of the Company;

(b) the Company increased its issued and paid-up capital from RM50,468,943 to RM75,602,000 by wayof:

(i) the conversion of 115,600,000 Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)of RM1 each into 25,130,057 ordinary shares of RM1 each. The conversion was made on thefollowing basis:-

• 25,127,557 new ordinary shares of RM1 each were issued by the tendering of115,590,000 ICULS with nominal value of RM1 each;

• 2,500 new ordinary shares of RM1 each were issued by the tendering of 10,000ICULS with nominal value of RM1 each and cash subscription of RM1,500.

The new shares which arose from the conversion of the ICULS rank pari passu in allrespects with the existing shares of the Company.

(ii) the exercise of share options by eligible employees pursuant to the Employee Share OptionScheme of 3,000 ordinary shares of RM1 each. The new shares issued rank pari passu in allrespects with the existing shares of the Company.

(c) the Company issued RM61,961,250 Al-Bai Bithaman Ajil Bonds (ABBA Bonds) comprisingRM49,569,000 nominal value Primary Bonds and RM12,392,250 nominal value Secondary Bonds forworking capital purposes.

EMPLOYEE SHARE OPTION SCHEME (“ESOS”)

Pursuant to the ESOS which was implemented on 14 July 2000, the movement in the options to subscribefor new 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 2002 1,754,000 Lapsed during the financial year due to: - exercised during the financial year (3,000) - staff resignation (87,000)

At 31 March 2003 1,664,000


DIRECTORS’ REPORT

Page 3

EMPLOYEE SHARE OPTION SCHEME (“ESOS”) (CONT’D)

The salient features of the ESOS are as follows:-

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

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

(iii) the possible allocation for any single eligible employee during the existence of the ESOS shall not beless than 1,000 or more than 450,000 shares subject to the maximum allowable allocation accordingto their respective categories;

(iv) the subscription price was based on the weighted average market price of the shares as shown inthe Daily Official List of the Kuala Lumpur Stock Exchange for the 5 market days prior to the date ofoffer with an allowance for a discount of not more than 10% therefrom or at par value, whichever ishigher; and

(v) the shares to be alloted 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.

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 and Transferable SubscriptionRights (“TSRs”). The Company has in issue a total of 17,076,200 TSRs, the expiry date of which has beenextended to 20 February 2004. The TSRs entitle the holders thereof the rights to subscribe for new ordinaryshares of RM1 each on the basis of 1 new ordinary share of RM1 each for every TSR held at a pre-determined subscription price of RM3.50 per share.

During the financial year, none of the subscription rights under the TSRs were exercised.

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors tookreasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and themaking of allowance for doubtful debts, and satisfied themselves that all known bad debts had been writtenoff and that adequate allowance had been made for doubtful debts.

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


DIRECTORS’ REPORT

Page 4

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors tookreasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised inthe ordinary course of business, including their values as shown in the accounting records of the Group andof 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 LIABILITIES

The contingent liabilities of the Company are disclosed in Note 47 to the financial statements. At the date ofthis report, there does not exist:

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

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

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 theopinion of the directors, will or may substantially affect the ability of the Group and of the Company to meettheir obligations when they fall due.

CHANGE OF CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in 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.


DIRECTORS’ REPORT

Page 5

ITEMS OF AN UNUSUAL NATURE (CONT’D)

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 MOHAMADDATUK SIM PENG CHOONABDUL RAHMAN BIN A.SHUKOR (ALTERNATE TO DATUK SIM PENG CHOON)VINCENT KOH KOK KEE ( RESIGNED ON 31.5.2003 )TAN SRI DATO’ IR MUHAMMAD YUSUFF BIN HAJI MUHAMMAD YUNUS (RESIGNED ON 14.8.2002)

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

Pursuant to Article 77 of the Articles of Association of the Company, Dato’ Dr. Norraesah Bt Haji Mohamadretires by rotation at the forthcoming Annual General Meeting and, being eligible, offers herself for re-election.


DIRECTORS’ REPORT

Page 6

DIRECTORS’ INTERESTS

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

NUMBER OF ORDINARY SHARES OF RM1 EACHAT AT

1.4.2002 ALLOTMENT/ SOLD 31.3.2003BOUGHT

DIRECT INTERESTS

SIA KWEE MOW @ SIA HOK CHAI 3,982,400 446,576 (2,948,176) 1,480,800 SIA TEONG HENG 1,296,400 1,095,412 (2,056,820) 334,992 MUN CHONG SHING @ MUN CHONG TIAN 17,000 4,782 - 21,782 DATO’ LIM PHAIK GAN 5,000 6,000 - 11,000 DATUK SIM PENG CHOON 10,000 869 - 10,869

INDIRECT INTERESTS

SIA KWEE MOW @ SIA HOK CHAI 7,463,832 19,498,523 (7,463,832) 19,498,523 SIA TEONG HENG 7,463,832 19,498,523 (7,463,832) 19,498,523

TSRS AT AT

1.4.2002 BOUGHT SOLD 31.3.2003DIRECT INTERESTS

SIA KWEE MOW @ SIA HOK CHAI 3,078,500 - - 3,078,500 DATO’ DR. NORRAESAH BT HAJI MOHAMAD 4,000 - - 4,000 MUN CHONG SHING @ MUN CHONG TIAN 12,500 - - 12,500

INDIRECT INTERESTS

SIA KWEE MOW @ SIA HOK CHAI 1,746,780 - - 1,746,780 SIA TEONG HENG 1,746,780 - - 1,746,780

NUMBER OF ORDINARY SHARES OF RM1 EACHUNDER OPTION

AT AT 1.4.2002 GRANTED LAPSED 31.3.2003

DIRECT INTERESTS

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

By virtue of their interests in the Company, Sia Kwee Mow @ Sia Hok Chai and Sia Teong Heng aredeemed to have interests in the shares in the subsidiaries to the extent of the Company’s interest, inaccordance with Section 6A of the Companies Act, 1965.

None of the other directors holding office at the end of the financial year had any interests in shares, TSRsor options under the ESOS of the Company or its related corporations during the financial year.


DIRECTORS’ REPORT

Page 7

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive anybenefit (other than a benefit included in the aggregate amount of emoluments received or due and receivableby directors as shown in the financial statements, or the fixed salary of a full-time employee of theCompany) by reason of a contract made by the Company or a related corporation with the director or with afirm of which the director is a member, or with a company in which the director has a substantial financialinterest except for any benefits which may be deemed to arise from transactions entered into in the ordinarycourse of business with companies in which certain directors have substantial financial interests asdisclosed in Note 45 to the financial statements.

Neither during nor at the end of the financial year was the Company or its subsidiaries a party to anyarrangements whose object is to enable the directors to acquire benefits by means of the acquisition ofshares in or debentures of the Company or any other body corporate except for the existing TSRs held bycertain directors which would enable them to acquire new shares in the Company and the share optionsgranted pursuant to the ESOS.

SIGNIFICANT EVENTS

The significant events involving the Group and the Company during the current financial year are disclosedin Note 49 to the financial statements.


DIRECTORS’ REPORT

Page 8

AUDITORS

The auditors, Messrs. Horwath Mok & Poon, who are now practising as Messrs. Horwath with effect from 1January 2003, have expressed their willingness to continue in office.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORSDATED 25 JULY 2003

Sia Kwee Mow @ Sia Hok Chai

Mun Chong Shing @ Mun Chong Tian


Page 9

STATEMENT BY DIRECTORS

We, Sia Kwee Mow @ Sia Hok Chai and Mun Chong Shing @ Mun Chong Tian, being two of thedirectors of Siah Brothers Corporation Berhad, state that, in the opinion of the directors, thefinancial statements set out on pages 12 to 65 are drawn up in accordance with applicableapproved accounting standards in Malaysia so as to give a true and fair view of the state of affairsof the Group and of the Company at 31 March 2003 and of their results and cash flows for thefinancial year ended on that date.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORSDated 25 JULY 2003

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

STATUTORY DECLARATION

I, Ng Kee Chye, I/C No. 640324-06-5691, being the officer primarily responsible for the financialmanagement of Siah Brothers Corporation Berhad, do solemnly and sincerely declare that thefinancial statements set out on pages 12 to 65 are, to the best of my knowledge and belief,correct, and I make this solemn declaration conscientiously believing the same to be true and byvirtue 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 25 JULY 2003

Ng Kee Chye

Before me

Haron Hashim (No. W 128)Commissioner for OathsKuala Lumpur25 July 2003


Page 10

REPORT OF THE AUDITORS TO THE MEMBERS OF

SIAH BROTHERS CORPORATION BERHADCompany No : 199310 - P

We have audited the financial statements set out on pages 12 to 65. The preparation of thefinancial statements is the responsibility of the Company’s directors. Our responsibility is toexpress an opinion on the financial statements based on our audit.

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

In our opinion,

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

(i) the state of affairs of the Group and of the Company at 31 March 2003 and theirresults and cash flows for the financial year ended on that date; and

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

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

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

REPORT OF THE AUDITORS TO THE MEMBERS OF

SIAH BROTHERS CORPORATION BERHAD (CONT’D)Company No : 199310 - P

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

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

Horwath Mok & Poon Onn Kien HoeFirm No: AF 0995 Approval No: 1772/11/04 (J/PH)Chartered Accountants Partner

Kuala Lumpur


BALANCE SHEETS AT 31 MARCH 2003

The annexed notes form an integral part of these financial statements. Page 12

THE GROUP THE COMPANY 2003 2002 2003 2002

(Restated) (Restated)NOTE RM RM RM RM

ASSETSInvestment in subsidiaries 6 - - 211,064,785 167,370,110 Interest in associates 7 110,700,175 119,902,566 2,400,000 10,440,450 Property, plant and equipment 8 35,812,639 7,047,290 53,152 75,503 Investment properties 9 41,774,547 21,088,833 - - Other assets 10 382,107 714,168 - - Goodwill on consolidation 11 27,271,844 10,245,527 - -

215,941,312 158,998,384 213,517,937 177,886,063

CURRENT ASSETSInventories 12 14,109,911 9,269,103 - - Property development in progress 13 54,738,163 28,591,098 - - Receivables 14 68,079,974 78,944,793 123,962 6,401,217 Amount owing by contract customers 15 685,256 1,407,450 - - Amounts owing by subsidiaries 16 - - 52,644,365 46,676,415 Amounts owing by associates 17 5,525,184 5,448,175 11,434 51,883 Tax recoverable 18 5,350,142 3,971,217 11,265,166 9,913,290 Short term deposits with licensed banks 19 1,422,125 5,042,274 1,239,225 5,012,274 Cash and bank balances 20 6,084,094 1,460,540 5,201,131 1,904

155,994,849 134,134,650 70,485,283 68,056,983

LESS: CURRENT LIABILITIESAmount owing to contract customers 15 4,769,567 2,673,438 - - Payables 21 26,618,315 31,260,945 331,492 245,422 Amounts owing to subsidiaries 16 - - 12,635,183 21,100,467 Amounts owing to associates 17 65,500 65,500 - - Amounts owing to directors 22 2,450,481 1,967,680 1,967,680 1,967,680 Dividend payable 270,587 270,587 270,587 270,587 Short term borrowings 23 47,707,856 41,029,726 11,413,736 7,337,727 ABBA Bonds 24 2,478,450 - 2,478,450 -

84,360,756 77,267,876 29,097,128 30,921,883

NET CURRENT ASSETS 71,634,093 56,866,774 41,388,155 37,135,100

287,575,405 215,865,158 254,906,092 215,021,163

FINANCED BY:-

Share capital 25 82,435,000 57,301,943 82,435,000 57,301,943 Share application account 26 - 115,600,000 - 115,600,000 Reserves 27 134,681,876 42,524,427 134,643,948 42,119,220

Shareholders’ equity 217,116,876 215,426,370 217,078,948 215,021,163 ABBA Bonds 24 37,827,144 - 37,827,144 - Deferred liabilities 28 32,631,385 438,788 - -

287,575,405 215,865,158 254,906,092 215,021,163

NET TANGIBLE ASSETS PER ORDINARY SHARE - Actual 32 242 sen 393 sen - Proforma 32 N/A 262 sen


INCOME STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2003



(Restated) (Restated)NOTE RM RM RM RM

TURNOVER 33 69,828,919 81,644,823 8,982,613 9,277,687

COST OF SALES 34 (48,699,540) (68,499,179) - -

GROSS PROFIT 21,129,379 13,145,644 8,982,613 9,277,687

OTHER OPERATING INCOME 3,097,647 247,281 - 59,039

ADMINISTRATIVE EXPENSES (6,793,398) (3,863,420) (1,069,681) (1,076,604)

OTHER OPERATING EXPENSES (9,417,624) (1,651,190) (156,715) (352,121)

PROFIT FROM OPERATIONS 8,016,004 7,878,315 7,756,217 7,908,001

FINANCE COSTS (6,793,334) (9,611,991) (4,464,721) (8,529,384)

SHARE OF PROFIT OF ASSOCIATES 3,926,816 3,351,575 - -

PROFIT/(LOSS) BEFORE TAXATION 35 5,149,486 1,617,899 3,291,496 (621,383)

TAXATION 36 (3,138,593) (444,278) (913,324) (94,000)

PROFIT/(LOSS) AFTER TAXATION 2,010,893 1,173,621 2,378,172 (715,383)

Earnings per share - basic 37 2.4 sen 1.8 sen - diluted 37 N/A N/A

Dividend per ordinary share - Final 38 1 sen -


STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 MARCH 2003


NOTESHARE CAPITAL

SHAREAPPLICATION

ACCOUNT SHARE PREMIUMRETAINED PROFITS

CAPITAL RESERVE TOTALTHE GROUP RM RM RM RM RM RM

Balance at 1.4.2001 (as previously reported) 57,301,943 - 21,306,521 20,580,642 1,199,999 100,389,105Prior year adjustments 39 - - - (1,155,000) - (1,155,000 )

Balance at 1.4.2001 (as restated) 57,301,943 - 21,306,521 19,425,642 1,199,999 99,234,105Arising from conversion of Irredeemable Convertible Unsecured Loan Stock (“ICULS”) to ordinary shares - - 1,500 - - 1,500Shares pending allotment arising on expiry of ICULS - 115,600,000 - - - 115,600,000Expenses incurred on conversion of ICULS - - (312,269) - - (312,269 )Profit after taxation for the financial year (as restated) - - - 1,173,621 - 1,173,621Dividends 38 - - - (270,587) - (270,587 )

Balance at 31.3.2002/1.4.2002 57,301,943 115,600,000 20,995,752 20,328,676 1,199,999 215,426,370Issuance of shares 25,133,057 - - - - 25,133,057Reversal of share application account - (115,600,000) - - - (115,600,000 )Share premium arising from issuance of shares - - 90,471,143 - - 90,471,143Expenses incurred on conversion of ICULS - - (54,000) - - (54,000 )Profit after taxation for the financial year - - - 2,010,893 - 2,010,893Dividends 38 - - - (270,587) - (270,587 )

Balance at 31.3.2003 82,435,000 - 111,412,895 22,068,982 1,199,999 217,116,876


STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 MARCH 2003


NOTESHARE CAPITAL

SHAREAPPLICATION

ACCOUNT SHARE PREMIUMRETAINED PROFITS

CAPITAL RESERVE TOTALTHE COMPANY RM RM RM RM RM RM

Balance at 1.4.2001 (as previously reported) 57,301,943 - 21,306,521 26,234,438 - 104,842,902Prior year adjustments 39 - - - (4,125,000) - (4,125,000 )

Balance at 1.4.2001 (as restated) 57,301,943 - 21,306,521 22,109,438 - 100,717,902Arising from conversion of ICULS to ordinary shares - - 1,500 - - 1,500Shares pending allotment arising on expiry of ICULS - 115,600,000 - - - 115,600,000Expenses incurred on conversion of ICULS - - (312,269) - - (312,269 )Loss after taxation for the financial year (as restated) - - - (715,383) - (715,383)Dividends 38 - - - (270,587) - (270,587 )

Balance at 31.3.2002/1.4.2002 57,301,943 115,600,000 20,995,752 21,123,468 - 215,021,163Issuance of shares 25,133,057 - - - - 25,133,057Reversal of share application account - (115,600,000) - - - (115,600,000 )Share premium arising from issuance of shares - - 90,471,143 - - 90,471,143Expenses incurred on conversion of ICULS - - (54,000) - - (54,000 )Profit after taxation for the financial year - - - 2,378,172 - 2,378,172Dividends 38 - - - (270,587) - (270,587 )

Balance at 31.3.2003 82,435,000 - 111,412,895 23,231,053 - 217,078,948

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

2003 2002 RM RM

The Company 23,231,053 21,123,468 Subsidiaries (16,643,931) (18,318,593) Associates 15,481,860 17,523,801

22,068,982 20,328,676


CASH FLOW STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2003



(Restated)NOTE RM RM RM RM

CASH FLOWS FROM/(FOR) OPERATING ACTIVITIESProfit/(Loss) before taxation 5,149,486 1,617,899 3,291,496 (621,383)

Adjustments for:-Allowance for doubtful debts 8,625,447 816,507 - - Amortisation of bonds expenses 134,364 - 134,364 - Bad debts written off 110,965 101,340 - - Depreciation and amortisation of property, plant and equipment 406,603 325,978 22,351 32,676 Interest expense 6,407,721 9,474,903 4,442,243 8,461,022 Loss on disposal of investment properties 150,154 33,015 - - Plant and equipment written off - 2,800 - - Dividend income - - (8,090,000) (7,805,555) Gain on disposal of property, plant and equipment (7,302) (131,031) - (59,039) Interest income (110,604) (585,124) (622,613) (1,152,687) Writeback of diminution in value of inventory (6,527) - - - Writeback of allowance for doubtful debts (1,988,813) - - - Share of profit in associates (3,926,816) (3,351,575) - -

Operating profit/(loss) before working capital changes 14,944,678 8,304,712 (822,159) (1,144,966) Decrease in inventories 10,089,220 471,208 - - Increase in property development-in-progress (15,568,195) (1,633,516) - - Decrease/(Increase) in trade and other receivables 11,175,302 (5,683,694) 6,277,255 (625,803) (Decrease)/Increase in trade and other payables (8,910,013) (3,611,900) 86,070 (176,117) Increase in amount owing to contract customers 2,287,849 298,050 - -

CASH FROM/(FOR) OPERATIONS 14,018,841 (1,855,140) 5,541,166 (1,946,886) Interest paid (4,702,299) (10,311,139) (1,880,098) (8,461,022) Taxes paid (3,377,151) (2,225,772) - -

NET CASH FROM/(FOR) OPERATING ACTIVITIES CARRIED FORWARD 5,939,391 (14,392,051) 3,661,068 (10,407,908)


CASH FLOW STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2003



(Restated)NOTE RM RM RM RM

NET CASH FROM/(FOR) OPERATING ACTIVITIES BROUGHT FORWARD 5,939,391 (14,392,051) 3,661,068 (10,407,908)

CASH FLOWS (FOR)/FROM INVESTING ACTIVITIESInterest received 641,078 949,238 622,613 1,152,687 Dividends received from subsidiaries - - 3,816,000 5,620,000 Dividends received from associate 2,116,800 - 2,008,800 - Net cash outflow on acquisition of subsidiary 40 (34,835,444) - (35,000,000) - Expenses incurred on acquisition of subsidiary - - (654,225) - Purchase of property, plant and equipment 41 (201,665) (115,327) - (15,400) Purchase of investment properties (3,438,068) - - - Hotel development expenditure (386,797) - - - Proceeds from disposal of property, plantand equipment 149,222 183,039 - 68,500 Proceeds from disposal of investment properties 952,000 1,164,915 - - Incidental expenses on investment properties (42,589) (161,151) - - Proceeds from disposal of subsidiary - 27,075,000 - 27,075,000 Placement of cash in sinking fund account 20 (5,198,398) - (5,198,398) -

NET CASH (FOR)/FROM INVESTING ACTIVITIES (40,243,861) 29,095,714 (34,405,210) 33,900,787

CASH FLOWS FROM/(FOR) FINANCING ACTIVITIESProceeds from issuance of shares 4,200 - 4,200 - Proceeds from bonds 24 38,848,310 - 38,848,310 - Repayment of bonds 24 (1,239,225) - (1,239,225) - Net repayment by/(Advances to) associates (42,209) 261,523 40,449 49,500 Net advances to subsidiaries - - (14,433,234) (9,405,022) Repayment to a director - (951,120) - (951,120) Dividend paid to shareholders of the Company - (545,065) - (545,065) Payment of expenses on conversion of ICULS (54,000) (312,269) (54,000) (312,269) Proceeds received for conversion of ICULS - 1,500 - 1,500 Dividend paid to holder of ICCPS (270,587) (270,587) (270,587) (270,587) Repayment of revolving credit (3,280,000) (1,320,000) (680,000) (1,320,000) Repayment of loans (4,103,454) (74,250) - - Repayment to hire purchase payables (87,784) (83,130) - -

NET CASH FROM/(FOR) FINANCING ACTIVITIES 29,775,251 (3,293,398) 22,215,913 (12,753,063)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (4,529,219) 11,410,265 (8,528,229) 10,739,816

CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR (14,340,876) (25,751,141) 3,356,451 (7,383,365)

CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR 42 (18,870,095) (14,340,876) (5,171,778) 3,356,451


NOTES TO FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2003

. Page 18

1. GENERAL INFORMATION

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

2. PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding and theprovision of management and administrative services to the subsidiaries. The principalactivities of the subsidiaries are disclosed in Note 6 to the financial statements. Therehave been no significant changes in the nature of these activities during the financial year.

3. FINANCIAL RISK MANAGEMENT POLICIES

The Group's financial risk management policy seeks to ensure that adequate financialresources are available for the development of the Group's business whilst managing itscurrency, interest rate, market, credit, liquidity and cash flow risks. The Group operateswithin defined guidelines that are approved by the Board and the policies in respect of themajor areas of treasury activity are as follows:

(a) Currency Risk

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

(b) Interest Rate Risk

The Group obtains financing through bank borrowings and hire purchase. Its policyis to obtain the most favourable interest rates available without increasing itsforeign currency exposure.

Surplus funds are placed with reputable financial institutions at the most favourableinterest rates.

(c) Market Risk

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



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3. FINANCIAL RISK MANAGEMENT POLICIES(CONT’D)

(d) Credit Risk

The Group's exposure to credit risks, or the risk of counterparties defaulting, arisesmainly from cash deposits and receivables. The maximum exposure to credit risksis represented by the total carrying amount of these financial assets in the balancesheet reduced by the effects of any netting arrangements with counterparties.

The Group does not have any major concentration of credit risk related to anyindividual customer or counterparty except for 61% of trade debts due from amajor customer, details of which are set out in Note 14 to the financial statements.

The Group manages its exposure to credit risk by investing its cash assets safelyand profitably, and by the application of credit approvals, credit limits andmonitoring procedures on an ongoing basis.

(e) Liquidity and Cash Flow Risk

The Group's exposure to liquidity and cashflow risks arises mainly from generalfunding and business activities.

It practises prudent liquidity risk management by maintaining sufficient cashbalances and the availability of funding through certain committed credit facilities.

4. BASIS OF ACCOUNTING

The financial statements are prepared under the historical cost convention and modified toinclude other bases of valuation as disclosed in other sections under significantaccounting policies, and in compliance with applicable approved accounting standards inMalaysia.

The new applicable approved accounting standard adopted in these financial statementsis MASB 19 – Events After Balance Sheet Date. Comparative figures have been adjustedto conform with changes in presentation due to the requirements of the new MASB thathave been applied retrospectively.

Save for the adoption of MASB 19 as stated in Note 39 to the financial statements, thereare no other changes to the accounting policies adopted by the Company.



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5. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of theCompany and all its subsidiaries made up to 31 March 2003.

A subsidiary is defined as a company in which the parent company holds directlyor indirectly more than 50% of the equity share capital and has control over thefinancial and operating policies.

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

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

(b) Goodwill or Negative Goodwill On Consolidation

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

Goodwill is stated net of negative goodwill. The net carrying amount of goodwill isreviewed annually, and is written down for impairment where it is considerednecessary. The impairment value of goodwill written off is taken to the incomestatement.



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5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(c) Associates

Associates are enterprises in which the Group exercises significant influence.Significant influence is the power to participate in the financial and operating policydecisions of the associates but not control over those policies. Investments inassociates are accounted for in the consolidated financial statements by the equitymethod of accounting.

Equity accounting involves recognising in the income statement the Group’s shareof the results of the associates for the period. The Group’s investment inassociates is carried in the balance sheet at an amount that reflects its share ofthe assets of the associates and includes goodwill (net of accumulatedamortisation) on acquisition. At the date of acquisition, the fair value of theassociates’ net assets are determined and these values are reflected in theconsolidated financial statements. Equity accounting is discontinued when thecarrying amount of the investment in an associate reaches zero, unless the Grouphas incurred obligations or guaranteed obligations in respect of the associate.

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

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

(d) Property, Plant and Equipment

Property, plant and equipment, other than freehold land, are stated at cost lessaccumulated depreciation or amortisation. Freehold land is stated at cost and isnot depreciated.

Leasehold land having an unexpired term of more than fifty years is not amortised.The non-amortisation of the long term leasehold land has no material effect on thefinancial statements.

Depreciation and amortisation is calculated under the straight-line method to writeoff the cost of the assets over their estimated useful lives. The principal annualrates used for this purpose are:-

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%



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(d) Property, Plant and Equipment (Cont’d)

The Group does not have a policy for frequent revaluation of the properties.Surpluses arising from the revaluation of the properties are credited to arevaluation reserve. Deficits arising from the revaluation, to the extent that they arenot supported by any previous revaluation surpluses, are charged to the incomestatement.

(e) Impairment of Assets

The carrying amounts of assets, other than those to which MASB Standard 23Impairment of Assets does not apply, are reviewed at each balance sheet date forimpairment when there is an indication that the assets might be impaired.Impairment is measured by comparing the carrying amounts of the assets withtheir recoverable amounts.

An impairment loss is charged to the income statement immediately unless theasset is carried at its revalued amount. Any impairment loss of a revalued asset istreated as a revaluation decrease to the extent of a previously recognisedrevaluation surplus for the same asset.

In respect of assets other than goodwill, and when there is a change in theestimates used to determine the recoverable amount, a subsequent increase inthe recoverable amount of an asset is treated as reversal of the previousimpairment loss and is recognised to the extent of the carrying amount of the assetthat would have been determined (net of amortisation and depreciation) had noimpairment loss been recognised. The reversal is recognised in the incomestatement immediately, unless the asset is carried at its revalued amount. Areversal of an impairment loss on a revalued asset is credited directly to therevaluation surplus. However, to the extent that an impairment loss on the samerevalued asset was previously recognised as an expense in the income statement,a reversal of that impairment loss is recognised as income in the incomestatement.

(f) Investments

The investment in subsidiaries, associates and joint ventures are initially stated atcost in the balance sheet of the Company, and are reviewed for impairment at theend of the financial year if events or changes in circumstances indicate that theircarrying values may not be recoverable.

(g) Investment Properties

Investment properties are held as long term investments to generate income andfor capital gain, and are stated at cost. These properties are not depreciated.



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(h) Inventories

Inventories are stated at the lower of cost and net realisable value. The unsoldcompleted properties are stated at the lower of cost and net realisable value. Forfinished goods and work-in-progress, cost includes direct labour and appropriateproduction overheads.

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

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

(i) Property Development-In-Progress

Property development-in-progress comprises land and related developmentexpenditure incurred plus attributable profits less progress billings and foreseeablelosses, if any.

Land is stated at cost. Development expenditure comprises construction and otherrelated development costs and administrative overheads relating to the propertydevelopment. Interest costs on borrowings taken to finance the relevantdevelopment projects are included in the development expenditure fromcommencement to the completion of the development projects.

Attributable profits are determined based on the percentage of completion method,on sold properties.

(j) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off inthe period in which they are identified. An estimate is made for doubtful debtsbased on a review of all outstanding amounts at the balance sheet date.

(k) Amount Owing By/To Contract Customers

The amount owing by/to contract customers is stated at cost plus profitsattributable to contracts in progress less progress billings and provision forforeseeable losses, if any. Cost includes direct materials, labour and applicableoverheads.

(l) Payables

Trade and other payables are stated at cost which is the fair value of theconsideration to be paid in the future for goods and services received.



. Page 24


(m) Interest-bearing Borrowings

Interest-bearing bank loans and overdrafts are recorded at the amount of proceedsreceived, net of transaction costs.

Borrowing costs directly attributable to the acquisition and construction ofdevelopment properties and property, plant and equipment are capitalized as partof the cost of those assets, until such time as the assets are ready for theirintended use or sale.

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

(n) Bonds

Bonds issued by the Company and the Group are initially recognised based onproceeds received, net of issuance expenses incurred and are adjusted insubsequent years for amortization of premium and/or accretion of discount tomaturity, using the effective yield method. The premium amortised and/or discountaccreted is recognised in the income statement over the period of the bonds.

(o) Deferred Taxation

Deferred taxation is provided using the liability method on all material timingdifferences except where no liability is expected to arise in the foreseeable future.Deferred tax benefit is only recognised when there is reasonable expectation ofrealisation in the foreseeable future.

(p) Foreign Currencies

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

(q) Assets under Hire Purchase

Equipment acquired under hire purchase are capitalised in the financial statementsand are depreciated in accordance with the policy set out in Note 5(d) above. Eachhire purchase payment is allocated between the liability and finance charges so asto achieve a constant rate on the finance balance outstanding. Finance chargesare allocated to the income statement over the periods of the respective hirepurchase agreements.



. Page 25


(r) Equity Instruments

Ordinary shares and convertible preference shares are classified as equity.

(s) Dividends

Dividends on equity are recognised as liabilities when declared.

(t) Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demanddeposits, deposits pledged with financial institutions, bank overdrafts and shortterm, highly liquid investments that are readily convertible to known amounts ofcash and which are subject to an insignificant risk of changes in value.

(u) Financial Instruments

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

Financial instruments are classified as liabilities or equity in accordance with thesubstance of the contractual arrangement. Interest, dividends, gains and lossesrelating to a financial instrument classified as a liability, are reported as expense orincome. Distributions to holders of financial instruments classified as equity arecharged directly to equity.

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

Financial instruments recognised in the balance sheet are disclosed in theindividual policy statement associated with each item.



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(v) Income Recognition

(i) Construction Contracts

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

The stage of completion is determined based on surveys of workperformed.

(ii) Property Development

Revenue from property development is recognised from the sale ofcompleted and uncompleted development properties.

Revenue from the sale of completed properties is recognised when thesale is contracted.

Revenue on uncompleted properties contracted for sale is recognisedbased on the stage of completion method unless the outcome of thedevelopment cannot be reliably determined in which case the revenue onthe development is only recognised to the extent of development costsincurred that are recoverable.

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

Foreseeable losses, if any, are recognised immediately in the incomestatement.

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

(iii) Revenue from Sales of Goods

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

(iv) Revenue from Services

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



. Page 27


(v) Income Recognition (Cont’d)

(v) Management Fee and Administrative Charges

Management fee and administrative charges are recognised on an accrualbasis.

(vi) Rental Income

Rental income is recognised on an accrual basis.

(vii) Dividend Income

Dividend income from investments is recognised when the right to receivepayment is established.

Dividend income was recognised upon declaration by the subsidiaries andassociates in previous financial years. During the financial year, there wasa change in the accounting policy with regards to the revenue recognition ofdividends to conform with the requirements of MASB 19 – Events After TheBalance Sheet Date. The change in the accounting policy has an effect ofincreasing the profit before taxation of the Company for the current financialyear by RM5,300,000 and decreasing the profit before taxation for theprevious financial year by RM1,175,000. It also has the effect of decreasingthe taxation of the Group for the current financial year by RM1,484,000 andincreasing the taxation for the previous financial year by RM329,000. Thechange in the accounting policy is made retrospectively and the effect onprevious financial years has been accounted for as prior year adjustments.

(viii) Interest Income

Interest income is recognised on an accrual basis, based on the effectiveyield on the investment.

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

(w) Segmental Information

Segment revenues and expenses are those directly attributable to the segmentsand include any joint revenue and expenses where a reasonable basis of allocationexists. Segment assets include all assets used by a segment and consistprincipally of property, plant and equipment (net of accumulated depreciation,where applicable), other investments, inventories, receivables, and cash and bankbalances.

Most segment assets can be directly attributed to the segments on a reasonablebasis. Segment assets and liabilities do not include income tax assets andliabilities respectively.



. Page 28


(w) Segmental Information (Cont’d)

Segment revenues, expenses and results include transfers between segments.The prices charged on intersegment transactions are based on normalcommercial terms. These transfers are eliminated on consolidation.

6. INVESTMENT IN SUBSIDIARIESTHE COMPANY

2003 2002 RM RM

Unquoted shares, at costAt 1 April 2002/2001 167,370,110 167,370,110 Additions during the financial year 43,694,675 -

At 31 March 211,064,785 167,370,110

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

Name of Company Effective Equity Interest Principal2003 2002 Activities

% %

Syarikat Siah Brothers 100 100 General building Trading Sdn. Bhd. contractor and

investment holding

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

Lifeplus – Siah Brothers Trading 100 100 Project management JV Sdn. Bhd. and its related

technical services

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

Siah Brothers Land 100 100 Investment holding Sdn. Bhd.

Seri Ampangan Realty 100 100 Property development Sdn. Bhd.

Sinaran Naga Sdn. Bhd. 100 100 Property development



. Page 29

6. INVESTMENT IN SUBSIDIARIES (CONT’D)

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


% %

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

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

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

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

development

Winsome Ventures 100 100 Intended property Sdn. Bhd. management

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

Aureate Construction 100 100 Property investment Sdn. Bhd.*

SBC Leisure Sdn. Bhd.* 100 100 Property development

SBC Towers Sdn. Bhd.* 100 100 Property development

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

services

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

South-East Best 100 20 Property development Sdn. Bhd.#



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6. INVESTMENT IN SUBSIDIARIES (CONT’D)


% %

Gracemart Resources 100 20 Property development Sdn. Bhd.##

Sutrati Development Sdn. Bhd.## 100 20 Dormant

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

Masahmura Sales & 51 51 Trading of light Service Sdn. Bhd. industrial handling

equipment and metal frames

* Not audited by Horwath

# During the financial year, the Company acquired the remaining 80% of its equityinterest in South-East Best Sdn. Bhd. (“SEB”) thereby resulting in SEB becoming asubsidiary.

## Held by SEB



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7. INTEREST IN ASSOCIATES

THE GROUP THE COMPANY 2003 2002 2003 2002 RM RM RM RM

Unquoted shares, at cost 3,600,001 10,760,451 2,400,000 10,440,450 Unquoted shares at Group cost 91,618,314 91,618,314 - - Share of post acquisition reserves 15,481,860 17,523,801 - -

110,700,175 119,902,566 2,400,000 10,440,450

THE GROUP2003 2002 RM RM

The interest in associates comprises:-

Group’s share of net tangible assets - at cost 64,684,205 73,886,596 - at fair value 45,952,003 45,952,003

Group’s share of intangible assets 63,967 63,967

110,700,175 119,902,566

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

Effective Equity PrincipalName of Company Interest Activities

2003 2002% %

Ligamas Sdn. Bhd.# 50.0 50.0 Property development

Varich Industries 50.0 50.0 Proposed quarrying Sdn. Bhd.*

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



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7. INTEREST IN ASSOCIATES (CONT’D)

Effective Equity PrincipalName of Company Interest Activities

2003 2002% %

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

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

landed properties

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

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

South-East Best - 20.0 Property development Sdn. Bhd.^

Gracemart Resources - 20.0 Property development Sdn. Bhd.###

Sutrati Development Sdn. Bhd.### - 20.0 Dormant

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

# Share of results of these associates are based on the latest available unauditedmanagement financial statements made up to 31 March 2003.

## Held by Paling

### Held by SEB

^ During the financial year, the Company acquired the remaining 80% of its equityinterest in South-East Best Sdn. Bhd. (“SEB”) thereby resulting in SEB becominga subsidiary.



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8. PROPERTY, PLANT AND EQUIPMENT

THE GROUP

AT 1.4.2002ACQUISITION

OF SUBSIDIARY ADDITIONS DISPOSAL

TRANSFER TODEVELOPMENT

LANDDEPRECIATION

CHARGE AT 31.3.2003NET BOOK VALUE RM RM RM RM RM RM RM

Freehold land 5,748,145 - - (30,000) (979,312) - 4,738,833Land and hotel development expenditure - 29,489,968 386,797 - - - 29,876,765

Plant and machinery, constructionmachinery and equipment 77,999 - 635 - - (15,282) 63,352

Formwork, scaffoldings and containers 15,310 - - - - (4,848) 10,462Office renovation, office equipment,computers, furniture and fittings, toolsand fittings 804,013 214,754 201,030 (111,919) - (269,301) 838,577

Motor vehicles 401,823 - - (1) - (117,172) 284,650

Total 7,047,290 29,704,722 588,462 (141,920) (979,312) (406,603) 35,812,639



Page 34

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

THE GROUP

AT 31.3.2003 AT COSTACCUMULATEDDEPRECIATION NET BOOK VALUE

RM RM RM

Freehold land 4,738,833 - 4,738,833Land and hotel developmentexpenditure

29,876,765 - 29,876,765

Plant and machinery, constructionmachinery and equipment 4,374,257 (4,310,905) 63,352

Formwork, scaffoldings and containers 4,316,916 (4,306,454) 10,462Office renovation, office equipment,computers, furniture and fittings, toolsand fittings 4,161,954 (3,323,377) 838,577

Motor vehicles 1,946,651 (1,662,001) 284,650

49,415,376 (13,602,737 ) 35,812,639

AT 31.3.2002 AT COSTACCUMULATEDDEPRECIATION NET BOOK VALUE

RM RM RM

Freehold land 5,748,145 - 5,748,145Plant and machinery, constructionmachinery and equipment 4,373,622 (4,295,623) 77,999

Formwork, scaffoldings and containers 4,316,916 (4,301,606) 15,310Office renovation, office equipment,computers, furniture and fittings, toolsand fittings 3,626,222 (2,822,209) 804,013

Motor vehicles 1,594,753 (1,192,930) 401,823

19,659,658 (12,612,368 ) 7,047,290

Land and hotel development expenditure consists of:

31.3.2003RM

31.3.2002RM

Long leasehold land, at cost 27,691,066 -

Hotel development expenditure 2,185,699 -

29,876,765 -



Page 35


THE COMPANY AT DEPRECIATION AT1.4.2002 CHARGE 31.3.2003

NET BOOK VALUE RM RM RM

Office equipment, computers, furniture and fittings 75,502 (22,351) 53,151 Motor vehicles 1 - 1

75,503 (22,351) 53,152

AT ACCUMULATED NETCOST DEPRECIATION BOOK VALUE

At 31.3.2003 RM RM RM

Office equipment, computers, furniture and fittings 370,801 (317,650) 53,151 Motor vehicles 376,950 (376,949) 1

747,751 (694,599) 53,152

AT ACCUMULATED NETCOST DEPRECIATION BOOK VALUE

At 31.3.2002 RM RM RM

Office equipment, computers,furniture and fittings 370,801 (295,299) 75,502 Motor vehicles 376,950 (376,949) 1

747,751 (672,248) 75,503

The motor vehicles of the Group acquired under hire purchase terms were carried at netbook value of RM231,384 (2002 – RM402,608) at the balance sheet date.



Page 36


The carrying value of certain property, plant and equipment that are charged to financialinstitutions to secure banking facilities granted to the Group are as follows:-


Furniture and fittings 107,183 - Office and other equipment 4,951 - Land and hotel development expenditure 29,876,765 - Office equipment 9,976 -

29,998,875 -

9. INVESTMENT PROPERTIES THE GROUP

2003 2002 RM RM

Leasehold land 19,778,424 4,979,933 Expenditure on land 4,202,191 318,927

23,980,615 5,298,860

Freehold land and buildings 15,812,472 16,987,903 Leasehold land and buildings 3,041,025 -

18,853,497 16,987,903 Disposed during the financial year (1,059,565) (1,197,930)

17,793,932 15,789,973

41,774,547 21,088,833

Freehold land and building of a subsidiary costing RM2,792,736 in the previous financialyear was charged to a licensed bank for a term loan facility granted to the subsidiary. Thelease period of the leasehold land expires in the year 2086.

Based on valuation exercises carried out on 27 March 2000 and 2 January 2002 by anindependent professional valuer, the market value of certain investment properties of theGroup amounts to approximately RM54.61 million (2002 – RM35.58 million). No valuationexercise has been carried out on the properties since the last exercise in the financial year2002.



Page 37

10. OTHER ASSETSTHE GROUP

2003 2002 RM RM

Other assets 189,807 521,868

Other investmentsQuoted shares in Malaysia, at cost 12,300 12,300 Unquoted shares, at cost 180,000 180,000

192,300 192,300

382,107 714,168

Market value of quoted shares 4,455 5,850

Other assets are retention monies relating to amounts which are due and receivable aftertwelve months from the balance sheet date, upon expiry of the warranty period of therelevant contracts.

11. GOODWILLTHE GROUP

2003 2002 RM RM

At 1 April 2002/2001 10,245,527 10,245,527 Goodwill arising from the acquisition of equity interest in a subsidiary 17,026,317 -

At 31 March 27,271,844 10,245,527

12. INVENTORIESTHE GROUP

2003 2002 RM RM

Unsold completed properties, at cost 14,109,911 9,269,103

Certain inventories costing RM1,423,220 (2002 – Nil) are charged to a third party for theissuance of bonds granted to the Company.

Certain inventories costing RM11,528,558 (2002 – Nil) are charged to licensed banks andfinancial institutions for banking facilities granted to a subsidiary.

None of the inventories are carried at net realisable value.



Page 38

13. PROPERTY DEVELOPMENT-IN-PROGRESSTHE GROUP

2003 2002 RM RM

Freehold land, at cost 15,406,955 14,547,886 Leasehold land, at cost 8,340,583 801,805 Land and development expenditure 41,721,744 46,155,119

65,469,282 61,504,810 Attributable profits 3,709,493 8,665,215

69,178,775 70,170,025 Progress billings (14,440,612) (41,578,927)

54,738,163 28,591,098

Included in development expenditure is interest expense capitalised during the financialyear amounting to RM856,723 (2002 – RM836,236).

Leasehold land of a subsidiary costing RM7,674,555 (2002 – Nil) is charged to a licensedbank for a term loan facility granted to the subsidiary.

14. RECEIVABLESThe Group The Company

2003 2002 2003 2002 RM RM RM RM

Trade receivables 69,665,907 58,910,469 - -Retention receivable 5,709,953 10,081,043 - -

Total trade receivables 75,375,860 68,991,512 - -Allowance for doubtful debtsAt 1 April 2002/2001 (6,803,879) (5,987,372) - -Acquisition of subsidiary (22,819) -Additions (8,216,602) (816,507) - -Write-back 1,988,813 - - -

At 31 March (13,054,487) (6,803,879) - -

Net trade receivables 62,321,373 62,187,633 - -

Other receivables, deposits and prepayment 8,849,878 19,439,592 2,476,699 8,753,954Allowance for doubtful debtsAt 1 April 2002/2001 (2,682,432) (2,682,432) (2,352,737) (2,352,737)Additions (408,845) - - -

At 31 March (3,091,277) (2,682,432) (2,352,737) (2,352,737)

Net other receivables, deposits and prepayment 5,758,601 16,757,160 123,962 6,401,217

Total receivables 68,079,974 78,944,793 123,962 6,401,217



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14. RECEIVABLES (CONT’D)

Included in trade receivables at the balance sheet date is RM37,720,372 (2002 –RM37,720,372) owing by Smart Home Sdn. Bhd. (“SH”), a related party. Details of therelated party relationship and nature of the transactions and balances are set out in Note45 to the financial statements. The amount owing by SH has been outstanding since 1996.During the financial year, SH has proposed to settle the amount owing in the followingmanner:-

(i) transfer of several parcels of land with development potential for a totalconsideration of RM34,760,000; and

(ii) the balance is to be settled by cash and/or other consideration to be mutuallyagreed between SH and the Group.

The Board of Directors, assisted by independent advisers, are reviewing the terms of thesettlement as well as the valuation of the land offered for settlement, and a decision isexpected to be made in the next financial year. The directors are of the opinion that theamount owing by SH will be recovered in full in due course, and as such, no allowance fordoubtful debt is required.

Included in other receivables is RM2,647,103 (2002 – RM4,582,518) due from sub-contractors for the purchase of building materials. The amount owing is unsecured,interest-free, and is to be repaid via deductions against future claims for work performedby the sub-contractors. Also included in other receivables is an amount owing by a relatedparty of RM500,000 (2002 – Nil). The details of the transaction and the balance aredisclosed in Note 45 to the financial statements.

Credit terms of trade receivables, other than the amount owed by SH, range from 14 to 30days.

15. AMOUNT OWING BY/(TO) CONTRACT CUSTOMERSTHE GROUP

2003 2002 RM RM

Amount owing by contract customersContract costs incurred to date 8,090,361 29,952,686 Attributable profits 241,371 8,335,542


Amount owing by contract customers 685,256 1,407,450

Amount owing to contract customersContract costs incurred to date 184,168,929 173,176,995 Attributable profits 8,802,347 7,214,110


Amount owing to contract customers (4,769,567) (2,673,438)



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15. AMOUNT OWING BY/(TO) CONTRACT CUSTOMERS (CONT’D)

Included in costs incurred on contract works is interest income capitalised during thefinancial year of RM530,474 (2002 – RM364,114).

16. AMOUNTS OWING BY/(TO) SUBSIDIARIESTHE COMPANY

2003 2002 RM RM

Amounts owing by:Non-trade - Interest-bearing 6,582,470 6,996,470 - Interest-free 46,061,895 39,679,945

52,644,365 46,676,415

Amounts owing to:Non-trade - Interest-bearing 3,797,629 12,740,618 - Interest-free 8,837,554 8,359,849

12,635,183 21,100,467

The above amounts owing are unsecured and not subject to fixed terms of repayment.The interest-bearing amounts are subject to interest at rates ranging from 8.4% to 8.65%(2002 - 8.65% to 9.05%) per annum.

17. AMOUNTS OWING BY/(TO) ASSOCIATES

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

18. TAX RECOVERABLE

Subject to agreement with the tax authorities, the Company has tax recoverable ofRM11,265,166 at the balance sheet date in respect of the financial years ended 31 March1997 to 31 March 2003. At the date of this report, the amount is still pending agreementwith the tax authorities.

19. SHORT TERM DEPOSITS WITH LICENSED BANKS

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

THE GROUP THE COMPANY2003 2002 2003 2002

% % % %

Licensed bank 2.84 3.20 2.77 3.20



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19. SHORT TERM DEPOSITS WITH LICENSED BANKS (CONT’D)

Deposits of the Company and the Group have average maturities of 30 days (2002 – 30days).

The deposit of the Company in respect of the current financial year has been charged assecurity for the issuance of ABBA Bonds as disclosed in Note 24 to the financialstatements.

20. CASH AND BANK BALANCESTHE GROUP THE COMPANY

2003 2002 2003 2002 RM RM RM RM

Cash and bank balances 885,696 1,460,540 2,733 1,904 Sinking fund account (Note 42) 5,198,398 - 5,198,398 -

6,084,094 1,460,540 5,201,131 1,904

Included in the cash and bank balances of the Group is RM518,922 (2002 – RM686,692)maintained under the Housing Development Accounts pursuant to Section 7A of theHousing Development (Control and Licensing ) Act, 1966.

The sinking fund account is maintained with a financial institution and has been chargedas security for the repayment of the ABBA Bonds.

21. PAYABLESTHE GROUP THE COMPANY

2003 2002 2003 2002 RM RM RM RM

Trade payables 20,217,451 18,180,622 - - Retention payable 5,680,103 6,310,023 - -

Total trade payables 25,897,554 24,490,645 - -

Other payables and accruals 632,977 6,682,516 331,492 245,422 Hire purchase payables (Note 28a) 87,784 87,784 - -

26,618,315 31,260,945 331,492 245,422

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

Included in other payables is an amount owing to a related party of RM108,222 (2002 -RM160,534). The details of the transaction and the balance are disclosed in Note 45 to thefinancial statements.



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22. AMOUNTS OWING TO DIRECTORSTHE GROUP THE COMPANY

2003 2002 2003 2002 RM RM RM RM

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

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

The above amounts owing are unsecured and not subject to fixed terms of repayment.The amount owing to Sia Kwee Mow @ Sia Hok Chai bears interest at 5.5% (2002 –5.5%) per annum.

23. SHORT TERM BORROWINGS

THE GROUP2003 2002

Secured Unsecured Total Secured Unsecured TotalRM RM RM RM RM RM

Bridging loans (Note30)

8,167,060 - 8,167,060 - - -

Term loans (Note 29) 1,568,480 - 1,568,480 111,636 - 111,636Revolving credits - 16,794,400 16,794,400 - 20,074,400 20,074,400Bank overdrafts (Note42) - 21,177,916 21,177,916 - 20,843,690 20,843,690

9,735,540 37,972,316 47,707,856 111,636 40,918,090 41,029,726

THE COMPANY2003 2002

Secured Unsecured Total Secured Unsecured TotalRM RM RM RM RM RM

Bridging loans (Note30)

- - - - - -

Term loans (Note 29) - - - - - -Revolving credits - 5,000,000 5,000,000 - 5,680,000 5,680,000Bank overdrafts (Note42) - 6,413,736 6,413,736 - 1,657,727 1,657,727

- 11,413,736 11,413,736 - 7,337,727 7,337,727



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23. SHORT TERM BORROWINGS (CONT’D)

The weighted average effective interest rates at the balance sheet date for borrowings(excluding hire purchase) which bear interest at floating rates, were as follows:


% % % %

Bridging loans 7.87 - - - Term loans 7.94 - - - Revolving credits 6.05 6.06 7.55 7.58 Bank overdrafts 8.45 8.14 8.68 8.80

24. ABBA BONDSTHE GROUP/THE COMPANY2003 2002 RM RM

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

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

Net proceeds 38,848,310 - Cumulation of amortisation of ABBA Bonds issuance expenses 134,364 - Cumulation of amortisation of finance charges on ABBA Bonds issue 2,562,145 -

Net proceeds 41,544,819 - Less : Repayment during the financial year (1,239,225) -

40,305,594 -

Representing ABBA Bonds:- Due within 12 months 2,478,450 - - Due after 12 months 37,827,144 -

40,305,594 -

Analysis of the ABBA Bonds:- Not later than one year 2,478,450 - - Later than one year and not later

than five years 59,482,800 -

61,961,250 -



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24. ABBA BONDS (CONT’D)

During the financial year, the Company issued RM61,961,250 nominal value Al-BaiBithaman Ajil Bonds (ABBA Bonds) comprising RM49,569,000 nominal value PrimaryBonds and 10 equal tranches Secondary Bonds with RM12,392,250 nominal value. ThePrimary Bonds are redeemable at maturity. Each Primary Bond is supported by 10Secondary Bonds which are redeemable in semi-annual instalments commencing 6months from the date of first issue of the Secondary Bonds. The ABBA Bonds wereplaced out to a licensed financial institution via a private placement. The tenure of theABBA Bonds is 5 years from the date of issue. The profit margin on the ABBA Bonds is ata fixed percentage of 5.00% per annum, payable in arrears on a semi-annual basisrepresented by the Secondary Bonds. The ABBA Bonds are issued based on a 10% perannum 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 ownedsubsidiary in an associate;

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

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

25. SHARE CAPITAL THE COMPANY2003 2002 RM RM

AUTHORISED

Ordinary shares of RM1 eachAt 1 April/31 March 193,167,000 193,167,000

5.5% ICCPS of RM1 each

At 1 April/31 March 6,833,000 6,833,000

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



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25. SHARE CAPITAL (CONT’D) THE COMPANY2003 2002 RM RM

ISSUED AND FULLY PAID-UP

Ordinary shares of RM1 eachAt 1 April 2002/2001 50,468,943 50,468,943

Allotment during the financial year 25,133,057 -

At 31 March 75,602,000 50,468,943

5.5% ICCPS of RM1 each

At 1 April/31 March 6,833,000 6,833,000

Total issued and fully paid-up share capital 82,435,000 57,301,943

The main terms of the 5.5% ICCPS are as follows:-

(a) entitlement to receive a fixed cumulative preferential dividend of 5.5% per annumpayable annually in arrears;

(b) the ICCPS shall mature after 5 years from the date of issue of 5 May 1999 and willbe automatically converted into ordinary shares of the Company on the maturitydate of 4 May 2004;

(c) the holders have the option to convert all ICCPS into ordinary shares at any timeafter the date of issue until the maturity date. The ICCPS are not redeemable forcash;

(d) the conversion price into ordinary shares is fixed at RM1.00 per share;

(e) the ICCPS shall rank in priority to the ordinary shares of the Company in respect ofreturn of capital on liquidation or otherwise for the par value of the ICCPS plus anyarrears in dividend, provided that there shall be no further right to participate in thesurplus assets or profits of the Company; and

(f) there are no voting rights other than the rights to vote at meetings convened for thepurpose of reducing the capital, or winding up, or sanctioning a sale of undertaking,or where the proposition directly affects the rights and privileges of the holders ofthe ICCPS.



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25. SHARE CAPITAL (CONT’D)

During the financial year, the Company increased its issued and paid-up capital fromRM50,468,943 to RM75,602,000 by way of:

(i) the conversion of 115,600,000 Irredeemable Convertible Unsecured Loan Stocks(“ICULS”) of RM1 each into 25,130,057 ordinary shares of RM1 each. Theconversion was made on the following basis:-

• 25,127,557 new ordinary shares of RM1 each were issued by the tenderingof 115,590,000 ICULS with nominal value of RM1 each;

• 2,500 new ordinary shares of RM1 each were issued by the tendering of10,000 ICULS with nominal value of RM1 each and cash subscription ofRM1,500.

The new shares which arose from the conversion of the ICULS rank pari passu inall respects with the existing shares of the Company.

(ii) the exercise of share options by eligible employees pursuant to the EmployeeShare Option Scheme of 3,000 ordinary shares of RM1 each. The new sharesissued rank pari passu in all respects with the existing shares of the Company.

26. SHARE APPLICATION ACCOUNT

The share application account represents the sum arising from the mandatory conversionof the ICULS.

27. RESERVESTHE GROUP THE COMPANY

2003 2002 2003 2002 RM RM RM RM

Share premium reserve (Note a)At 1 April 2002/2001 20,995,752 21,306,521 20,995,752 21,306,521

Arising from conversion of ICULS to ordinary shares - 1,500 - 1,500 Arising from issuance of shares 90,471,143 - 90,471,143 - Set-off against expenses incurred on conversion of ICULS (54,000) (312,269) (54,000) (312,269)

At 31 March 111,412,895 20,995,752 111,412,895 20,995,752

Capital reserve (Note b) 1,199,999 1,199,999 - - Retained profits (Note c) 22,068,982 20,328,676 23,231,053 21,123,468

134,681,876 42,524,427 134,643,948 42,119,220



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27. RESERVES (CONT’D)

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

(b) The capital reserve arose from a bonus issue of ordinary shares on 21 August1992 by a former subsidiary, and is not available for distribution by way ofdividends.

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

(i) tax-exempt income of approximately RM233,000 (2002 – RM233,000)available for the purpose of paying tax-exempt dividends; and

(ii) tax credit under Section 108 of the Income Tax Act, 1967 to frank thepayment of dividends of approximately RM11,366,000 (2002 –RM11,366,000) out of its entire retained profits without incurring anyadditional tax liability.

28. DEFERRED LIABILITIESTHE GROUP

2003 2002 RM RM

Term loans - Note 29 2,460,155 215,520 Hire purchase payables - Note a 135,484 223,268 Deferred taxation - Note 31 966,746 - Amount owing to Sabah State Government – Note b 29,069,000 -

32,631,385 438,788

(a) Hire purchase payables

Future minimum hire purchase payments

- repayable not later than one year 110,916 110,916 - repayable later than one year and not later than five years 171,258 282,174

282,174 393,090 Future finance charges (58,906) (82,038)

Present value of hire purchase liabilities 223,268 311,052



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28. DEFERRED LIABILITIES (CONT’D)THE GROUP

2003 2002 RM RM

Present value of hire purchase liabilities:-

Not later than one year (Note 21) 87,784 87,784 Later than one year and not later than five years 135,484 223,268

223,268 311,052

The hire purchase liabilities at the balance sheet date bore interest at between5.25% to 5.35% (2002 – 5.25% to 5.35%) per annum.

(b) Amount owing to Sabah State Government

The amount owing to the Sabah State Government arose from the acquisition of asubsidiary, SEB. The details of the investment are disclosed in Note 49 to thefinancial statements.

The amount owing to the Sabah State Government shall be paid in the form of 130units of the property to be completed within a period of five years from thecommencement of their construction as consideration in kind pursuant to a jointventure contract entered into by SEB with the State Government.

The contract, dated 5 September 1994, states that the subsidiary is committed tojointly develop with the Sabah State Government a parcel of state land covering anarea of approximately 26 acres into residential apartments, townhouses,condominiums and a hotel.

On 16 July 2002, the Sabah State Government agreed to execute the change oftheir entitlement that had not been settled amounting RM29,069,000 by theconstruction of an office building for the Land and Survey Department (JabatanTanah dan Ukur) and part of a building for the Ministry of Finance at the same valueby the subsidiary.

On 21 October 2002, the subsidiary was requested to prepare the ContractDocument and Estimation for the above project. To-date, the subsidiary is in theprocess of finalising the details of the project with the Sabah State Government.



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29. TERM LOANSTHE GROUP

2003 2002 RM RM

Term loans 4,028,635 327,156 Less : Portion repayable within twelve months (Note 23) (1,568,480) (111,636)

Portion repayable after twelve months (Note 28) 2,460,155 215,520

The long term loans are repayable as follows:Not later than one year 1,568,480 111,636 Later than one year and not later than five years 2,029,475 215,520 Later than five years 430,680 -

4,028,635 327,156

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

THE GROUP2003 2002

Term loan RM RM

1 - 327,156 2 3,541,663 - 3 486,972 -

4,028,635 327,156

Number of Monthly Interest Rate Date ofTerm loan Monthly Instalment Per Annum Commencement

Instalments Amount % of RepaymentRM

1 162 39,429 1.5% + BLR September1994

2 25 141,667 8.15% to 8.55% May 20033 264 3,617 6.4% January 2003



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29. TERM LOANS (CONT’D)

The term loans are secured as follows:-

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

(b) by way of a third party legal charge over 2 units of the inventories of a subsidiary;and

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

30. BRIDGING LOANTHE GROUP

2003 2002 RM RM

Not later than one year (Note 23) 8,167,060 -

The syndicated bridging loan from three licensed financial institutions is subject to interestat 1.125% to 1.750% (2002 – Nil) per annum above the bank’s base lending rate / cost offunds of the respective lenders and is secured by way of:

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

(ii) a debenture incorporating a fixed and floating charge over all present and futureassets of a subsidiary;

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

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

The loan is repayable by way of redemption of the individual units of a subsidiary’sdevelopment property, or in 12 quarterly instalments commencing from April 2001,whichever is earlier.



Page 51

31. DEFERRED TAXATIONTHE GROUP

2003 2002 RM RM

At 1 April 2002/2001 - - Addition through the revaluation surplus on leasehold land of a subsidiary 966,746 -

966,746 -

32. NET TANGIBLE ASSETS PER SHARE

The actual net tangible assets per share is calculated based on the net tangible assetsvalue of RM183,012,032 (2002 - RM198,347,843) attributable to ordinary shares divided bythe number of ordinary shares in issue at the balance sheet date of 75,602,000 (2002 -50,468,943) shares.

The proforma net tangible assets per share of the previous financial year is calculatedbased on the net tangible assets value of RM198,347,843 attributable to ordinary sharesdivided by the proforma enlarged number of ordinary shares of 75,599,000 after taking intoaccount the allotment of new ordinary shares pursuant to the mandatory conversion of theICULS.

33. TURNOVERTHE GROUP THE COMPANY

2003 2002 2003 2002 RM RM RM RM

Revenue from construction contracts 35,362,729 56,858,840 - - Proportionate sales value of development properties 34,366,715 24,084,755 - - Rental income 64,200 119,300 - - Dividend income - - 8,090,000 8,125,000 Interest income 35,275 536,328 35,275 533,461 Other interest income - - 587,338 619,226 Management and administrativecharges - 45,600 270,000 -

69,828,919 81,644,823 8,982,613 9,277,687

Continuing operations: -existing 65,260,219 81,644,823 8,982,613 9,277,687 -new acquisition 4,568,700 - - -

69,828,919 81,644,823 8,982,613 9,277,687



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34. COST OF SALESTHE GROUP THE COMPANY

2003 2002 2003 2002 RM RM RM RM

Construction costs 37,647,813 65,941,186 - - Land and development expenditure 10,913,140 2,339,143 - - Direct costs 88,062 162,878 - - Management and administrative charges 50,525 55,972 - -

48,699,540 68,499,179 - -

35. PROFIT/(LOSS) BEFORE TAXATION

THE GROUP THE COMPANY2003 2002 2003 2002 RM RM RM RM

Profit/(Loss) before taxation is arrived at aftercharging/(crediting):-

Allowance for doubtful debts 8,625,447 816,507 - - Amortisation of bond expenses 134,364 - 134,364 - Auditors’ remuneration - for the financial year 59,700 51,500 13,000 11,000 - underprovision in previous financial year 2,000 - 2,000 - Bad debts written off 110,965 101,340 - - Contract costs 37,647,814 65,941,186 - - Depreciation of property, plant and equipment 406,603 325,978 22,351 32,676 Directors’ benefits-in-kind 16,925 31,875 16,925 29,625 Directors’ fees 67,000 46,000 67,000 46,000 Directors’ remuneration 752,400 594,500 516,900 419,625 Dividend income over-recognised - 319,445 - 319,445 Finance charges on bonds 2,562,145 - 2,562,145 - Interest expense- bank borrowings 3,178,494 3,175,729 1,093,069 1,354,608 - hire purchase 23,132 21,884 - - - ICULS - 5,717,576 - 5,717,576 - loans 113,476 197,918 787,029 1,388,838 - others 530,474 361,796 - - Loss on disposal of investment properties 150,154 33,015 - - Plant and equipment written off - 2,800 - - Rental expense- premises - - 60,000 55,930 - machinery and equipment 15,651 14,883 - - Staff costs 2,598,056 1,996,604 72,786 149,581 Gross dividend income- subsidiaries (unquoted) - - (5,300,000) (8,125,000) - associate - - (2,790,000) - Interest income- licensed financial institutions (36,891) (533,461) (35,275) (533,461) - subsidiaries - - (587,338) (619,226) - others (73,713) (51,663) - - Management and administrative charges (45,600) (45,600) - -

Gain on disposal of property, plant and equipment (7,302) (131,031) - (59,039) Rental of premises (315,672) (284,414) - -



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35. PROFIT/(LOSS) BEFORE TAXATION (CONT’D)


RM RM RM RM

Writeback of allowance for doubful debts (1,988,813) - - - Writeback of diminution in value of inventory (6,527) - - -

36. TAXATIONTHE GROUP THE COMPANY

2003 2002 2003 2002 RM RM RM RM

Current 982,916 (538,495) 913,324 94,000 Share of associates’ taxation 1,100,935 982,773 - -

2,083,851 444,278 913,324 94,000 Underprovision in previous financial year 1,054,742 - - -

3,138,593 444,278 913,324 94,000

The effective tax rate of the Company is higher than the statutory tax rate mainly due tocertain expenses being disallowed for taxation purposes. Similarly, the effective tax rate ofthe Group is higher due to losses of certain subsidiaries not being utilised against thetaxable profit of other subsidiaries as no group relief is available in Malaysia.

Subject to agreement with the tax authorities, the Group has unutilised tax losses andunabsorbed capital allowances of approximately RM5,834,000 (2002 – RM4,682,000) andRM725,000 (2002 – RM689,000) respectively available at the balance sheet date to becarried forward for offset against future taxable business income.

The potential deferred taxation benefits, arising from timing differences, that have not beenaccounted for in the financial statements are as follows:-

UNUTILITISEDTAX

LOSSES

UNABSORBEDCAPITAL

ALLOWANCES OTHERS TOTAL

At 1 April 2001 979,000 150,000 - 1,129,000Arising during the financial year 331,000 41,000 611,000 983,000

At 31 March 2002/1 April 2002 1,310,000 191,000 611,000 2,112,000Arising during the financial year 323,000 11,000 275,000 609,000

At 31 March 2003 1,633,000 202,000 886,000 2,721,000



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37. EARNINGS PER SHARE

Basic earnings per share (“EPS”) is arrived at by dividing the profit after taxationattributable to shareholders after deducting preference dividend of RM270,587 (2002 -RM270,587) by the weighted average number of ordinary shares in issue during thefinancial year of approximately 73,507,579 (2002 – 50,468,943).

The computation of diluted EPS is not applicable as the effects of conversion of eachclass of potential ordinary shares are anti-dilutive.

38. DIVIDENDSTHE COMPANY

2003 2002 RM RM

Declared – dividend of 5.5% per ICCPS less28% tax (2002 - 5.5% per ICCPS

less 28% tax) 270,587 270,587

At the forthcoming Annual General Meeting, a final dividend in respect of the financial yearended 31 March 2003 of 1 sen per ordinary share of RM1 each less 28% tax (2002 - Nil)amounting to RM544,334 (2002 - Nil) will be tabled for shareholders’ approval. Thesefinancial statements do not reflect this final dividend which will be accrued as a liabilityupon approval by shareholders. This represents a change in accounting treatment withrespect to the recognition of liabilities in compliance with the new MASB 19 - Events AfterThe Balance Sheet Date.

39. PRIOR YEAR ADJUSTMENTS

The prior year adjustments are in respect of the change in the accounting policy withregards to revenue recognition for dividend income as explained in Note 5(v) to thefinancial statements.

The comparative figures have been restated accordingly as disclosed in Note 51 to thefinancial statements.

40. SUMMARY OF EFFECTS OF ACQUISITION OF A SUBSIDIARY

During the financial year, the Company paid RM35,000,000 in cash to acquire an 80%equity interest in South-East Best Sdn. Bhd..



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40. SUMMARY OF EFFECTS OF ACQUISITION OF A SUBSIDIARY (CONT’D)

The effect of the acquisition of the subsidiary on the financial results of the Group for thefinancial year was as follows:-


Turnover 4,568,700 - Cost of sales (3,855,913) -

Gross Profit 712,787 - Other operating income 509,312 - Less: Operating expensesAdministrative expenses (653,287) - Selling and distribution expenses (250,750) - Other operating expenses (1,245,105) -

Loss from operations (927,043) - Finance costs (709,550) -

Loss before taxation (1,636,593) - Pre-acquisition loss 149,996 -

Decrease in net profit of the Group (1,486,597) -

The effect of the acquisition of the subsidiary on the financial position of the Group at thefinancial year end is as follows:-


Investment in associate 880,000 - Property, plant and equipment 29,998,876 - Properties held for future development 18,537,782 - Current assets 25,836,655 - Current liabilities (3,878,840) - Deferred liabilities (42,231,441) -

Increase in net assets of the Group 29,143,032 -



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40. SUMMARY OF EFFECTS OF ACQUISITION OF A SUBSIDIARY (CONT’D)


Property, plant and equipment 29,704,722 - - - Investment in associate 880,000 - - - Properties held for future development 27,050,046 - - - Current assets 22,503,103 - - - Current liabilities (8,879,842) - - - Deferred liabilities (41,735,746) - - -

Net assets in subsidiary acquired 29,522,283 - - - Reduction in net assets arising from acquisition (10,894,375) - - -

Net assets 18,627,908 - - - Goodwill on acquisition 17,026,317 - - -

Purchase consideration 35,654,225 - 35,000,000 - Cash and cash equivalents acquired (818,781) - - -

Net cash outflow on acquisition of subsidiary 34,835,444 - 35,000,000 -

41. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT


Purchase of property, plant and equipment 201,665 208,427 - 15,400 Amount financed through hire purchase arrangements - (93,100) - -

Cash disbursed for the purchase of property, plant and equipment 201,665 115,327 - 15,400



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42. CASH AND CASH EQUIVALENTS

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


Short term deposits (Note 19) 1,422,125 5,042,274 1,239,225 5,012,274 Cash and bank balances (Note 20) 6,084,094 1,460,540 5,201,131 1,904 Bank overdrafts (Note 23) (21,177,916) (20,843,690) (6,413,736) (1,657,727)

(13,671,697) (14,340,876) 26,620 3,356,451 Less: Cash placed in sinking

fund account (Note 20) (5,198,398) - (5,198,398) -

(18,870,095) (14,340,876) (5,171,778) 3,356,451

43. DIRECTORS’ REMUNERATION

The aggregate amount of emoluments received and receivable by directors of theCompany during the financial year are as follows:-


RM RM RM RM

DIRECTORS’ FEES:-

1. Mun Chong Shing @ Mun Chong Tian12,000 3,000 12,000 3,000 2. Dato’ Lim Phaik Gan 12,000 12,000 12,000 12,000 3. Dato’ Dr. Norraesah Bt Haji

Mohamad 13,000 13,000 13,000 13,000 4. Datuk Sim Peng Choon 12,000 12,000 12,000 12,000 5. Vincent Koh Kok Kee 12,000 6,000 12,000 6,000 6. Tan Sri Dato’ Ir Muhammad

Yusuff Bin Haji Muhammad Yunus 6,000 - 6,000 -

67,000 46,000 67,000 46,000



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43. DIRECTORS’ REMUNERATION (CONT’D)THE GROUP THE COMPANY

2003 2002 2003 2002 RM RM RM

RM DIRECTORS’ NON-FEE EMOLUMENTS:-

1. Sia Kwee Mow @ Sia Hok Chai 486,000 396,000 486,000 396,000 2. Sia Teong Heng 255,000 180,000 19,500 15,750 3. Mun Chong Shing @ Mun Chong

Tian 1,200 300 1,200 300 4. Dato’ Lim Phaik Gan 1,200 900 1,200 900 5. Dato’ Dr. Norraesah Bt Haji

Mohamad 2,400 1,500 2,400 1,500 6. Datuk Sim Peng Choon 3,000 2,100 3,000 2,100 7. Vincent Koh Kok Kee 3,000 1,200 3,000 1,200 8. Tan Sri Dato’ Ir Muhammad

Yusuff Bin Haji Muhammad Yunus 600 - 600 - 9. Yeoh Hock Thong - 12,500 - 1,875

752,400 594,500 516,900 419,625

Apart from the amounts disclosed under directors’ remuneration above, the estimated monetary valueof other benefits-in-kind received by the following directors during the financial year, otherwise than incash are as follows:-


RM RM RM RM

1. Sia Kwee Mow @ Sia Hok Chai 16,925 16,925 16,925 16,925 2. Sia Teong Heng - 13,500 - 11,250 3. Yeoh Hock Thong - 1,450 - 1,450

16,925 31,875 16,925 29,625

44. RELATED COMPANY TRANSACTIONSTHE COMPANY

2003 2002 RM RM

Interest paid to subsidiaries 678,807 1,228,304 Rental paid to a subsidiary 60,000 55,930 Dividend income received/receivable from subsidiaries 5,300,000 8,125,000 Interest received from subsidiaries 587,338 619,226 Management fee received from subsidiaries 270,000 -



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45. RELATED PARTY TRANSACTIONS/BALANCES

NAME OF NATURE OF GROUP

RELATED PARTY NOTE TRANSACTION 2003 2002 RM RM

Ligamas Sdn. Bhd. (a) Progress billings received/receivable 19,114,882 17,559,960

Paling Industries (a) Purchase of material 58,873 181,113 Sdn. Bhd.

Gross dividend income received 2,790,000 -

Sri Rawang Properties Sdn. Bhd. (a) Gross dividend income received 150,000 -

Sia Teong Leng (c) & (d) Property sold - 600,000

Wong Hon Kum (c) Retainer fee paid 42,000 42,000

Sia Poh Eng (d) Property sold 550,000 -

Sia Kwee Mow @ Sia Hok Chai (e) Interest paid/payable 108,222 160,534

RECEIVABLE PAYABLE

NAME OF GROUP GROUP

RELATED PARTIES NOTE 2003 2002 2003 2002 RM RM RM RM

Ligamas Sdn. Bhd. (a) 9,886,903 10,258,378 - -

Paling Industries Sdn. Bhd. (a) - - - 38,534

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

Sia Poh Eng (d) 500,000 - - -

Sia Kwee Mow @ Sia Hok Chai (e) - - 108,222 160,534

(a) Associates

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

(c) A director of certain related companies

(d) A person connected to Sia Kwee Mow @ Sia Hok Chai and Sia Teong Heng

(e) A director of the Company

In the opinion of the directors, the above transactions have been entered into in theordinary course of business on terms established by arm’s length negotiations betweenthe parties.



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46. CAPITAL COMMITMENTTHE COMPANY

2003 2002 RM RM

Approved capital commitment contracted but not provided for - 29,050,000

The capital commitment in the previous financial year relates to the balance of theconsideration payable for the acquisition of an 80% equity interest in South-East Best Sdn.Bhd..

47. CONTINGENT LIABILITIESTHE COMPANY

2003 2002 RM RM

Corporate guarantee (unsecured) given to banks and other licensed financial institutions for credit facilities granted to subsidiaries- funded facilities 26,616,000 30,352,000 - non-funded facilities 3,907,000 4,472,000

30,523,000 34,824,000

48. SEGMENTAL REPORTING

THE GROUP2003

CONSTRUCTION

PROPERTYDEVELOPMENT INVESTMENT

MANUFACTURINGAND TRADING ELIMINATIONS GROUP

RM RM RM RM RM RM

REVENUE:External revenue 35,362,729 34,366,715 99,475 - - 69,828,919Intersegment revenue 15,298,779 - 6,401,224 - (21,700,003) -

Total revenue 50,661,508 34,366,715 6,500,699 - (21,700,003) 69,828,919

Results:Segment results 7,690,175 2,510,945 4,884,004 (15,190) (7,053,930) 8,016,004Finance costs (6,793,334)Share of results ofassociates - 1,884,741 - 2,042,075 - 3,926,816

Profit from ordinaryactivities before taxation 5,149,486Taxation (3,138,593)

Profit from ordinaryactivities after taxation 2,010,893



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48. SEGMENTAL REPORTING (CONT’D)

THE GROUP2003

CONSTRUCTIONPROPERTY

DEVELOPMENT INVESTMENTMANUFACTURING

AND TRADING GROUPRM RM RM RM RM

Other informationSegment assets 39,398,622 287,381,500 26,959,851 12,846,046 366,586,019Unallocated assets 5,350,142

371,936,161

Segment liabilities 43,876,909 55,859,860 14,750,259 26,663 114,513,691Unallocated liabilities 40,305,594

154,819,285

Capital expenditure 7,700 580,762 - - 588,462

Depreciation 142,474 229,114 32,016 2,999 406,603

THE GROUP2002

CONSTRUCTION

PROPERTYDEVELOPMENT INVESTMENT

MANUFACTURINGAND TRADING ELIMINATIONS GROUP

RM RM RM RM RM RM

REVENUE:

External revenue 56,858,840 24,084,755 701,228 - 81,644,823Intersegment revenue 16,644,238 - 10,161,626 - (26,805,864) -

Total revenue 73,503,078 24,084,755 10,862,854 - (26,805,864) 81,644,823

Results:Segment results 6,503,527 4,025,639 8,947,252 (8,006) (11,590,097) 7,878,315Finance costs (9,611,991)Share of results ofassociates - 1,511,621 - 1,839,954 - 3,351,575

Profit from ordinaryactivities before taxation 1,617,899Taxation (444,278)

Profit from ordinaryactivities after taxation 1,173,621



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48. SEGMENTAL REPORTING (CONT’D)

THE GROUP2002

CONSTRUCTIONPROPERTY

DEVELOPMENT INVESTMENTMANUFACTURING

AND TRADING GROUPRM RM RM RM RM

Other informationSegment assets 47,120,266 214,434,561 15,417,666 12,189,324 289,161,817Unallocated assets 3,971,217

293,133,034

Segment liabilities 53,795,745 13,105,051 10,776,147 29,721 77,706,664

Capital expenditure 70,088 122,099 16,240 - 208,427

Depreciation 208,060 72,489 42,341 3,088 325,978

No geographical analysis has been prepared as the Group operates wholly in Malaysia.

49. SIGNIFICANT EVENTS

The following are the significant events involving the Group and the Company:-

(a) At the Extraordinary General Meeting convened on 30 April 2002, the shareholdersof the Company approved the acquisition by the Company of 500,000 ordinaryshares of RM1 each in South-East Best Sdn. Bhd., representing an 80% equityinterest in SEB for a cash consideration of RM35,000,000.

(b) On 18 June 2002, the nominal value of the ABBA Bonds initially approved by theBoard of Directors on 27 September 2001, was revised to RM61,961,250comprising RM49,569,000 nominal value Primary Al-Bai Bithaman Ajil Bonds(“Primary ABBA Bonds”) and RM12,392,250 nominal value Secondary Al-BaiBithaman Ajil Bonds (“Secondary ABBA Bonds”). The proposed ABBA Bonds wereplaced out to a licensed financial institution via a private placement exercise. TheABBA Bonds have a tenure of five (5) years from the date of issue. The profitmargin on the ABBA Bonds is at a fixed percentage of 5.00% per annum, payablein arrears on a semi-annual basis represented by the Secondary ABBA Bonds.The ABBA Bonds are secured in the manner disclosed in Note 24 to the financialstatements.



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49. SIGNIFICANT EVENTS (CONT’D)

The Company submitted the application in relation to the proposed ABBA Bonds to theSecurities Commission (“SC”) on 20 June 2002. The application was approved by the SCon 19 July 2002.

50. NUMBER OF EMPLOYEESTHE GROUP THE COMPANY

2003 2002 2003 2002

Number of employees at the balance sheet date 90 55 9 8

51. COMPARATIVE FIGURES

Following the adoption of MASB 19, “Events After The Balance Sheet Date”, in thepreparation of this set of financial statements the presentation and classification ofdividends in the financial statements have been changed. Accordingly, comparativeamounts for dividends have been reclassified to ensure comparability with the currentfinancial year’s presentation.

The following comparative figures of the Group and of the Company have been reclassifiedto conform with the current financial year’s presentation:

AS PREVIOUSLYAS RESTATED REPORTED

THE GROUP THE COMPANY THE GROUP THE COMPANYRM RM RM RM

BALANCE SHEETS (EXTRACT):

Receivables - 6,401,217 - 10,217,217 Tax recoverable 3,971,217 9,913,290 5,455,217 11,397,290 Reserves 42,524,427 42,119,220 44,008,427 47,419,220



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51. COMPARATIVE FIGURES (CONT’D)AS PREVIOUSLY

AS RESTATED REPORTEDTHE GROUP THE COMPANY THE GROUP THE COMPANY

RM RM RM RM

INCOME STATEMENTS (EXTRACT):

Turnover - 9,277,687 - 10,452,687 Taxation (444,278) - (115,278) - Profit after taxation 1,173,621 - 1,502,621 -

CASH FLOW STATEMENTS (EXTRACT):

(Loss)/Profit before taxation - (621,383) - 553,617 Dividend income - (7,805,555) - (8,980,555)

52. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

Fair value is defined as the amount at which the financial instrument could be exchangedin a current transaction between knowledgeable willing parties in an arm’s lengthtransaction, other than in a forced or liquidation sale. Fair values are obtained from quotedmarket prices, discounted cash flow models and option pricing models as appropriate.

The following methods and assumptions are used to estimate the fair value of each classof financial instruments:

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

The carrying amounts approximate the fair value due to the relatively short termmaturity of these instruments.

(ii) Quoted and unquoted investments

The fair values of quoted investments are estimated based on quoted marketprices for these investments.

For unquoted investments, it is not practicable to determine the fair valuesbecause of the lack of quoted market prices and the assumptions used in valuationmodels to value these investments cannot be reasonably determined.



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52. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES (CONT’D)

(ii) Short term borrowings and other current liabilities

The carrying amounts approximate the fair values because of the short period tomaturity of these instruments.

(iv) Long term bank loans

The carrying amounts approximate the fair values as these instruments bearinterest at variable rates.

(v) Lease obligations

The fair value of lease obligations is determined by discounting the relevant cashflow using current interest rates for similar instruments at the balance sheet date.

There is no disclosure of fair value for investments in subsidiaries and associate, andborrowings under the basis of Islamic banking principles as these are excluded fromMASB 24 – Financial Instruments: Disclosure and Presentation.

sbc corporation berhad, annual audited accounts 2003

Investor Relations

yeoh hock thong

sia teong heng

ng kee chye

sinking fund account

sabah state government

effective tax rate

licensed financial institution

licensed financial institutions