b u i l d i n g p a r t n e r s h i p s since 1954

Transcription

1 b u i l d i n g p a r t n e r s h i p s since 1954 A n n u a l R e p o r t

2 Corporate Information AS AT 6 AUGUST BOARD OF DIRECTORS SIA KWEE SIA HOK CHAI JMN, FFB, FCIOB, FAIB Executive Chairman SIA TEONG HENG B.Sc. (Eng), M.Sc. Managing Director MUN CHONG MUN CHONG TIAN Non-Executive Director DATO DR. NORRAESAH BT. HAJI MOHAMAD DSPN, DSDK, PhD., B.Sc.(Econ) Independent Non-Executive Director AHMAD FIZAL BIN OTHMAN B.Acc & Fin. (Hons) Independent Non-Executive Director AUDIT COMMITTEE DATO DR. NORRAESAH BT. HAJI MOHAMAD DSPN, DSDK, PhD., B.Sc.(Econ) Chairperson & Independent Non-Executive Director AHMAD FIZAL BIN OTHMAN B.Acc & Fin. (Hons) Independent Non-Executive Director MUN CHONG MUN CHONG TIAN Non-Executive Director NOMINATING COMMITTEE AHMAD FIZAL BIN OTHMAN B.Acc & Fin. (Hons) Chairman & Independent Non-Executive Director DATO DR. NORRAESAH BT. HAJI MOHAMAD DSPN, DSDK, PhD., B.Sc.(Econ) Independent Non-Executive Director MUN CHONG MUN CHONG TIAN Non-Executive Director SOLICITORS CHEANG ARIFF 39 Loke Mansion 273A Jalan Medan Tuanku Kuala Lumpur FOONG & PARTNERS Suite 21-08, Level 21 Plaza 138, 138, Jalan Ampang Kuala Lumpur LEE, PERARA & TAN 55, Jalan Thambapillai Off Jalan Tun Sambanthan Brickfields, Kuala Lumpur LIM & YEOH 145-M Jalan Maharajalela Kuala Lumpur REMUNERATION COMMITTEE DATO DR. NORRAESAH BT. HAJI MOHAMAD DSPN, DSDK, PhD., B.Sc.(Econ) Independent Non-Executive Director AHMAD FIZAL BIN OTHMAN B.Acc & Fin. (Hons) Independent Non-Executive Director MUN CHONG MUN CHONG TIAN Non-Executive Director AUDITORS CROWE HORWATH Chartered Accountants Level 16 Tower C, Megan Avenue II 12 Jalan Yap Kwan Seng Kuala Lumpur COMPANY SECRETARIES CHONG FOOK SIN ATII, MCCS, AFA KAN CHEE JING ACIS

3 Contents PRINCIPAL BANKERS ALLIANCE BANK MALAYSIA BERHAD AL-RAJHI BANKING & INVESTMENT CORPORATION (MALAYSIA) BERHAD BANGKOK BANK BERHAD MALAYAN BANKING BERHAD MIDF AMANAH INVESTMENT BANK BERHAD OCBC BANK (MALAYSIA) BERHAD REGISTERED OFFICE WISMA SIAH BROTHERS 74A Jalan Pahang Kuala Lumpur Tel: Fax: REGISTRARS TACS CORPORATE SERVICES SDN. BHD. Unit No. 203, 2nd Floor, Block C Damansara Intan No. 1, Jalan SS20/ Petaling Jaya Tel: Fax: Corporate Information 1 Directors Profile 2 Corporate Structure 7 Group Financial Highlights 8 Executive Chairman s Statement 9 Penyata Pengerusi Eksekutif 12 Statement of Corporate Governance 14 Statement on Internal Control 23 Audit Committee Report 25 Statement of Directors Responsibilities 30 Financial Statements 31 Group Properties 96 Shareholders Information 98 Notice of Annual General Meeting 101 Notice of Dividend Payment 103 Statement Accompanying Notice of 104 Annual General Meeting Proxy Form STOCK EXCHANGE LISTING MAIN MARKET OF BURSA MALAYSIA SECURITIES BERHAD

4 Directors Profile AS AT 28 JULY SIA KWEE SIA HOK CHAI Malaysian, Aged 77 Executive Chairman Sia Kwee Sia Hok Chai, a Malaysian, aged 77, is the Executive Chairman of SBC Corporation Berhad ( SBC ). He has been a Director of SBC since its incorporation on 14th June, He has over 56 years of experience in building and civil engineering contracting and not less than 38 years of experience in plastic engineering. 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, 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. 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 interest in SBC, he is deemed to have interest in the securities of SBC s subsidiaries to the extent of SBC s interest, in accordance with Section 6A of the Companies Act, 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. 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. 2 ANNUAL REPORT SBC CORPORATION BERHAD P

5 Directors Profile AS AT 28 JULY Sia Teong Heng, a Malaysian, aged 47, is the Managing Director of SBC Corporation Berhad ( SBC ). He was appointed as a Director of SBC on 5th February, He graduated with a Bachelor of Science degree in Civil Engineering from Loughborough University, United Kingdom ( UK ) and in 1986, earned a post graduate Masters degree in Management Science from Imperial College, University of London, UK. SIA TEONG HENG Malaysian, Aged 47 Managing Director Between 1986 and 1991, prior to his return to Malaysia, he worked in the investment banking industry based in London and Singapore. He joined SBC in 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 interest in SBC, he is deemed to have interest in the securities of SBC s subsidiaries to the extent of SBC s interest, in accordance with Section 6A of the Companies Act, He is a son of Sia Kwee Sia Hok Chai, the Executive Chairman and a 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. SBC CORPORATION BERHAD P ANNUAL REPORT 3

6 Directors Profile AS AT 28 JULY MUN CHONG MUN CHONG TIAN Malaysian, Aged 73 Non-Executive Director Mun Chong Mun Chong Tian, a Malaysian, aged 73, was appointed as an Executive Director of SBC Corporation Berhad ( SBC ) on 1st 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 31st December, On 31st December, 2001, he was redesignated as a Non-Executive Director of SBC. He is a member of the Audit Committee, the Nominating Committee and the Remuneration 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 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 all the four Board Meetings held during the last financial year. 4 ANNUAL REPORT SBC CORPORATION BERHAD P

7 Directors Profile AS AT 28 JULY Dato Dr. Norraesah bt. Haji Mohamad, a Malaysian, aged 62, was appointed as an Independent Non-Executive Director of SBC Corporation Berhad ( SBC ) on 8th July, She is the Chairperson of the Audit Committee and a member of the Nominating 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 38 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. DATO DR. NORRAESAH BT. HAJI MOHAMAD Malaysian, Aged 62 Independent Non-Executive Director 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, Protasco Berhad, Ya Horng Electronic (M) Berhad, Adventa Berhad, My E.G. Services Berhad and Malaysian Genomics Resource Centre 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. SBC CORPORATION BERHAD P ANNUAL REPORT 5

8 Directors Profile AS AT 28 JULY AHMAD FIZAL BIN OTHMAN Malaysian, Aged 47 Independent Non-Executive Director Ahmad Fizal bin Othman, a Malaysian, aged 47, was appointed as an Independent Non-Executive Director of SBC Corporation Berhad ( SBC ) on 24th February, He is the Chairman of the Nominating Committee and a member of the Audit Committee and the Remuneration 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. 6 ANNUAL REPORT SBC CORPORATION BERHAD P

9 Corporate Structure AS AT 6 AUGUST 100% Syarikat Siah Brothers Trading Sdn Bhd 33.3% 28.5% Sri Berjaya Development Sdn Bhd Sri Rawang Properties Sdn Bhd 100% Syarikat Siah Brothers Construction Sdn Bhd 100% Mixwell (Malaysia) Sdn Bhd 50% Ligamas Sdn Bhd 100% South-East Best Sdn Bhd 100% Gracemart Resources Sdn Bhd 100% PJX Property Sdn Bhd (Formerly known as Siah Brothers Land Sdn Bhd) 100% 100% Kiara East Property Sdn Bhd (Formerly known as Seri Ampangan Realty Sdn Bhd) Sinaran Naga Sdn Bhd 100% SBC Towers Sdn Bhd 100% Aureate Construction Sdn Bhd 100% SBC Leisure Sdn Bhd 100% Siah Brothers Properties Sdn Bhd 100% Masahmura Sdn Bhd 50% Varich Industries Sdn Bhd 100% Masahmura Sales & Service Sdn Bhd 80% Armada Bayumas Sdn Bhd 51% Kiara Amalan Sdn Bhd 50% Tri-Development Co., Ltd Strategic Investment Property Development Investment Holding Build / Construction 49% Built SBC Co., Ltd 49% Kanyara Co., Ltd H 100% Siah Brothers Industries Sdn.Bhd. (Under members valuntary liquidation) SBC CORPORATION BERHAD P ANNUAL REPORT 7

10 Group Financial Highlights (Restated) (Restated) RESULTS '000 '000 '000 '000 '000 Revenue 103,415 77, ,055 77,103 69,927 Profit before taxation 13,131 5,089 4,487 (2,207) 1,369 Profit after taxation but before minority interest 9,885 4,988 3,504 (3,009) 1,047 Profit attributable to shareholders 9,894 4,990 3,514 (3,009) 1,047 ASSET EMPLOYED Property, plant and equipment 5,078 5,709 6,319 8,550 8,243 Investments and other assets 173, , , , ,861 Net current assets 68,056 46,133 24,380 8,854 50,881 Goodwill and deferred expenditure 26,957 28,586 27,499 27,499 27, , , , , ,303 FINANCED BY Share capital 82,435 82,435 82,435 82,435 82,435 Reserves 146, , , , ,294 Minority Interests ABBA bonds ,978 Deferred liabilities 44,609 27,214 33,846 34,906 31, , , , , ,303 SELECTED RATIOS Net earnings per share (sen) (3.7) 1.3 Net assets per share (sen) Gross dividend (%) ANNUAL REPORT SBC CORPORATION BERHAD P

11 Executive Chairman s Statement On behalf of the Board of Directors, I am pleased to present the Annual Report and the Audited Financial Report of the Group and the Company for the financial year ended 31 March. FINANCIAL REVIEW The Group recorded revenue of million compared to the preceding year of million, an increase of million representing 32.98% increase. The Group s profit after taxation was also recorded higher, at 9.89 million compared to 4.99 million during the cases. SBC CORPORATION BERHAD P ANNUAL REPORT 9

12 Executive Chairman s Statement OPERATIONS REVIEW During the year there was no abatement in activity on all five flagship locations of PJ, Jalan Kuching, Kuala Lumpur, Kota Kinabalu and the two townships at Gambang, Kuantan / Ligamas, Selangor. Delivery of vacant possession occurred at The Peak Suites, Kota Kinabalu and the three mixed developments located at Seri Mahkota Aman, Kuantan for Shop Office, Single Storey Phase 6B (II) and Double Storey Phase 4B (II). Ongoing activities during the year include the completion of iconic 33 storey PJX in Petaling Jaya and The Peak Vista, Kota Kinabalu. Stylized resort homes, new culture workspaces and transit oriented developments in Klang Valley are development themes that will continue to anchor SBC s activities going forward. ECONOMIC AND BUSINESS OUTLOOK SBC continues to focuses on leading new development themes, leveraging on its rich delivery brand value of trustworthiness and experience. DIVIDEND The Board is pleased to recommend a first and final dividend of 1.5% per ordinary share less 25% tax for the financial year ended 31 March subject to the shareholders approval at the forthcoming Annual General Meeting of the Company. 10 ANNUAL REPORT SBC CORPORATION BERHAD P

13 Executive Chairman s Statement 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 their confidence, understanding and continued support with the Board and the management of the SBC Group. 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. Your effective execution of corporate strategies through sheer hard work, commitment and team work in a demanding and everchanging business environment have certainly contributed much to the success of the Group. Thank you. Sia Kwee Sia Hok Chai JMN,FFB,FCIOB,FAIB Executive Chairman SBC CORPORATION BERHAD P ANNUAL REPORT 11

14 Penyata Pengarah Eksekutif Bagi pihak Lembaga Pengarah, saya dengan suka citanya membentangkan Laporan Tahunan dan PENYATA Kewangan yang TELAH diaudit UNTUK Kumpulan dan Syarikat bagi tahun kewangan berakhir 31 Mac. ULASAN KEWANGAN Kumpulan telah mencatatkan hasil sebanyak juta berbanding dengan juta pada tahun sebelumnya, peningkatan sebanyak juta yang mewakili peningkatan sebanyak 32.98%. Keuntungan Kumpulan selepas cukai juga dicatatkan lebih tinggi sebanyak 9.89 juta berbanding dengan 4.99 juta pada tahun sebelumnya. ULASAN OPERASI Sepanjang tahun kewangan ini, tiada berlaku sebarang pengurangan aktiviti di kesemua lima lokasi kemegahan kami iaitu di PJ, Jalan Kuching, Kuala Lumpur, Kota Kinabalu dan dua buah perbandaran di Gambang Kuantan dan Ligamas, Selangor. Penyerahan harta milik kosong berjaya dilaksanakan di The Peak Suites, Kota Kinabalu dan di tiga projek pembangunan campuran di Seri Mahkota Aman, Kuantan untuk Pejabat Kedai, Setingkat Fasa 6B (II) dan Dua Tingkat Fasa 4B (II). Aktiviti yang sedang dijalankan sepanjang tahun ini adalah termasuk menyiapkan bangunan ikonik 33 tingkat PJX di Petaling Jaya dan The Peak Vista, di Kota Kinabalu. Kediaman dengan gaya tempat peranginan, tempat kerja dengan budaya baru dan pembangunan berorientasikan transit di Lembah Kelang akan terus menjadi tema pembangunan yang akan mengukuhkan aktiviti SBC di masa hadapan. TINJAUAN EKONOMI DAN PERNIAGAAN SBC akan meneruskan fokus menjadi peneraju dalam tema pembangunan yang baru, bersandarkan kepada kepercayaan yang amat tinggi oleh para pelanggan terhadap keupayaannya untuk menyiapkan semua projek pembangunan dan pengalaman yang luasnya dalam bidang tersebut. 12 ANNUAL REPORT SBC CORPORATION BERHAD P

15 Penyata Pengarah Eksekutif DIVIDEN Lembaga Pengarah dengan sukacitanya mencadangkan pembayaran dividen pertama dan akhir sebanyak 1.5% sesaham tolak cukai 25% bagi tahun kewangan berakhir 31 Mac. Pembayaran dividen ini adalah tertakluk kepada persetujuan para pemegang saham pada Mesyuarat Agung Tahunan syarikat yang akan datang. PPENGHARGAAN DAN TERIMA KASIH 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 di atas keyakinan, persefahaman dan sokongan berterusan mereka terhadap Lembaga Pengarah dan pihak pengurusan Kumpulan SBC. Saya juga ingin mengucapkan terima kasih kepada para pelanggan dan penyokong produk dan perkhidmatan SBC, semua yang telah meletakkan sepenuh kepercayaan kepada kumpulan dalam bidang pelaburan harta dan kediaman. Akhirnya, saya ingin mengucapkan terima kasih kepada pengurusan dan para pekerja SBC. Pelaksanaan strategi korporat yang berkesan melalui usaha bersungguh-sungguh, komitmen dan kerjasama, terutama di dalam persekitaran perniagaan yang mencabar dan sentiasa berubah, tentunya banyak menyumbangkan kepada kejayaan Kumpulan. Terima kasih. Sia Kwee Sia Hok Chai JMN,FFB,FCIOB,FAIB Pengerusi Eksekutif SBC CORPORATION BERHAD P ANNUAL REPORT 13

16 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 5 members, comprising 2 Independent Non-Executive Directors, 1 Non-Executive Director 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 Profile of the Directors. 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 Executive Chairman and Managing Director are clearly distinct to ensure that there is a balance of power and authority. The Executive 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 Dr. Norraesah bt. Haji Mohamad is the Senior Independent Non-Executive Director to whom concerns may be conveyed. 14 ANNUAL REPORT SBC CORPORATION BERHAD P

17 Statement of Corporate Governance BOARD OF DIRECTORS (Cont d) 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, 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: Name of Director Sia Kwee Sia Hok Chai (Executive Chariman) Sia Teong Heng (Managing Director) Mun Chong Mun Chong Tian (Non-Executive Director) Dato Zainol Abidin bin Haji A. Hamid (Non-Executive Director Deceased on 19 April ) Dato Dr. Norraesah bt. Haji Mohamad (Independent Non-Executive Director) Ahmad Fizal bin Othman (Independent Non-Executive Director) No. of meetings attended 4/4 4/4 4/4 3/4 4/4 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 P ANNUAL REPORT 15

18 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, Directors Training All members of the Board have attended the Mandatory Accreditation Programme. Pursuant to Paragraph 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 Nominating 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. During the financial year, the Board recommended all its members to attend a one day training course entitled Latest Fraud Encountered by Board of Directors. The following Directors had attended the said course on 12 November :- 1) Sia Kwee Sia Hok Chai 2) Sia Teong Heng 3) Mun Chong Mun Chong Tian 4) Dato Zainol Abidin bin Haji A. Hamid 5) Dato Dr. Norraesah bt. Haji Mohamad 6) Ahmad Fizal bin Othman 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 Nominating 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 25 to 29 of this annual report. 16 ANNUAL REPORT SBC CORPORATION BERHAD P

19 Statement of Corporate Governance NOMINATING COMMITTEE ( NC ) The NC has held one meeting during the financial year ended 31 March. The attendance of the members of the NC at the meeting is as follows:- Name of members No. of meetings held during the financial year ended 31 March No. of meetings attended Ahmad Fizal bin Othman Chairman (Independent Non-Executive Director) Dato Dr Norraesah bt Haji Mohamad (Independent Non-Executive Director) Mun Chong Mun Chong Tian (Non-Executive Director) 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 nonexecutive 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 ongoing 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 P ANNUAL REPORT 17

20 Statement of Corporate Governance NOMINATING COMMITTEE ( NC ) (Cont d) (d) Duties The duties of the Committee shall be: (i) (ii) (iii) (iv) 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. to recommend to the Board, directors to fill the seats on board committees. 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. 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, the following matters were considered and resolved: (a) (b) (c) re-appointment and re-election of Directors at the Twentieth Annual General Meeting; mix of skills, experience and qualities of all Directors; and 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 are as follows: Name of members No. of meetings held during the financial year ended 31 March No. of meetings attended Dato Zainol Abidin bin Haji A. Hamid - Chairman (Non-Executive Director Deceased on 19 April ) Dato Dr Norraesah bt Haji Mohamad (Independent Non-Executive Director) Sia Teong Heng (Managing Director Resigned on 9 February ) Ahmad Fizal bin Othman (Independent Non-Executive Director Appointed on 9 February ) Mun Chong Mun Chong Tian (Non-Executive Director Appointed on 19 July ) Not Applicable Not Applicable Not Applicable Not Applicable 18 ANNUAL REPORT SBC CORPORATION BERHAD P

21 Statement of Corporate Governance REMUNERATION COMMITTEE ( RC ) (Cont d) 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, the RC met once to consider the remuneration of the Executive Chairman and Managing Director for. SBC CORPORATION BERHAD P ANNUAL REPORT 19

22 Statement of Corporate Governance DIRECTORS REMUNERATION The details of the remuneration of each Director during the financial year ended 31 March are as follows: (a) Total Remuneration Basic Salary Bonuses Fees Benefits-inkind Attendance Fee Total Executive Sia Kwee Sia Hok Chai 575, ,149-27, ,339 Sia Teong Heng 506, , ,849 Non-Executive Mun Chong Mun Chong Tian ,000-1,500 25,500 Dato Zainol Abidin bin Haji A. Hamid ,000-2,100 27,100 Dato Dr. Norraesah bt. Haji Mohamad ,000-3,000 28,000 Ahmad Fizal bin Othman ,000-2,700 27,700 Total 1,081, ,910 99,000 27,550 9,300 1,464,488 (b) Directors remuneration by bands Executive Non-Executive Total 1 to 50, ,001 to 100, ,001 to 150, ,001 to 200, ,001 to 250, ,001 to 300, ,001 to 350, ,001 to 400, ,001 to 450, ,001 to 500, ,001 to 550, ,001 to 600, ,001 to 650, ,001 to 700, ,001 to 750, Total ANNUAL REPORT SBC CORPORATION BERHAD P

23 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 30. 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 23 to 24. 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 51,000 of non-audit fees to the external auditors for the financial year ended 31 March. 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 P ANNUAL REPORT 21

24 Statement of Corporate Governance ADDITIONAL COMPLIANCE INFOATION 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. 2. Materials Contracts There were no material contracts entered into by the Company and its subsidiaries which involved the directors and major shareholders interests subsisting at the end of the financial year ended 31 March or entered into since the end of the previous financial year. 3. Utilisation of Proceeds There were no proceeds raised from any proposals by the Company during the financial year. 4. Share Buy-backs There were no share buy-backs by the Company during the financial year. The Company is seeking a renewal of shareholders mandate for the Share Buy-Back at the forthcoming Annual General Meeting. 5. Options or Convertible Securities There were no options or convertible securities issued by the Company during the financial year. 6. Depository Receipt Programme During the financial year, the Company did not sponsor any depository receipt programme. 7. Sanctions and / or Penalties There were no sanctions and / or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year. 8. Variation in Results There was no material variation between the results for the financial year and the unaudited results previously announced. 9. Profit Guarantee There was no profit guarantee given by the Company in respect of the financial year. 10. Corporate Social Responsibility The Group had undertaken and participated in the corporate social responsibility activities as follows:- (a) A donation of 2,500 to IEM (S) Fund Raising Dinner ; (b) A donation of 1,000 to Palliative Care Association (Kota Kinabalu) Charity Dinner & Concert; (c) A sponsorship of 5,000 to Persatuan Chopin Malaysia for 4th ASEAN International Chopin Piano Competition; (d) A donation of 500 to Budimas Charitable Foundation; and (e) A donation of 24,510 to Persatuan Kebajikan Teratak Shifa Kuala Lumpur. 22 ANNUAL REPORT SBC CORPORATION BERHAD P

25 Statement of Internal Control Introduction Pursuant to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and as guided by the Statement on Internal Control: Guidance for Directors of Public Listed Companies, the Board of Directors ( the Board ) is pleased to provide a statement on the Group s state of internal controls for financial year ended 31 March. Board Responsibility The Board acknowledges that it is ultimately responsible for the Group s systems of internal control and for reviewing the adequacy and integrity of the internal control systems to ensure that shareholders interests and the Group s assets are safeguarded. In this respect, the responsibility of reviewing the adequacy and integrity of the internal control systems has been delegated to the Audit Committee, which is empowered by its terms of reference to seek the assurance on the adequacy and integrity of the internal control systems through reports it receives from independent reviews conducted by the internal audit function and management. However, as there are inherent limitations in any system on internal controls, such internal control systems put into effect by Management can only manage rather than eliminate all the risks that may impede the achievement of the Group s business objectives or goals. Therefore, the internal control systems can only provide reasonable and not absolute assurance against material misstatement or loss. In addition, in devising internal control procedures, due consideration is given to the cost of implementation as compared to the expected benefits to be derived from the implementation of the internal controls. Risk Management Framework Key management staff and Head of Departments are delegated with the responsibility to manage identified risks within defined parameters and standards. Periodic management meetings were held in which key risks and the appropriate mitigating controls were discussed. Significant risks affecting the Group s strategic and business plans are escalated to the Board at their scheduled meetings. The abovementioned risk management practices of the Group serve as the on-going process used to identify, evaluate and manage significant risks. Internal Audit Function The Group s internal audit function which is outsourced to a professional service firm, is an integral part of the assurance mechanism in ensuring that the Group systems of internal controls are adequate and effective. The outsourced internal auditors assist the Board and the Audit Committee in providing independent assessment of the adequacy, efficiency and effectiveness of the Group s internal control systems. They report directly to the Audit Committee. SBC CORPORATION BERHAD P ANNUAL REPORT 23

26 Statement of Internal Control The other key elements of the Group s internal control systems are: An organizational structure, which clearly defines the lines of responsibility, proper segregation of duties and delegation of authority; The Executive Directors are closely involved in the running of business and operation of the Group and they report to the Board on significant changes in the business and external environment, which affect the operation of the Group at large; Regular management meeting are held to discuss the Group s performance, business operation and management issues as well as formulate appropriate measures to address them; and The Group has established policies and procedures to support the Group s various business activities. The internal audit function did not perform any review and assessment of the Group s associate companies as the Group does not have the full management control over the associates. The costs incurred in maintaining the outsourced internal audit function for the financial year ended 31 March amounted to 29, Conclusion The Board is of the view that the Group s system of internal controls is adequate to safeguard shareholder s investments and the Group s assets. However, the Board is conscious of the fact that the systems of internal control and risk management practices must continuously evolve to support the Group s operations and changing business environment. Therefore, the Board will, when necessary, put in place appropriate action plans to further enhance the system of internal controls. 24 ANNUAL REPORT SBC CORPORATION BERHAD P

27 Audit Committee Report The Board of SBC Corporation Berhad is pleased to present the Audit Committee Report for the financial year ended 31 March. Composition and Meetings The Audit Committee presently comprises three members, two are Independent Non-Executive Directors and one is Non-Executive Director. During the financial year ended 31 March, the Committee met 4 times. The name of the members and their attendance at meetings are as follows:- Name of members Dato Dr Norraesah bt Haji Mohamad- Chairperson (Independent Non-Executive Director) Ahmad Fizal bin Othman (Independent Non-Executive Director) Dato Zainol Abidin bin Haji A.Hamid (Non-Executive Director Deceased on 19 April ) Mun Chong Mun Chong Tian (Non-Executive Director Appointed on 19 July ) No. of meetings attended 4/4 4/4 3/4 Not Applicable The Audit Committee normally meets four times a year with additional meetings convened between scheduled meetings, if necessary, to deliberate on urgent and significant matters. The Group Financial Controller and the representatives of the outsourced Internal Auditors and the External Auditors attended the meetings at the invitation of the Audit Committee, where considered necessary. The Company Secretary is responsible for distributing the notice of the meetings and relevant papers to the Audit Committee members prior to their meetings and recording the proceedings of the meetings thereat. Internal Audit Function The Company has maintained the engagement of Audex Governance Sdn. Bhd. for the provision of internal audit function to the Group. The principal role of the Internal Auditor is to undertake independent, regular and systematic review of the Group s systems of internal control so as to provide reasonable assurance that such systems continue to operate efficiently and effectively. It is the responsibility of the Internal Auditor to provide the Audit Committee with independent and objective reports on the state of internal control of various operating units within the Group and the extent of compliance of the units with Group s established policies and procedures as well as relevant statutory requirements. SBC CORPORATION BERHAD P ANNUAL REPORT 25

28 Audit Committee Report Summary of Activities of the Audit Committee In line with the terms of reference of the Audit Committee, the following activities were carried out by the Audit Committee during the financial year ended 31 March :- a) Discussed and reviewed the Audit Planning Memorandum which covers the external auditor s plan, scope and nature of work. b) Reviewed the Audit Review Memorandum in relation to their findings and accounting issues arising from the audit of the Group s annual financial results. c) Reviewed the unaudited quarterly report on the consolidated results of the Group for the quarters ended 31 March, 30 June, 30 September and 31 December. d) Assessed the Group s financial performance. e) Reviewed related party transactions and conflicts of interest situation that may arise within the Group. f) Reviewed and approved the internal audit plan and the internal audit reports and followed up on the remedial actions implemented by the Management in respect of the internal control weaknesses identified. g) Reviewed the Group s risk management policy and framework. h) Reviewed the Group s compliance with the applicable approved accounting standards issued by the Malaysian Accounting Standards Board and other relevant legal and regulatory requirements. Summary of Activities of the Internal Audit Function During the financial year ended 31 March, the Internal Auditor has:- a) Presented a risk-based annual audit plan and risk assessment policy for the Audit Committee s review and approval; b) Performed company-wide operation and special audits giving due attention to high and medium risk area of concerns; c) Followed up on the status of rectification with regards to significant issues and kept the Audit Committee abreast of the current status; and d) Furnished internal audit reports to the Audit Committee as updates of the internal audit activities. In accordance with the approved audit plan for /, the areas reviewed by the internal audit function were as follows:- a) Management and operational review of companies within the Group; b) Projects performance reviews and evaluation; c) Management of progress billing; d) Property handover; e) Application for the Certificate of Completion and Compliance; f) Inspection & issuance of Certificate of Practical Completion; g) Finalisation of accounts with contractors; h) Management contractor performance; i) Management the issuance of work orders and variation orders; j) Progress claims processing; k) Payment processing; l) Project status and cost monitoring; m) Credit control collection; n) Execution of sales and purchase agreement; o) Sales processing; p) Advertising and promotion; q) Review of relevant operating policies and procedures; and r) Related party transactions. A number of minor internal control weaknesses were identified during the year, all of which have been addressed by the Management. None of the weaknesses has resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group s annual report. 26 ANNUAL REPORT SBC CORPORATION BERHAD P

29 Audit Committee Report Summary of Activities of the Internal Audit Function (Cont d) The annual internal audit plan for /2011 was presented to the Audit Committee for review and approval during the financial year ended 31 March. The activities of the internal audit function cover the following areas:- a) Management and operational review of companies within the Group; b) Management of progress billing; c) Project status and cost monitoring; d) Credit control and collection; e) Execution of sales and purchase agreement; f) Sales processing; g) Advertising and promotion; h) Feasible studies and planning; i) Preparation of cost estimation / project budgeting; j) Design tender management; k) Submission of regulation approval management; l) Approval and contract award management; m) Mobilization of resources; n) Program evaluation; o) Financial analysis and planning; p) Project monitoring and cost monitoring; q) Project meeting and reporting; r) Value engineering; s) Contractor pre-qualification; t) Tender management; u) Contractor and agreement; v) Review of relevant policies and procedures; and w) Related party transactions. The above reviews cover all the offices and project sites which are located in Kuala Lumpur, Kuantan and Kota Kinabalu. TES OF REFERENCE OF THE AUDIT COMMITTEE Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of at least 3 members. All the members must be non-executive directors, with a majority of them are independent directors. At least one member of the Committee: (i) (ii) must be a member of the Malaysian Institute of Accountants ( MIA ); or if he is not a member of the MIA, he must have at least 3 years working experience and he must have passed the examinations specified in Part I of the 1st Schedule to the Accountant Act, 1967; or he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule to the Accountants Act, 1967; or (iii) fulfills such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad. The members of the Committee shall elect a Chairman from amongst their number who shall be an independent director. In order to form a quorum in respect of a meeting of the Committee, the majority of the members present must be independent directors. SBC CORPORATION BERHAD P ANNUAL REPORT 27

30 Audit Committee Report TES OF REFERENCE OF THE AUDIT COMMITTEE (Cont d) Attendance At Meetings The Group Financial Controller and the representatives of the internal auditors and the external auditors shall normally attend meetings. Other directors and employees of the Company may attend meetings at the Committee s invitation. The Committee shall be able to convene meetings with external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary. The Company Secretary shall be the secretary of the Committee. Frequency Of Meetings Meetings shall be held not less than four times a year. The external auditors may request a meeting if they consider that one is necessary. Authority The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all the employees are directed to cooperate with any request made by the Committee. The Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of an outsider with relevant experience and expertise, if it considers this necessary. Duties The duties of the Committee shall be: (1) to consider the appointment of the external auditors, the audit fees and any questions of nomination, resignation or dismissal. (2) to discuss with the external auditors before the audit commences the nature and scope of the audit and ensure co-ordination where more than one audit firm is involved. (3) to discuss with the external auditors the evaluation of the system of internal controls, audit report and ensure assistance given by the employees to the external auditors. (4) to review the quarterly and year-end financial statements before submission to the Board, focusing particularly on: any changes or implementation of changes in accounting policies and practices; major judgement areas; significant adjustments arising from the audit; significant and unusual events; the going concern assumption; compliance with accounting standards; and compliance with stock exchange and legal requirements. 28 ANNUAL REPORT SBC CORPORATION BERHAD P

31 Audit Committee Report TES OF REFERENCE OF THE AUDIT COMMITTEE (Cont d) Duties (Cont d) (5) to discuss problems and reservations arising from the interim and final audits and any matters the external auditor may wish to discuss (in the absence of management, where necessary). (6) to review the external auditors management letter and management s response. (7) to do the following in respect of the internal audit function: review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work. review the internal audit programme and processes and results of the internal audit programme, processes and investigation and where necessary, ensure that appropriate action is taken on the recommendations of the internal audit function. review any appraisal or assessment of the performance of the members of the internal audit function. approve the appointment or termination of senior staff members of the internal audit function. inform itself of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning. (8) to consider any related party transactions and conflict of interest situations that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity. (9) to consider the major findings of internal investigations and management s response and ensure co-ordination between internal and external auditors. (10) to consider other topics, as defined by the Board. Reporting The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. SBC CORPORATION BERHAD P ANNUAL REPORT 29

32 Statement of Directors Responsibilities in respect of the preparation of the financial statements The Directors are responsible for ensuring that the financial statements of the Group are drawn up in accordance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and the Company as of 31 March and of the results and cash flows of the Group and Company for the financial year ended on that date. In preparing the financial statements, the Directors have: (a) (b) (c) (d) adopted suitable accounting policies and applied them consistently; made judgements and estimates that are prudent and reasonable; ensured the adoption of applicable approved accounting standards; and used the going concern basis for the preparation of the financial statements. The Directors are responsible for ensuring proper accounting records are kept which disclose with reasonable accuracy at any time the financial position of the Group and the Company and are kept in accordance with the Companies Act, The Directors are also responsible for taking such steps as are reasonably open to them to safeguard the Group s assets and to prevent and detect fraud and other irregularities. 30 ANNUAL REPORT SBC CORPORATION BERHAD P

33 Financial Statements Directors Report 32 Statement by Directors 36 Statutory Declaration 36 Independent Auditors Report 37 Balance Sheets 39 Income Statements 41 Statements of Changes in Equity 42 Cash Flow Statements 44 Notes to the Financial Statements 47 SBC CORPORATION BERHAD P ANNUAL REPORT 31