sbc corporation berhad: annual audited accounts 2004

SBC CORPORATION BERHAD

(Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P FINANCIAL REPORT for the financial year ended 31 March 2004 CONTENTS

Page Directors’ Report....................................................................................................... 1 Statement by Directors ............................................................................................. 8 Statutory Declaration ................................................................................................ 8 Auditors’ Report ........................................................................................................ 9 Balance Sheets......................................................................................................... 11 Income Statements................................................................................................... 13 Statements of Changes in Equity............................................................................. 14 Cash Flow Statements ............................................................................................. 16 Notes to the Financial Statements ........................................................................... 19

SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT

Page 1

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 March 2004. PRINCIPAL ACTIVITIES The Company is principally engaged in the business of investment holding and the provision of management and administrative services to the subsidiaries. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. CHANGE OF NAME On 21 October 2003, the Company changed its name from Siah Brothers Corporation Berhad to SBC Corporation Berhad. RESULTS THE GROUP THE COMPANY RM RM Profit/(Loss) after taxation for the financial year 2,072,995 (352,434) DIVIDENDS Since the end of the previous financial year, the Company paid a dividend of 5.5% per Irredeemable Convertible Cumulative Preference Share (“ICCPS”) less 28% tax amounting to RM270,587 in respect of the previous financial year, in accordance with the terms of issue of the ICCPS and a first and final dividend of 1% per ordinary share less 28% tax amounting to RM544,330 in respect of the previous financial year. For the current financial year, (a) the directors have declared the payment of a dividend of 5.5% per ICCPS less 28% tax

amounting to RM270,587, in accordance with the terms of issue of the ICCPS; and (b) the directors recommend the payment of first and final dividend of 1% per ordinary share less

28% tax amounting to RM593,532. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year except as disclosed in the financial statements.


Page 2

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

and (b) there were no issues of debentures by the Company. EMPLOYEE SHARE OPTION SCHEME (“ESOS”) Pursuant to the ESOS which was implemented on 14 July 2000, the movement in the options to subscribe for new shares of RM1 each in the Company at an exercise price of RM1.40 per share is as follows:- NUMBER OF

ORDINARY SHARES OF RM1 EACH

UNDER OPTION At 1 April 2003 1,664,000 Lapsed during the financial year due to: - exercised during the financial year - - staff resignation (174,000) At 31 March 2004 1,490,000 The salient features of the ESOS are as follows:- (i) eligible employees are employees who have served in the employment of any company

within the Group 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 the total issued and paid-up ordinary share capital of the Company at any point of time during the existence 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 be less than 1,000 or more than 450,000 shares subject to the maximum allowable allocation according to their respective categories;

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


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EMPLOYEE SHARE OPTION SCHEME (“ESOS”) (CONT’D) (v) the shares to be allotted upon any exercise of an option will, upon allotment, rank pari passu

in all respects 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 unissued shares in the Company, other than the existing options under the ESOS and Transferable Subscription Rights (“TSRs”). The Company issued a total of 17,076,200 TSRs, the expiry date of which had been extended to 20 February 2004. The TSRs entitle the holders thereof the right to subscribe for new ordinary shares 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 and the TSRs expired on 20 February 2004. BAD AND DOUBTFUL DEBTS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satisfied themselves that there are no known bad debts and that adequate allowance had been made for doubtful debts. At the date of this report, the directors are not aware of any circumstances that would require the writing off of bad debts, or additional allowance for doubtful debts in the financial statements of the Group and of the Company. CURRENT ASSETS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their values as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise. At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.


Page 4

VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES The contingent liabilities of the Company are disclosed in Note 43 to the financial statements. At the date of this report, there does not exist:- (a) any charge on the assets of the Group and of the Company that has arisen since the end of

the financial year which secures the liabilities of any other person; or (b) any contingent liability of the Group and of the Company which has arisen since the end of

the financial year. No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. ITEMS OF AN UNUSUAL NATURE The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year.


Page 5

DIRECTORS The directors who served since the date of the last report are as follows:- SIA KWEE MOW @ SIA HOK CHAI SIA TEONG HENG MUN CHONG SHING @ MUN CHONG TIAN DATO’ LIM PHAIK GAN DATO’ DR. NORRAESAH BT HAJI MOHAMAD DATUK SIM PENG CHOON (RESIGNED ON 19.8.2003) ABDUL RAHMAN BIN A. SHUKOR (ALTERNATE TO DATUK SIM PENG CHOON; CEASED ON 19.8.2003) DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID (APPOINTED ON 10.10.2003) AHMAD FIZAL BIN OTHMAN (APPOINTED ON 24.2.2004) Pursuant to Section 129 of the Companies Act, 1965, Sia Kwee Mow @ Sia Hok Chai and Dato’ Lim Phaik Gan retire at the forthcoming Annual General Meeting and offer themselves for re-appointment under the provisions of Section 129(6) of the said Act to hold office until the next Annual General Meeting of the Company. Pursuant to Article 77 of the Articles of Association of the Company, Sia Teong Heng retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election. Pursuant to Article 84 of the Articles of Association of the Company, Dato’ Zainol Abidin Bin Haji A. Hamid and Ahmad Fizal Bin Othman retire at the forthcoming Annual General Meeting and offer themselves for re-election. DIRECTORS’ INTERESTS According to the register of directors’ shareholdings, the interests of directors holding office at the end of the financial year, in shares, TSRs and options under the ESOS in the Company during the financial year are as follows:- NUMBER OF ORDINARY SHARES OF RM1 EACH AT

1.4.2003

BOUGHT

SOLD AT

31.3.2004 DIRECT INTERESTS SIA KWEE MOW @ SIA HOCK CHAI 1,480,800 - - 1,480,800 SIA TEONG HENG 334,992 993,000 - 1,327,992 MUN CHONG SHING @ MUN CHONG TIAN 21,782 - - 21,782 DATO’ LIM PHAIK GAN 11,000 - (11,000) - INDIRECT INTERESTS SIA KWEE MOW @ SIA HOCK CHAI 19,498,523 - - 19,498,523 SIA TEONG HENG 19,498,523 - - 19,498,523


Page 6

DIRECTORS’ INTERESTS (CONT’D) TSRs AT

1.4.2003

BOUGHT

EXPIRED AT

31.3.2004 DIRECT INTERESTS SIA KWEE MOW @ SIA HOCK 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 HOCK CHAI 1,746,780 - (1,746,780) - SIA TEONG HENG 1,746,780 - (1,746,780) - NUMBER OF ORDINARY SHARES OF RM1 EACH

UNDER OPTION AT

1.4.2003

GRANTED

EXERCISED AT

31.3.2004 DIRECT INTERESTS SIA KWEE MOW @ SIA HOCK 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 are deemed to have interests in the shares in the subsidiaries to the extent of the Company’s interests, in accordance with Section 6A of the Companies Act, 1965. None of the other directors holding office at the end of the financial year had any interests in shares, TSRs or options under the ESOS of the Company or its related corporations during the financial year. DIRECTORS’ BENEFITS Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors as shown in the financial statements, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain directors have substantial financial interests as disclosed in Note 42 to the financial statements. Neither during nor at the end of the financial year was the Company or its subsidiaries a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate except for the share options granted pursuant to the ESOS.


Page 7

SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE The significant event subsequent to the balance sheet date involving the Group and the Company is disclosed in Note 45 to the financial statements. AUDITORS The auditors, Messrs. Horwath, have expressed their willingness to continue in office. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian Kuala Lumpur 20 July 2004

SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P

Page 8

STATEMENT BY DIRECTORS We, Sia Kwee Mow @ Sia Hok Chai and Mun Chong Shing @ Mun Chong Tian, being two of the directors of SBC Corporation Berhad (formerly known as Siah Brothers Corporation Berhad), state that, in the opinion of the directors, the financial statements set out on pages 11 to 69 are drawn up in accordance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 March 2004 and of their results and cash flows for the financial year ended on that date. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian Kuala Lumpur 20 July 2004 STATUTORY DECLARATION I, Ng Kee Chye, I/C No. 640324-06-5691, being the officer primarily responsible for the financial management of SBC Corporation Berhad (formerly known as Siah Brothers Corporation Berhad), do solemnly and sincerely declare that the financial statements set out on pages 11 to 69 are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by Ng Kee Chye, I/C No. 640324-06-5691, at Kuala Lumpur in the Federal Territory on this 20 July 2004

Ng Kee Chye

Before me, HARON HASHIM (W128) Commissioner for Oaths Kuala Lumpur 20 July 2004

REPORT OF THE AUDITORS TO THE MEMBERS OF SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) Company No : 199310 - P We have audited the financial statements set out on pages 11 to 69. The preparation of the financial statements is the responsibility of the Company’s directors. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. Our audit included examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. Our audit also included an assessment of the accounting principles used and significant estimates made by the directors as well as evaluating the overall adequacy of the presentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion. In our opinion, (a) the financial statements are properly drawn up in accordance with the provisions of the

Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of:-

(i) the state of affairs of the Group and of the Company at 31 March 2004 and their

results and cash flows for the financial year ended on that date; and (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with

in the financial statements of the Group and of the Company; and (b) the accounting and other records and the registers required by the Companies Act, 1965

to be kept by the Company and by the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act.

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

REPORT OF THE AUDITORS TO THE MEMBERS OF SBC CORPORATION BERHAD (CONT’D) (Formerly known as Siah Brothers Corporation Berhad) Company No : 199310 - P We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comments made under Section 174 (3) of the said Act. Horwath Onn Kien Hoe Firm No: AF 1018 Approval No: 1772/11/04 (J/PH) Chartered Accountants Partner Kuala Lumpur 20 July 2004

SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P BALANCE SHEETS AT 31 MARCH 2004

The annexed notes form an integral part of these financial statements. Page 11

THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM ASSETS Investment in subsidiaries 6 - - 211,064,785 211,064,785 Interest in associates 7 112,064,656 110,700,175 2,400,000 2,400,000 Property, plant and equipment 8 36,246,114 35,812,639 35,428 53,152 Investment properties 9 41,391,466 41,774,547 - - Other assets 10 247,107 382,107 - - Goodwill on consolidation 11 27,317,640 27,271,844 - - 217,266,983 215,941,312 213,500,213 213,517,937 CURRENT ASSETS Inventories 12 8,604,731 14,109,911 - - Property development in progress 13 50,449,300 54,738,163 - - Receivables 14 66,593,226 68,079,974 209,050 123,962 Amount owing by contract customers 15 4,775,992 685,256 - - Amounts owing by subsidiaries 16 - - 55,919,091 52,644,365 Amount owing by associates 17 5,533,926 5,525,184 11,434 11,434 Tax recoverable 18 8,331,990 5,350,142 11,823,151 11,265,166 Short term deposits with licensed banks 19 1,407,125 1,422,125 1,239,225 1,239,225 Cash and bank balances 20 3,474,278 6,084,094 2,012,100 5,201,131 149,170,568 155,994,849 71,214,051 70,485,283 LESS: CURRENT LIABILITIES Amount owing to contract customers 15 1,601,053 4,769,567 - - Payables 21 28,718,800 26,618,315 230,925 331,492 Amounts owing to subsidiaries 16 - - 12,563,323 12,635,183 Amounts owing to associates 17 78,236 65,500 - - Amounts owing to directors 22 2,450,481 2,450,481 1,967,680 1,967,680 Dividend payable 270,587 270,587 270,587 270,587 Short term borrowings 23 39,941,312 47,707,856 11,580,169 11,413,736 ABBA Bonds 24 2,478,450 2,478,450 2,478,450 2,478,450 75,538,919 84,360,756 29,091,134 29,097,128 NET CURRENT ASSETS 73,631,649 71,634,093 42,122,917 41,388,155 290,898,632 287,575,405 255,623,130 254,906,092

SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P BALANCE SHEETS AT 31 MARCH 2004 (CONT’D)


THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM FINANCED BY:- Share capital 25 82,435,000 82,435,000 82,435,000 82,435,000 Reserves 26 135,939,954 134,681,876 133,476,597 134,643,948 Shareholders’ equity 218,374,954 217,116,876 215,911,597 217,078,948 ABBA Bonds 24 39,711,533 37,827,144 39,711,533 37,827,144 Deferred liabilities 27 32,812,145 32,631,385 - - 290,898,632 287,575,405 255,623,130 254,906,092 NET TANGIBLE ASSETS PER ORDINARY SHARE(RM)

31

244 sen

242 sen

SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P INCOME STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004


THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM TURNOVER 32 86,316,639 69,828,919 7,220,737 8,982,613 COST OF SALES 33 (68,900,779) (48,699,540) - - GROSS PROFIT 17,415,860 21,129,379 7,220,737 8,982,613 OTHER OPERATING INCOME 3,911,925 3,097,647 - - ADMINISTRATIVE EXPENSES (7,420,741) (6,793,398) (891,180) (1,069,681) OTHER OPERATING EXPENSES (3,270,390) (9,417,624) (326,746) (156,715) PROFIT FROM OPERATIONS 10,636,654 8,016,004 6,002,811 7,756,217 FINANCE COSTS (7,263,617) (6,793,334) (5,533,390) (4,464,721) SHARE OF PROFIT OF ASSOCIATES 3,623,112 3,926,816 - - PROFIT BEFORE TAXATION 34 6,996,149 5,149,486 469,421 3,291,496 TAXATION 35 (4,923,154) (3,138,593) (821,855) (913,324) PROFIT/(LOSS) AFTER TAXATION 2,072,995 2,010,893 (352,434) 2,378,172 Earnings per share - basic 36 2.4 sen 2.4 sen - diluted 36 N/A N/A Dividend per ordinary share - final 37 - 1 sen

SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004


SHARE SHARE APPLICATION SHARE RETAINED CAPITAL NOTE CAPITAL ACCOUNT PREMIUM PROFITS RESERVE TOTAL RM RM RM RM RM RM THE GROUP Balance at 1.4.2002 57,301,943 115,600,000 20,995,752 20,328,676 1,199,999 215,426,370 Issuance of shares 25,133,057 - - - - 25,133,057 Reversal of share application account - (115,600,000) - - - (115,600,000) Share premium arising from issuance of shares - - 90,471,143 - - 90,471,143 Expenses incurred on conversion of ICULS - - (54,000) - - (54,000) Profit after taxation for the financial year - - - 2,010,893 - 2,010,893 Dividends 37 - - - (270,587) - (270,587) Balance at 31.3.2003/1.4.2003 82,435,000 - 111,412,895 22,068,982 1,199,999 217,116,876 Profit after taxation for the financial year - - - 2,072,995 - 2,072,995 Dividends 37 - - - (814,917) - (814,917) Balance at 31.3.2004 82,435,000 - 111,412,895 23,327,060 1,199,999 218,374,954

SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 (CONT’D)


SHARE SHARE APPLICATION SHARE RETAINED CAPITAL NOTE CAPITAL ACCOUNT PREMIUM PROFITS RESERVE TOTAL RM RM RM RM RM RM THE COMPANY Balance at 1.4.2002 57,301,943 115,600,000 20,995,752 21,123,468 - 215,021,163 Issuance of shares 25,133,057 - - - - 25,133,057 Reversal of share application account - (115,600,000) - - - (115,600,000) Share premium arising from issuance of shares - - 90,471,143 - - 90,471,143 Expenses incurred on conversion of ICULS - - (54,000) - - (54,000) Profit after taxation for the financial year - - - 2,378,172 - 2,378,172 Dividends 37 - - - (270,587) - (270,587) Balance at 31.3.2003/1.4.2003 82,435,000 - 111,412,895 23,231,053 - 217,078,948 Loss after taxation for the financial year - - - (352,434) - (352,434) Dividends 37 - - - (814,917) - (814,917) Balance at 31.3.2004 82,435,000 - 111,412,895 22,063,702 - 215,911,597 The retained profits of the Group are attributable to/(absorbed by):- 2004 2003 RM RM The Company 22,063,702 23,231,053 Subsidiaries (15,582,983) (16,643,931) Associates 16,846,341 15,481,860 23,327,060 22,068,982

SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004


THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM CASH FLOWS FROM/ (FOR) OPERATING ACTIVITIES Profit before taxation 6,996,149 5,149,486 469,421 3,291,496 Adjustments for:- Allowance for doubtful debts 828,553 8,625,447 - - Amortisation of bonds expenses 303,272 134,364 303,272 134,364 Bad debts written off - 110,965 - - Depreciation and amortisation of property, plant and equipment 446,060 406,603 23,474 22,351 Interest expense / finance charges 7,110,435 6,407,721 5,506,995 4,442,243 Loss on disposal of investment properties 1,557,400 150,154 - - Plant and equipment written off 13,663 - - - Other investment written off 135,000 - - - Dividend income - - (4,928,000) (8,090,000) Gain on disposal of property, plant and equipment (313,882) (7,302) - - Interest income (107,322) (110,604) (612,688) (622,613) Writeback of diminution in value of inventory - (6,527) - - Writeback of allowance for doubtful debts - (1,988,813) - - Share of profit in associates (3,623,112) (3,926,816) - - Operating profit/(loss) before working capital changes 13,346,216 14,944,678 762,474 (822,159) Decrease in inventories 5,505,180 10,089,220 - - Decrease/(Increase) in property development-in-progress 4,712,161 (15,568,195) - - Decrease/(Increase) in trade and other receivables 658,195 11,175,302 (85,088) 6,277,255 Increase/(Decrease) in trade and other payables 1,707,814 (8,910,013) (100,567) 86,070 (Decrease)/Increase in amount owing to contract customers (7,259,250) 2,287,849 - - CASH FROM OPERATIONS 18,670,316 14,018,841 576,819 5,541,166 Interest paid (3,402,444) (4,702,299) (1,375,706) (1,880,098) Taxes paid (6,780,583) (3,377,151) - - NET CASH FROM/(FOR) OPERATING ACTIVITIES CARRIED FORWARD 8,487,289 5,939,391 (798,887) 3,661,068

SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 (CONT’D)


THE GROUP THE COMPANY 2004 2003 2004 2003 NOTE RM RM RM RM NET CASH FROM/ (FOR) OPERATING ACTIVITIES BROUGHT FORWARD 8,487,289 5,939,391 (798,887) 3,661,068 CASH FLOWS FROM/ (FOR) INVESTIING ACTIVITIES Interest received 107,322 641,078 612,688 622,613 Dividends received from subsidiaries - - 2,304,000 3,816,000 Dividends received from associates 1,526,883 2,116,800 1,244,160 2,008,800 Net cash outflow on acquisition of subsidiary 38 - (34,835,444) - (35,000,000) Expenses incurred on acquisition of subsidiary - - - (654,225) Purchase of property, plant and equipment (924,876) (201,665) (5,750) - Purchase of investment properties (3,110,115) (3,438,068) - - Hotel development expenditure - (386,797) - - Proceeds from disposal of property, plant and equipment 345,560 149,222 - - Proceeds from disposal of investment properties 1,910,000 952,000 - - Incidental expenses on investment properties (20,000) (42,589) - - Withdrawal/(Placement) of cash in sinking fund account 3,188,398 (5,198,398) 3,188,398 (5,198,398) NET CASH FROM/(FOR) INVESTING ACTIVITIES 3,023,172 (40,243,861) 7,343,496 (34,405,210)

SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 (CONT’D)


THE GROUP THE COMPANY 2004 2003 2004 2003 Note RM RM RM RM CASH FLOWS (FOR)/FROM FINANCING ACTIVITIES Payment of bonds expenses (71,722) - (71,722) - Proceeds from issuance of shares - 4,200 - 4,200 Proceeds from bonds 24 - 38,848,310 - 38,848,310 Repayment of bonds 24 (2,478,450) (1,239,225) (2,478,450) (1,239,225) Net repayment by/ (Advances to) associates 3,994 (42,209) - 40,449 Net advances to subsidiaries - - (3,346,586) (14,433,234) Dividend paid to shareholders of the Company (544,330) - (544,330) - Payment of expenses on conversion of ICULS - (54,000) - (54,000) Dividend paid to holders of ICCPS (270,587) (270,587) (270,587) (270,587) Repayment of revolving credit (500,000) (3,280,000) - (680,000) Repayment of loans (6,460,269) (4,103,454) - - Repayment to hire purchase payables (87,784) (87,784) - - NET CASH (FOR)/FROM FINANCING ACTIVITIES (10,409,148) 29,775,251 (6,711,675) 22,215,913 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,101,313 (4,529,219) (167,066) (8,528,229) CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR (18,870,095) (14,340,876) (5,171,778) 3,356,451 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 39 (17,768,782) (18,870,095) (5,338,844) (5,171,778)

SBC CORPORATION BERHAD (Formerly known as Siah Brothers Corporation Berhad) (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004

Page 19

1. GENERAL INFORMATION The Company is a public company limited by shares and is incorporated under the

Malaysian Companies Act, 1965. The domicile of the Company is in Malaysia. The registered office, which is also the principal place of business, is at Wisma Siah Brothers, 74A, Jalan Pahang, 53000 Kuala Lumpur.

The financial statements were authorised for issue by the Board of Directors in

accordance with a resolution of the directors dated 20 July 2004. 2. PRINCIPAL ACTIVITIES The Company is principally engaged in the business of investment holding and the provision

of management and administrative services to the subsidiaries. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

3. FINANCIAL RISK MANAGEMENT POLICIES

The Group's financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group's business whilst managing its currency, interest rate, market, credit, liquidity and cash flow risks. The Group operates within defined guidelines that are approved by the Board and the policies in respect of the major areas of treasury activity are as follows: (a) Currency Risk

The Group does not have material foreign currency transactions, assets or liabilities 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 policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure.

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


Page 20

3. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D) (c) Market Risk

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

(d) Credit Risk

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

The Group does not have any major concentration of credit risk related to any individual customer or counterparty except for the amount owing by a major customer which constitutes approximately 61% of trade receivables. The details pertaining to the aforesaid amount are set out in Note 14 to the financial statements.

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

(e) Liquidity and Cash Flow Risk

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

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

4. BASIS OF ACCOUNTING

The financial statements are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965. MASB 32 - Property Development Activities has been adopted in the financial statements of the Group prior to its effective date.


Page 21

5. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Consolidation The consolidated financial statements incorporate the financial statements of the

Company and all its subsidiaries made up to 31 March 2004. A subsidiary is defined as a company in which the parent company holds directly or

indirectly more than 50% of the equity share capital and has the power to exercise control over its financial and operating policies.

All subsidiaries are consolidated using the acquisition method of accounting. Under

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

Intragroup transactions, balances and unrealised gains on transactions are

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

(b) Goodwill or Negative Goodwill On Consolidation Goodwill represents the excess of the fair value of the purchase consideration over

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

Goodwill is stated net of negative goodwill. The net carrying amount of goodwill is

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


Page 22

5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (c) Associates Associates are enterprises in which the Group exercises significant influence.

Significant influence is the power to participate in the financial and operating policy decisions of the associates but not control over those policies. Investments in associates are accounted for in the consolidated financial statements by the equity method of accounting.

Equity accounting involves recognising in the income statement the Group’s share of

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

Unrealised gains on transactions between the Group and its associates are

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

Where necessary, in applying the equity method, adjustments are made to the

financial statements of associates to ensure consistency of accounting policies with those of the Group.

(d) Property, Plant and Equipment Property, plant and equipment, other than freehold land, are stated at cost less

accumulated depreciation or amortisation. Freehold land is stated at cost and is not 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 the financial statements.

Depreciation and amortisation is calculated under the straight-line method to write off

the cost of the assets over their estimated useful lives. The principal annual rates used for this purpose are:-

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


Page 23

5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (e) Impairment of Assets

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

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

In respect of assets other than goodwill, and when there is a change in the

estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to the revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement.

(f) Investments

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

(g) Investment Properties Investments properties consist of investments in land and buildings that are not

substantially occupied for use by, or in the operations, of the Company/Group.


Page 24

5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (g) Investment Properties (Cont’d) Investments properties are treated as long term investment. They are initially stated

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

On disposal of an investment, the difference between the net disposal proceeds and

the carrying amount is charged to the income statement; any amount in revaluation reserve relating to that investment property is transferred to retained earnings.

(h) Inventories Inventories are stated at the lower of cost and net realisable value. The unsold

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

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

development expenditure and related interest cost incurred during the development period.

In arriving at net realisable value, due allowance is made for all damaged, obsolete

and slow-moving items. (i) Property Development Costs

Property development costs comprise costs associated with the acquisition of land and all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. Property development costs that are not recognised as an expense are recognised as an asset and carried at the lower of cost and net realisable value.

When the financial outcome of a development activity can be reliably estimated, the amount of property revenues and expenses recognised in the income statement are determined by reference to the stage of completion of development activity at the balance sheet date.


Page 25

5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(i) Property Development Costs (Cont’d) When the financial outcome of a development activity cannot be reliably estimated, the property development revenue is recognised only to the extent of property development costs incurred that will be recoverable. The property development costs on the development units sold are recognised as an expense in the period in which they are incurred.

Where it is probable that property development costs will exceed property

development revenue, any expected loss is recognised as an expense immediately, including costs to be incurred over the defects liability period.

The financial effects on the change in accounting policy with respect to the treatment

of property development costs is considered not material. (j) Amount Owing By/To Contract Customers The amount owing by/to contract customers is stated at cost plus profits attributable

to contracts in progress less progress billings and provision for foreseeable losses, if any. Cost includes direct materials, labour and applicable overheads.

(k) Receivables Receivables are carried at anticipated realisable value. Bad debts are written off in

the period in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date.

(l) Payables Trade and other payables are stated at cost which is the fair value of the

consideration to be paid in the future for goods and services received.


Page 26

5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (m) Interest-bearing Borrowings Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds

received, net of transaction costs. Borrowing costs directly attributable to the acquisition and construction of

development properties and property, plant and equipment are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale.

All other borrowing costs are charged to the income statement as an expense in the

period in which they are incurred.

(n) Bonds

Bonds issued by the Company and the Group are initially recognised based on proceeds received, net of issuance expenses incurred and are adjusted in subsequent years for amortisation of premium and/or accretion of discount to maturity, using the effective yield method. The premium amortised and/or discount accreted is recognised in the income statement over the period of the bonds.

(o) Taxation Taxation for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable

profit for the year and is measured using the tax rates that have been enacted or substantially enacted at the balance sheet date.

Previously, deferred taxation was provided using the liability method on all material

timing differences except where no liability was expected to arise in the foreseeable future. Deferred tax benefit was only recognised when there was reasonable expectation of realisation in the foreseeable future.

During the financial year, the accounting policy for deferred taxation has been

changed to comply with MASB 25 - Income Taxes. Deferred taxation is now provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences other than

those that arise from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.


Page 27

5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (o) Taxation (Cont’d)

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

Deferred tax assets and liabilities are measured at the tax rates that are expected to

apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date.

Deferred tax is recognised in the income statement, except when it arises from a

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

The financial effect on the change in accounting policy with respect to the

treatment of deferred taxation is considered not material. (p) Foreign Currencies Transactions in foreign currencies are converted into Ringgit Malaysia at the

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

(q) Assets under Hire Purchase Equipment acquired under hire purchase are capitalised in the financial

statements and are depreciated in accordance with the policy set out in Note 5(d) above. Each hire purchase payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Finance charges are allocated to the income statement over the periods of the respective hire purchase agreements.


Page 28

5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(r) Equity Instruments Ordinary shares and convertible preference shares are classified as equity.

(s) Dividends

Dividends on equity are recognised as liabilities when declared and approved.

(t) Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand, bank balances, demand

deposits, deposits pledged with financial institutions, bank overdrafts and short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(u) Financial Instruments Financial instruments are recognised in the balance sheet when the Company has

become a party to the contractual provisions of the instruments. Financial instruments are classified as liabilities or equity in accordance with the

substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when the Company has a legally enforceable right to

offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

Financial instruments recognised in the balance sheet are disclosed in the individual

policy statement associated with each item.


Page 29

5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (v) Income Recognition (i) Construction Contracts Revenue on contracts is recognised on the percentage of completion

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

The stage of completion is determined based on surveys of work performed. (ii) Property Development Revenue from property development is recognised from the sale of

completed and uncompleted development properties. Revenue from the sale of completed properties is recognised when the sale is

contracted. Revenue on uncompleted properties contracted for sale is recognised based

on the stage of completion method unless the outcome of the development cannot be reliably determined in which case the revenue on the development is only recognised to the extent of development costs incurred that are recoverable.

The stage of completion is determined based on the proportion that the

development costs incurred for work performed to date bear to the estimated total development costs.

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

statement.

Foreseeable losses, if any, are provided for in full as and when it can be reasonably 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.


Page 30

5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (v) Income Recognition (Cont’d)

(iv) Revenue from Services Revenue is recognised upon rendering of services and when the outcome of

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

(v) Management Fee and Administrative Charges

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

(vi) Rental Income Rental income is recognised on an accrual basis. (vii) Dividend Income Dividend income from investments is recognised when the right to receive

payment is established. (viii) Interest Income

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

yield on the investment. Interest income on late payment is recognised on a receipt basis. (w) Segmental Information

Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of property, plant and equipment (net of accumulated depreciation, where applicable), other investments, inventories, receivables, and cash and bank balances. Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets and liabilities do not include income tax assets and liabilities respectively.

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


Page 31

6. INVESTMENT IN SUBSIDIARIES THE COMPANY 2004 2003 RM RM Unquoted shares, at cost At 1 April 2003/2002 211,064,785 167,370,110 Additions during the financial year - 43,694,675 At 31 March 211,064,785 211,064,785

Details of the subsidiaries, which are all incorporated in Malaysia, are as follows:- Name of Company Effective Equity Interest Principal 2004 2003 Activities % % Syarikat Siah Brothers 100 100 General building Trading Sdn. Bhd. contractor and investment holding Syarikat Siah Brothers 100 100 Building and civil Construction Sdn. Bhd. engineering works Lifeplus - Siah Brothers Trading 100 100 Project management JV Sdn. Bhd. and its related technical services Siah Brothers Enterprise 100 100 Building contractor Sdn. Bhd. * Siah Brothers Land 100 100 Investment holding Sdn. Bhd. Seri Ampangan Realty 100 100 Property development Sdn. Bhd. Sinaran Naga Sdn. Bhd. 100 100 Property development Siah Brothers Development 100 100 Proposed property Sdn. Bhd. * development Tiara Development 100 100 Proposed property Sdn. Bhd.* development SBC Homes Sdn. Bhd.* 100 100 Proposed property development


Page 32

6. INVESTMENT IN SUBSIDIARIES (CONT’D) Name of Company Effective Equity Interest Principal 2004 2003 Activities % % Mixwell (Malaysia) 100 100 Project management Sdn. Bhd. and property development Winsome Ventures 100 100 Proposed property Sdn. Bhd. management Siah Brothers Properties 100 100 Investment holding Sdn. Bhd.* Aureate Construction 100 100 Property investment Sdn. Bhd.* SBC Leisure Sdn. Bhd.* 100 100 Property development SBC Towers Sdn. Bhd.* 100 100 Property development Siah Brothers Project 100 100 Provision of Management Sdn. Bhd.* management services Siah Brothers Industries 100 100 Investment holding Sdn. Bhd. * South-East Best 100 100 Property development Sdn. Bhd. Gracemart Resources 100 100 Property development Sdn. Bhd. Sutrati Development Sdn. Bhd. 100 100 Dormant Masahmura Sdn. Bhd.* 51 51 Manufacturing of material handling equipment and metal frames Masahmura Sales & 51 51 Trading of light Service Sdn. Bhd. industrial handling equipment and metal frames * Not audited by Horwath


Page 33

7. INTEREST IN ASSOCIATES

THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Unquoted shares, at cost 3,600,001 3,600,001 2,400,000 2,400,000 Unquoted shares, at Group cost 91,618,314 91,618,314 - - Share of post acquisition reserves 16,846,341 15,481,860 - - 112,064,656 110,700,175 2,400,000 2,400,000

THE GROUP 2004 2003 RM RM The interest in associates comprises:- Group’s share of net tangible assets - at cost 66,048,686 64,684,205 - at fair value 45,952,003 45,952,003 Group’s share of intangible assets 63,967 63,967 112,064,656 110,700,175

Details of the associates, which are all incorporated in Malaysia, are as follows:- Effective Equity Principal Name of Company Interest Activities 2004 2003 % % 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


Page 34

7. INTEREST IN ASSOCIATES (CONT’D) Effective Equity Principal Name of Company Interest Activities 2004 2003 % % Liga Canggih Sdn. Bhd.*## 40.0 40.0 Dormant Sri Berjaya Development 33.3 33.3 Investment and Sdn. Bhd.* development of landed properties Sri Rawang Properties 22.2 22.2 Investment in properties Sdn. Bhd.* and rubber estates Sam & Lau Plantation 50.0 50.0 Tree plantation and Sdn. Bhd.*### nursery operators * The results of these associates have not been equity accounted as the amounts

involved are insignificant. # The share of results of these associates is based on the latest available unaudited

management financial statements made up to 31 March 2004. ## Held by Paling Industries Sdn. Bhd. ### Held by South-East Best Sdn. Bhd. (“SEB”)


Page 35

8. PROPERTY, PLANT AND EQUIPMENT AT WRITTEN DEPRECIATION AT 1.4.2003 ADDITIONS DISPOSALS OFF CHARGE 31.3.2004 RM RM RM RM RM RM THE GROUP NET BOOK VALUE Freehold land 4,738,833 - - (11,000) - 4,727,833 Land and hotel development expenditure 29,876,765 147,589 - - - 30,024,354 Sales office - 148,676 - - (29,883) 118,793 Plant and machinery, construction machinery and equipment 63,352 1,700 (1) - (14,109) 50,942 Formwork, scaffoldings and containers 10,462 - - - (4,014) 6,448 Office renovation, office equipment, computers, furniture and fittings, tools and fittings 838,577 536,911 (31,676) (2,663) (273,882) 1,067,267 Motor vehicles 284,650 90,000 (1) - (124,172) 250,477 Total 35,812,639 924,876 (31,678) (13,663) (446,060) 36,246,114

AT COST

ACCUMULATED DEPRECIATION

NET BOOK VALUE

RM RM RM AT 31.3.2004 Freehold land 4,727,833 - 4,727,833 Land and hotel development expenditure 30,024,354 - 30,024,354 Sales office 148,676 (29,883) 118,793 Plant and machinery, construction machinery and equipment 4,343,457 (4,292,515) 50,942 Formwork, scaffoldings and containers 4,316,916 (4,310,468) 6,448 Office renovation, office equipment, computers, furniture and fittings, tools and fittings 4,633,477 (3,566,210) 1,067,267 Motor vehicles 2,005,751 (1,755,274) 250,477 50,200,464 (13,954,350) 36,246,114

AT 31.3.2003 Freehold land 4,738,833 - 4,738,833 Land and hotel development expenditure 29,876,765 - 29,876,765 Plant and machinery, construction machinery and equipment 4,374,257 (4,310,905) 63,352 Formwork, scaffoldings and containers 4,316,916 (4,306,454) 10,462 Office renovation, office equipment, computers furniture and fittings, tools and 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


Page 36

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

2004 2003 RM RM Long leasehold land, at cost 27,691,066 27,691,066 Hotel development expenditure 2,333,288 2,185,699 30,024,354 29,876,765

AT DEPRECIATION AT 1.4.2003 ADDITIONS CHARGE 31.3.2004 RM RM RM RM THE COMPANY NET BOOK VALUE Office equipment, computers, furniture and fittings 53,151 5,750 (23,474) 35,427 Motor vehicles 1 - - 1 53,152 5,750 (23,474) 35,428

AT ACCUMULATED NET BOOK COST DEPRECIATION VALUE RM RM RM AT 31.3.2004 Office equipment, computers, furniture and fittings 376,551 (341,124) 35,427 Motor vehicles 376,950 (376,949) 1 753,501 (718,073) 35,428 AT 31.3.2003 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

The motor vehicles of the Group acquired under hire purchase terms were carried at net

book value of RM125,997 (2003 - RM231,384) at the balance sheet date.


Page 37

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

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

THE GROUP 2004 2003 RM RM Sales office 118,793 - Furniture and fittings 137,332 107,183 Office and other equipment 102,092 4,951 Land and hotel development expenditure 30,024,354 29,876,765 Office renovation 5,664 9,976 30,388,235 29,998,875

9. INVESTMENT PROPERTIES

THE GROUP 2004 2003 RM RM Leasehold land, at cost 19,778,424 19,778,424 Expenditure on land 4,500,413 4,202,191 24,278,837 23,980,615 Freehold land and buildings, at cost 15,213,507 15,812,472 Leasehold land and buildings, at cost 5,366,522 3,041,025 20,580,029 18,853,497 Disposed during the financial year (3,467,400) (1,059,565) 17,112,629 17,793,932 41,391,466 41,774,547

Certain investment properties are charged to financial institutions for banking facilities

granted to the company.


Page 38

10. OTHER ASSETS THE GROUP 2004 2003 RM RM Other assets 189,807 189,807 Other investments Quoted shares in Malaysia, at cost 12,300 12,300 Unquoted shares, at cost 45,000 180,000 57,300 192,300 247,107 382,107 Market value of quoted shares 4,590 4,455

Other assets are retention monies relating to amounts which are due and receivable after

twelve months from the balance sheet date, upon expiry of the warranty period of the relevant contracts.

11. GOODWILL ON CONSOLIDATION

THE GROUP 2004 2003 RM RM At 1 April 2003/2002 27,271,844 10,245,527 Goodwill arising from the acquisition of equity interest in a subsidiary - 17,026,317 Goodwill arising from the acquisition of equity interest in a subsidiary in the previous financial year not accounted for 45,796 - At 31 March 27,317,640 27,271,844

12. INVENTORIES

THE GROUP 2004 2003 RM RM Unsold completed properties, at cost 8,604,731 14,109,911

In the previous financial year, certain inventories costing RM1,423,220 were charged to a

third party for the procurement of bonds issued by the Company.


Page 39

12. INVENTORIES (CONT’D) In the previous financial year, certain inventories costing RM11,528,558 were charged to

licensed banks and financial institutions for banking facilities granted to a subsidiary. None of the inventories are carried at net realisable value. 13. PROPERTY DEVELOPMENT COST

THE GROUP 2004 2003 RM RM Balance at beginning of the financial year: - land 31,209,528 24,624,246 - development costs 34,259,753 45,015,434 65,469,281 69,639,680 Cost incurred during the year: - land - 6,400,000 - development costs 19,138,472 27,255,572 84,607,753 103,295,252 Development cost for completed projects - (5,683,038) 84,607,753 97,612,214 Cost recognised as an expense in the income statement: - previous year (10,731,119) (30,643,740) - current year (23,019,919) (12,163,165) (33,751,038) (42,806,905) Sub-total 50,856,715 54,805,309 Transfer to inventories (407,415) (67,146) 50,449,300 54,738,163

Included in development expenditure is interest expense capitalised during the financial year

amounting to RM423,298 (2003 - RM856,723). Leasehold land of a subsidiary costing RM7,674,555 (2003 - RM7,674,555) is charged to a

licensed bank for a term loan facility granted to the subsidiary.


Page 40

14. RECEIVABLES THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Trade receivables 69,536,316 69,665,907 - - Retention receivable 5,547,621 5,709,953 - - Total trade receivables 75,083,937 75,375,860 - - Allowance for doubtful debts At 1 April 2003/2002 (13,054,487) (6,803,879) - - Acquisition of subsidiary - (22,819) - - Additions (419,708) (8,216,602) - - Write-back - 1,988,813 - - At 31 March (13,474,195) (13,054,487) - - Net trade receivables 61,609,742 62,321,373 - - Other receivables, deposits and prepayments 8,483,606 8,849,878 2,561,787 2,476,699 Allowance for doubtful debts At 1 April 2003/2002 (3,091,277) (2,682,432) (2,352,737) (2,352,737) Additions (408,845) (408,845) - - At 31 March (3,500,122) (3,091,277) (2,352,737) (2,352,737) Net other receivables, deposits and prepayments 4,983,484 5,758,601 209,050 123,962 Total receivables 66,593,226 68,079,974 209,050 123,962

Included in trade receivables at the balance sheet date are RM37,720,372 (2003 - RM37,720,372) and RM11,021,388 (2003 - RM9,886,903) owing by Smart Home Sdn. Bhd. (“SH”) and Ligamas Sdn. Bhd. respectively, both of which are related parties. Details of the related party relationship and the nature of the transactions and balances are set out in Note 42 to the financial statements. The amount owing by SH has been outstanding since 1996. During the financial year, SH proposed to settle the amount owing through the transfer of six parcels of development land for a total consideration of RM37,828,242. The proposed debt settlement was approved by the shareholders of the Company at an extraordinary general meeting convened on 16 April 2004, and this is elaborated in Note 45 to the financial statements.


Page 41

14. RECEIVABLES (CONT’D)

Included in other receivables is RM1,552,059 (2003 - RM2,647,103) 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 to be performed by the sub-contractors. Also included in other receivables in the previous financial year, was an amount owing by a related party of RM500,000. The details of the transaction and the balance are disclosed in Note 42 to the financial statements.

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

90 days. 15. AMOUNT OWING BY/(TO) CONTRACT CUSTOMERS

THE GROUP 2004 2003 RM RM Amount owing by contract customers Contract costs incurred to date 45,035,273 8,090,361 Attributable profits 7,522,655 241,371 52,557,928 8,331,732 Progress billings (47,781,936) (7,646,476) Amount owing by contract customers 4,775,992 685,256 Amount owing to contract customers Contract costs incurred to date 211,960,362 184,168,929 Attributable profits 8,757,050 8,802,347 220,717,412 192,971,276 Progress billings (222,318,465) (197,740,843) Amount owing to contract customers (1,601,053) (4,769,567)


Page 42

16. AMOUNTS OWING BY/(TO) SUBSIDIARIES THE COMPANY 2004 2003 RM RM Amounts owing by: Non-trade - Interest-bearing 6,272,445 6,582,470 - Interest-free 49,646,646 46,061,895 55,919,091 52,644,365 Amounts owing to: Non-trade - Interest-bearing 2,677,629 3,797,629 - Interest-free 9,885,694 8,837,554 12,563,323 12,635,183

The above amounts owing are unsecured and not subject to fixed terms of repayment. The

interest-bearing amounts are subject to interest at 3.20% to 8.50% (2003 - 8.40% to 8.65%) per annum.

17. AMOUNTS OWING BY/(TO) ASSOCIATES

The amounts owing are unsecured, interest-free and not subject to fixed terms of repayment. 18. TAX RECOVERABLE Subject to agreement with the tax authorities, the Company has tax recoverable of

RM11,823,151 at the balance sheet date in respect of the financial years ended 31 March 1997 to 31 March 2004. At the date of this report, the amount is still pending agreement with the tax authorities.


Page 43

19. SHORT TERM DEPOSITS WITH LICENSED BANKS The weighted average effective interest rate of deposits at the balance sheet date was as

follows:

THE GROUP THE COMPANY 2004 2003 2004 2003 % % % % Licensed bank 2.81 2.84 2.77 2.77

Deposits of the Group and the Company have an average maturity period of 30 days (2003 -

30 days). The deposits of the Company have been charged as security for the issuance of ABBA

Bonds as disclosed in Note 24 to the financial statements. 20. CASH AND BANK BALANCES

THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Cash and bank balances 1,464,278 885,696 2,100 2,733 Sinking fund account (Note 39) 2,010,000 5,198,398 2,010,000 5,198,398 3,474,278 6,084,094 2,012,100 5,201,131

Included in the cash and bank balances of the Group is RM1,158,751 (2003 – RM518,922) maintained under the Housing Development Accounts pursuant to Section 7A of the Housing Development (Control and Licensing ) Act, 1966.

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


Page 44

21. PAYABLES THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Trade payables 19,943,924 20,217,451 - - Retention payable 8,228,498 5,680,103 - - Total trade payables 28,172,422 25,897,554 - - Other payables and accruals 458,594 632,977 230,925 331,492 Hire purchase payables (Note 27a) 87,784 87,784 - - 28,718,800 26,618,315 230,925 331,492

Credit terms of trade payables range from 30 days to 60 days. Included in other payables is an amount owing to a related party of RM108,519 (2003 -

RM108,222). The details of the transaction and the balance are disclosed in Note 42 to the financial statements.

22. AMOUNTS OWING TO DIRECTORS

THE GROUP THE COMPANY 2004 2003 2004 2003 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 482,801 482,801 - - 2,450,481 2,450,481 1,967,680 1,967,680

The above amounts owing are interest free, unsecured and not subject to fixed terms of

repayment except for the amount owing to Sia Kwee Mow @ Sia Hok Chai which bears interest at 5.5% (2003 - 5.5%) per annum.


Page 45

23. SHORT TERM BORROWINGS THE GROUP 2004 2003 SECURED UNSECURED TOTAL SECURED UNSECURED TOTAL RM RM RM RM RM RM Bridging loan (Note 29) 2,993,580 - 2,993,580 8,167,060 - 8,167,060 Term loans (Note 28) 13,147 - 13,147 1,568,480 - 1,568,480 Revolving credits - 16,294,400 16,294,400 - 16,794,400 16,794,400 Bank overdrafts (Note 39) - 20,640,185 20,640,185 - 21,177,916 21,177,916 3,006,727 36,934,585 39,941,312 9,735,540 37,972,316 47,707,856

THE COMPANY 2004 2003 SECURED UNSECURED TOTAL SECURED UNSECURED TOTAL RM RM RM RM RM RM Bridging loan (Note 29) - - - - - - Term loans (Note 28) - - - - - - Revolving credits - 5,000,000 5,000,000 - 5,000,000 5,000,000 Bank overdrafts (Note 39) - 6,580,169 6,580,169 - 6,413,736 6,413,736 - 11,580,169 11,580,169 - 11,413,736 11,413,736

The weighted average effective interest rates at the balance sheet date for borrowings which

bear interest at floating rates, were as follows:

THE GROUP THE COMPANY 2004 2003 2004 2003 % % % % Bridging loan 7.76 7.87 - - Term loans 7.55 7.94 - - Revolving credits 6.03 6.05 7.55 7.55 Bank overdrafts 8.21 8.45 8.28 8.68


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24. ABBA BONDS

THE GROUP/THE COMPANY 2004 2003 RM RM Al-Bai Bithaman Ajil Bonds (nominal value) 61,961,250 61,961,250 Less: ABBA Bonds issuance expenses (1,151,690) (1,151,690) Finance charges on bonds issue (21,961,250) (21,961,250) Net proceeds 38,848,310 38,848,310 Additional ABBA Bonds issuance expenses (71,722) - 38,776,588 38,848,310 Cumulation of amortisation of ABBA Bonds issuance expenses 437,636 134,364 Cumulation of amortisation of finance charges on ABBA Bonds issue 6,693,434 2,562,145 Net proceeds 45,907,658 41,544,819 Repayment made in previous financial year (1,239,225) - Repayment made during the year (2,478,450) (1,239,225) Total repayments (3,717,675) (1,239,225) 42,189,983 40,305,594 Analysis of the ABBA Bonds: - Not later than one year 2,478,450 2,478,450 - Later than one year and not later than five years 39,711,533 37,827,144 42,189,983 40,305,594


Page 47

24. ABBA BONDS (CONT’D)

In the previous financial year, the Company issued RM61,961,250 nominal value Al-Bai Bithaman Ajil Bonds (ABBA Bonds) comprising RM49,569,000 nominal value Primary Bonds and 10 equal tranches Secondary Bonds with RM12,392,250 nominal value. The Primary Bonds are redeemable at maturity. Each Primary Bond is supported by 10 Secondary Bonds which are redeemable in semi-annual instalments commencing 6 months from the date of the first issue of the Secondary Bonds. The ABBA Bonds were placed out to a licensed financial institutions via a private placement. The tenure of the ABBA Bonds is 5 years from the date of issue. The profit margin on the ABBA Bonds is fixed at 5% per annum, payable in arrears on a semi-annual basis represented by the Secondary Bonds. The ABBA Bonds are issued based on a 10% per annum yield to maturity. The ABBA Bonds are secured in the following manner:- (i) by a third party first legal charge over certain properties of a subsidiary;

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

subsidiary in an associate;

(iii) by a first party charge over a reserve account which is an Islamic banking account has 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 of the

Company. 25. SHARE CAPITAL

THE COMPANY 2004 2003 2004 2003 NUMBER OF SHARES RM RM AUTHORISED ORDINARY SHARES OF RM1 EACH:- At 1 April/31 March 193,167,000 193,167,000 193,167,000 193,167,000 5.5% ICCPS of RM1 each At 1 April/31 March 6,833,000 6,833,000 6,833,000 6,833,000 Total authorised share capital

200,000,000

200,000,000

200,000,000

200,000,000


Page 48

25. SHARE CAPITAL (CONT’D) 2004 2003 2004 2003 NUMBER OF SHARES RM RM ISSUED AND FULLY PAID-UP ORDINARY SHARES OF RM1 EACH:- At 1 April/31 March 75,602,000 50,468,943 75,602,000 50,468,943 Allotment during the financial year - 25,133,057 - 25,133,057 At 31 March 75,602,000 75,602,000 75,602,000 75,602,000 5.5% ICCPS of RM1 each At 1 April/31 March 6,833,000 6,833,000 6,833,000 6,833,000 Total issued and fully paid-up share capital 82,435,000 82,435,000 82,435,000 82,435,000

The main terms of the 5.5% ICCPS are as follows:- (a) entitlement to receive a fixed cumulative preferential dividend of 5.5% per annum

payable annually in arrears; (b) the ICCPS shall mature after 5 years from the date of issue on 5 May 1999 and will

be automatically converted into ordinary shares of the Company on the maturity date of 4 May 2004;

(c) the holders have the option to convert all ICCPS into ordinary shares at any time after

the date of issue until the maturity date. The ICCPS are not redeemable for cash; (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 of

return of capital on liquidation or otherwise for the par value of the ICCPS plus any dividends in arrears, provided that there shall be no further right to participate in the surplus assets or profits of the Company; and

(f) there are no voting rights other than the rights to vote at meetings convened for the

purpose 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 of the ICCPS.


Page 49

26. RESERVES THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Share premium (Note a) At 1 April 2003/2002 111,412,895 20,995,752 111,412,895 20,995,752 Arising from issuance of shares - 90,471,143 - 90,471,143 Set-off against expenses incurred on conversion of ICULS - (54,000) - (54,000) At 31 March 111,412,895 111,412,895 111,412,895 111,412,895 Capital reserve (Note b) 1,199,999 1,199,999 - - Retained profits (Note c) 23,327,060 22,068,982 22,063,702 23,231,053 135,939,954 134,681,876 133,476,597 134,643,948

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

by a former subsidiary, and is not available for distribution by way of dividends. (c) Subject to agreement with the tax authorities, at the balance sheet date, the

Company has:-

(i) tax-exempt income of approximately RM233,000 (2003 - 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 the

payment of dividends of approximately RM11,366,000 (2003 - RM11,366,000) out of its entire retained profits without incurring any additional tax liability.


Page 50

27. DEFERRED LIABILITIES THE GROUP 2004 2003 RM RM Term loans (Note 28) 2,728,699 2,460,155 Hire purchase payables (Note a) 47,700 135,484 Deferred taxation (Note 30) 966,746 966,746 Amount owing to the Sabah State Government (Note b) 29,069,000 29,069,000 32,812,145 32,631,385

(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 60,342 171,258 171,258 282,174 Future finance charges (35,774) (58,906) Present value of hire purchase liabilities 135,484 223,268 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 47,700 135,484 135,484 223,268

The hire purchase liabilities at the balance sheet date were subject to interest at rates ranging from 5.25% to 5.35% (2003 - 5.25% to 5.35%) per annum.


Page 51

27. DEFERRED LIABILITIES (CONT’D) (b) Amount owing to the Sabah State Government

The amount owing arose from the acquisition of a subsidiary, South-East Best Sdn. Bhd. (“SEB”) and shall be paid in the form of 130 units of the property to be developed and completed within a period of five years from the commencement of their construction as consideration in kind pursuant to a joint venture contract entered into by SEB with the State Government. The contract, dated 5 September 1994, states that the subsidiary is committed to jointly develop with the Sabah State Government a parcel of state land covering an area 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 of their entitlement for the outstanding amount of RM29,069,000. The change of entitlement is in the form of the construction of an office building for the Land and Survey Department (Jabatan Tanah dan Ukur) and part of a building for the Ministry of Finance at a value equivalent to the amount outstanding of RM29,069,000. On 21 October 2002, the subsidiary was requested to prepare the Contract Document and Estimation for the above project. To-date, the subsidiary is in the process of finalising the details of the project with the Sabah State Government.


Page 52

28. TERM LOANS THE GROUP 2004 2003 RM RM Term loans 2,741,846 4,028,635 Less: Portion repayable within twelve months (Note 23) (13,147) (1,568,480) Portion repayable after twelve months (Note 27) 2,728,699 2,460,155

The long term loans are repayable as follows:- Not later than one year 13,147 1,568,480 Later than one year and not later than five years 2,329,435 2,029,475 Later than five years 399,264 430,680 2,741,846 4,028,635 Details of the term loans outstanding at the balance sheet date are as follows:- THE GROUP 2004 2003 Term loan RM RM

1 2,267,272 3,541,663 2 474,574 486,972

2,741,846 4,028,635

Number of Monthly Interest Rate Date of Term loan Monthly Instalment Per Annum Commencement Instalments Amount % of Repayment RM

1 25 141,667 7.75% May 2003 * 2 264 3,673 6.60% January 2003

* The bank has agreed to defer seventeen monthly principal installments of RM141,667

each for eighteen months commencing 1 May 2004 and the subsequent installments shall commence from 1 November 2005.


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28. 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 a subsidiary;

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

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

29. BRIDGING LOAN

THE GROUP 2004 2003 RM RM Not later than one year (Note 23) 2,993,580 8,167,060

The syndicated bridging loan from three licensed financial institutions is subject to interest at rates disclosed in Note 23 to the financial statements 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 future

assets of a subsidiary; (iii) an assignment of all present and future rights, title and interest under a construction

contract and construction guarantees from a related company of a subsidiary; and (iv) the joint and several guarantee of a director of a subsidiary and the Company. The loan is repayable by way of redemption of the individual units of a subsidiary’s development property, or in 7 quarterly instalments commencing July 2003, whichever is earlier.


Page 54

30. DEFERRED TAXATION THE GROUP 2004 2003 RM RM At 1 April 2003/2002 966,746 - Addition through the revaluation surplus on leasehold land of a subsidiary - 966,746 966,746 966,746

31. NET TANGIBLE ASSETS PER SHARE The net tangible assets per share is calculated based on the net tangible assets value of

RM184,224,314 (2003 - RM183,012,032) attributable to ordinary shares divided by the number of ordinary shares in issue at the balance sheet date of 75,602,000 (2003 - 75,602,000) shares.

32. TURNOVER

THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Revenue from construction contracts 49,919,830 35,362,729 - - Proportionate sales value of development properties 36,270,464 34,366,715 - - Rental income 73,600 64,200 - - Dividend income - - 4,928,000 8,090,000 Interest income 52,745 35,275 52,745 35,275 Other interest income - - 559,943 587,338 Management and administrative charges - - 1,680,049 270,000 86,316,639 69,828,919 7,220,737 8,982,613 Continuing operations: - existing 86,316,639 65,260,219 7,220,737 8,982,613 - new acquisition - 4,568,700 - - 86,316,639 69,828,919 7,220,737 8,982,613


Page 55

33. COST OF SALES THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Contract costs 56,131,953 37,647,813 - - Construction costs 56,131,953 37,647,813 - - Land and development expenditure 12,625,057 10,913,140 - - Direct costs 88,062 88,062 - - Management and administrative charges 55,707 50,525 - - 68,900,779 48,699,540 - -

34. PROFIT BEFORE TAXATION

THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Profit before taxation is arrived at after charging/ (crediting):- Allowance for doubtful debts 828,553 8,625,447 - - Amortisation of bond expenses 303,272 134,364 303,272 134,364 Auditors’ remuneration - for the financial year 67,600 59,700 13,000 13,000 - underprovision in the previous financial year 4,200 2,000 - 2,000 Bad debts written off - 110,965 - - Depreciation of property, plant and equipment 446,060 406,603 23,474 22,351 Directors’ benefits-in- kind 16,925 16,925 16,925 16,925 Directors’ fees 52,000 67,000 52,000 67,000 Directors’ remuneration 791,520 752,400 489,120 516,900 Finance charges on bonds 4,131,289 2,562,145 4,131,289 2,562,145


Page 56

34. PROFIT BEFORE TAXATION (CONT’D)

THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Profit before taxation is arrived at after charging/ (crediting):- Interest expense - bank borrowings 2,845,495 3,178,494 1,042,298 1,093,069 - hire purchase 23,132 23,132 - - - loans 108,519 113,476 333,408 787,029 - others 2,000 530,474 - - Loss on disposal of investment properties 1,557,400 150,154 - - Plant and equipment written off 13,663 - - - Rental expense - premises 3,600 - 12,000 60,000 - machinery and equipment 8,207 15,651 - - Staff costs 3,069,674 2,598,056 160,107 72,786 Gross dividend income - subsidiaries (unquoted) - - (3,200,000) (5,300,000) - associate - - (1,728,000) (2,790,000) Interest income - licensed financial institutions (59,137) (36,891) (52,745) (35,275) - subsidiaries - - (559,943) (587,338) - others (48,185) (73,713) - - Gain on disposal of property, plant and equipment (313,882) (7,302) - - Rental of premises (316,621) (315,672) - - Writeback of allowance for doubtful debts - (1,988,813) - - Writeback of diminution in value of inventory - (6,527) - -


Page 57

35. TAXATION THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Current 2,000,589 982,916 228,520 913,324 Share of associates’ taxation 1,014,472 1,100,935 - - 3,015,061 2,083,851 228,520 913,324 Underprovision in the previous financial years 1,908,093 1,054,742 593,335 - 4,923,154 3,138,593 821,855 913,324

Subject to agreement with the tax authorities, the Group has unutilised tax losses and

unabsorbed capital allowances of approximately RM2,308,400 (2003 – RM5,834,000) and RM317,000 (2003 – RM725,000) respectively available at the balance sheet date to be carried forward for offset against future taxable business income.


Page 58

35. TAXATION (CONT’D) A reconciliation of the income tax expense applicable to the profit before taxation at the

statutory tax rate to the income tax expense at the effective tax rate of the Group and of the Company is as follows:-

THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Profit before taxation 6,996,149 5,149,486 469,421 3,291,496 Tax at applicable tax rates 1,958,921 1,441,856 131,438 921,619 Tax effects of: Non-deductible expenses 1,119,212 692,513 251,606 61,352 Non-taxable gains (1,835) (557,000) - - Deferred tax assets not recognised during the financial year 358,834 806,161 - 5,953 Underprovision in the previous financial years 1,908,093 1,054,742 593,335 - Reversal of deferred tax assets not recognised in the previous financial year (510,880) - (154,524) - Tax losses disallowed during the financial year 1,016 2,810 - - Others 89,793 (302,489) - (75,600) 4,923,154 3,138,593 821,855 913,324


Page 59

36. EARNINGS PER SHARE Basic earnings per share (“EPS”) is arrived at by dividing the profit after taxation

attributable to shareholders after deducting the preference dividend of RM270,587 (2003 - RM270,587) by the weighted average number of ordinary shares in issue at the balance sheet date of 75,602,000 (2003 - 73,507,579).

The computation of diluted EPS is not applicable as the effects of conversion of each

class of potential ordinary shares are anti-dilutive. 37. DIVIDENDS

2004 2003 RM RM Declared - dividend of 5.5% per ICCPS less 28% tax 270,587 270,587 (2003 - 5.5% per ICCPS less 28% tax) Paid - dividend of 1% per ordinary share less 28% tax (2003 - Nil) 544,330 - 814,917 270,587

At the forthcoming Annual General Meeting, a final dividend in respect of the financial

year ended 31March 2004 of 1 sen per ordinary share of RM1 each less 28% tax (2003 - 1 sen per ordinary share of RM1 each less 28% tax) amounting to RM593,532 (2003 - RM544,330) will be tabled for shareholders’ approval. These financial statements do not reflect this final dividend which will be accrued as a liability only upon approval by shareholders.


Page 60

38. SUMMARY OF EFFECTS OF ACQUISITION OF A SUBSIDIARY In the previous financial year, the Company paid RM35,000,000 in cash to acquire an

80% equity interest in South-East Best Sdn. Bhd. The effect of the acquisition of the subsidiary on the financial results of the Group for the

financial year was as follows:- THE GROUP 2004 2003 RM RM Turnover - 4,568,700 Cost of sales - (3,855,913) Gross profit - 712,787 Other operating income - 509,312 Less: Operating expenses Administrative 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 the

financial year end is as follows:-

THE GROUP 2004 2003 RM RM 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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38. SUMMARY OF EFFECTS OF ACQUISITION OF A SUBSIDIARY (CONT’D)

The details of net assets acquired and cashflow arising from the acquisition of the subsidiaries are as follows:-

THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM 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


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39. CASH AND CASH EQUIVALENTS For the purpose of the cash flow statements, cash and cash equivalents comprise the

following:- THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM Short term deposits (Note 19) 1,407,125 1,422,125 1,239,225 1,239,225 Cash and bank balances (Note 20) 3,474,278 6,084,094 2,012,100 5,201,131 Bank overdrafts (20,640,185) (21,177,916) (6,580,169) (6,413,736) (15,758,782) (13,671,697) (3,328,844) 26,620 Less: Cash placed in sinking fund account (Note 20) (2,010,000) (5,198,398) (2,010,000) (5,198,398) (17,768,782) (18,870,095) (5,338,844) (5,171,778)

40. DIRECTORS’ REMUNERATION

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

THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM DIRECTORS’ FEES:-

1. Mun Chong Shing @ Mun Chong Tian 12,000 12,000 12,000 12,000 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 5,000 12,000 5,000 12,000 5. Vincent Koh Kok Kee 2,000 12,000 2,000 12,000 6. Dato’ Zainol Abidin bin Haji A. Hamid 6,000 - 6,000 - 7. Ahmad Fizal Bin Othman 2,000 - 2,000 - 8. Tan Sri Dato’ Ir Muhammad Yusuff Bin Haji Muhammad Yunus - 6,000 - 6,000 52,000 67,000 52,000 67,000


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40. DIRECTORS’ REMUNERATION (CONT’D)

THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM DIRECTORS’ NON-FEES EMOLUMENTS:-

1. Sia Kwee Mow @ Sia Hok Chai 443,520 486,000 443,520 486,000 2. Sia Teong Heng 336,000 255,000 33,600 19,500 3. Mun Chong Shing @ Mun Chong Tian 2,400 1,200 2,400 1,200 4. Dato’ Lim Phaik Gan 3,600 1,200 3,600 1,200 5. Dato’ Dr. Norraesah Bt Haji Mohamad 3,900 2,400 3,900 2,400 6. Datuk Sim Peng Choon 600 3,000 600 3,000 7. Vincent Koh Kok Kee 900 3,000 900 3,000 8. Tan Sri Dato’ Ir Muhammad Yusuff Bin Haji Muhammad Yunus - 600 - 600 9. Dato’ Zainol Abidin bin Haji A. Hamid 600 - 600 - 791,520 752,400 489,120 516,900

Apart from the amounts disclosed under directors’ remuneration above, the estimated

monetary value of other benefits-in-kind received by the following directors during the financial year, otherwise than in cash are as follows:-

THE GROUP THE COMPANY 2004 2003 2004 2003 RM RM RM RM 1. Sia Kwee Mow @ Sia Hok Chai 16,925 16,925 16,925 16,925


Page 64

41. RELATED COMPANY TRANSACTIONS THE COMPANY 2004 2003 RM RM Interest paid to subsidiaries 224,889 678,807 Rental paid to a subsidiary 12,000 60,000 Dividend income received/receivable from subsidiaries 3,200,000 5,300,000 Interest received from subsidiaries 559,943 587,338 Management fee received from subsidiaries 1,680,049 270,000

42. RELATED PARTY TRANSACTIONS/BALANCES

GROUP NAME OF RELATED PARTY

NOTE

NATURE OF TRANSACTION

2004

2003

RM RM Ligamas Sdn. Bhd (a) Progress billings received/receivable 49,919,830 19,114,882 Paling Industries Sdn. Bhd. (a) Purchase of materials 93,652 58,873 Gross dividend income received 1,728,000 2,790,000 Sri Rawang Properties (a) Gross dividend income Sdn. Bhd. received 150,005 150,000 Sri Berjaya Development (a) Gross dividend income Sdn. Bhd. received 242,666 - LOM Holdings Sdn. Bhd. (e) Acquisition of a motor vehicle 90,000 - Sia Poh Eng (c) Property sold - 550,000 Sia Kwee Mow @ Sia Hock Chai (d) Interest paid/payable 108,519 108,222


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

RECEIVABLE PAYABLE GROUP GROUP NAME OF 2004 2003 2004 2003 RELATED PARTIES NOTE RM RM RM RM Ligamas Sdn Bhd. (a) 12,021,388 9,886,903 - - Smart Home Sdn. Bhd. (b) 37,720,372 37,720,372 - - Sia Poh Eng (c) - 500,000 - - Sia Kwee Mow @ Sia Hok Chai (d) - - 108,519 108,222 Peak Marketing Sdn. Bhd.

(f) -

-

66,645

66,645

(a) Associates

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

direct interest. (c) A person connected to Sia Kwee Mow @ Sia Hok Chai and Sia Teong Heng

(d) A director of the Company

(e) A substantial shareholder of the Company

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

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

43. CONTINGENT LIABILITIES

THE COMPANY 2004 2003 RM RM Corporate guarantee (unsecured) given to banks and other licensed financial institutions for credit facilities granted to subsidiaries 49,444,912 30,523,000


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44. SEGMENTAL REPORTING

THE GROUP 2004

MANUFACTURING PROPERTY AND CONSTRUCTION DEVELOPMENT INVESTMENT TRADING ELIMINATIONS GROUP RM RM RM RM RM RM REVENUE: External revenue 49,919,830 36,270,464 126,345 - - 86,316,639 Intersegment revenue 16,693,194 - 7,746,381 - (24,439,575) - Total revenue 66,613,024 36,270,464 7,872,726 - (24,439,575) 86,316,639 Results: Segment results 8,288,220 2,590,585 6,291,718 (7,987) (6,525,882) 10,636,654 Finance costs (7,263,617) Share of results of associates - 2,512,271 - 1,110,841 - 3,623,112 Profit from ordinary activities before taxation 6,996,149 Taxation (4,923,154) Profit from ordinary activities after taxation 2,072,995

MANUFACTURING PROPERTY AND CONSTRUCTION DEVELOPMENT INVESTMENT TRADING GROUP RM RM RM RM RM Other information Segment assets 31,821,441 290,967,684 23,771,453 11,544,983 358,105,561 Unallocated assets 8,331,990 366,437,551 Segment liabilities 42,636,445 48,802,170 14,355,639 78,360 105,872,614 Unallocated liabilities 42,189,983 148,062,597 Capital expenditure 333,977 584,399 6,500 - 924,876 Depreciation 172,645 239,203 33,535 677 446,060


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44. SEGMENTAL REPORTING (CONT’D)

THE GROUP 2003 MANUFACTURING PROPERTY AND CONSTRUCTION DEVELOPMENT INVESTMENT TRADING ELIMINATIONS GROUP RM RM RM RM RM RM REVENUE: External revenue 35,362,729 34,366,715 99,475 - - 69,828,919 Intersegment 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) 8,016,004 Finance costs (6,793,334) Share of results of associates - 1,884,741 - 2,042,075 3,926,816 Profit from ordinary activities before taxation 5,149,486 Taxation (3,138,593) Profit from ordinary activities after taxation 2,010,893

MANUFACTURING PROPERTY AND CONSTRUCTION DEVELOPMENT INVESTMENT TRADING GROUP RM RM RM RM RM Other information Segment assets 39,398,622 287,381,500 26,959,851 12,846,046 366,586,019 Unallocated assets 5,350,142 371,936,161 Segment liabilities 43,876,909 55,859,860 14,750,259 26,663 114,513,691 Unallocated 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

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


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45. SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE

During the financial year, Smart Home Sdn. Bhd. proposed to settle its debts owing to Mixwell (Malaysia) Sdn. Bhd. and Syarikat Siah Brothers Construction Sdn. Bhd. amounting to RM37,720,372 in aggregate, through the transfer of six parcels of development land with an aggregate market value of RM37,828,242 (“The Proposed Debt Settlement”). On 16 April 2004, the Proposed Debt Settlement was approved by the shareholders of the Company at an extraordinary general meeting.

46. NUMBER OF EMPLOYEES

THE GROUP THE COMPANY 2004 2003 2004 2003 Number of employees at the balance sheet date 100 90 9 9

47. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES Fair value is defined as the amount at which the financial instrument could be exchanged in a

current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation. Fair values are obtained from quoted market 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 class of

financial instruments:- (i) Bank balances and other liquid funds and short term receivables The carrying amounts approximate the fair values due to the relatively short term

maturity of these instruments.

(ii) Quoted and unquoted investments

The fair values of quoted investments are estimated based on quoted market prices for these investments. For unquoted investments, it is not practicable to determine the fair values because of the lack of quoted market prices and the assumptions used in valuation models to value these investments cannot be reasonably determined.


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

(iii) Short term borrowings and other current liabilities

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

(iv) Long term bank loans

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

(v) Hire purchase obligations The fair value of hire purchase obligations is determined by discounting the relevant

cash flow using current interest rates for similar instruments at the balance sheet date.

There is no disclosure of fair value for investments in subsidiaries and associates, and

borrowings under the basis of Islamic banking principles as these are excluded from MASB 24 - Financial Instruments: Disclosure and Presentation.

sbc corporation berhad: annual audited accounts 2004

Investor Relations

sia teong heng

ng kee chye

sia poh eng

sbc corporation berhad

sinking fund account

deductible temporary differences

proposed debt settlement

smart home sdn