sbc corporation berhad: annual audited accounts 2005

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

DIRECTORS’ REPORT

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

PRINCIPAL ACTIVITIES

The Company is principally engaged in the businesses of investment holding and the provision ofmanagement and administrative services to the subsidiaries. The principal activities of thesubsidiaries are disclosed in Note 6 to the financial statements. There have been no significantchanges in the nature of these activities during the financial year.

RESULTS THE GROUP THE COMPANYRM RM

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

DIVIDENDS

Since the end of the previous financial year, the Company paid a dividend of 5.5% perIrredeemable Convertible Cumulative Preference Share (“ICCPS”) less 28% tax amounting toRM270,587 in respect of the previous financial year, in accordance with the terms of issue of theICCPS and a first and final dividend of 1% per ordinary share less 28% tax amounting toRM593,527 in respect of the previous financial year.

For the current financial year,

(a) the directors have declared the payment of a dividend of 5.5% per ICCPS less 28% taxamounting to RM24,463, in accordance with the terms of issue of the ICCPS; and

(b) the directors recommend the payment of first and final dividend of 1% per ordinary sharesless 28% tax amounting to RM593,527.

RESERVES AND PROVISIONS

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


DIRECTORS’ REPORT

ISSUES OF SHARES AND DEBENTURES

During the financial year,

(a) there were no changes in the authorised and issued and paid-up share capital of theCompany except that the ICCPS were converted into 6,833,000 ordinary shares of RM1each of the Company on their maturity date on 4 May 2004. The new shares which arosefrom the conversion of the ICCPS rank pari passu in all respects with the existing sharesof 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 tosubscribe for new shares of RM1 each in the Company at an exercise price of RM1.40 per shareis as follows:-

NUMBER OFORDINARYSHARES OFRM1 EACH

UNDER OPTION

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

At 31 March 2005 1,411,000

The salient features of the ESOS are as follows:-

(i) eligible employees are employees who have served in the employment of any companywithin 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 timeduring the existence of the ESOS which shall be in force for a period of 5 years from the dateof offer;

(iii) the possible allocation for any single eligible employee during the existence of the ESOSshall not be less than 1,000 or more than 450,000 shares subject to the maximum allowableallocation according to their respective categories;


DIRECTORS’ REPORT

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

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

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

The ESOS was expired on 13 July 2005.

OPTIONS GRANTED OVER UNISSUED SHARES

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

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors tookreasonable steps to ascertain that action had been taken in relation to the writing off of bad debtsand the making of allowance for doubtful debts, and satisfied themselves that there are no knownbad 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 thewriting off of bad debts, or additional allowance for doubtful debts in the financial statements of theGroup and of the Company.

CURRENT ASSETS

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

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


DIRECTORS’ REPORT

VALUATION METHODS

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

CONTINGENT AND OTHER LIABILITIES

The contingent liability of the Company is disclosed in Note 43 to the financial statements. At thedate 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 ofthe 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 ofthe financial year.

No contingent or other liability of the Group and of the Company has become enforceable or is likelyto become enforceable within the period of twelve months after the end of the financial year which, inthe opinion of the directors, will or may substantially affect the ability of the Group and of theCompany 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 inthis report or the financial statements of the Group and of the Company which would render anyamount 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, inthe opinion of the directors, substantially affected by any item, transaction or event of a material andunusual nature.

There has not arisen in the interval between the end of the financial year and the date of this reportany 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 financialyear.


DIRECTORS’ REPORT

DIRECTORS

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

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

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

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

DIRECTORS’ INTERESTS

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

NUMBER OF ORDINARY SHARES OF RM1 EACHAT

1.4.2004 BOUGHT SOLDAT

31.3.2005DIRECT INTERESTSSIA KWEE MOW @ SIA HOK CHAI 1,480,800 - - 1,480,800SIA TEONG HENG 1,327,992 1,190,000 - 2,517,992MUN CHONG SHING @ MUN CHONG TIAN 21,782 - - 21,782

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

NUMBER OF ORDINARY SHARES OF RM1 EACHUNDER OPTION

AT1.4.2004 GRANTED EXERCISED

AT31.3.2005

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


DIRECTORS’ REPORT

DIRECTORS’ INTERESTS (CONT’D)

By virtue of their interests in the Company, Sia Kwee Mow @ Sia Hok Chai and Sia Teong Hengare deemed to have interests in the shares in the subsidiaries to the extent of the Company’sinterest, in accordance with Section 6A of the Companies Act, 1965.

None of the other directors holding office at the end of the financial year had any interest in sharesor 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 receiveany benefit (other than a benefit included in the aggregate amount of emoluments received or dueand receivable by directors as shown in the financial statements, or the fixed salary of a full-timeemployee of the Company) by reason of a contract made by the Company or a related corporationwith the director or with a firm of which the director is a member, or with a company in which thedirector has a substantial financial interest except for any benefits which may be deemed to arisefrom transactions entered into in the ordinary course of business with companies in which certaindirectors 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 anyarrangements whose object is to enable the directors to acquire benefits by means for theacquisition of shares in or debentures of the Company or any other body corporate except for theshare options granted pursuant to the ESOS.

SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

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


DIRECTORS’ REPORT

AUDITORS

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

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORSDATED 20 JULY 2005

Sia Kwee Mow @ Sia Hok Chai

Mun Chong Shing @ Mun Chong Tian


STATEMENT BY DIRECTORS

We, Sia Kwee Mow @ Sia Hok Chai and Mun Chong Shing @ Mun Chong Tian, being two of thedirectors of SBC Corporation Berhad, state that, in the opinion of the directors, the financialstatements set out on pages 11 to 67 are drawn up in accordance with applicable approvedaccounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give atrue and fair view of the state of affairs of the Group and of the Company at 31 March 2005 andof their results and cash flows for the financial year ended on that date.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORSDATED 20 JULY 2005

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

STATUTORY DECLARATION

I, Ng Kee Chye, I/C No. 640324-06-5691, being the officer primarily responsible for the financialmanagement of SBC Corporation Berhad, do solemnly and sincerely declare that the financialstatements set out on pages 11 to 67 are, to the best of my knowledge and belief, correct, and Imake this solemn declaration conscientiously believing the same to be true and by virtue of theprovisions of the Statutory Declarations Act, 1960.

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

Ng Kee Chye

Before me,

Datin Hajah Raihela Wanchik (W275)Commissioner for Oaths

REPORT OF THE AUDITORS TO THE MEMBERS OFSBC CORPORATION BERHAD(Incorporated In Malaysia)Company No : 199310 - P

We have audited the financial statements set out on pages 11 to 67. The preparation of thefinancial statements is the responsibility of the Company’s directors.

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

We conducted our audit in accordance with approved standards on auditing in Malaysia. Thesestandards require that we plan and perform the audit to obtain reasonable assurance that thefinancial statements are free of material misstatement. Our audit included examining, on a testbasis, evidence relevant to the amounts and disclosures in the financial statements. Our auditalso included an assessment of the accounting principles used and significant estimates madeby the directors as well as evaluating the overall adequacy of the presentation of information inthe 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 theCompanies Act, 1965 and applicable approved accounting standards in Malaysia so as togive a true and fair view of:-

(i) the state of affairs of the Group and of the Company at 31 March 2005 and theirresults and cash flows for the financial year ended on that date; and

(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt within 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, 1965to be kept by the Company and by the subsidiaries of which we have acted as auditorshave been properly kept in accordance with the provisions of the said Act.

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

REPORT OF THE AUDITORS TO THE MEMBERS OFSBC CORPORATION BERHAD (CONT’D)(Incorporated in Malaysia)Company No : 199310 - P

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

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

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

Kuala Lumpur20 July 2005


BALANCE SHEETS AT 31 MARCH 2005

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

THE GROUP THE COMPANY 2005 2004 2005 2004

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

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

CURRENT ASSETSInventories 12 4,359,492 8,604,731 - -Property development costs 13 54,745,687 50,449,300 - -Receivables 14 28,150,859 66,593,226 143,077 209,050Amount owing by contract customers 15 969,629 4,775,992 - -Amounts owing by subsidiaries 16 - - 61,299,355 55,919,091Amount owing by associates 17 5,399,534 5,533,926 11,434 11,434Tax recoverable 18 6,607,700 8,331,990 8,597,916 11,823,151Short term deposits with licensed banks 19 1,364,225 1,407,125 1,239,225 1,239,225Cash and bank balances 20 5,612,658 3,474,278 4,027,843 2,012,100

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

CURRENT LIABILITIESAmount owing to contract customers 15 8,194 1,601,053 - -Payables 21 29,491,952 28,718,800 256,127 230,925Amounts owing to subsidiaries 16 - - 15,155,558 12,563,323Amounts owing to associates 17 547,586 78,236 - -Amounts owing to directors 22 1,867,680 2,450,481 1,867,680 1,967,680Dividend payable - 270,587 - 270,587Short term borrowings 23 16,749,403 19,301,127 5,000,000 5,000,000ABBA Bonds 24 2,478,450 2,478,450 2,478,450 2,478,450Bank overdrafts 25 18,824,019 20,640,185 5,760,593 6,580,169

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

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

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


BALANCE SHEETS AT 31 MARCH 2005 (CONT’D)



NOTE RM RM RM RM

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

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

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

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


INCOME STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2005



NOTE RM RM RM RM

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

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

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

OTHER OPERATING INCOME 1,026,365 3,911,925 50,850 -

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

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

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

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

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

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

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

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

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

Dividend per ordinary share - final 38 - 1 sen


STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 MARCH 2005


SHARE SHARE RETAINED CAPITAL CAPITAL PREMIUM PROFITS RESERVE TOTAL

NOTE RM RM RM RM RMTHE GROUP

Balance at 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 38 - - (814,917) - (814,917)

Balance at 31.3.2004/ 1.4.2004 82,435,000 111,412,895 23,327,060 1,199,999 218,374,954


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

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

THE COMPANY

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

Loss after taxation for the financial year - - (352,434) - (352,434)

Dividends 38 - - (814,917) - (814,917)

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


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

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

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

2005 2004 RM RM

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

24,959,499 23,327,060


CASH FLOW STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2005



NOTE RM RM RM RMCASH FLOWS FROM/ (FOR) OPERATING ACTIVITIESProfit before taxation 3,321,254 6,996,149 1,859,451 469,421

Adjustments for:-Allowance for doubtful debts - 828,553 - -Amortisation of bonds expenses 275,709 303,272 275,709 303,272Depreciation of property, plant and equipment 459,128 446,060 17,792 23,474Interest expense/ finance charges 4,844,740 7,110,435 5,583,651 5,506,995Impairment loss on interest in an associate 330,565 - - -Plant and equipment written off - 13,663 - -Other investment written off 45,000 135,000 - -Dividend income - - (5,404,800) (4,928,000)Loss/(Gain) on disposal of property, plant and equipment 19,177 (313,882) - -(Gain)/Loss on disposal of investment properties (15,082) 1,557,400 - -Interest income (203,425) (107,322) (1,389,168) (612,688)Write-back of allowance for doubtful debts (58,356) - (50,850) -Share of profits in associates (1,566,728) (3,623,112) - -

Operating profit before working capital changes 7,451,982 13,346,216 891,785 762,474Decrease in inventories 4,245,239 5,505,180 - -(Increase)/Decrease in property development costs (3,028,141) 4,712,161 - -Decrease/(Increase) in receivables 598,481 658,195 116,823 (85,088)Increase/(Decrease) in payables 1,291,820 1,707,814 25,202 (100,567)Net decrease/(increase) in amount owing by contract customers 2,213,504 (7,259,250) - -

CASH FROM OPERATIONS 12,772,885 18,670,316 1,033,810 576,819Interest paid (544,034) (3,402,444) (1,282,945) (1,375,706)Tax refundable/(paid) 1,256,001 (6,780,583) 4,116,757 -

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


CASH FLOW STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2005 (CONT’D)



NOTE RM RM RM RM

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

CASH FLOWS (FOR)/ FROM INVESTIING ACTIVITIESInterest received 203,425 107,322 1,389,168 612,688Dividends received from subsidiaries - - 3,456,000 2,304,000Dividends received from associates 435,456 1,526,883 435,456 1,244,160Purchase of property, plant and equipment (408,819) (924,876) - (5,750)Purchase of investment properties (1,640,541) (3,110,115) - -Proceeds from disposal of property, plant and equipment 7,700 345,560 - -Proceeds from disposal of investment properties 556,200 1,910,000 - -Incidental expenses on investment properties (424,603) (20,000) - -(Placement)/Withdrawal of cash in sinking fund account (2,015,883) 3,188,398 (2,015,883) 3,188,398

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

BALANCE CARRIED FORWARD 10,197,787 11,510,461 7,132,363 6,544,609


CASH FLOW STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2005 (CONT’D)



Note RM RM RM RM

BALANCE BROUGHT FORWARD 10,197,787 11,510,461 7,132,363 6,544,609

CASH FLOWS FOR FINANCING ACTIVITIESPayment of bonds expenses (57,871) (71,722) (57,871) (71,722)Repayment of bonds 24 (2,478,450) (2,478,450) (2,478,450) (2,478,450)Repayment to directors (582,801) - (100,000) -Net repayment by associates 603,742 3,994 - -Net advances to subsidiaries - - (2,788,029) (3,346,586)Dividend paid to shareholders of the company (593,527) (544,330) (593,527) (544,330)Dividend paid to holders of ICCPS (295,050) (270,587) (295,050) (270,587)Repayment of revolving credit (1,350,000) (500,000) - -Repayment of loans (3,460,283) (6,460,269) - -Repayment to hire purchase payables (87,784) (87,784) - -

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

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

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

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


NOTES TO FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2005

1. GENERAL INFORMATION

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

The financial statements were authorised for issue by the Board of Directors inaccordance with a resolution of the directors dated 20 July 2005.

2. PRINCIPAL ACTIVITIES

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

3. FINANCIAL RISK MANAGEMENT POLICIES

The Group's financial risk management policy seeks to ensure that adequate financialresources are available for the development of the Group's business whilst managing itsforeign currency, interest rate, market, credit, liquidity and cash flow risks. The policies inrespect of the major areas of treasury activity are as follows:-

(a) Foreign Currency Risk

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

(b) Interest Rate Risk

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

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



3. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Market Risk

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

(d) Credit Risk

The Group's exposure to credit risks, or the risk of counterparties defaulting,arises mainly from receivables. The maximum exposure to credit risks isrepresented by the total carrying amount of these financial assets in the balancesheet reduced by the effects of any netting arrangements with counterparties.

The Group does not have any major concentration of credit risk related to anyindividual customer or counterparty.

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

(e) Liquidity and Cash Flow Risk

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

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

4. BASIS OF ACCOUNTING

The financial statements are prepared under the historical cost convention and modified toinclude other bases of valuation as disclosed in other sections under significant accountingpolicies, and in compliance with applicable approved accounting standards in Malaysia andthe provisions of the Companies Act, 1965.



5. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of theCompany and all its subsidiaries made up to 31 March 2005.

A subsidiary is defined as an enterprise in which the Company has the power,directly or indirectly, to exercise control over the financial and operating policies so asto obtain benefits from its activities.

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

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

(b) Goodwill or Negative Goodwill On Consolidation

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

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



5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(c) Associates

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

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

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

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

(d) Property, Plant and Equipment

Property, plant and equipment, other than freehold land, are stated at cost lessaccumulated depreciation and impairment loss, if any. Freehold land is stated at costand is not depreciated.

The long term leasehold land has an unexpired term of more than fifty years and isnot amortised. The non-amortisation of the long term leasehold land has no materialeffect on the financial statements.

Depreciation is calculated under the straight-line method to write off the cost of theassets over their estimated useful lives. The principal annual rates used for thispurpose 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%




(e) Land and Hotel Development Expenditure

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

(f) Impairment of Assets

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

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

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

(g) Investments

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




(h) Investment Properties

Investment properties consist of investments in land and buildings that are notsubstantially occupied for use by, or in the operations, of the Company/Group.

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

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

(i) Inventories

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

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

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

(j) Property Development Costs

Property development costs comprise costs associated with the acquisition of landand all costs that are directly attributable to development activities or that can beallocated on a reasonable basis to such activities.

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




(j) Property Development Costs (Cont’d)

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

When the financial outcome of a development activity cannot be reliablyestimated, the property development revenue is recognised only to the extent ofproperty development costs incurred that will be recoverable. The propertydevelopment costs on the development units sold are recognised as an expensein the period in which they are incurred.

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

(k) Progress Billings/Accrued Billings

In respect of progress billings:-

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

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

(l) Amount Owing By/To Contract Customers

The amount owing by/to contract customers is stated at cost plus profits attributableto contracts in progress less progress billings and allowance for foreseeable losses, ifany. Cost includes direct materials, labour and applicable overheads.

(m) Receivables

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




(n) Payables

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

(o) Interest-bearing Borrowings

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

Borrowing costs directly attributable to the acquisition and construction ofdevelopment properties and property, plant and equipment are capitalised as part ofthe cost of those assets, until such time as the assets are ready for their intended useor sale.

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

(p) Bonds

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

(q) Taxation

Taxation for the year comprises current and deferred tax.

Current tax is the expected amount of income taxes payable in respect of the taxableprofit for the year and is measured using the tax rates that have been enacted orsubstantially enacted at the balance sheet date.

Deferred taxation is provided in full, using the liability method, on temporarydifferences arising between the tax bases of assets and liabilities and their carryingamounts in the financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences other thanthose that arise from goodwill or negative goodwill or from the initial recognition of anasset or liability in a transaction which is not a business combination and at the timeof the transaction, affects neither accounting profit nor taxable profit.




(q) Taxation (Cont’d)

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

Deferred tax assets and liabilities are measured at the tax rates that are expected toapply in the period when the asset is realised or the liability is settled, based on thetax 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 atransaction which is recognised directly in equity, in which case the deferred tax isalso charged or credited directly in equity, or when it arises from a businesscombination that is an acquisition, in which case the deferred tax is included in theresulting goodwill or negative goodwill. The carrying amounts of deferred tax assetsare reviewed at each balance sheet date and reduced to the extent that it is no longerprobable that sufficient taxable profits will be available to allow all or part of thedeferred tax assets to be utilised.

(r) Foreign Currencies

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

(s) Assets under Hire Purchase

Equipment acquired under hire purchase are capitalised in the financialstatements 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 financecharges so as to achieve a constant rate on the finance balance outstanding.Finance charges are allocated to the income statement over the periods of therespective hire purchase agreements.




(t) Equity Instruments

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

(u) Cash and Cash Equivalents

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

(v) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group and theCompany has become a party to the contractual provisions of the instruments.

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

Financial instruments are offset when the Group and the Company has a legallyenforceable right to offset and intends to settle either on a net basis or to realise theasset and settle the liability simultaneously.

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




(w) Employee Benefits

(i) Short-term Benefits

Wages, salaries, paid annual leave, bonuses and non-monetary benefits areaccrued in the period in which the associated services are rendered byemployees of the Company.

(ii) Defined Contribution Plans

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

(x) Income Recognition

(i) Construction Contracts

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

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



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

(ii) Property Development

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

Revenue from the sale of completed properties is recognised when the sale iscontracted.

Revenue on uncompleted properties contracted for sale is recognised basedon the stage of completion method unless the outcome of the developmentcannot be reliably determined in which case the revenue on the developmentis only recognised to the extent of development costs incurred that arerecoverable.

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

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

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

(iii) Revenue from Sales of Goods

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

(iv) Revenue from Services

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



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

(v) Management Fee and Administrative Charges

Management fee and administrative charges are recognised on an accrualbasis.

(vi) Rental Income

Rental income is recognised on an accrual basis.

(vii) Dividend Income

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

(viii) Interest Income

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

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

(y) Segmental Information

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

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

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



6. INVESTMENT IN SUBSIDIARIESTHE COMPANY

2005 2004 RM RM

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

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

Name of Company Effective Equity Interest Principal2005 2004 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.



6. INVESTMENT IN SUBSIDIARIES (CONT’D)Name of Company Effective Equity Interest Principal

2005 2004 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 Messrs. Horwath



7. INTEREST IN ASSOCIATES

THE GROUP THE COMPANY 2005 2004 2005 2004 RM RM RM RM

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

3,269,435 3,600,001 2,400,000 2,400,000Unquoted shares, at Group cost 91,618,314 91,618,314 - -Share of post acquisition reserves 17,375,079 16,846,341 - -

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

THE GROUP 2005 2004 RM RM

The interest in associates comprises:-

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

112,262,828 112,064,656

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

Effective Equity PrincipalName of Company Interest Activities

2005 2004% %

Ligamas Sdn. Bhd.# 50.0 50.0 Property development.

Varich Industries 50.0 50.0 Dormant. Sdn. Bhd.*

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



7. INTEREST IN ASSOCIATES (CONT’D)

Effective Equity PrincipalName of Company Interest Activities

2005 2004% %

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 amountsinvolved are insignificant.

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

## Held by Paling Industries Sdn. Bhd.

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



8. PROPERTY, PLANT AND EQUIPMENTTRANSFER TO

AT DEVELOPMENT DEPRECIATION AT1.4.2004 ADDITIONS DISPOSALS COST CHARGE 31.3.2005 RM RM RM RM RM RM

THE GROUP

NET BOOK VALUE

Freehold land 4,727,833 - - (716,560) - 4,011,273Land and hotel development expenditure 30,024,354 119,190 - - - 30,143,544Sales office 118,793 34,081 - - (37,004) 115,870Plant and machinery, construction machinery and equipment 50,942 270 - - (13,223) 37,989Formwork, scaffoldings and containers 6,448 - - - (2,503) 3,945Office renovation, office equipment, computers, furniture and fittings, tools and fittings 1,067,267 200,770 (26,877) - (272,106) 969,054Motor vehicles 250,477 54,508 - - (134,292) 170,693

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

AT ACCUMULATED NET BOOKCOST DEPRECIATION VALUE

RM RM RMAT 31.3.2005

Freehold land 4,011,273 - 4,011,273Land and hotel development expenditure 30,143,544 - 30,143,544Sales office 182,757 (66,887) 115,870Plant and machinery, construction machinery and equipment 4,343,727 (4,305,738) 37,989Formwork, scaffoldings and containers 4,316,916 (4,312,971) 3,945Office renovation, office equipment, computers, furniture and fittings, tools and fittings 4,576,896 (3,607,842) 969,054Motor vehicles 2,020,927 (1,850,234) 170,693

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

AT 31.3.2004

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

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



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

Land and hotel development expenditure consists of:- 2005 2004 RM RM

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

Hotel development expenditure, at cost 2,452,478 2,333,288

30,143,544 30,024,354

AT DEPRECIATION AT1.4.2004 CHARGE 31.3.2005

RM RM RMTHE COMPANY

NET BOOK VALUE

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

35,428 (17,792) 17,636

AT ACCUMULATED NET BOOKCOST DEPRECIATION VALUERM RM RM

AT 31.3.2005

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

753,501 (735,865) 17,636

AT 31.3.2004

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

753,501 (718,073) 35,428

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



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

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

THE GROUP 2005 2004 RM RM

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

- 30,388,235

9. INVESTMENT PROPERTIESTHE GROUP

2005 2004 RM RM

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

25,317,696 24,278,837

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

55,613,689 20,580,029Disposed of during the financial year (661,600) (3,467,400)Transfer to property development costs (551,686) -

54,400,403 17,112,629

79,718,099 41,391,466

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



10. OTHER ASSETSTHE GROUP

2005 2004 RM RM

Other assets 189,807 189,807

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

86,300 57,300

276,107 247,107

Market value of quoted shares 5,400 4,590

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

11. GOODWILL ON CONSOLIDATIONTHE GROUP

2005 2004 RM RM

At 1 April 2004/2003 27,317,640 27,271,844Goodwill arising from the acquisition of equity interest in a subsidiary in the previous financial year not accounted for - 45,796

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

12. INVENTORIESTHE GROUP

2005 2004 RM RM

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

None of the inventories are carried at net realisable value.



13. PROPERTY DEVELOPMENT COSTSTHE GROUP

2005 2004 RM RM

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

74,881,906 65,469,281Cost incurred during the year:- transferred from investment properties 551,686 -- transferred from property, plant and equipment 716,560 -- land 151,034 -- development costs 41,773,802 19,138,472

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

117,759,948 84,607,753

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

- (9,318,432)

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

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

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

54,745,687 50,449,300

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

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



14. RECEIVABLESTHE GROUP THE COMPANY

2005 2004 2005 2004 RM RM RM RM

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

Total trade receivables 36,514,691 75,083,937 - -Allowance for doubtful debtsAt 1 April 2004/2003 (13,474,195) (13,054,487) - -Additions - (419,708) - -Write-back 7,506 - - -

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

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

Other receivables, deposits and prepayments 8,602,979 8,483,606 2,495,814 2,561,787Allowance for doubtful debtsAt 1 April 2004/2003 (3,500,122) (3,091,277) (2,352,737) (2,352,737)Additions - (408,845) - -

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

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

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

Included in trade receivables at the balance sheet date are the amount owing by thefollowing related parties:-

2005 2004 RM RM

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

* relates to retention receivable



14. RECEIVABLES (CONT’D)

Details of the related party relationship and the nature of the transactions and balances areset out in Note 42 to the financial statements. The amount owing by SH has beenoutstanding since 1996. During the financial year, SH settled the amount owing through thetransfer of six parcels of development land for a total consideration of RM37,828,242, whichwas approved by the shareholders of the Company at an extraordinary general meeting heldon 16 April 2004.

Included in other receivables is an amount of RM1,517,957 (2004 - RM1,552,059) due fromsub-contractors for the purchase of building materials. The amount owing is unsecured,interest-free, and is to be repaid through deductions against future claims for work to beperformed by the sub-contractors.

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

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

2005 2004 RM RM

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

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

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

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

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

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



16. AMOUNTS OWING BY/(TO) SUBSIDIARIESTHE COMPANY

2005 2004 RM RM

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

61,299,355 55,919,091

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

15,155,558 12,563,323

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

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 ofRM5,375,200 and RM3,222,716 at the balance sheet date in respect of the financial yearsended 31 March 1997 to 31 March 2000 and 31 March 2003 to 31 March 2005 respectively.At the date of this report, the amount is still pending agreement with the tax authorities.



19. SHORT TERM DEPOSITS WITH LICENSED BANKS

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

THE GROUP THE COMPANY2005 2004 2005 2004

% % % %

Licensed bank 2.80 2.81 2.77 2.77

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

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

20. CASH AND BANK BALANCES


Cash and bank balances 1,586,775 1,464,278 1,960 2,100

Sinking fund account (Note 39) 4,025,883 2,010,000 4,025,883 2,010,000

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

Included in the cash and bank balances of the Group is RM1,380,169 (2004 -RM1,158,751) maintained under the Housing Development Accounts pursuant to Section7A of the Housing Development (Control and Licensing ) Act, 1966.

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



21. PAYABLESTHE GROUP THE COMPANY

2005 2004 2005 2004 RM RM RM RM

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

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

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

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

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

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

22. AMOUNTS OWING TO DIRECTORS


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

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

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



23. SHORT TERM BORROWINGS

THE GROUP2005 2004

SECURED UNSECURED TOTAL SECURED UNSECURED TOTAL RM RM RM RM RM RM

Bridging loan (Note 30) - - - 2,993,580 - 2,993,580Term loans (Note 29) 1,805,003 - 1,805,003 13,147 - 13,147Revolving credits - 14,944,400 14,944,400 - 16,294,400 16,294,400

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

THE COMPANY2005 2004

SECURED UNSECURED TOTAL SECURED UNSECURED TOTAL RM RM RM RM RM RM

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

The weighted average effective interest rates at the balance sheet date for borrowings whichbear interest at floating rates, were as follows:-


% % % %

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



24. ABBA BONDS

THE GROUP/THE COMPANY 2005 2004 RM RM

Al-Bai Bithaman Ajil Bonds (nominal value) 61,961,250 61,961,250Less: ABBA Bonds issuance expenses (1,223,412) (1,151,690) Finance charges on bonds issue (21,961,250) (21,961,250)

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

38,718,717 38,776,588Cumulation of amortisation of ABBA Bonds issuance expenses 713,345 437,636Cumulation of amortisation of finance charges on ABBA Bonds issue 10,994,140 6,693,434

50,426,202 45,907,658

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

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

44,230,077 42,189,983

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

44,230,077 42,189,983

On 13 September 2002, the Company issued RM61,961,250 nominal value Al-Bai BithamanAjil Bonds (“ABBA Bonds”) comprising RM49,569,000 nominal value Primary Bonds and 10equal tranches of Secondary Bonds with RM12,392,250 nominal value. The Primary Bondsare redeemable at maturity. Each Primary Bond is supported by 10 Secondary Bonds whichare redeemable in semi-annual instalments commencing 6 months from the date of the firstissue of the Secondary Bonds. The ABBA Bonds were placed out to a licensed financialinstitution via a private placement. The tenure of the ABBA Bonds is 5 years from the date ofissue. The profit margin on the ABBA Bonds is fixed at 5% per annum, payable in arrears ona semi-annual basis represented by the Secondary Bonds. The ABBA Bonds are issuedbased on a 10% per annum yield to maturity.



24. ABBA BONDS (CONT’D)

The ABBA Bonds are secured in the following manner:-

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

(ii) by a third party first legal charge over all the shares held by a wholly ownedsubsidiary in an associate;

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

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

25. BANK OVERDRAFTS

THE GROUP THE COMPANY2005 2004 2005 2004RM RM RM RM

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

The weighted average effective interest rates at the balance sheet date for bank overdraftswere as follows:-


% % % %

Bank overdrafts 8.19 8.21 8.22 8.28



26. SHARE CAPITAL

THE COMPANY 2005 2004 2005 2004

NUMBER OF SHARES RM RMAUTHORISED

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

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

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

ISSUED AND FULLY PAID-UP

ORDINARY SHARES OF RM1 EACH:-At 1 April 75,602,000 75,602,000 75,602,000 75,602,000Issuance of new shares arising from conversion of ICCPS 6,833,000 - 6,833,000 -

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

5.5% ICCPS OF RM1 EACHAt 1 April 6,833,000 6,833,000 6,833,000 6,833,000Conversion into ordinary shares during the year (6,833,000) - (6,833,000) -

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

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

During the financial year, the ICCPS were converted into 6,833,000 ordinary shares of RM1each of the Company on their maturity date on 4 May 2004. The new shares which arosefrom the conversion of the ICCPS rank pari passu in all respects with the existing shares ofthe Company.

.



27. RESERVESTHE GROUP THE COMPANY

2005 2004 2005 2004 RM RM RM RM

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

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

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

(b) The capital reserve arose from a bonus issue of ordinary shares on 21 August 1992by 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, theCompany has:-

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

(ii) tax credits under Section 108 of the Income Tax Act, 1967 to frank thepayment of dividends of approximately RM13,114,000 (2004 -RM13,732,000) out of its entire retained profits without incurring anyadditional tax liabilities.



28. NON-CURRENT LIABILITIESTHE GROUP

2005 2004 RM RM

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

29,543,776 31,845,399

(a) Hire purchase payables

Future minimum hire purchase payments:

- repayable not later than one year 54,458 110,916- repayable later than one year and not later than five years 5,885 60,342

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

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

Present value of hire purchase liabilities are payable as follows:-

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

47,700 135,484

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



28. NON-CURRENT LIABILITIES (CONT’D)

(b) Amount owing to the Sabah State Government

The amount owing arose from the acquisition of a subsidiary, South-East Best Sdn.Bhd. (“SEB”). The amount owing shall be paid in the form of 130 units of properties tobe developed and completed within a period of five years from the commencement oftheir construction as consideration in kind pursuant to a joint venture contract enteredinto by SEB with the State Government.

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

On 16 July 2002, the Sabah State Government agreed to execute the change of theirentitlement for the outstanding amount of RM29,069,000. The change of entitlementis in the form of the construction of an office building for the Land and SurveyDepartment (Jabatan Tanah dan Ukur) and part of a building for the Ministry ofFinance at a value equivalent to the amount outstanding of RM29,069,000.

On 21 October 2002, the subsidiary was requested to prepare the ContractDocument and Estimation for the above project.

On 17 December 2004, the Company entered into an supplemental agreement withthe Sabah State Government to execute a change of the former’s entitlement. Thechange of entitlement is in the form of the construction by the Company of an officebuilding for the Land and Survey Department (Jabatan Tanah dan Ukur) at a valueequivalent to the amount outstanding of RM29,069,000.

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



29. TERM LOANSTHE GROUP

2005 2004 RM RM

The long term loans are repayable as follows:-Not later than one year (Note 23) 1,805,003 13,147

Later than one year and not later than five years 470,140 2,329,435Later than five years - 399,264

Portion repayable after twelve months (Note 28) 470,140 2,728,699

2,275,143 2,741,846

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

THE GROUP 2005 2004

Term loan RM RM

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

2,275,143 2,741,846

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

Instalments Amount % of RepaymentRM

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

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



29. TERM LOANS (CONT’D)The term loans are secured as follows:-

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

(b) by way of negative pledges against the plant and equipment of a subsidiary rankingpari passu amongst the bankers; and

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

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

30. BRIDGING LOANTHE GROUP

2005 2004 RM RM

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

In the previous financial year, the syndicated bridging loan from three licensed financialinstitutions was subject to interest at rates disclosed in Note 23 to the financial statementsand was secured by way of:-

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

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

(iii) an assignment of all present and future rights, title and interest under a constructioncontract 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.

31. DEFERRED TAXATION

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



32. NET TANGIBLE ASSETS PER SHARE

The net tangible assets per share is calculated based on the net tangible assets value ofRM192,689,753 (2004 - RM184,224,314) attributable to ordinary shares divided by thenumber of ordinary shares in issue at the balance sheet date of 82,435,000 (2004 -75,602,000) shares.

33. TURNOVERTHE GROUP THE COMPANY

2005 2004 2005 2004 RM RM RM RM

Revenue from construction contracts 15,383,973 49,919,830 - -Proportionate sales value of development properties 51,370,658 36,270,464 - -Rental income - 73,600 - -Dividend income - - 5,404,800 4,928,000Interest income 112,502 52,745 112,502 52,745Other interest income - - 1,276,666 559,943Management and administrative charges - - 2,111,160 1,680,049

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

34. COST OF SALESTHE GROUP THE COMPANY

2005 2004 2005 2004 RM RM RM RM

Construction costs 46,727,012 56,131,953 - -Land and development expenditure 5,081,343 12,625,057 - -Direct costs 552,048 88,062 - -Management and administrative charges 68,178 55,707 - -

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



35. PROFIT BEFORE TAXATION


Profit before taxation is arrived at after charging/ (crediting):-

Allowance for doubtful debts - 828,553 - -Amortisation of bonds expenses 275,709 303,272 275,709 303,272Auditors’ remuneration- for the financial year 70,100 67,600 13,000 13,000- underprovision in the previous financial year 29,109 4,200 - -Depreciation of property, plant and equipment 459,128 446,060 17,792 23,474Directors’ benefits-in- kind 16,925 16,925 16,925 16,925Directors’ fees 93,000 52,000 93,000 52,000Directors’ remuneration 1,339,020 791,520 787,140 489,120Finance charges on bonds 4,300,706 4,131,289 4,300,706 4,131,289Interest expense- bank borrowings 290,761 2,845,495 1,179,770 1,042,298- hire purchase 126,307 23,132 - -- loans 126,966 108,519 103,175 333,408- others - 2,000 - -Impairment loss on interest in associate 330,565 - - -Loss/(Gain) on disposal of property, plant and equipment 19,177 (313,882) - -Plant and equipment written off - 13,663 - -Rental expense- premises 15,329 3,600 12,000 12,000- machinery and equipment 8,315 8,207 - -



35. PROFIT BEFORE TAXATION (CONT’D)


Profit before taxation is arrived at after charging/ (crediting):-

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

(15,082) 1,557,400 - -

Gross dividend income- subsidiaries (unquoted) - - (4,800,000) (3,200,000)- associates - - (604,800) (1,728,000)Interest income- licensed financial institutions (138,190) (59,137) (112,502) (52,745)- subsidiaries - - (1,276,666) (559,943)- others (65,235) (48,185) - -Rental of premises (327,616) (316,621) - -Writeback of allowance for doubtful debts (58,356) - (50,850) -



36. TAXATIONTHE GROUP THE COMPANY

2005 2004 2005 2004 RM RM RM RM

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

1,269,271 3,015,061 621,822 228,520(Over)/Underprovision in previous financial years (198,446) 1,908,093 - 593,335

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

Subject to agreement with the tax authorities, the Group has unutilised tax losses andunabsorbed capital allowances of approximately RM3,838,700 (2004 - RM2,308,000) andRM481,000 (2004 - RM317,000) respectively available at the balance sheet date to becarried forward for offset against future taxable business income. No deferred tax assets arerecognised on these items.



36. TAXATION (CONT’D)A reconciliation of the income tax expense applicable to the profit before taxation at thestatutory tax rate to the income tax expense at the effective tax rate of the Group and of theCompany is as follows:-


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

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

Tax effects of:Non-deductible expenses 658,281 1,119,212 97,182 251,606Non-taxable gains (2,060) (1,835) - -Reversal of deferred tax assets not recognised (203,757) (152,046) - (154,524)Utilisation of tax losses brought forward (131,070) - - -(Over)/Underprovision in previous financial years (198,446) 1,908,093 - 593,335Others 17,926 90,809 3,994 -

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

37. EARNINGS PER SHARE

Basic earnings per share (“EPS”) is arrived at by dividing the profit after taxationattributable to shareholders after deducting the preference dividend of RM24,463 (2004 -RM270,587) by the weighted average number of ordinary shares in issue at the balancesheet date of 81,798,501 (2004 - 75,602,000).

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



38. DIVIDENDS2005 2004RM RM

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

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

617,990 814,917

At the forthcoming Annual General Meeting, a final dividend in respect of the financialyear ended 31 March 2005 of 1 sen per ordinary share of RM1 each less 28% tax (2004 -1 sen per ordinary share of RM1 each less 28% tax) amounting to RM593,527 (2004 -RM593,527) will be tabled for shareholders’ approval. These financial statements do notreflect this final dividend which will be accrued as a liability only upon approval byshareholders.

39. CASH AND CASH EQUIVALENTS

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


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

(11,847,136) (15,758,782) (493,525) (3,328,844)Less: Cash placed in sinking fund account (Note 20) (4,025,883) (2,010,000) (4,025,883) (2,010,000)

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



40. DIRECTORS’ REMUNERATION

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


DIRECTORS’ FEES:-1. Mun Chong Shing @

Mun Chong Tian 18,000 12,000 18,000 12,0002. Dato’ Lim Phaik Gan 19,000 12,000 19,000 12,0003. Dato’ Dr. Norraesah

Bt Haji Mohamad 19,000 13,000 19,000 13,0004. Datuk Sim Peng

Choon - 5,000 - 5,0005. Vincent Koh Kok Kee - 2,000 - 2,0006. Dato’ Zainol Abidin

bin Haji A. Hamid 19,000 6,000 19,000 6,0007. Ahmad Fizal

Bin Othman 18,000 2,000 18,000 2,000

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

DIRECTORS’ NON-FEES EMOLUMENTS:-

1. Sia Kwee Mow @ Sia Hok Chai 712,320 443,520 712,320 443,520

2. Sia Teong Heng 613,200 336,000 61,320 33,6003. Mun Chong Shing @

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

Bt Haji Mohamad 3,600 3,900 3,600 3,9006. Datuk Sim Peng

Choon - 600 - 6007. Vincent Koh Kok Kee - 900 - 9008. Dato’ Zainol Abidin

bin Haji A. Hamid 1,800 600 1,800 6009. Ahmad Fizal Bin

Othman 3,300 - 3,300 -

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



40. DIRECTORS’ REMUNERATION (CONT’D)

Apart from the amounts disclosed under directors’ remuneration above, the estimatedmonetary value of other benefits-in-kind received by the following director during the financialyear, otherwise than in cash are as follows:-


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

41. RELATED COMPANY TRANSACTIONSTHE COMPANY

2005 2004 RM RM

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

42. RELATED PARTY TRANSACTIONS/BALANCES

GROUP

NAME OF RELATED PARTY NOTENATURE OF

TRANSACTION 2005 2004 RM RM

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

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

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

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



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

GROUP

NAME OF RELATED PARTY NOTENATURE OF

TRANSACTION 2005 2004 RM RM

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

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

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

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

RECEIVABLE PAYABLEGROUP GROUP

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

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

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

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

Peak Marketing Sdn. Bhd.

(e) - - 66,645 66,645



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

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

(c) A director of the Company.

(d) A substantial shareholder of the Company.

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

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

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

43. CONTINGENT LIABILITYTHE COMPANY

2005 2004 RM RM

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



44. SEGMENTAL REPORTINGTHE GROUP2005

MANUFACTURINGPROPERTY INVESTMENT AND

CONSTRUCTION DEVELOPMENT HOLDING TRADING ELIMINATIONS GROUP RM RM RM RM RM RM

REVENUE:External revenue 15,383,973 51,370,658 112,502 - - 66,867,133Intersegment revenue 36,502,043 - 13,835,025 - (50,337,068) -

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

Results:Segment results 3,707,234 3,572,497 12,386,681 7,221 (12,966,069) 6,707,564Finance costs (4,953,038)Share of results of associates - 2,151,912 - (585,184) - 1,566,728

Profit from ordinary activities before taxation 3,321,254Taxation (1,070,825)

Profit from ordinary activities after taxation 2,250,429


CONSTRUCTION DEVELOPMENT HOLDING TRADING GROUP RM RM RM RM RM

Other informationSegment assets 18,159,410 306,751,573 20,261,994 10,456,149 355,629,126Unallocated assets 6,607,700

362,236,826

Segment liabilities 41,049,469 44,042,754 12,902,797 4,336 97,999,356Unallocated liabilities 44,230,077

142,229,433

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

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



44. SEGMENTAL REPORTING (CONT’D)

THE GROUP2004


CONSTRUCTION DEVELOPMENT HOLDING TRADING ELIMINATIONS GROUP RM RM RM RM RM RM

REVENUE:External revenue 49,919,830 36,270,464 126,345 - - 86,316,639Intersegment 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) 10,636,654Finance costs (7,263,617)Share of results of associates - 2,512,271 - 1,110,841 - 3,623,112

Profit from ordinary activities before taxation 6,996,149Taxation (4,923,154)

Profit from ordinary activities after taxation 2,072,995


CONSTRUCTION DEVELOPMENT HOLDING TRADING GROUP RM RM RM RM RM

Other informationSegment assets 31,821,441 290,967,684 23,771,453 11,544,983 358,105,561Unallocated assets 8,331,990

366,437,551

Segment liabilities 42,636,445 48,802,170 14,355,639 78,360 105,872,614Unallocated liabilities 42,189,983

148,062,597

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

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

The Group operates wholly in Malaysia.



45. NUMBER OF EMPLOYEESTHE GROUP THE COMPANY

2005 2004 2005 2004

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

46. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

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

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

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

The carrying amounts approximated their fair values due to the relatively short termmaturity of these instruments.

(ii) Quoted and unquoted investments

The fair values of quoted investments are estimated based on quoted market pricesfor these investments.

For unquoted investments, it is not practicable to determine the fair values becauseof the lack of quoted market prices and the assumptions used in valuation models tovalue these investments cannot be reasonably determined.

(iii) Short term borrowings and other current liabilities

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

(iv) Long term bank loans

The carrying amounts approximated their fair values as these instruments bearinterest at variable rates.



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

(v) Hire purchase obligations

The fair value of hire purchase obligations is determined by discounting the relevantcash flow using current interest rates for similar instruments at the balance sheetdate.

There is no disclosure of fair value for investments in subsidiaries and associates, andborrowings under the basis of Islamic banking principles as these are excluded from MASB24 - Financial Instruments: Disclosure and Presentation.

47. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

During the financial year, Smart Home Sdn. Bhd. settled its debts owing to Mixwell(Malaysia) Sdn. Bhd. and Syarikat Siah Brothers Construction Sdn. Bhd., amounting toRM37,720,372 in aggregate, through the transfer of six parcels of development land withan aggregate market value of RM37,828,242. This settlement was approved by theshareholders of the Company at an extraordinary general meeting held on 16 April 2004.

48. COMPARATIVE FIGURES

The following comparative figures have been reclassified to conform with the presentation ofthe current financial year:-

THE GROUP THE COMPANY

ASRESTATED

ASPREVIOUSLYREPORTED

ASRESTATED

ASPREVIOUSLYREPORTED

RM RM RM RM

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


FINANCIAL REPORTfor the financial year ended 31 March 2005

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 ............................................................................................. 15

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

sbc corporation berhad: annual audited accounts 2005

Investor Relations

sia teong heng

ng kee chye

sbc corporation berhad

sinking fund account

deductible temporary differences

defined contribution plans

sabah state government

unused tax credits