SBC Corporation Berhad: Annual Audited Accounts 2007

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Information about SBC Corporation Berhad: Annual Audited Accounts 2007
Investor Relations

Published on July 10, 2009

Author: sbc.corporation

Source: slideshare.net

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 2007. 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 (Loss)/Profit after taxation for the financial year (3,009,272) 676,891 DIVIDENDS Since the end of the previous financial year, the Company paid a first and final dividend of 1% less 28% tax on the ordinary shares amounting to RM593,527 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% less 27% tax on the ordinary shares amounting to RM601,776 to be approved by the shareholders at the forthcoming Annual General Meeting. RESERVES AND PROVISIONS All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements. 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. Page 1

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT 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 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. 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. Page 2

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT CONTINGENT AND OTHER LIABILITIES The contingent liability of the Company is disclosed in Note 46 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

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P 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 Pursuant to Section 129 of the Companies Act, 1965, Sia Kwee Mow @ Sia Hok Chai, Dato’ Lim Phaik Gan and Mun Chong Shing @ Mun Chong Tian retire at the forthcoming Annual General Meeting and offer themselves for re-appointment under the provisions of Section 129(6) of the said Act to hold office until the next Annual General Meeting of the Company. Pursuant to Article 77 of the Articles of Association of the Company, Ahmad Fizal bin Othman retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re- election. DIRECTORS’ INTERESTS According to the register of directors’ shareholdings, the interests of directors holding office at the end of the financial year in shares in the Company during the financial year are as follows:- NUMBER OF ORDINARY SHARES OF RM1 EACH AT AT 1.4.2006 BOUGHT SOLD 31.3.2007 DIRECT INTERESTS SIA KWEE MOW @ SIA HOK CHAI 1,480,800 - - 1,480,800 SIA TEONG HENG 2,517,992 2,260,000 (100,000) 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. Page 4

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P DIRECTORS’ REPORT DIRECTORS’ INTERESTS (CONT’D) 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. 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 of the Company are disclosed in Note 51 to the financial statements. Page 5

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P 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 30 JULY 2007 Sia Kwee Mow @ Sia Hok Chai Mun Chong Shing @ Mun Chong Tian Page 6

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P 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 10 to 72 are drawn up in accordance with applicable MASB approved accounting standards in Malaysia for Entities Other Than Private Entities 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 2007 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 30 JULY 2007 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 10 to 72 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 30 July 2007 Lee Yan Yaw Before me Datin Hajah Raihela Wanchik (W275) Commissioner for Oaths Page 7

REPORT OF THE AUDITORS TO THE MEMBERS OF SBC CORPORATION BERHAD (Incorporated In Malaysia) Company No : 199310 - P We have audited the financial statements set out on pages 10 to 72. The preparation of the financial statements is the responsibility of the Company’s directors. It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report. We conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. Our audit included examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. Our audit also included an assessment of the accounting principles used and significant estimates made by the directors as well as evaluating the overall adequacy of the presentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion. In our opinion, (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable MASB approved accounting standards in Malaysia for Entities Other Than Private Entities so as to give a true and fair view of:- (i) the state of affairs of the Group and of the Company at 31 March 2007 and their results and cash flows for the financial year ended on that date; and (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company; and (b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and by the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act. We have considered the financial statements and the auditors’ reports thereon of the subsidiaries for which we have not acted as auditors, as indicated in Note 6 to the financial statements. Page 8

REPORT OF THE AUDITORS TO THE MEMBERS OF SBC CORPORATION BERHAD (CONT’D) (Incorporated in Malaysia) Company No : 199310 - P We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comments made under Section 174(3) of the said Act. Horwath Lee Kok Wai Firm No: AF 1018 Approval No: 2760/06/08 (J) Chartered Accountants Partner Kuala Lumpur 30 July 2007 Page 9

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P BALANCE SHEETS AT 31 MARCH 2007 THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated) NON-CURRENT ASSETS Investment in subsidiaries 6 - - 210,990,785 211,064,785 Interest in associates 7 112,085,613 111,816,402 2,400,000 2,400,000 Investment in joint venture 8 - - 1,801,128 712,500 Property, plant and equipment 9 8,549,543 8,242,610 2,657 7,552 Investment properties 10 3,122,452 6,867,925 - - Land held for property development 11 87,700,188 87,090,675 - - Other assets 12 220,300 86,300 - - Goodwill on consolidation 13 27,499,451 27,317,640 - - 239,177,547 241,421,552 215,194,570 214,184,837 CURRENT ASSETS Inventories 14 726,148 1,283,422 - - Property development costs 15 59,707,257 55,130,848 - - Receivables 16 59,332,215 42,574,730 479,393 226,427 Amount owing by contract customers 17 2,616,779 3,114,994 - - Amount owing by subsidiaries 18 - - 58,919,707 65,774,637 Amount owing by associates 19 5,390,600 5,399,534 2,500 11,434 Amount owing by joint venture 20 280,727 - 561,454 - Tax recoverable 21 1,367,292 1,551,225 3,451,474 3,206,127 Short-term deposits with licensed banks 22 3,334,226 1,364,225 1,239,225 1,239,225 Cash and bank balances 23 13,918,913 9,205,230 12,077,309 8,150,432 146,674,157 119,624,208 76,731,062 78,608,282 TOTAL ASSETS 385,851,704 361,045,760 291,925,632 292,793,119 The annexed notes form an integral part of these financial statements. Page 10

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P BALANCE SHEETS AT 31 MARCH 2007 (CONT’D) THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated) EQUITY AND LIABILITIES EQUITY Share capital 24 82,435,000 82,435,000 82,435,000 82,435,000 Reserves 25 130,690,786 134,293,585 133,735,893 133,652,529 TOTAL EQUITY 213,125,786 216,728,585 216,170,893 216,087,529 NON-CURRENT LIABILITIES ABBA Bonds 26 - 43,978,499 - 43,978,499 Long-term borrowings 27 33,939,069 30,629,180 - - Deferred taxation 29 966,746 966,746 - - 34,905,815 75,574,425 - 43,978,499 CURRENT LIABILITIES Amount owing to contract customers 17 2,850,429 1,540,444 - - Payables 30 42,512,894 32,241,497 371,667 244,765 Amount owing to subsidiaries 18 - - 12,375,674 18,082,756 Amount owing to associates 19 3,378 16,711 - - Amount owing to a director 31 1,867,680 1,867,680 1,867,680 1,867,680 Short-term borrowings 32 14,874,442 15,941,779 5,000,000 5,000,000 ABBA Bonds 26 48,683,146 2,478,450 48,683,146 2,478,450 Bank overdrafts 33 27,028,134 14,656,189 7,456,572 5,053,440 137,820,103 68,742,750 75,754,739 32,727,091 TOTAL LIABILITIES 172,725,918 144,317,175 75,754,739 76,705,590 TOTAL EQUITY AND LIABILITIES 385,851,704 361,045,760 291,925,632 292,793,119 NET ASSETS PER ORDINARY SHARE (RM) 34 2.59 2.63 The annexed notes form an integral part of these financial statements. Page 11

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P INCOME STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated) REVENUE 35 77,102,946 69,926,734 8,338,611 7,641,913 COST OF SALES 36 (60,499,310) (56,847,233) - - GROSS PROFIT 16,603,636 13,079,501 8,338,611 7,641,913 OTHER INCOME 1,324,144 1,751,359 203,976 - ADMINISTRATIVE EXPENSES (8,315,933) (7,142,456) (1,282,327) (1,154,115) OTHER EXPENSES (5,382,766) (1,262,033) (407,665) (289,792) FINANCE COSTS (6,705,397) (5,160,442) (5,868,501) (5,697,750) SHARE OF PROFITS OF ASSOCIATES 269,211 103,008 - - (LOSS)/PROFIT BEFORE TAXATION 37 (2,207,105) 1,368,937 984,094 500,256 INCOME TAX EXPENSE 38 (802,167) (321,740) (307,203) (350,436) (LOSS)/PROFIT AFTER TAXATION (3,009,272) 1,047,197 676,891 149,820 ATTRIBUTABLE TO:- Equity holders of the Company (3,009,272) 1,047,197 676,891 149,820 (Loss)/Earnings per share - basic 39 (3.7) sen 1.3 sen - diluted 39 N/A N/A Dividend per ordinary share - final 40 1 sen 1 sen The annexed notes form an integral part of these financial statements. Page 12

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 SHARE SHARE RETAINED CAPITAL CAPITAL PREMIUM PROFITS RESERVE TOTAL NOTE RM RM RM RM RM THE GROUP Balance at 1.4.2005 - as previously reported 82,435,000 111,412,895 24,959,499 1,199,999 220,007,393 - prior year adjustments 49 - - (3,732,478) - (3,732,478) - as restated 82,435,000 111,412,895 21,227,021 1,199,999 216,274,915 Loss after taxation for the financial year - - 1,047,197 - 1,047,197 Dividend 40 - - (593,527) - (593,527) Balance at 31.3.2006/ 1.4.2006 82,435,000 111,412,895 21,680,691 1,199,999 216,728,585 Loss after taxation for the financial year - - (3,009,272) - (3,009,272) Dividend 40 - - (593,527) - (593,527) Balance at 31.3.2007 82,435,000 111,412,895 18,077,892 1,199,999 213,125,786 THE COMPANY Balance at 1.4.2005 82,435,000 111,412,895 22,683,341 - 216,531,236 Profit after taxation for the financial year - - 149,820 - 149,820 Dividend 40 - - (593,527) - (593,527) Balance at 31.3.2006/1.4.2006 82,435,000 111,412,895 22,239,634 - 216,087,529 Profit after taxation for the financial year - - 676,891 - 676,891 Dividend 40 - - (593,527) - (593,527) Balance at 31.3.2007 82,435,000 111,412,895 22,322,998 - 216,170,893 The annexed notes form an integral part of these financial statements. Page 13

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated) CASH FLOWS (FOR)/ FROM OPERATING ACTIVITIES (Loss)/Profit before taxation (2,207,105) 1,368,937 984,094 500,256 Adjustments for:- Amortisation of bonds expenses 277,770 279,708 277,770 279,708 Bad debts written off 697,574 - - - Depreciation of property, plant and equipment 580,160 424,695 4,895 10,084 Interest expense/ finance charges 6,564,396 5,058,620 5,817,195 5,671,876 Impairment loss on interest in an associate - 549,434 - - 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 - Loss/(Gain) on disposal of investment properties 413,987 (812,642) - - Waiver of debts (211,269) (448,845) (203,976) - Dividend income - - (5,000,000) (5,000,000) Gain on disposal of property, plant and equipment (155,791) (132,283) - - Interest income (513,693) (261,016) (768,966) (1,214,091) Share of profits in associates (269,211) (103,008) - - Operating profit before working capital changes 9,110,208 5,923,600 1,236,012 247,833 Decrease in inventories 557,274 3,076,070 - - (Increase)/Decrease in property development costs (4,273,713) 6,171,242 - - Increase in receivables (17,243,790) (13,785,219) (252,966) (83,350) Increase/(Decrease) in payables 10,272,117 2,695,419 126,902 (11,362) Net decrease/(increase) in amount owing by contract customers 1,808,200 (613,115) - - CASH FROM OPERATIONS 230,296 3,467,997 1,109,548 153,121 Interest paid (2,077,587) (571,134) (1,330,386) (1,184,390) Net tax (paid)/refunded (618,234) 4,734,735 797,450 6,441,353 NET CASH (FOR)/FROM OPERATING ACTIVITIES CARRIED FORWARD (2,465,525) 7,631,598 577,012 5,410,084 The annexed notes form an integral part of these financial statements. Page 14

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 (CONT’D) THE GROUP THE COMPANY 2007 2006 2007 2006 NOTE RM RM RM RM (Restated) NET CASH (FOR)/FROM OPERATING ACTIVITIES BROUGHT FORWARD (2,465,525) 7,631,598 577,012 5,410,084 CASH FLOWS (FOR)/FROM INVESTIING ACTIVITIES Acquisition of joint venture - - (1,088,628) (712,500) Additional investment in subsidiaries (181,811) - - - Repayment from/ (Advances to) subsidiaries - - 7,254,414 (3,466,050) Interest received 513,693 261,016 369,482 204,859 Dividends received from subsidiaries - - 3,650,000 3,600,000 Advances to joint venture (280,727) - (561,454) - Incidental cost for investment properties (117,070) Payment for land held for development (2,468,347) (466,545) - - Purchase of property, plant and equipment 41 (1,204,262) (194,106) - - Purchase of investment in subsidiaries - - (51,000) - Proceeds from disposal of property, plant and equipment 170,264 132,370 - - Proceeds from disposal of investment properties 1,374,000 4,211,187 - - Investment in club membership (134,000) - - - Placement of cash in sinking fund account (3,877,963) (4,097,229) (3,877,963) (4,097,229) Repayment from associates 8,934 - 8,934 - NET CASH (FOR)/FROM INVESTING ACTIVITIES (6,197,289) (153,307) 5,703,785 (4,470,920) BALANCE CARRIED FORWARD (8,662,814) 7,478,291 6,280,797 939,164 The annexed notes form an integral part of these financial statements. Page 15

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 (CONT’D) THE GROUP THE COMPANY 2007 2006 2007 2006 Note RM RM RM RM (Restated) BALANCE BROUGHT FORWARD (8,662,814) 7,478,291 6,280,797 939,164 CASH FLOWS FOR FINANCING ACTIVITIES Payment of bonds expenses (59,932) (61,872) (59,932) (61,872) Repayment of bonds 26 (2,478,450) (2,478,450) (2,478,450) (2,478,450) Net repayment by associates (13,333) (530,875) - - (Repayment to)/Advances from subsidiaries - - (5,503,106) 2,927,198 Dividend paid to shareholders of the company (593,527) (593,527) (593,527) (593,527) Repayment of revolving credit (1,050,000) (1,600,000) - - Drawdown of term loans 6,400,068 3,600,000 - - Repayment of term loans (3,007,129) (2,077,764) - - Repayment of hire purchase obligations (101,107) (72,630) - - NET CASH FOR FINANCING ACTIVITIES (903,410) (3,815,118) (8,635,015) (206,651) NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (9,566,224) 3,663,173 (2,354,218) 732,513 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR (12,209,846) (15,873,019) (3,786,895) (4,519,408) CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 42 (21,776,070) (12,209,846) (6,141,113) (3,786,895) The annexed notes form an integral part of these financial statements. Page 16

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 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 30 July 2007. 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 a significant impact on the financial statements. Page 17

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 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 cashflow risks arises mainly from general funding and business activities. It practises prudent liquidity risk management by maintaining sufficient cash balances and the availability of funding through certain committed credit facilities. Page 18

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 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 MASB approved accounting standards in Malaysia for Entities Other Than Private Entities and the provisions of the Companies Act, 1965. In the current financial year, the Company has adopted all the new and revised Financial Reporting Standards (“FRS”) issued by the Malaysian Accounting Standards Board which are relevant to its operations and effective for financial periods beginning on or after 1 January 2006. The adoption of these new and revised FRS does not have any material effects on the financial statements of the Company. The following FRS have been issued and are effective for financial periods beginning on or after 1 October 2006 and will be effective for the Group’s and the Company’s financial statements for the financial year ending 31 March 2008:- FRS 117 Leases FRS 124 Related Party Disclosures The following revised FRS have been issued and are effective for financial periods beginning on or after 1 July 2007 and will be effective for the Group’s 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 121 The Effects of Changes in Foreign Exchange Rates FRS 134 Interim Financial Reporting FRS 137 Provisions, Contingent Liabilities and Contingent Assets FRS 139 - Financial Instruments: Recognition and Measurement has been issued and the effective date has yet to be determined by the MASB. This new standard establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The Group and the Company will apply this standard when it becomes effective. Page 19

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 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 and production 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. (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. Page 20

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (a) Critical Accounting Estimates And Judgements (Cont’d) (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. (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. Page 21

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (a) Critical Accounting Estimates And Judgements (Cont’d) (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. (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. Page 22

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (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. (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. Page 23

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (d) Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries made up to 31 March 2007. 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. (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. Page 24

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (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. (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 2007. 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. Page 25

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (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% 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. Page 26

SBC CORPORATION BERHAD (Incorporated in Malaysia) Company No : 199310 - P NOTES TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007 5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (j) Land Held for Property Development (Cont’d) 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. (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 rec

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