SBC Corporation Berhad: Annual Audited Accounts 2008

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

DIRECTORS’ REPORT

The directors hereby submit their report and the audited financial statements of the Group and of
the Company for the financial year ended 31 March 2008.

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

RESULTS
THE GROUP THE COMPANY
RM RM

Profit after taxation for the financial year 3,503,533 204,163

Attributable to:-
Equity holders of the Company 3,513,519 204,163
Minority interests (9,986) -

3,503,533 204,163

DIVIDENDS
Since the end of the previous financial year, the Company paid a first and final dividend of 1% less
27% tax on the ordinary shares amounting to RM601,773 in respect of the previous financial
year.

For the current financial year, the directors recommend the payment of a first and final dividend of
1.5% less 25% tax on the ordinary shares amounting to RM927,394 to be approved by the
shareholders at the forthcoming Annual General Meeting. This dividend will be accounted for as an
appropriation of retained profits in the period when it is approved by shareholders.

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

Page 1


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 the
Company; and

(b) there were no issues of debentures by 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.

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 all known bad
debts had been written off and that adequate allowance had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances that would further
require the writing off of bad debts, or the 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 2


DIRECTORS’ REPORT

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 liability of the Company is disclosed in Note 47 to the financial statements. At the
date of this report, there does not exist:-

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

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

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

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

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

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

Page 3


DIRECTORS’ REPORT

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

SIA KWEE MOW @ SIA HOK CHAI
SIA TEONG HENG
MUN CHONG SHING @ MUN CHONG TIAN
DATO’ LIM PHAIK GAN
DATO’ DR. NORRAESAH BT HAJI MOHAMAD
DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID
AHMAD FIZAL BIN OTHMAN

DIRECTORS’ INTERESTS
According to the register of directors’ shareholdings, the interests of directors holding office at the
end of the financial year in shares in the Company and its related corporations during the financial
year are as follows:-

NUMBER OF ORDINARY SHARES OF RM1 EACH
AT AT
1.4.2007 BOUGHT SOLD 31.3.2008
DIRECT INTERESTS
SIA KWEE MOW @ SIA HOK CHAI 1,480,800 - - 1,480,800
SIA TEONG HENG 4,677,992 - - 4,677,992
MUN CHONG SHING @ MUN CHONG TIAN 21,782 - - 21,782

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

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

None of the other directors holding office at the end of the financial year had any interest in shares
of the Company or its related corporations during the financial year.

Page 4


DIRECTORS’ REPORT

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 45 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.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
The significant events during the financial year are disclosed in Note 51 to the financial statements.

Page 5


DIRECTORS’ REPORT

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

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS
DATED 28 JULY 2008

Sia Kwee Mow @ Sia Hok Chai

Mun Chong Shing @ Mun Chong Tian

Page 6


STATEMENT BY DIRECTORS

We, Sia Kwee Mow @ Sia Hok Chai and Mun Chong Shing @ Mun Chong Tian, being two of the
directors of SBC Corporation Berhad, state that, in the opinion of the directors, the financial
statements set out on pages 11 to 80 are drawn up in accordance with applicable approved
Financial Reporting 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
2008 and of their results and cash flows for the financial year ended on that date.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS
DATED 28 JULY 2008

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

STATUTORY DECLARATION

I, Lee Yan Yaw, I/C No. 710315-10-5509, being the officer primarily responsible for the financial
management of SBC Corporation Berhad, do solemnly and sincerely declare that the financial
statements set out on pages 11 to 80 are, to the best of my knowledge and belief, correct, and I
make this solemn declaration conscientiously believing the same to be true and by virtue of the
provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by
Lee Yan Yaw, I/C No. 710315-10-5509,
at Kuala Lumpur in the Federal Territory
on this 28 July 2008.

Lee Yan Yaw
Before me

Mohd Radzi Bin Yasin (W327)
Commissioner for Oaths

Page 7

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

Report on the Financial Statements

We have audited the financial statements of SBC Corporation Berhad, which comprise the
balance sheets as at 31 March 2008 of the Group and of the Company, and the income
statements, statements of changes in equity and cash flow statements of the Group and of the
Company for the year then ended, and a summary of significant accounting policies and other
explanatory notes, as set out on pages 11 to 80.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these
financial statements in accordance with Financial Reporting Standards and the Companies Act,
1965 in Malaysia. This responsibility includes designing, implementing and maintaining internal
control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error, selecting and applying appropriate
accounting policies, and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with approved standards on auditing in Malaysia. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance whether the financial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on our judgment,
including the assessment of risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, we consider internal control relevant to
the Company’s preparation and fair presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors, as well as evaluating the overall presentation of the
financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.

Page 8

SBC CORPORATION BERHAD (CONT’D)

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with
Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and
fair view of the financial position of the Group and of the Company as of 31 March 2008 and of
their financial performance and cash flows for the year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the
following:-

(a) In our opinion, the accounting and other records and the registers required by the Act to
be kept by the Company and its subsidiaries of which we have acted as auditors have
been properly kept in accordance with the provisions of the Act;

(b) We have considered the accounts and the auditors’ reports of all the subsidiaries of
which we have not acted as auditors, which are indicated in Note 6 to the financial
statements;

(c) We are satisfied that the accounts 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 financial statements of the Group and we have
received satisfactory information and explanations required by us for those purposes;
and

(d) The audit reports on the accounts of the subsidiaries did not contain any qualification or
any adverse comment made under Section 174(3) of the Act.

Page 9

SBC CORPORATION BERHAD (CONT’D)

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with
Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not
assume responsibility to any other person for the content of this report.

Horwath James Chan Kuan Chee
Firm No: AF 1018 Approval No: 2271/10/09 (J)
Chartered Accountants Partner

Kuala Lumpur

28 July 2008

Page 10


BALANCE SHEETS AT 31 MARCH 2008
2008 2007 2008 2007
NOTE RM RM RM RM

ASSETS
NON-CURRENT
ASSETS
Investment in
subsidiaries 6 - - 210,990,785 210,990,785
Interest in associates 7 113,032,417 112,085,613 3,993,865 2,400,000
Investment in joint
venture 8 - - 1,801,128 1,801,128
Property, plant and
equipment 9 7,405,096 8,549,543 387,635 2,657
Investment properties 10 - 3,122,452 - -
Land held for property
development 11 77,385,675 87,700,188 - -
Other assets 12 220,300 220,300 - -
Goodwill on
consolidation 13 27,499,451 27,499,451 - -

225,542,939 239,177,547 217,173,413 215,194,570

CURRENT ASSETS
Inventories 14 659,001 726,148 - -
Property development
costs 15 55,151,791 59,707,257 - -
Receivables 16 38,191,784 59,332,215 893,608 479,393
Amount owing by
contract customers 17 2,354,585 2,616,779 - -
Amount owing by
subsidiaries 18 - - 57,297,883 58,919,707
Amount owing by
associates 19 6,571,977 5,390,600 237,184 11,434
Amount owing by
joint venture 20 72,520 280,727 72,520 552,520
Tax recoverable 21 1,286,456 1,367,292 3,639,260 3,451,474
Short-term deposits
with licensed banks 22 985,000 3,334,226 - 1,239,225
Cash and bank
balances 23 10,015,198 13,918,913 2,510,961 12,077,309

115,288,312 146,674,157 64,651,416 76,731,062

TOTAL ASSETS 340,831,251 385,851,704 281,824,829 291,925,632

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


BALANCE SHEETS AT 31 MARCH 2008 (CONT’D)

2008 2007 2008 2007
NOTE RM RM RM RM

EQUITY AND LIABILITIES
EQUITY
Share capital 24 82,435,000 82,435,000 82,435,000 82,435,000
Reserves 25 133,602,532 130,690,786 133,338,283 133,735,893

SHAREHOLDERS’ EQUITY 216,037,532 213,125,786 215,773,283 216,170,893

MINORITY INTEREST 39,014 - - -

TOTAL EQUITY 216,076,546 213,125,786 215,773,283 216,170,893

LIABILITIES
NON-CURRENT
LIABILITIES
Long-term borrowings 26 32,879,564 33,939,069 24,314,819 -
Deferred taxation 29 966,746 966,746 - -

33,846,310 34,905,815 24,314,819 -

CURRENT LIABILITIES
Amount owing to
contract customers 17 4,932,581 2,850,429 - -
Payables 30 37,673,403 42,512,894 285,918 371,667
Amount owing to
subsidiaries 18 - - 19,397,294 12,375,674
Amount owing to
associates 19 78,236 3,378 - -
Amount owing to a
director 31 1,867,680 1,867,680 1,867,680 1,867,680
Short-term borrowings 32 23,981,994 14,874,442 17,735,306 5,000,000
ABBA Bonds 33 - 48,683,146 - 48,683,146
Bank overdrafts 34 22,374,501 27,028,134 2,450,529 7,456,572

90,908,395 137,820,103 41,736,727 75,754,739

TOTAL LIABILITIES 124,754,705 172,725,918 66,051,546 75,754,739

TOTAL EQUITY AND
LIABILITIES 340,831,251 385,851,704 281,824,829 291,925,632

NET ASSETS
PER ORDINARY
SHARE (RM) 35 2.62 2.59



INCOME STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008
2008 2007 2008 2007
NOTE RM RM RM RM

REVENUE 36 107,054,789 77,102,946 10,296,801 8,338,611

COST OF SALES 37 (87,834,953) (60,499,310) - -

GROSS PROFIT 19,219,836 16,603,636 10,296,801 8,338,611

OTHER INCOME 2,202,590 1,324,144 29,999 203,976

ADMINISTRATIVE
EXPENSES (8,964,127) (8,315,933) (4,336,804) (1,282,327)

OTHER EXPENSES (1,008,602) (5,382,766) (233,310) (407,665)

FINANCE COSTS (6,316,002) (6,705,397) (5,054,663) (5,868,501)

SHARE OF (LOSS)/PROFIT
OF ASSOCIATES (647,061) 269,211 - -

PROFIT/(LOSS)
BEFORE TAXATION 38 4,486,634 (2,207,105) 702,023 984,094

INCOME TAX
EXPENSE 39 (983,101) (802,167) (497,860) (307,203)

PROFIT/(LOSS)
AFTER TAXATION 3,503,533 (3,009,272) 204,163 676,891

ATTRIBUTABLE TO:-
Equity holders of
the Company 3,513,519 (3,009,272) 204,163 676,891
Minority interests (9,986) - - -

3,503,533 (3,009,272) 204,163 676,891

Earnings/(Loss) per
share
- basic 40 4.3 sen (3.7) sen
- diluted 40 N/A N/A

Dividend per ordinary
share
- final 41 1 sen 1 sen



STATEMENTS OF CHANGES IN EQUITY

ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

SHARE SHARE RETAINED CAPITAL MINORITY TOTAL
NOTE CAPITAL PREMIUM PROFITS RESERVE TOTAL INTERESTS EQUITY
RM RM RM RM RM RM RM
THE GROUP

Balance at 1.4.2006 82,435,000 111,412,895 21,680,691 1,199,999 216,728,585 - 216,728,585

Loss after taxation for the financial year - - (3,009,272) - (3,009,272) - (3,009,272)

Dividend 41 - - (593,527) - (593,527) - (593,527)

Balance at 31.3.2007/1.4.2007 82,435,000 111,412,895 18,077,892 1,199,999 213,125,786 - 213,125,786

Profit after taxation for the financial year - - 3,513,519 - 3,513,519 (9,986) 3,503,533

Subscription for shares in a subsidiary - - - - - 49,000 49,000

Dividend 41 - - (601,773) - (601,773) - (601,773)

Balance at 31.3.2008 82,435,000 111,412,895 20,989,638 1,199,999 216,037,532 39,014 216,076,546



STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2008 (CONT’D)

SHARE REVALUATION RETAINED
CAPITAL RESERVE PROFITS TOTAL
THE COMPANY NOTE RM RM RM RM

Balance at 1.4.2006 82,435,000 111,412,895 22,239,634 216,087,529

Profit after taxation for the
financial year - - 676,891 676,891

Dividend 41 - - (593,527) (593,527)

Balance at 31.3.2007/1.4.2007 82,435,000 111,412,895 22,322,998 216,170,893

Profit after taxation for the
financial year - - 204,163 204,163

Dividend 41 - - (601,773) (601,773)

Balance at 31.3.2008 82,435,000 111,412,895 21,925,388 215,773.283



CASH FLOW STATEMENTS
2008 2007 2008 2007
NOTE RM RM RM RM

CASH FLOWS (FOR)/
FROM OPERATING ACTIVITIES
Profit/(Loss) before taxation 4,486,634 (2,207,105) 702,023 984,094

Adjustments for:-
Allowance for
doubtful debts 214,034 - - -
Amortisation of bond
expenses 144,265 277,770 144,265 277,770
Bad debts written off 74,922 697,574 4,626 -
Depreciation of
property, plant and equipment 717,935 580,160 98,804 4,895
Interest expense/
finance charges 6,201,668 6,564,396 5,009,169 5,817,195
Impairment loss on
investment properties - 2,074,556 - -
Impairment loss on
land held for property
development - 1,858,834 - -
Investment in subsidiaries
written off - - - 125,000
Property, plant and
equipment written off 8,303 - - -
Waiver of debts (211,269) - (203,976)
Dividend income - - (6,500,000) (5,000,000)
(Gain)/Loss on disposal of
investment properties (48,248) 413,987 - -
Gain on disposal of
land held for future development (383,552) - - -
Gain on disposal of
property, plant and
equipment (71,949) (155,791) (29,999) -
Interest income (823,441) (513,693) (206,714) (768,966)
Share of loss/(profit) in
associates 647,061 (269,211) - -

Operating profit/(loss) before
working capital changes 11,167,632 9,110,208 (777,826) 1,236,012
Decrease in inventories 67,147 557,274 - -
Decrease/(Increase) in property
development costs 11,762,574 (4,273,713) - -
Increase in receivables (8,217,525) (17,243,790) (418,841) (252,966)
(Decrease)/Increase in
payables (4,914,691) 10,272,117 (160,949) 126,902
Net decrease in amount
owing by contract customers 2,344,346 1,808,200 - -

CASH FROM/(FOR) OPERATIONS 12,209,483 230,296 (1,357,616) 1,109,948
Interest paid (4,208,853) (2,077,587) (3,016,354) (1,330,386)
Net tax (paid)/refunded (902,265) (618,234) (70,526) 797,450

NET CASH FROM/(FOR)
OPERATING ACTIVITIES
CARRIED FORWARD 7,098,365 (2,465,525) (4,444,496) 577,012




2008 2007 2008 2007
NOTE RM RM RM RM

NET CASH FROM/(FOR)
OPERATING ACTIVITIES
BROUGHT FORWARD 7,098,365 (2,465,525) (4,444,496) 577,012

CASH FLOWS (FOR)/FROM
INVESTIING ACTIVITIES
Acquisition of associates (1,593,865) - (1,593,865) -
Acquisition of joint venture - - - (1,088,628)
Additional investment in
subsidiaries 49,000 (181,811) - (51,000)
Repayment from
subsidiaries - - 1,621,824 7,254,414
Interest received 823,441 513,693 206,714 369,482
Dividends received
from subsidiaries - - 4,810,000 3,650,000
Repayment from/
(Advances to) joint venture 208,207 (280,727) 480,000 (561,454)
Incidental cost for
investment properties - (117,070) - -
Payment for land held
for development (2,941,967) (2,468,347) - -
Purchase of property,
plant and equipment 42 (287,778) (1,204,262) (107,783) -
Proceeds from
disposal of land held
for future development 7,514,910 - - -
Proceeds from
disposal of property,
plant and equipment 71,950 170,264 30,000 -
Proceeds from
disposal of investment
properties 3,170,700 1,374,000 - -
Investment in club
membership - (134,000) - -
Withdrawal/(Placement)
of cash in
sinking fund account 11,129,109 (3,877,963) 12,001,075 (3,877,963)
(Advances to)/Repayment
from associates (1,181,377) 8,934 (225,750) 8,934

NET CASH FROM/(FOR)
INVESTING ACTIVITIES 16,962,330 (6,197,289) 17,222,215 5,703,785

BALANCE CARRIED
FORWARD 24,060,695 (8,662,814) 12,777,719 6,280,797




2008 2007 2008 2007
Note RM RM RM RM

BALANCE BROUGHT
FORWARD 24,060,695 (8,662,814) 12,777,719 6,280,797

CASH FLOWS FOR
FINANCING ACTIVITIES
Payment of bond
expenses (12,001) (59,932) (12,001) (59,932)
Repayment of bonds 33 (50,808,225) (2,478,450) (50,808,225) (2,478,450)
Advances from/
(Repayment to) associates 74,858 (13,333) - -
Advances from/
(Repayment to) subsidiaries - - 8,096,500 (5,503,106)
Dividend paid to
shareholders of the
Company (601,773) (593,527) (601,773) (593,527)
Repayment of revolving credit (2,994,400) (1,050,000) - -
Drawdown of term loans 44,636,915 6,400,068 40,000,000 -
Repayment of term loans (4,698,460) (3,007,129) (3,219,340) -
Repayment of hire
purchase obligations (127,808) (101,107) (31,335) -

NET CASH FOR
FINANCING ACTIVITIES (14,530,894) (903,410) (6,576,174) (8,635,015)

NET INCREASE/(DECREASE)
IN CASH AND CASH
EQUIVALENTS 9,529,801 (9,566,224) 6,201,545 (2,354,218)

CASH AND CASH
EQUIVALENTS AT
BEGINNING OF THE
FINANCIAL YEAR (21,776,070) (12,209,846) (6,141,113) (3,786,895)

CASH AND CASH
EQUIVALENTS AT
END OF THE
FINANCIAL YEAR 43 (12,246,269) (21,776,070) 60,432 (6,141,113)



NOTES TO FINANCIAL STATEMENTS

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

The financial statements were authorised for issue by the Board of Directors in
accordance with a resolution of the directors dated 28 July 2008.

2. PRINCIPAL ACTIVITIES
The Company is principally engaged in the businesses of investment holding and the
provision of management and administrative services to the subsidiaries. The principal
activities of the subsidiaries are disclosed in Note 6 to the financial statements. There have
been no significant changes in the nature of these activities during the financial year.

3. FINANCIAL RISK MANAGEMENT POLICIES
The Group's financial risk management policy seeks to ensure that adequate financial
resources are available for the development of the Group's business whilst managing its
market, credit, liquidity and cash flow risks. The policies in respect of the major areas of
treasury activity are as follows:-

(a) Market Risk

(i) Foreign Currency Risk

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

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

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

Page 19



3. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)
(a) Market Risk (Cont’d)

(ii) Interest Rate Risk

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

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

(iii) Price 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.

(b) Credit Risk

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

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

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

(c) Liquidity and Cash Flow Risk
The Group's exposure to liquidity and cash flow 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.

Page 20



4. BASIS OF PREPARATION
The financial statements of the Group and of the Company 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 Financial Reporting Standards in Malaysia and the provisions of the
Companies Act, 1965.

During the current financial year, the Group and the Company have adopted the following
new and revised Financial Reporting Standards (“FRSs”) issued by the Malaysian
Accounting Standards Board (“MASB”):

(a) FRSs issued and effective for financial periods beginning on or after 1 October
2006:

FRS 117 Leases
FRS 124 Related Party Disclosures

(b) FRSs issued and effective for financial periods beginning on or after 1 January
2007:

FRS 6 Exploration for and Evaluation of Mineral Resources
FRS 1192004 Amendment to FRS 1192004 Employee Benefits - Actuarial Gains
and Losses, Group Plans and Disclosures

The adoption of FRS 124 only impacts the form and content of disclosures presented in
the financial statements.

FRS 117, FRS 6 and FRS 1192004 are not relevant to the Group and the Company’s
operations.

Framework for the Preparation and Presentation of Financial Statements has been issued
and is effective immediately. This Framework sets out the concepts that underlie the
preparation and presentation of financial statements for external users. It is not a MASB
approved accounting standard and hence, does not define standards for any particular
measurement or disclosure issue. The Group and the Company have applied this
Framework from the financial year ended 31 March 2008 onwards.

Page 21



4. BASIS OF PREPARATION (CONT’D)

The Group and the Company have not adopted FRS 139 - Financial Instruments:
Recognition and Measurement and the consequential amendments resulting from FRS
139 as the effective date is deferred to a date to be announced by the MASB. FRS 139
establishes the principles for the recognition and measurement of financial assets and
financial liabilities including circumstances under which hedge accounting is permitted.
By virtue of the exemption provided under paragraph 103AB of FRS 139, the impact of
applying FRS 139 on its financial statements upon initial application of the standard as
required by paragraph 30(b) of FRS 108 is not disclosed.

The following FRSs have been issued and are effective for financial periods beginning on
or after 1 July 2007 and will be effective for the Group and the Company’s financial
statements for the financial year ending 31 March 2009:

FRS 107 Cash Flow Statements
FRS 111 Construction Contracts
FRS 112 Income Taxes
FRS 118 Revenue
FRS 120 Accounting for Government Grants and Disclosure of Government
Assistance
FRS 134 Interim Financial Reporting
FRS 137 Provisions, Contingent Liabilities and Contingent Assets

The above FRSs align the MASB’s FRSs with the equivalent International Accounting
Standards (”IASs”), both in terms of form and content. The adoption of these standards
will only impact the form and content of disclosures presented in the financial statements.
FRS 120 is not relevant to the Group and the Company’s operations. The Group and the
Company will apply these FRSs from the financial year ending 31 March 2009 onwards.

Amendment to FRS 121 - The Effects of Changes in Foreign Exchange Rates Net
Investment in a Foreign Operation has been issued and is effective for financial periods
beginning on or after 1 July 2007. This amendment results in exchange differences arising
from a monetary item that forms part of the Group’s net investment in a foreign operation to
be recognised in equity irrespective of the currency in which the monetary item is
denominated and whether the monetary item results from a transaction with the Company
or any of its subsidiaries/associates/joint ventures. Previously, exchange differences arising
from such transactions between the Company and its subsidiaries/associates/joint ventures
would be accounted for in the income statement or in equity depending on the currency of
the monetary item. The Group and the Company will apply this amendment from the
financial year ending 31 March 2009 onwards.

Page 22



4. BASIS OF PREPARATION (CONT’D)
The following IC Interpretations have been issued and are effective for financial periods
beginning on or after 1 July 2007 but are not relevant for the Group and the Company’s
operations:

IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar
Liabilities
IC Interpretation 2 Members’ Shares in Co-operative Entities and Similar Instruments
IC Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and
Environmental Rehabilitation Funds
IC Interpretation 6 Liabilities arising from Participating in a Specific Market - Waste
Electrical and Electronic Equipment
IC Interpretation 7 Applying the Restatement Approach under FRS 1292004 Financial
Reporting in Hyperinflationary Economies
IC Interpretation 8 Scope of FRS 2

5. SIGNIFICANT ACCOUNTING POLICIES
(a) Critical Accounting Estimates And Judgements

Estimates and judgements are continually evaluated by the directors and
management and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. The estimates and judgements that affect the application of the
Group’s accounting policies and disclosures, and have a significant risk of causing a
material adjustment to the carrying amounts of assets, liabilities, income and
expenses are discussed below:-

(i) Depreciation of Property, Plant and Equipment

The estimates for the residual values, useful lives and related depreciation
charges for the property, plant and equipment are based on commercial
factors which could change significantly as a result of technical innovations
and competitors’ actions in response to the market conditions.

The Group anticipates that the residual values of its property, plant and
equipment will be insignificant. As a result, residual values are not being
taken into consideration for the computation of the depreciable amount.

Changes in the expected level of usage and technological development
could impact the economic useful lives and the residual values of these
assets, therefore future depreciation charges could be revised.

Page 23



5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(a) Critical Accounting Estimates And Judgements (Cont’d)

(ii) Income Taxes

There are certain transactions and computations for which the ultimate tax
determination may be different from the initial estimate. The Group
recognises tax liabilities based on its understanding of the prevailing tax
laws and estimates of whether such taxes will be due in the ordinary course
of business. Where the final outcome of these matters is different from the
amounts that were initially recognised, such difference will impact the
income tax and deferred tax provisions in the period in which such
determination is made.

(iii) Impairment of Assets

When the recoverable amount of an asset is determined based on the
estimate of the value-in-use of the cash-generating unit to which the asset is
allocated, the Group is required to make an estimate of the expected future
cash flows from the cash-generating unit and also to apply a suitable
discount rate in order to determine the present value of those cash flows.

(iv) Property Development

The Group recognises property development revenue and expenses in the
income statement by using the stage of completion method. The stage of
completion is determined by the proportion that the property development
costs incurred for work performed to date bear to the estimated total
property development costs.

Significant judgement is required in determining the stage of completion, the
extent of the property development costs incurred, the estimated total
property development revenue and costs, as well as the recoverability of the
development projects. In making the judgement, the Group evaluates based
on past experience and by relying on the work of specialists.

Page 24




(a) Critical Accounting Estimates And Judgements (Cont’d)

(v) Construction Contracts

Construction contracts accounting requires reliable estimation of the costs to
complete the contract and reliable estimation of the stage of completion.

(i) Contract Revenue

Construction contracts accounting requires that variation claims and
incentive payments only be recognised as contract revenue to the
extent that it is probable that they will be accepted by the customers.
As the approval process often takes some time, a judgement is
required to be made of its probability and revenue recognised
accordingly.

(ii) Contract Costs

Using experience gained on each particular contract and taking into
account the expectations of the time and materials required to
complete the contract, management estimates the profitability of the
contract on an individual basis at any particular time.

(vi) Allowance for Doubtful Debts of Receivables

The Group makes allowance for doubtful debts based on an assessment of
the recoverability of receivables. Allowances are applied to receivables
where events or changes in circumstances indicate that the carrying
amounts may not be recoverable. Management analyses historical bad
debt, customer concentrations, customer creditworthiness, current economic
trends and changes in customer payment terms when making a judgement
to evaluate the adequacy of the allowance for doubtful debts of receivables.
Where the expectation is different from the original estimate, such
difference will impact the carrying value of receivables.

(vii) Allowance for Inventories

Reviews are made periodically by management on damaged, obsolete and
slow-moving inventories. These reviews require judgement and estimates.
Possible changes in these estimates could result in revisions to the
valuation of inventories.

Page 25



(b) Financial Instruments

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

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

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

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

(c) Functional and Foreign Currency

(i) Functional and Presentation Currency

The functional currency of the Group is measured using the currency of the
primary economic environment in which the Group operates.

The consolidated financial statements are presented in Ringgit Malaysia
(“RM”) which is the parent’s functional and presentation currency.

(ii) Transactions and Balances

Transactions in foreign currency are converted into the respective functional
currencies on initial recognition, using the exchange rates approximating
those ruling at the transaction dates. Monetary assets and liabilities at the
balance sheet date are translated at the rates ruling as of that date. Non-
monetary assets and liabilities are translated using exchange rates that
existed when the values were determined. All exchange differences are
taken to the income statement.

Page 26




(c) Functional and Foreign Currency (Cont’d)

(iii) Foreign Operations

The results and financial position of all the Group entities that have a
functional currency different from the presentation currency are translated
into the presentation currency as follows:-

(i) assets and liabilities for each balance sheet presented are translated
at the closing rate at the date of the balance sheet;

(ii) income and expense for the income statement are translated at the
average exchange rates for the year; and

(iii) all resulting exchange differences are recognised as a separate
component of equity, as a foreign currency translation reserve. On
disposal, accumulated translation differences are recognised in the
consolidated income statements as part of the gain or loss on sale.

(d) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the
Company and all its subsidiaries made up to 31 March 2008.

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

All subsidiaries are consolidated using the purchase method. Under the purchase
method, the results of subsidiaries acquired or disposed of are included from the
date of acquisition or up to the date of disposal. At the date of acquisition, the fair
values of the subsidiaries’ net assets are determined and these values are reflected
in the consolidated financial statements. The cost of acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity instruments issued by the Group in exchange for
control of the acquiree, plus any costs directly attributable to the business
combination.

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.

Page 27




(e) Goodwill On Consolidation

Goodwill on consolidation represents the excess of the fair value of the purchase
consideration over the Group's share of the fair values of the identifiable net assets
of the subsidiaries at the date of acquisition.

Goodwill is measured at cost less accumulated impairment losses, if any. The
carrying value of goodwill is reviewed for impairment annually. The impairment
value of goodwill is recognised immediately in the consolidated income statement.
An impairment loss recognised for goodwill is not reversed in a subsequent period.

If, after reassessments, the Group's interest in the fair values of the identifiable net
assets of the subsidiaries exceeds the cost of the business combinations, the
excess is recognised immediately in the consolidated income statement.

(f) Investments

(i) Investments in Subsidiaries, Associates and Joint Ventures

Investments in subsidiaries, associates and joint ventures are 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.

On the disposal of the investments in subsidiaries, associates and joint
ventures, the difference between the net disposal proceeds and the carrying
amount of the investments is taken to the income statement.

(ii) Investments in Club Membership

The investment in club membership is stated at cost and is reviewed for
impairment at the end of the financial year if events or changes in
circumstances indicate that its carrying value may not be recovered.

Page 28



(g) Associates

An associate is an entity in which the Company has a long-term equity interest and
where it exercises significant influence over the financial and operating policies.

The investments in associates in the consolidated financial statements are
accounted for under the equity method, based on the financial statements of the
associates made up to 31 March 2008. The Company's share of the post
acquisition profits of the associates is included in the consolidated income
statement and the Company's interest in associates is stated at cost plus the
Company's share of the post-acquisition retained profits and reserves.

Unrealised gains on transactions between the Company and the associates are
eliminated to the extent of the Company's interest in the associate. Unrealised
losses are eliminated unless cost cannot be recovered.

(h) Investment in Joint Venture

A joint venture represents a business arrangement formed under contract with a
third party to undertake specific projects.

The investment in the joint venture is accounted for using the proportionate
consolidation method whereby assets, liabilities and the income statement of the
joint venture are consolidated in the Group's financial statements in the proportion
of the Group's interest in the venture.

(i) Property, Plant and Equipment

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

Depreciation is calculated under the straight-line method to write off the cost of the
assets over their estimated useful lives. Depreciation of an asset does not cease
when the asset becomes idle or is retired from active use unless the asset is fully
depreciated. The principal annual rates used for this purpose are:-

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

Page 29



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

The depreciation method, useful life and residual values are reviewed, and adjusted
if appropriate, at each balance sheet date to ensure that the amount, method and
period of depreciation are consistent with previous estimates and the expected
pattern of consumption of the future economic benefits embodied in the items of the
property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no
future economic benefits are expected from its use. Any gain or loss arising from
derecognition of the asset is included in the income statement in the year the asset
is derecognised.

(j) Land Held for Property Development

Land held for property development is carried at cost less any accumulated
impairment losses. Where land held for property development had previously been
recorded at a revalued amount, the revalued amount is retained as its surrogate
cost.

Land held for property development is classified as non-current asset where no
development activities are carried out or where development activities are not
expected to be completed within the normal operating cycle.

Costs associated with the acquisition of land include the purchase price of the land,
professional fees, stamp duties, commissions, conversion fees and other relevant
levies. Pre-acquisition costs are charged to the income statement as incurred
unless such costs are directly identifiable to the consequent property development
activity.

Land held for property development is transferred to current asset when
development activities have commenced and where it can be demonstrated that the
development activities can be completed within the normal operating cycle.

Page 30




(k) Impairment of Assets

The carrying values of assets, other than those to which FRS 136 - Impairment of
Assets does not apply, are reviewed at each balance sheet date for impairment
when there is an indication that the assets might be impaired. Impairment is
measured by comparing the carrying values of the assets with their recoverable
amounts. The recoverable amount of the assets is the higher of the assets' net
selling price and their value-in-use, which is measured by reference to discounted
future cash flow.

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.

(l) Assets under Hire Purchase

Assets acquired under hire purchase are capitalised in the financial statements
and are depreciated in accordance with the policy set out in Note 5(i) 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 31



(m) Investment Properties

Investment properties are property held either to earn rental income or for capital
appreciation or for both. Investment properties are stated at cost less accumulated
depreciation and impairment losses, if any, consistent with the accounting policy for
property, plant and equipment as stated in the financial statements.

Investment properties are derecognised when they have either been disposed of or
when the investment property is permanently withdrawn from use and no future
benefit is expected from its disposal.

On the derecognition of an investment property, the difference between the net
disposal proceeds and the carrying amount is charged to the income statement.

(n) Inventories

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

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

Where necessary, due allowance is made for all damaged, obsolete and slow-
moving items.

Page 32



(o) Property Development Costs

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

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

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

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

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

(p) Progress Billings/Accrued Billings

In respect of progress billings:-

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

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

(q) Amount Owing By/To Contract Customers

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

Page 33



(r) 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.

(s) 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.

(t) Payables

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

(u) 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. Capitalisation of borrowing costs is suspended during extended periods
in which active development is interrupted.

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

(v) 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.

Page 34



(w) Income Taxes

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

Deferred taxation is provided in full, using the liability method, on all material
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 excess of the acquirer's interest in the net fair
value of the acquiree's identifiable assets, liabilities and contingent liabilities over the
business combination costs or from the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of the transaction,
affects neither accounting profit nor taxable profit.

Deferred tax assets are recognised for all deductible temporary differences, unused
tax losses and unused tax credits to the extent that it is probable that future 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 to 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 excess of the acquirer's interest in the net fair value of the
acquiree's identifiable assets, liabilities and contingent liabilities over the business
combination costs. 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 future taxable profits will be available to allow all or part of the deferred tax
assets to be utilised.

Page 35



(x) Equity Instruments

Ordinary shares are classified as equity. Incremental costs directly attributable to
the issue of new shares or options are shown in equity as a deduction, net of tax,
from proceeds.

Dividends on ordinary shares are recognised as liabilities when approved for
appropriation.

(y) Employee Benefits

(i) Short-term Benefits

Wages, salaries, paid annual leave, bonuses and social security
contributions are recognised as an expense in the year in which the
associated services are rendered by employees of the Group. Short-term
accumulating compensated absences such as paid annual leave are
recognised when services are rendered by employees that increase their
entitlement to future compensated absences, and short-term non-
accumulating compensated absences such as sick leave are recognised
when the absences occur.

(ii) Defined Contribution Plans

The Group’s contributions to a defined contribution plan are charged to the
income statement in the period to which they relate. Once the contributions
have been paid, the Group has no further liability in respect of the defined
contribution plan. A foreign subsidiary of the Group makes contributions to
its respective country’s pension schemes. Such contributions are recognised
as an expense in the income statement as incurred.

Page 36



(z) Related Parties

For the purposes of these financial statements, a party is considered to be related
if:-

(i) directly, or indirectly through one or more intermediaries, the party:-

• controls, is controlled by, or is under common control with, the entity
(this includes parents, subsidiaries and fellow subsidiaries);

• has an interest in the entity that gives it significant influence over the
entity; or

• has joint control over the entity;

(ii) the party is an associate of the entity;

(iii) the party is a joint venture in which the entity is a venturer;

(iv) the party is a member of the key management personnel of the entity or its
parent;

(v) the party is a close member of the family of any individual referred to in (i)
or (iv);

(vi) the party is an entity that is controlled, jointly controlled or significantly
influenced by, or for which significant voting power in such entity resides
with, directly or indirectly, any individual referred to in (iv) or (v); or

(vii) the party is a post-employment benefit plan for the benefit of employees of
the entity, or of any entity that is a related party of the entity.

Close members of the family of an individual are those family members who may
be expected to influence, or be influenced by, that individual in their dealings with
the entity.

Page 37



(aa) Contingent Liabilities and Contingent Assets

A contingent liability is a possible obligation that arises from past events and
whose existence will only be confirmed by the occurrence of one or more
uncertain future events not wholly within the control of the Group. It can also be a
present obligation arising from past events that is not recognised because it is not
probable that an outflow of economic resources will be required or the amount of
obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial
statements. When a change in the probability of an outflow occurs so that the
outflow is probable, it will then be recognised as a provision.

A contingent asset is a probable asset that arises from past events and whose
existence will be confirmed only by the occurrence or non-occurrence of one or
more uncertain events not wholly within the control of the Company.

(ab) Revenue 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.

Page 38



(ab) Revenue Recognition (Cont’d)

(ii) Property Development (Cont’d)

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

(iii) Revenue from Sale of Goods

Revenue is 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 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.

Page 39




(ac) 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.

6. INVESTMENT IN SUBSIDIARIES
THE COMPANY
2008 2007
RM RM

Unquoted shares, at cost 210,990,785 210,990,785

Details of the subsidiaries, which are all incorporated in Malaysia, are as follows:-
Name of Company Effective Equity Interest Principal
2008 2007 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 contractor.

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

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

Page 40



6. INVESTMENT IN SUBSIDIARIES (CONT’D)
Name of Company Effective Equity Interest Principal
2008 2007 Activities
% %

Sinaran Naga Sdn. Bhd. 100 100 Property development.

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

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

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

SBC Leisure Sdn. Bhd.* 100 100 Investment holding.

SBC Towers Sdn. Bhd.* 100 100 Investment holding.

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

South-East Best 100 100 Project development and
Sdn. Bhd. property investment.

Gracemart Resources 100 100 Property development.
Sdn. Bhd.

Masahmura Sdn. Bhd.* 100 100 General building
contractor and trading
of construction
materials.

Masahmura Sales & 100 100 Trading in material
Service Sdn. Bhd. handling equipment,
selling of spare parts
and providing general
services.

Kiara Amalan Sdn. Bhd. 51 51 Dormant.

* Not audited by Messrs. Horwath.

Page 41

SBC Corporation Berhad: Annual Audited Accounts 2008

SBC Corporation Berhad: Annual Audited Accounts 2008

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