Published on July 10, 2009
20 0 7 RE P O RT AN N UA L S B C C O R P O R AT I O N B E R H A D ANNUAL REPORT 2007
CORE PURPOSE • To build upon our construction heritage to design and deliver exciting, unique and valuable solutions for buildings and communities. CORE VALUES • Equipping our people to anticipate and respond to the needs of our customers and stakeholders. • Adherence to industry’s highest ethics. • Use of designs and processes that promote standards.
CONTENTS 2 CORPORATE INFORMATION 4 DIRECTORS’ PROFILES 12 CORPORATE STRUCTURE 13 GROUP FINANCIAL HIGHLIGHTS 14 EXECUTIVE CHAIRMAN’S STATEMENT 18 PENYATA PENGERUSI EKSEKUTIF 22 STATEMENT OF CORPORATE GOVERNANCE 31 STATEMENT ON INTERNAL CONTROL 33 AUDIT COMMITTEE REPORT 38 STATEMENT OF DIRECTORS’ RESPONSIBILITIES 39 FINANCIAL STATEMENTS 100 GROUP PROPERTIES 104 SHAREHOLDERS’ INFORMATION 108 NOTICE OF ANNUAL GENERAL MEETING 110 NOTICE OF DIVIDEND PAYMENT 110 STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING 111 APPENDIX 1 PROXY FORM
2 CORPORATE INFORMATION BOARD OF DIRECTORS AUDIT COMMITTEE NOMINATION COMMITTEE SIA KWEE MOW @ SIA HOK CHAI DATO’ DR. NORRAESAH BT. HAJI MOHAMAD DATO’ LIM PHAIK GAN JMN, FFB, FCIOB, FAIB DSPN, DSDK, PhD., B.Sc.(Econ) DPMP, DMPN, M.A.(Law), FCI, ARB Executive Chairman Chairperson & Independent Non-Executive Director Chairperson & Independent Non-Executive Director SIA TEONG HENG DATO’ LIM PHAIK GAN DATO’ DR. NORRAESAH BT. HAJI MOHAMAD B.Sc. (Eng), M.Sc. DPMP, DMPN, M.A.(Law), FCI, ARB DSPN, DSDK, PhD., B.Sc.(Econ) Managing Director Independent Non-Executive Director Independent Non-Executive Director MUN CHONG SHING @ MUN CHONG TIAN AHMAD FIZAL BIN OTHMAN AHMAD FIZAL BIN OTHMAN Non-Executive Director B.Acc & Fin. (Hons) B.Acc & Fin. (Hons) Independent Non-Executive Director Independent Non-Executive Director DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID LLB (Hons) SIA TEONG HENG MUN CHONG SHING @ MUN CHONG TIAN Non-Executive Director B.Sc. (Eng), M.Sc. Non-Executive Director Managing Director DATO’ LIM PHAIK GAN DPMP, DMPN, M.A.(Law), FCI, ARB EXECUTIVE MANAGEMENT Independent Non-Executive Director REMUNERATION COMMITTEE SIA TEONG HENG DATO’ DR. NORRAESAH BT. HAJI MOHAMAD DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID B.Sc. (Eng), M.Sc. DSPN, DSDK, PhD., B.Sc.(Econ) LLB (Hons) Chairman & Managing Director Independent Non-Executive Director Chairman & Non-Executive Director SIA TEONG LENG AHMAD FIZAL BIN OTHMAN DATO’ LIM PHAIK GAN B.A. (Hons) (Law & Econs), M.B.A. B.Acc & Fin. (Hons) DPMP, DMPN, M.A.(Law), FCI, ARB Corporate Director Independent Non-Executive Director Independent Non-Executive Director YAP WAI YEE DATO’ DR. NORRAESAH BT. HAJI MOHAMAD B. Eng, M.Sc. DSPN, DSDK, PhD., B.Sc.(Econ) Deputy Chief Operating Officer Independent Non-Executive Director TEH KAI CHUA SIA TEONG HENG B.Sc. (Eng) B.Sc. (Eng), M.Sc. General Manager - Technical Managing Director BANGKOK BANK HEADQUARTERS 1954 - 2000
3 CORPORATE INFORMATION WISMA HLA 1954 - 2000 SOLICITORS PRINCIPAL BANKERS CHEANG & ARIFF ALLIANCE BANK MALAYSIA BERHAD 39 Court AL-RAJHI BANKING & INVESTMENT CORPORATION 39, Jalan Yap Kwan Seng (MALAYSIA) BERHAD 50450 Kuala Lumpur BANGKOK BANK BERHAD FOONG & PARTNERS BANK MUAMALAT MALAYSIA BERHAD Suite 21-08, Level 21 CIMB BANK BERHAD Plaza 138, 138, Jalan Ampang 50450 Kuala Lumpur MALAYAN BANKING BERHAD MIDF AMANAH INVESTMENT BANK BERHAD LEE, PERARA & TAN OCBC BANK (MALAYSIA) BERHAD 55, Jalan Thambapillai Off Jalan Tun Sambanthan UNITED OVERSEAS BANK (MALAYSIA) BERHAD Brickfields, 50470 Kuala Lumpur LIM & YEOH REGISTERED OFFICE 145-M Jalan Maharajalela 50150 Kuala Lumpur WISMA SIAH BROTHERS 74A Jalan Pahang 53000 Kuala Lumpur AUDITORS Tel: 03-4041 8118 Fax: 03-4043 5281 HORWATH Chartered Accountants REGISTRARS Level 16 Tower C, Megan Avenue II 12 Jalan Yap Kwan Seng TACS CORPORATE SERVICES SDN. BHD. 50450 Kuala Lumpur Unit No. 203, 2nd Floor, Block C Damansara Intan No. 1, Jalan SS 20/27 COMPANY SECRETARIES 47400 Petaling Jaya Tel: 03-7118 2688 Fax: 03-7118 2693 CHONG FOOK SIN ATII, MCCS, AFA STOCK EXCHANGE LISTING KAN CHEE JING ACIS MAIN BOARD OF BURSA MALAYSIA SECURITIES BERHAD
4 DIRECTORS’ PROFILES AS AT 31 JULY 2007 SIA KWEE MOW @ SIA HOK CHAI MALAYSIAN, AGED 74 • EXECUTIVE CHAIRMAN Sia Kwee Mow @ Sia Hok Chai has been a Director of SBC Corporation Berhad (“SBC”) since its incorporation on 14 June 1990. He has over 53 years of experience in building and civil engineering contracting and not less than 35 years of experience in plastic engineering since the incorporation of Paling Industries Sdn. Bhd. in 1971. He was actively involved in Master Builders Association Malaysia (“MBAM”) and had served in various capacities including the post of President (1988 to 1994). He was elected as the 29th President (1994 to 1996) of the International Federation of Asian and Western Pacific Contractors’ Associations (“IFAWPCA”) during which he led the IFAWPCA delegation to a meeting between the World Bank and International Contractors Association held at Washington D.C. in November 1996. In recognition of his vast experience and knowledge in construction and his contribution to the building construction industry, he was awarded or conferred the following: • Johan Mangku Negara by DYMM Yang DiPertuan Agong in 2001 • Honorary Life President by MBAM in 2001 • Fellowship of the Faculty of Building, United Kingdom in 1981 • Fellowship of the Chartered Institute of Building, United Kingdom as a Chartered Builder in 1979 • Fellowship of the Australian Institute of Building by the Australian Royal Charter of Building in 1982 He was also a previous President of both the Selangor Builders Association and Selangor Chinese Plumbing and Sanitary Association. He also sits on the board of several private limited companies in Malaysia, including several subsidiaries of SBC. BANK NEGARA MALAYSIA HEADQUARTERS 1954 - 2000
5 DIRECTORS’ PROFILES AS AT 31 JULY 2007 His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 1,480,800 (a) 19,498,523 (b) (a) 1,480,800 shares are held in bare trust by RHB Capital Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares). By virtue of his interests in SBC, he is deemed to have interests in the securities of SBC’s subsidiaries to the extent of SBC’s interest in accordance with Section 6A of the Companies Act, 1965. He is the father of Sia Teong Heng, the Managing Director and a major shareholder of SBC. He does not have any conflict of interest with SBC except for those transactions disclosed in Note 45 to the financial statements. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year. KOTA RAYA SHOPPING COMPLEX 1954 - 2000
6 DIRECTORS’ PROFILES AS AT 31 JULY 2007 SIA TEONG HENG MALAYSIAN, AGED 44 • MANAGING DIRECTOR Sia Teong Heng was appointed as a Director of SBC Corporation Berhad (“SBC”) on 5 February 1991. He is a member of the Audit Committee and the Remuneration Committee of SBC. He graduated in 1985 with a degree in Bachelor of Science in Civil Engineering from Loughborough University, United Kingdom (“UK”) and a Master degree in Management Science from Imperial College, University of London, UK in 1986. His career began in investment banking in 1987 with Morgan Grenfell (Asia) Ltd., Singapore. He joined SBC in 1991. He was a past board member of the Entrepreneurs Organisation and a member of the Young President’s Organisation. Presently, he also sits on the boards of several subsidiaries of SBC. His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 4,677,992 (a) 19,498,523 (b) (a) 4,434,000 shares are held in bare trust by Amsec Nominees (Tempatan) Sdn. Bhd. (b) Deemed interest by virtue of his shareholding in LOM Holdings Sdn. Bhd. (14,317,500 shares) and Evergreen Legacy Sdn. Bhd. (5,181,023 shares). By virtue of his interests in SBC, he is deemed to have interests in the securities of SBC’s subsidiaries to the extent of SBC’s interest in accordance with Section 6A of the Companies Act, 1965. He is a son of Sia Kwee Mow @ Sia Hok Chai, the Executive Chairman and a major shareholder of SBC. He does not have any conflict of interest with SBC except for those transactions disclosed in Note 45 to the financial statements. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year.
7 DIRECTORS’ PROFILES AS AT 31 JULY 2007 MUN CHONG SHING @ MUN CHONG TIAN MALAYSIAN, AGED 70 • NON-EXECUTIVE DIRECTOR Mun Chong Shing @ Mun Chong Tian was appointed as an Executive Director of SBC Corporation Berhad (“SBC”) on 1 April 1996 when he was employed as General Manager of Paling Industries Sdn. Bhd. (“Paling”) from 1987 and appointed as a Director in 1991 and remained in both positions until his retirement on 31 December 2001. On 31 December 2001, he was redesignated as a Non-Executive Director of SBC. He is a member of the Nomination Committee of SBC. He has received training in Sales Management conducted by the National Productive Centre and the Malaysian Institute of Management and a General Management Programme at the National Productivity Board, Singapore. Prior to his involvement with Paling, he was employed as a General Manager in Hume Industries (M) Bhd. where he has had extensive exposure to industrial engineering and management. His holdings in the securities of SBC are as follows: Direct Interest Indirect Interest Ordinary shares 21,782 - He does not hold any securities, direct or indirect, in any of SBC’s subsidiaries. He is a brother-in-law to Sia Kwee Mow @ Sia Hok Chai and an uncle to Sia Teong Heng, both are Directors and major shareholders of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended three of the four Board Meetings held during the last financial year. WISMA LEE RUBBER 1954 - 2000
8 DIRECTORS’ PROFILES AS AT 31 JULY 2007 DATO’ LIM PHAIK GAN MALAYSIAN, AGED 87 • INDEPENDENT NON-EXECUTIVE DIRECTOR Dato’ Lim Phaik Gan was appointed as an Independent Non-Executive Director of SBC Corporation Berhad (“SBC”) on 5 February 1991. She is the Senior Independent Non-Executive Director, the Chairperson of the Nomination Committee and a member of the Audit Committee and the Remuneration Committee of SBC. She is an advocate and solicitor and was called to the Bar of England and the Bar of Malaysia. She obtained a Master of Arts degree in Law from the University of Cambridge, United Kingdom and was in active practice at the Bar of Malaysia from 1954 to 1971 and from 1980 until today. Since 1955, she has had a distinguished career in both the private and public sectors. In 1970, she was a member of the National Economic Consultative Council established when Parliament was suspended as a result of riots in 1969. From 1971 to 1980, she served as ambassador and Deputy Permanent Representative of Malaysia to the United Nations, and successively as the Malaysian Ambassador to Yugoslavia, Austria, Belgium and the European Economic Community. She was Malaysia’s Permanent Representative to the United Nations Industrial and Development Organisation and International Atomic Energy Agency in Vienna, and served as chairman in various committees. After her retirement from the Malaysian Foreign Service in 1980, she was appointed by the Government as Director of the Kuala Lumpur Regional Centre for Arbitration, an international organisation involved in the conduct and administration of international commercial arbitration for the settlement of disputes arising out of international commercial contracts and joint ventures, in which capacity she served from 1982 to 2000. She is currently a member of the Board of Trustees of the Institute of Strategic and International Studies. She does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. She has no family relationship with any Director and/or major shareholder of SBC. She does not have any conflict of interest with SBC. She has not been convicted of any offence within the past 10 years. She attended three of the four Board Meetings held during the last financial year.
9 DIRECTORS’ PROFILES AS AT 31 JULY 2007 DATO’ DR. NORRAESAH BT. HAJI MOHAMAD MALAYSIAN, AGED 59 • INDEPENDENT NON-EXECUTIVE DIRECTOR Dato’ Dr. Norraesah Bt. Haji Mohamad was appointed as an Independent Non-Executive Director of SBC Corporation Berhad (“SBC”) on 8 July 1991. She is the Chairperson of the Audit Committee and a member of the Nomination Committee and the Remuneration Committee of SBC. She holds a Doctorate Degree in Economics Science (International Economics and Finance) which she obtained in 1986 from University of Paris 1, Pantheon Sorbonne, France. She has over 35 years of working experience in banking, consultancy and international trade and commerce. She worked with the International Trade Division of the Ministry of Trade and Industry (now known as the Ministry of International Trade and Industry) from 1972 to 1985 and was later transferred to the Finance Division of the Ministry of Finance holding the post of Principal Assistant Secretary dealing with privatisation and debt management. In 1988, she joined ESSO Production Malaysia, Inc. as Communications Manager and subsequently, in 1990, took the position of Managing Director with a consultant firm providing financial advisory services. From 1991 to 1998 she was appointed as the Chief Representative of Credit Lyonnais Bank in Malaysia. She sits on the board of KESM Industries Berhad, Malaysian Oxygen Berhad, Protasco Berhad, Ya Horng Electronic (M) Berhad, Adventa Berhad, My E.G. Services Berhad and several private limited companies. She was awarded the distinction of Darjah Setia Pangkuan Negeri on 13th July, 2002 by Tuan Yang Terutama Yang di-Pertua Negeri Pulau Pinang on His Excellency’s 64th Birthday and the Dato’ Setia DiRaja Kedah on 21st January, 2007 by Kebawah Duli Yang Maha Mulia Tuanku Sultan Darul Aman on His Excellency’s 79th Birthday. She does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. She has no family relationship with any Director and/or major shareholder of SBC. She does not have any conflict of interest with SBC. She has not been convicted of any offence within the past 10 years. She attended all the four Board Meetings held during the last financial year. CENTRAL MARKET 1954 - 2000
10 DIRECTORS’ PROFILES AS AT 31 JULY 2007 DATO’ ZAINOL ABIDIN BIN HAJI A. HAMID MALAYSIAN, AGED 65 • NON-EXECUTIVE DIRECTOR Dato’ Zainol Abidin Bin Haji A. Hamid was appointed as a Non-Executive Director of SBC Corporation Berhad (“SBC”) on 10 October 2003, representing the interest of Permodalan Nasional Berhad. He is the Chairman of the Remuneration Committee of SBC. He graduated with LLB (Hons) from the University of London in 1995. He joined the Kedah State Government in 1966 as a civil servant. From 1973 to 1981, he was the District Officer for Sik, then Padang Terap and finally Kubang Pasu. He was General Manager and Director of Kedah Cement Sdn Bhd from 1981 to 1996 and Managing Director of Kedah Cement Marketing Sdn Bhd from 1990 to 1996. He sits on the Board of Paragon Union Berhad. He does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. He has no family relationship with any Director and/or major shareholder of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended three of the four Board Meetings held during the last financial year. FRENCH EMBASSY (In Malaysia) 1954 - 2000
11 DIRECTORS’ PROFILES AS AT 31 JULY 2007 AHMAD FIZAL BIN OTHMAN MALAYSIAN, AGED 44 • INDEPENDENT NON-EXECUTIVE DIRECTOR Ahmad Fizal Bin Othman was appointed as an Independent Non-Executive Director of SBC Corporation Berhad (“SBC”) on 24 February 2004. He is a member of the Audit Committee and the Nomination Committee of SBC. He graduated with a Bachelor in Accounting and Finance (Hons) from the Middlesex University, London. He is a well-rounded and experienced businessman and involved in a multitude of industries. Currently, he immerses himself in retail, multimedia and technology. He does not hold any securities, direct or indirect, in SBC or any of its subsidiaries. He has no family relationship with any Director and/or major shareholder of SBC. He does not have any conflict of interest with SBC. He has not been convicted of any offence within the past 10 years. He attended all the four Board Meetings held during the last financial year. CENTRAL SQUARE 1954 - 2000
12 CORPORATE STRUCTURE AS AT 8 AUGUST 2007 RESIDENTIAL PROPERTY DEVELOPMENT INVESTMENT HOLDING 100% | Aureate Construction Sdn Bhd 100% | Siah Brothers Industries Sdn Bhd 100% | Gracemart Resources Sdn Bhd 100% | Siah Brothers Land Sdn Bhd 100% | Mixwell (Malaysia) Sdn Bhd 100% | Siah Brothers Properties Sdn Bhd 100% | SBC Leisure Sdn Bhd 100% | SBC Towers Sdn Bhd BUILD / CONSTRUCTION 100% | Seri Ampangan Realty Sdn Bhd 100% | Sinaran Naga Sdn Bhd 100% | Syarikat Siah Brothers Construction Sdn Bhd 100% | South-East Best Sdn Bhd 100% | Syarikat Siah Brothers Trading Sdn Bhd 33.3% | Sri Berjaya Development Sdn Bhd 22.2% | Sri Rawang Properties Sdn Bhd STRATEGIC INVESTMENT 100% | Masahmura Sales & Service Sdn Bhd 100% | Masahmura Sdn Bhd 51% | Kiara Amalan Sdn Bhd 50% | Ligamas Sdn Bhd 50% | Tri-Development Co., Ltd 50% | Varich Industries Sdn Bhd 40% | Liga Canggih Sdn Bhd 40% | Paling Industries Sdn Bhd 19.6% | Pasti Bumi Sdn Bhd NEWS STRAITS TIME PRESS 1954 - 2000
13 GROUP FINANCIAL HIGHLIGHTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 EMPIRE TOWER 1954 - 2000 2007 2006 2005 2004 2003 RM’000 RM’000 RM’000 RM’000 RM’000 (Restated) RESULTS Turnover 77,103 69,927 66,867 86,317 69,829 Profit before taxation (2,207) 1,369 3,321 6,996 5,149 Profit after taxation but before minority interest (3,009) 1,047 2,250 2,073 2,011 Profit attributable to shareholders (3,009) 1,047 2,250 2,073 2,011 ASSET EMPLOYED Property, plant and equipment 8,550 8,243 35,452 36,246 35,813 Investments and other assets 203,129 205,861 192,257 153,703 152,856 Net current assets 8,854 50,881 37,243 73,632 71,634 Goodwill and deferred expenditure 27,499 27,318 27,318 27,318 27,272 248,032 292,303 292,270 290,899 287,575 FINANCED BY Share capital 82,435 82,435 82,435 82,435 82,435 Reserves 130,691 134,294 137,572 135,940 134,682 ABBA bonds - 43,978 41,752 39,712 37,827 Deferred liabilities 34,906 31,596 30,511 32,812 32,631 248,032 292,303 292,270 290,899 287,575 SELECTED RATIOS Net earnings per share (sen) (3.7) 1.3 2.7 2.4 2.4 Net assets per share (sen) 259 263 267 265 263 Gross dividend (%) 1.0 1.0 1.0 1.0 1.0
14 EXECUTIVE CHAIRMAN’S STATEMENT On behalf of the Board of Directors of SBC Corporation Berhad, I have the pleasure of presenting to you the Annual Report and the Audited Financial Statements of the Group and the Company for the ﬁnancial year ended 31 March 2007. EUA ARTHRON BANGKOK FINANCIAL REVIEW The Group recorded a RM77.10 million revenue representing an increase of 10.3% over RM69.93 million in the previous year. This result represents both remarkable MENARA MESINIAGA progress of our turnkey construction activities in Thailand as well as lower 1954 - 2000 contribution from the Malaysian property side on account of longer than expected gestation period in obtaining building permits. The overall negative ﬁnancial results were due to prudent measures undertaken to provide for possible impairment loss as well as ﬁnancial accounting adjustment for unamortised goodwill. OPERATIONS REVIEW The property sector within which the group operates continue to fare well; largely targeting to owner occupiers and referrals from existing customers. With our turnkey clients, mainly the government, we continue to maintain a selective presence where we are able to provide value added services.
15 EXECUTIVE CHAIRMAN’S STATEMENT During the year, Kuantan’s phase 4A and 6A consisting of double-storey and single storey terrace homes were handed over at our Seri Mahkota Aman project. Similarly at Kota Kinabalu’s Signal Hill Park semi-detached homes. In Klang, the second phase of Suria Pendamar’s double-storey terrace homes were also handed over. The state land and survey building in Sabah was completed three months ahead of schedule. Meanwhile the iconic Cube shop ofﬁces at Metpark are progressing well, as is the Suria Setapak Homes & Commercial precinct off Jalan Gombak. In Bandar Ligamas at the foothills of Genting Highlands, work on the fourth phase of double-storey terrace homes continue to progress well. As at today, site work has just commenced on the 34-storey PJX, a purpose built commercial building in the heart of Petaling Jaya’s CBD. This is also the case with the third phase of our Kota Kinabalu project, in the manner of The Peak Suites and we are hopeful of being able to move on to our fourth phase. Paling Industries Sdn Bhd, our manufacturing associate in water pipes and ﬁttings continues to look beyond Malaysia shores in an effort to achieve proﬁtability. JAYA SHOPPING COMPLEX 1954 - 2000
16 EXECUTIVE CHAIRMAN’S STATEMENT SURIA SETAPAK ECONOMIC AND BUSINESS OUTLOOK The outlook for the industry is promising given the continued stable business environment propagated by the government and the slew of construction activities slated for the next few years. The group is eminently positioned to partake in this optimism towards improving our top line growth. DIVIDEND The Board is pleased to recommend a ﬁrst and ﬁnal dividend of 1% per ordinary share less 27% tax for the ﬁnancial year ended 31 March 2007 subject to the shareholders’ approval at the forthcoming Annual General Meeting of the Company. CONFERENCE HALL & SURAU ~ ISTAC 1954 - 2000
17 EXECUTIVE CHAIRMAN’S STATEMENT SERI MAHKOTA AMAN APPRECIATION AND ACKNOWLEDGEMENT On behalf of the Board of Directors, I would like to thank our valued shareholders, joint venture partners, business associates, bankers and government authorities for INTAN KENNY CONDOMINIUM their conﬁdence, understanding and continued support for the SBC Group. 1954 - 2000 I would also like to add our appreciation to our customers and supporters of SBC’s products and services, all of whom have place much trust with us, as custodian to their home and property investments. Lastly, I would like to thank the SBC management team and employees of the Group for their continuous hard work and commitment in the ever-changing business environment towards the success of the Group. Thank you. SIA KWEE MOW @ SIA HOK CHAI JMN,FFB,FCIOB,FAIB Executive Chairman
18 PENYATA PENGERUSI EKSEKUTIF Saya bagi pihak Lembaga Pengarah SBC Corporation Berhad dengan bangganya membentangkan Laporan Tahunan serta Penyata Kewangan Kumpulan dan Syarikat bagi tahun kewangan berakhir 31 Mac 2007. SIGNAL HILL PARK ULASAN KEWANGAN Kumpulan mencatat pendapatan sejumlah RM77.10 juta menunjukkan kenaikan sebanyak 10.3% berbanding RM69.93 juta pada tahun lepas. Perolehan ini menunjukkan pertumbuhan yang positif daripada aktiviti-aktiviti pembinaan CONCORDE HOTEL 1954 - 2000 turnkey di Thailand, dan juga sumbangan yang rendah daripada sektor hartanah di Malaysia akibat penggunaan masa yang lebih lama dari yang dijangkakan dalam isu pemilikan permit pembangunan. Keseluruhan prestasi kewangan yang negatif ini adalah akibat daripada penggunaan piawaian kiraan secara waspada dalam aspek kerugian kemerosotan nilai, dan juga penyesuaian sistem perakaunan kewangan atas muhibbah penyatuan tidak terlunas. TINJAUAN OPERASI Sektor hartanah yang diusahakan oleh pihak Kumpulan terus mencapai keputusan yang memuaskan. Sebahagian besar pendapatan ini datang daripada penghuni asal serta rujukan-rujukan oleh pelanggan sedia ada. Dengan adanya sokongan daripada pelanggan turnkey khususnya pihak kerajaan, kami berupaya untuk kekal pada kedudukan yang baik dan selesa untuk terus membekalkan perkhidmatan yang berkualiti.
19 PENYATA PENGERUSI EKSEKUTIF Dalam tempoh tahun kewangan, projek rumah berteres dua tingkat dan satu tingkat Fasa 4A dan 6A di Seri Mahkota Aman, Kuantan, berserta projek rumah berkembar di Signal Hill Park, Kota Kinabalu telahpun disiapserahkan. Projek rumah berteres THE PEAK CONDOMINIUM dua tingkat fasa kedua di Suria Pendamar, Kelang juga telah disiapserahkan. 1954 - 2000 Di Sabah pula, kerja pembinaan ibu pejabat baru Tanah dan Ukur Negeri telah siap disempurnakan tiga bulan lebih awal dari yang dijadualkan. Sementara itu, projek pembinaan unit komersial The Cube di Metpark dan projek Perumahan dan Komersial di Suria Setapak di persekitaran Jalan Gombak turut berjalan lancar, begitu juga dengan aktiviti pembinaan fasa keempat rumah berteres dua tingkat di Bandar Ligamas di kaki bukit Genting Highlands. Sehingga kini, kerja tapak baru sahaja dimulakan ke atas projek PJX, sebuah kompleks komersial pelbagaigunaan setinggi 34 tingkat yang terletak di Perbandaran Petaling Jaya. Di Kota Kinabalu pula, kami dengan sesungguhnya berharap projek The Peak Suites akan dapat dilanjutkan daripada fasa ini ke tahap fasa keempat. Paling Industries Sdn Bhd, syarikat perkilangan bersekutu kami dalam bidang paip dan kelengkapan perairan terus berusaha meninjau peluang emas di luar Malaysia untuk mencapai hasil keuntungan yang lebih tinggi.
20 PENYATA PENGERUSI EKSEKUTIF MASTIARA CUBE TINJAUAN EKONOMI DAN PERNIAGAAN Masa depan industri ini akan semakin cerah dengan kestabilan suasana perniagaan yang dimantapkan oleh pihak kerajaan dengan adanya serangkaian aktiviti-aktiviti pembinaan yang akan dilaksanakan dalam tahun-tahun akan datang. Kumpulan amat positif terhadap keupayaan kami untuk terus mempertingkatkan pencapaian dan mutu pengeluaran dalam industri pembinaan ini. DIVIDEN Pihak Lembaga Pengarah dengan sukacitanya mencadangkan pembayaran dividen pertama dan akhir sebanyak 1% sesaham tolak cukai 27% bagi tahun kewangan berakhir 31 Mac 2007. Pembayaran dividen ini adalah tertakluk kepada persetujuan para pemegang saham pada Mesyuarat Agung Tahunan akan datang. DAMANSARA EMAS 2001 - 2004
21 PENYATA PENGERUSI EKSEKUTIF BATANG KALI PRODUK PALING PENGHARGAAN DAN PENGAKUAN Bagi pihak Lembaga Pengarah, saya ingin mengucapkan ribuan terima kasih kepada para pemegang saham, rakan-rakan bersekutu dan niaga, ahli-ahli bank dan pihak kerajaan atas kepercayaan, timbang rasa dan sokongan berterusan mereka terhadap Kumpulan SBC. Saya juga ingin merakamkan rasa penghargaan ikhlas kami kepada para pelanggan dan penyokong SBC yang selama ini memberikan kepercayaan tidak berbelah bahagi kepada Kumpulan dalam bidang pelaburan hartanah dan perumahan. Akhirnya, saya ingin berterima kasih kepada pihak pengurusan SBC berserta kakitangannya yang telah meyumbangkan usaha dan sokongan yang tidak ternilai ke arah kejayaan Kumpulan. Sekian, terima kasih. SIA KWEE MOW @ SIA HOK CHAI JMN,FFB,FCIOB,FAIB Pengerusi Eksekutif
22 STATEMENT OF CORPORATE GOVERNANCE The Board of Directors of SBC Corporation Berhad remains firmly committed towards ensuring the highest standard of corporate governance is maintained throughout the Company and its subsidiaries (“the Group”). Hence, the Board is fully dedicated to continuously evaluating the Group’s corporate governance practices and procedures with a view to ensure the principles and best practices in corporate governance as promulgated by the Malaysian Code on Corporate Governance (“the Code”) is applied and adhered to in the best interests of the stakeholders. This disclosure statement sets out the manner in which the Group has applied and complied with the Principles of the Code and the extent of compliance with Best Practices as set out in Part 1 and 2 of the Code. BOARD OF DIRECTORS Composition and Balance The Board as at the date of this statement has 7 members, comprising 3 Independent Non-Executive Directors, 2 Non-Executive Directors and 2 Executive Directors which satisfies Bursa Malaysia Securities Berhad (“Bursa Securities”) Listing Requirements of having at least 2 Directors or 1/3 of the Board whichever is higher, who are Independent Directors. The Directors have a wide range of experience and skills and are from diverse backgrounds relevant to managing and directing the Group’s operations. The Executive Directors are responsible for implementing policies of the Board, overseeing the Group’s operations and developing the Group’s business strategies. The role of the Independent Non-Executive Directors is to provide objective and independent judgement to the decision making of the Board and as such, provide an effective check and balance to the Board’s decision making process. The Board is satisfied that the current Board composition fairly reflects the investment of minority shareholders in the Company and represents the needed mix of skills and experience required to discharge the Board’s duties and responsibilities. Furthermore, no individual Director or group of Directors can dominate the Board’s decision making process. The profiles of the members of the Board are set out in this Annual Report under the section named Directors’ Profiles. Duties and Responsibilities The Board recognises its key role in charting the strategic direction, development and control of the Group and has adopted the specific responsibilities that are listed in the Code, which facilitates the discharge of the Board’s stewardship responsibilities. The roles of the Chairman and Managing Director are clearly distinct to ensure that there is a balance of power and authority. The Chairman is primarily responsible for the orderly conduct and working of the Board whilst the Managing Director is responsible for the day-to-day running of the business and implementation of Board policies and decisions adopted by the Board. Dato’ Lim Phaik Gan is the Senior Independent Non-Executive Director to whom concerns may be conveyed. SBC CORPORATION BERHAD
23 STATEMENT OF CORPORATE GOVERNANCE Board Meetings The Board meets on a scheduled basis once every quarter with additional meetings held as and when urgent issues and important decisions are required to be taken between the scheduled meetings. During the financial year ended 31 March 2007, the Board met 4 times where it deliberated on and considered matters relating to the Group’s financial performance, significant investments, corporate development, strategic issues and business plan. Details of each Director’s attendance of Board meetings are set out as follows: No. of meetings held during the financial year ended No. of meetings Name of Director 31 March 2007 attended Sia Kwee Mow @ Sia Hok Chai (Executive Chariman) 4 4 Sia Teong Heng (Managing Director) 4 4 Mun Chong Shing @ Mun Chong Tian (Non-Executive Director) 4 3 Dato’ Zainol Abidin Bin Haji A. Hamid (Non-Executive Director) 4 3 Dato’ Lim Phaik Gan (Independent Non-Executive Director) 4 3 Dato’ Dr. Norraesah Bt. Haji Mohamad (Independent Non-Executive Director) 4 4 Ahmad Fizal Bin Othman (Independent Non-Executive Director) 4 4 The Board members have unrestricted and timely access to all information necessary for the discharge of their responsibilities. All Directors are provided with all relevant information and reports on financial, operational, corporate, regulatory, business development by way of Board papers or upon specific request for informed decision making and effective discharge of their duties. These documents are comprehensive and include qualitative and quantitative information to enable the Board members to make informed decisions. Notice of Board Meetings and board papers are provided to Directors in advance so that meaningful deliberation and sound decisions can be made at Board meetings. All proceedings of the Board meetings are minuted by the Company Secretary. There is a formal schedule of matters reserved specifically for Board’s decisions. These include approval of key policies, significant acquisitions and disposals of assets, significant investments and approval of budgets and corporate plans. To assist in the discharge of their responsibilities and duties, all Directors have access to the advice and services of the Company Secretary. If required, the Directors may engage independent professionals at the Group’s expense, in the furtherance of their duties. SBC CORPORATION BERHAD
24 STATEMENT OF CORPORATE GOVERNANCE BOARD OF DIRECTORS (cont’d) Re-election and Re-appointment of Directors In accordance with the Company’s Articles of Association, one third of the Directors shall retire by rotation from office and be eligible for re-election at the annual general meeting and all Directors appointed by the Board are subject to re-election by shareholders at the first opportunity after their appointment. Furthermore, each Director shall retire from office at least once in every three years. Directors who are of or over the age of seventy years shall also retire from office and be eligible for re-appointment at the annual general meeting pursuant to Section 129 (6) of the Companies Act, 1965. Directors’ Training All members of the Board have attended the Mandatory Accreditation Programme. Pursuant to Paragraph 15.09 of the Bursa Securities Listing Requirements, the Board is responsible to identify the training needs of its Directors which will aid them in the discharge of their duties on a continuous basis. The Board noted that the Nomination Committee is satisfied that the Board comprises qualified people with professional background, expertise in various fields and practical experience. Nevertheless, the Board encourages its Directors to go for training on their own initiative from time to time in order to keep them abreast of the latest developments in the market-place as well as the current changes in the laws, regulations and accounting standards. For new Directors, a familiarisation program will be conducted for them. This includes a presentation of the Group’s operations by senior management and visits to the existing project sites. Board Committees The Board has delegated certain of its responsibilities to the three Committees, namely the Audit, the Nomination and the Remuneration Committees with clearly defined terms of reference in assisting the Board to discharge its duties and responsibilities effectively. AUDIT COMMITTEE The report of the Audit Committee is set out on pages 33 to 37 of this annual report. SBC CORPORATION BERHAD
25 STATEMENT OF CORPORATE GOVERNANCE NOMINATION COMMITTEE (“NC”) The NC has held one meeting during the financial year ended 31 March 2007. The attendance of the members of the NC at the meeting is as follows: No. of meetings held during the financial year ended No. of meetings Name of Members 31 March 2007 attended Dato’ Lim Phaik Gan – Chairperson (Independent Non-Executive Director) 1 1 Dato’ Dr. Norraesah Bt Haji Mohamad (Independent Non-Executive Director) 1 1 Ahmad Fizal Bin Othman (Independent Non-Executive Director) 1 1 Mun Chong Shing @ Mun Chong Tian (Non-Executive Director) 1 1 The terms of reference of the NC are as follows: (a) Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist exclusively of non-executive Directors, with a minimum of 3, a majority of whom are independent. The members of the Committee shall elect the Chairman from among their number who shall be an independent director. In order to form a quorum in respect of a meeting of the Committee, the members present must be wholly or a majority of whom must be independent directors. (b) Frequency of meetings Meetings shall be held not less than once a year. The Company Secretary shall be the Secretary of the Committee. (c) Authority The Committee is to recommend new nominees for the Board and the board committees and to assess Directors on an on-going basis. The actual decision as to who shall be nominated should be the responsibility of the full Board after considering the recommendations of the Committee. SBC CORPORATION BERHAD
26 STATEMENT OF CORPORATE GOVERNANCE NOMINATION COMMITTEE (“NC”) (cont’d) (d) Duties The duties of the Committee shall be: (i) to recommend to the Board, candidates for all directorships and in doing so, preference shall be given to shareholders or existing Board members and candidates proposed by the Chief Executive Officer and, within the bounds of practicability, by any other senior executive or any director or shareholder may also be considered. (ii) to recommend to the Board, directors to fill the seats on board committees. (iii) to review annually, on behalf of the Board, the required mix of skills, experience and other qualities, including core competencies, which non-executive directors should bring to the Board. (iv) to carry out annually, on behalf of the Board, the assessment of the effectiveness of the Board as a whole, the board committees and the contribution of each director. (e) Reporting procedures The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. At the meeting of the NC during the financial year ended 31 March 2007, the following matters were considered and resolved: (a) re-appointment and re-election of Directors at the Seventeenth Annual General Meeting; (b) mix of skills, experience and qualities of all Directors; and (c) the effectiveness of the Board and the contribution from each Board member. REMUNERATION COMMITTEE (“RC”) The members of the RC at the date of this report and their attendance at the meeting convened during the financial year ended 31 March 2007 are as follows: No. of meetings held during the financial year ended No. of meetings Name of Members 31 March 2007 attended Dato’ Zainol Abidin Bin Haji A. Hamid - Chairman (Non-Executive Director) 1 1 Dato’ Lim Phaik Gan (Independent Non-Executive Director) 1 1 Dato’ Dr. Norraesah Bt Haji Mohamad (Independent Non-Executive Director) 1 1 Sia Teong Heng (Managing Director) 1 1 SBC CORPORATION BERHAD
27 STATEMENT OF CORPORATE GOVERNANCE The terms of reference of the RC are as follows: (a) Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of at least 3 directors, wholly or a majority of whom are non-executive directors. The members of the Committee shall elect the Chairman from among their number who shall be a non-executive director. In order to form a quorum in respect of a meeting of the Committee, the members present must be wholly or a majority of whom must be non-executive directors. (b) Frequency of meetings Meetings shall be held not less than once a year. The Company Secretary shall be the Secretary of the Committee. (c) Authority The Committee is authorized to draw from outside advice as and when necessary in forming its recommendation to the Board on the remuneration of the executive directors in all its forms. Executive directors should play no part in decisions on their own remuneration and should abstain from discussion of their own remuneration. The determination of the remuneration packages of the non-executive directors, including non-executive chairman, should be a matter for the Board as a whole. The individuals concerned should abstain from discussion of their own remuneration. (d) Duties The duty of the Committee is to recommend to the Board the structure and level of remuneration of executive directors. (e) Reporting procedures The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. During the financial year ended 31 March 2007, the RC met once to consider the remuneration of the Executive Chairman and Managing Director for 2007. SBC CORPORATION BERHAD
28 STATEMENT OF CORPORATE GOVERNANCE DIRECTORS’ REMUNERATION The details of the remuneration of each Director during the financial year ended 31 March 2007 are as follows: (a) Total Remuneration Basic Benefits Attendance Salary Bonuses Fees -in-kind Fee Total RM RM RM RM RM RM Executive Sia Kwee Mow @ Sia Hok Chai 520,800 98,000 - 16,925 - 635,725 Sia Teong Heng 453,600 84,000 - - - 537,600 Non-Executive Mun Chong Shing @ Mun Chong Tian - - 19,500 - 1,200 20,700 Dato’ Zainol Abidin Bin Haji A. Hamid - - 20,500 - 1,200 21,700 Dato’ Lim Phaik Gan - - 20,500 - 2,400 22,900 Dato’ Dr. Norraesah Bt. Haji Mohamad - - 20,500 - 3,000 23,500 Ahmad Fizal Bin Othman - - 19,500 - 2,700 22,200 Total 974,400 182,000 100,500 16,925 10,500 1,284,325 (b) Directors’ remuneration by bands Executive Non-Executive Total RM1 to RM50,000 - 5 5 RM50,001 to RM100,000 - - - RM100,001 to RM150,000 - - - RM150,001 to RM200,000 - - - RM200,001 to RM250,000 - - - RM250,001 to RM300,000 - - - RM300,001 to RM350,000 - - - RM350,001 to RM400,000 - - - RM400,001 to RM450,000 - - - RM450,001 to RM500,000 - - - RM500,001 to RM550,000 1 - 1 RM550,001 to RM600,000 - - - RM600,001 to RM650,000 1 - 1 Total 2 5 7 SBC CORPORATION BERHAD
29 STATEMENT OF CORPORATE GOVERNANCE ACCOUNTABILITY AND AUDIT Financial Reporting The Board aims to convey a balanced and understandable assessment of the Group’s financial position and prospects through the quarterly results and annual reports/financial statements to the Company’s shareholders and regulators. The Responsibility Statement by the Directors pursuant to Bursa Securities Listing Requirements is set out on page 38. Internal Control The Board acknowledges its responsibility for maintaining a sound internal controls system, which provides reasonable assurance in ensuring the effectiveness and efficiency of operations and the safeguard of assets and interest in compliance with laws and regulations as well as with internal financial administration procedures and guidelines. The Group’s Statement on Internal Control is set out on pages 31 and 32. Relationship with Auditors The Board maintains a close and transparent professional relationship with the Group’s internal and external auditors through the Audit Committee. In the course of audit of the Group’s operations, the internal and external auditors have highlighted all important matters to the Audit Committee. The Audit Committee will then bring up the matters for the Board’s attention if it is necessary. The Group has paid RM 93,250 of non-audit fees to the external auditors for the financial year ended 31 March 2007. Relationship with Shareholders and Investors The primary tools of communication with the shareholders of the Company are through the annual report, announcements through Bursa Securities and circulars. All queries from shareholders and members of public received through phone calls or letters are handled by the Executive Directors, Group Financial Controller and Company Secretary. At the annual general meeting and extraordinary general meeting, the Chairman gives shareholders ample opportunity to participate through questions on the prospects, performance of the Group and other matters of concern to them with the Board. SBC CORPORATION BERHAD
30 STATEMENT OF CORPORATE GOVERNANCE ADDITIONAL COMPLIANCE INFORMATION In conformance with the requirements of Bursa Securities, the following compliance information is provided: 1. Revaluation Policy on Landed Properties The Group’s landed properties are stated at cost. There is no policy of regular revaluation of its landed properties as at the end of the financial year ended 31 March 2007. 2. Materials Contracts There were no material contracts entered into by the Company and its subsidiaries which involved the directors’ and major shareholders’ interests subsisti
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