Suria Capital Holdings Berhad - SuriaGroup Capital Holdings Berhad (96895-W) Laporan Tahunan |...

Suria Capital Holdings Berhad(96895-W)

Laporan Tahunan | Annual Report

w w w . s u r i a g r o u p . c o m . m y

2005

� NOTICE OF ANNUAL GENERAL MEETING

� STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

� CHAIRMAN’S STATEMENT

� CORPORATE INFORMATION

� BOARD OF DIRECTORS 14

� BOARD COMMITTEES

� PROFILE OF DIRECTORS

� AUDIT COMMITTEE REPORT

� STATEMENT ON INTERNAL CONTROL

� STATEMENT ON CORPORATE GOVERNANCE

� RESPONSIBILITY STATEMENT BY DIRECTORS

� DIRECTORS’ REPORT, AUDITED FINANCIAL STATEMENTS 2005

AND OTHER FINANCIAL INFORMATION

Directors’ Report

Statement By Directors

Statutory Declaration By Officer

Report of the Auditors to the Members

Income Statements

Balance Sheets

Statements of Changes in Equity

Cash Flow Statements

Notes to the Financial Statements

� SHAREHOLDERS INFORMATION AND ANALYSIS OF SHAREHOLDINGS

� LIST OF PROPERTIES

� PROXY FORM

1 - 2

3 - 5

7 - 10

12 - 13

15 - 16

17 - 23

36 - 41

42 - 43

44 - 49

50 - 51

55 - 59

60

60

61 - 62

63

64 - 65

66

67 - 68

69 - 107

108 - 113

114 - 115


Laporan Tahunan | Annual Report2005

Contents

CONTENTS

� GROUP HIGHLIGHTS 25 - 34

NOTICE OF ANNUAL GENERAL MEETING



NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

NOTES:

1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies (but not more than two) to attendand vote in his stead. Where a member appoints two (2) proxies, the appointments shall be invalid unless he specifies theproportions of his holdings to be represented by each proxy. A proxy may but need not be a member of the Company and theprovisions of Section 149 (1)(b) of the Companies Act, 1965 need not be complied with.

2. If the appointer is a corporation, this proxy form should be executed under its common seal.

3. The instrument appointing a proxy shall be deposited at the Registered Office of the Company at Lot , 8 Floor,Block C, Kompleks Karamunsing, Km 2.4 Jalan Tuaran, 88300 Kota Kinabalu at least forty-eight (48) hoursbefore the time set for holding the Meeting or any adjournment thereof.

8CF 01 - 02, Sabah, Malaysia

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Statement Accompanying Notice of Annual General Meetingpursuant to Paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad

Statement Accompanying Notice of Annual General Meeting

Directors who are standing for re-election at the 23 Annual General Meeting of the Company to beheld at Ballroom 1, Shangri-La's Tanjung Aru Resort, 20 Jalan Aru, Tanjung Aru, 88995Kota Kinabalu, Sabah on 25 May 2006 at 10.30 a.m.

Tan Sri Ibrahim Bin Menudin

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The Directors retiring by rotation pursuant to the Article 89 of the Company's Articles of Association and seeking re-election are:

Tan Sri Ibrahim Bin MenudinHj. Abdul Kadir Bin Hj. Mohd. KassimDatuk Anthony Lai Vai Ming @ Lai Kheng Meng, J. P.

Further details of the Directors seeking re-election as required under Appendix 8A Item (4), Paragraph 8.28 (2) of the ListingRequirements of the Bursa Malaysia Securities Berhad are set out as follow:

Chairman / Non-Independent & Non-Executive Director

(Aged 58, Malaysian)

Graduated with a Bachelor of Commerce from University of Western Australia.

Currently a member of Institute of Chartered Accountants in Australia, The Malaysian Institute of CertifiedPublic Accountants as well as the Malaysian Institute of Accountants.

Started his career in the Sabah State Civil Service and became Accountant General of Sabah from 1976 to1979. In 1980, he resigned from the Service to become the Chief Executive Officer of Bumiputra InvestmentFund of Sabah until 1985.

Had also served as Chairman of Sabah Gas Industries Sdn Bhd, Deputy Chairman of Sabah Forest IndustriesSdn Bhd and Board Member of other Sabah Government Corporations which involved in finance, forestry,manufacturing, plantations, hotel and property development.

Appointed as Group Chief Executive in 1986 of Malaysia Mining Corporation Berhad (MMC). Was also Chairman of thefollowing companies:-

- Malaysian Smelting Corporation Berhad- Gas Malaysia Sdn Bhd- Malakoff Berhad- Kulim Butterworth Highways Sdn Bhd- Tronoh Mines Malaysia Berhad- MMC Engineering Group Berhad- Board Member of Ashton Mining Limited (Australia)- Board Member of Plutonic Resources Ltd (Australia)

Had been a Director of Kompleks Kewangan, a financing subsidiary of Permodalan Nasional Berhad(PNB). Following the impending take-over of MMC by private group from PNB, he took early retirementon 31 October 2001.

On 1 February 2002, he was appointed as the Special Advisor to the Chief Minister of Sabah until March 2004.

Has been Chairman of SURIA since 20 May 2002 Sabah Ports Sdn Bhd since 23 December 2003

Currently, also the Deputy Chairman Cum Advisor of Sabah Forestry Development Authority (SAFODA).

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Has no securities holding in SURIA and its subsidiaries and no family relationship with any director and/or major

shareholder nor any conflict of interest with SURIA.

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nd SuriaBumiria Sdn Bhd since 7 September 2004. He is also a Director of Hikmat Bumimaju Sdn Bhd since 1 July 2004.

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1.



Statement Accompanying Notice of Annual General Meeting (CONTD.)

pursuant to Paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad


Hj. Abdul Kadir Bin Hj. Mohd. KassimDirector/Independent & Non-Executive(Aged 65, Malaysian)

Graduated with a Bachelor of Laws degree from University of Singapore.

Had served in the Malaysian Administrative and Diplomatic Service and in the Judicial and Legal Servicebetween 1966 and 1973, holding various positions.

Currently, the managing partner of Messrs Kadir, Andri & Partners. He is also a Director of United Engineers(Malaysia) Berhad, UEM World Berhad, TIME dotcom Berhad, Ho Hup Construction Company Berhad, ProtonHoldings Berhad and a few private companies, including being Chairman of the Committee of Labuan InternationalFinancial Exchange.

Appointed to the Board of SURIA on 18 July 1997.

Has no securities holdings in SURIA and/or its subsidiaries and also has no family relationship with any directorand/or major shareholders nor any conflict of interest with SURIA.

Has no securities holding in SURIA and its subsidiaries and no family relationship with any director and/or majorshareholder nor any conflict of interest with SURIA.

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Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J. P.Director / Independent & Non-Executive(Aged 62, Malaysian)

Holds CA (M) , CPA (M), FCPA (Aust), FCIS (Eng), FTII and MI Management.

Had served as a Senior Accountant in 1968 until 1971 with T H Liew & Co, as a Chartered Accountant,Management Consultant cum Accountant in 1972 up to 1974 with Sri Kedua Sdn Bhd.

Currently practicing as a Chartered Accountant since 1974 with V.M. Lai & Co.

Also a director of V.M. Lai Tax Services Sdn Bhd, Sabapak Eco-Holdings Sdn Bhd, S.P. Satria Sdn Bhd, Sabah Ports SdnBhd and the Chairman of Sabah Credit Corporation.

Appointed to the Board of SURIA on 1 2001.

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3.

Name of Director

No. of

Meetings

Attended

% of

Attendance

2005

Tan Sri Ibrahim Bin Menudin 11/11 100.0

Datuk Ismail Bin Awang Besar 10/11 90.9

Datuk Hj. Abu Bakar @ Wahab Hj Abas 11/11 100.0

Datuk Dr. Mohd. Yaakub Hj. Johari, J.P. 11/11 100.0

Hj. Abdul Kadir Bin Hj. Mohd. Kassim 9/11 81.8

Datuk Filik Bin Madan @ Esong 10/11 90.9

Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P. 11/11 100.0

Mohd. Hasnol Bin Ayub 11/11 100.0

Datuk Dr. Hj. Patawari Bin Hj. Patawe 8/11 72.7

4. None of the Directors has:

• Any family relationship with any Director of the Company, its subsidiaries and/or the major Shareholder of the Company;

• Any conflict of interest with the Company; and

• Any conviction within the past ten years.


Statement Accompanying Notice of Annual General Meeting (CONTD.)

Details of attendance at Board Meetings held in the financial year ended 31 December 2005.st

2. Board Meetings held during the financial year ended 31 December 2005.st

A total of (11) Board meetings held during the financial year ended 31 December 2005 were as follows:

27 January 2005 Company's Registered Office 1.30 p.m.24 February 2005 Company's Registered Office 10.30 a.m.31 March 2005 Company's Registered Office 11.30 a.m.28 April 2005 Company's Registered Office 2.30 p.m.28 May 2005 Company's Registered Office 4.00 p.m.27 June 2005 Nipah Room, 2 Floor 9.00 a.m.

Beverly Hotel, Kota Kinabalu, Sabah28 July 2005 Company's Registered Office 1.30 p.m.9 August 2005 Company's Registered Office 9.00 a.m.

29 Sept 2005 Company's Registered Office 4.30 p.m.18 November 2005 Company's Registered Office 2.30 p.m.19 December 2005 Company's Registered Office 10.00 a.m.

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DATES OF MEETING VENUE TIME

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5. All the Directors are Malaysian.

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Mobile Crane at work at the port



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On behalf of the Board of Directors, I am pleased to present theAnnual Report and the Audited Consolidated Financial Statements ofSuria Capital Holdings Berhad and its Group of Companies for thefinancial year ended 31 December 2005.

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The year 2005 has been a significant year for the company as well as for the Group.It was the first year that it completed the full financial year with port services as itsnew core business. With five new subsidiaries under its wing and being a newcomer to the industry, the Company saw the year 2005 as indeed challenging. I amhappy to report that the Company has accomplished these achievements throughsheer hard work and determination in the face of challenging economicenvironment during the year.

The global economic scenario in 2005 had been volatile as growth in world's majoreconomies such as the United States, Europe as well as Japan remained subduedon the back of the increasing global interest rates and oil prices, exacerbated by thegeopolitical tensions in East and West Asia. However, it was the Asian economiesthat continued to stand out during the year reflecting the region's resilience.Powered by the rapid economic growth in China and India, the robust economy inthe region had been buoyed by the intra-regional trade and the vibrant domesticdemands.

The Malaysian economy no doubt has benefited from the strong regional trade andinvestments. Driven by strong external and domestic demands, the Malaysianeconomy grew by 5.3 per cent in 2005. The strong growth was underpinned by theimprovement in the employment market, good corporate results, firm commodityprices and strong export earnings that enhanced consumer optimism andencouraged spending in the country.

The sound economic expansion in the country in 2005 had provided a conduciveenvironment for the Group to consolidate its business operations to achieveoptimum performance. In spite of the fact that the Group were in the early phaseof its operations as a Group, it managed to wade through the trying time well anddelivering reasonably good results.

I am pleased to announce that the Group recorded a pre-tax profit of RM62.399million in the 2005 financial year, rising from RM23.457 million, the Group's firstfinancial results in the last four months of 2004. The Group's performance wasmade possible following the higher revenue of RM161.400 million generated duringthe 2005 financial year as against RM71.925 million in the financial year of 2004.

The Group's earnings were mainly contributed by its port service operationsthrough the subsidiary, Sabah Ports Sdn Bhd (SPSB). Other areas of business havealso contributed to the revenue growth albeit to a lesser extent.

Financial Performance

Chairman’s Statement

7

TAN SRI IBRAHIM BIN MENUDIN



This had been a significant achievement considering the Company only acquired the operations of the sevenSabah's major ports in September 2004. The encouraging performance during the financial year wasattributed mainly due to increasing operational efficiencies which were achieved through the implementationsof various measures initiated during the year. Among the key efforts were the implementations of operationalcost-control measures, the improved working system in the port operations particularly with the introductionof new and better shift system as well as the investments in new and modern port machineries and equipmentto ensure higher productivity.

Since the takeover of the major ports' operations in September 2004, SPSB had made significant progressduring the 2005 financial year.

In the aspect of cargo tonnage handled by our seven ports, the total tonnage had increased by 6.2 per cent to26.16 million tonnes in 2005 from the year earlier. The strong global demand for palm oil from Sabahcontinued to impact positively on the port activities during 2005. Palm oil cargoes which passed through theports particularly in Lahad Datu, Sandakan and Kunak, posted a significant increase of 12.0 per cent from 5.0million tonnes in 2004 to 5.6 million tonnes in 2005. The commodity became the ports' main revenue earnerduring the year, making up about 28 per cent of the total cargoes handled in 2005. Sabah is the largest oilpalm producing state in Malaysia. Palm oil has been contributing about 30 per cent of total exports of the State.

In terms of cargo handling rate, the container movement in general had also showed some improvement. Thehandling rate stood at 7.5 containers per hour during 2005 in comparison to the rate of 7 containers theprevious year. However, there had been a positive development particularly in the last two months of last yearwhen the ports had achieved an average rate of 8.5 containers per hour. The improved efficiency wasattributed largely to the introduction of 2 units of newly purchased Mobile Harbour Cranes during the last twomonths of 2005.

The Group is positive that a much higher handling rate is achievable particularly with the optimization ofhandling methods and the operating staff has by then, become better-trained in handling the modernmachineries. The confidence is based on the recent SPSB's performance at average handling rate of 10.3containers per hour in the month of January 2006, higher than the preceding period of last year. Theperformance in the first two weeks of February 2006 was encouraging at 13 containers per hour, surpassingour target of 12 containers per hour.

The Group looks forward to the coming years with optimism. Although the year 2006 is anticipated to beanother challenging year, the Group expects the port services business to remain positive. The expectation offavourable growth in the regional, national and state economies, underpinned by the strong commoditymarkets this year, particularly for palm oil, provides a firm basis for the Group's business confidence. Thediscovery of new oil-fields off Sabah's waters will have positive impact on the Group operations.

This year, the Group endeavours to be more aggressive in supporting the State's economy, particularly indeveloping the key growth sectors, namely agriculture, manufacturing and tourism, as identified in HalatujuKemajuan dan Pembangunan Negeri Sabah.

Operational Performance

Future Outlook

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Chairman’s Statement (CONTD.)

The five-year Ninth Malaysia Plan beginning this year is expected to generate greater opportunities for SuriaGroup, especially with the anticipated emphasis of agriculture as the third engine of economic growth. Sabahno doubt will be a major beneficiary of this emphasis.In this respect, SPSB is committed to intensify its efforts to enhance the standard of its port services. Thisincludes the construction of a modern Sapangar Bay Container Port. The RM322.42 million Container Port isnow at the final stage of construction and will be fully commissioned by early 2007. Once operational, it will beturned into a dedicated container hub capable of handling two container vessels of up to 2,500 teus at onetime and a container stacking area of 15 hectares. The development of this port will be a boon to the State'sbusiness community especially those involved in the manufacturing sector.

The development of the State's palm oil industry is also high on the agenda. To meet the industry needs, SPSBis currently active in the extension works and development of new oil jetties for the State's Palm Oil IndustrialClusters (POICs) in Lahad Datu, Kunak and Sandakan. It is hoped that these facilities will help stimulatefurther investments in the industry and generate more down-stream activities in the State.

In accordance with the Group core business as port service provider, it will continue to remain committed toplay an effective role in enhancing the efficiency of the State's logistic services. Moving forward, the Groupfocus will be dedicated to further enhance our operational efficiency through the upgrading of port facilitieswhile expanding the capacities, investment in new and modern equipment. The Group will also implementmeasures to enhance the ability of its human resources to deliver superior results through training, retrainingand incorporation of positive working culture.

With the additional capacities coming on stream and the measures to increase port efficiency, productivity andcost-effectiveness as well as further optimization of the new facilities, the Group is confident of achievingbetter results.

It has been envisaged that the ports under the operations of SPSB hold big potentials. Not only they are thekey entry and exit points for exports or imports for the State, they have the potentials to be transformed intothe transit points for goods coming from the neighbouring countries. Being in the strategic location of theBIMP-EAGA region, Sabah ports can evolve into important trading links for the country and also for this side ofthe region.

Apart from providing port operating services as its core business through SPSB, the Group has also been activein other areas through its other subsidiaries. Suria Bumiria Sdn Bhd, as one of the subsidiaries, is committedto undertake the development of Kota Kinabalu Port land into a prestigious Jesselton Waterfront, anInternational Cruise Terminal, Integrated Tourism and Commercial Development project. As part of the firstphase of the Waterfront development, Suria Bumiria had taken over the management and operations of KotaKinabalu Ferry Terminal and Jetties from Sabah Ports Sdn Bhd. This mega-development will contributepositively to the growth of the tourism sector in the State as well as the commercial development of KotaKinabalu itself as a city.

SCHB Engineering Services Sdn Bhd, another subsidiary company, is not just active in its engineering servicesas a 'Project Management Consultant' (PMC) and Turnkey Contractor for Sabah ports, it has also been lookinginto other viable ventures such as the property development sector. Currently, the subsidiary is involved in aproject to upgrade the Sabah railway track from Tanjung Aru to Tenom for the Federal Ministry of Transport.

Other Business Ventures

9






S.P. Satria Sdn Bhd, a joint-venture subsidiary under Suria Group has been a supplier of port machineries forour ports, while simultaneously providing maintenance services of the machineries. The company'sperformance in terms of efficiency and returns had so far been very encouraging. With the acquired skill andexpertise, the subsidiary is ready to explore new frontiers.

Tricubes Suria Sdn Bhd, another joint venture company, functions actively as support provider for theinformation technology requirements and services for the Group. Apart from enhancing the information andcommunication technology (ICT) capability of the Group, Tricubes Suria will also be promoting its activitiesaggressively this year in order to enlarge its market share in the area of ICT in the State.

In view of the Group's encouraging financial performance during the financial year, I am pleased to report thatthe Company had declared an interim dividend of 1% less 28% taxation amounting to RM4.1 million on28 May 2005 and paid on 8 July 2005. The Board is also pleased to recommend for the shareholders'approval during the forthcoming 23 Annual General Meeting a final dividend 1% less 28% taxationamounting to a dividend payable of RM4.1 million in respect of the financial year ended 31 December 2005.

As a Group which adopts and practices the value of good corporate governance, the Group continues tosubscribe and remain committed in implementing the best practices as contained in the Malaysian Code ofCorporate Governance.

The achievements in 2005 would have not been made possible without the contributions and involvements bymany parties. On behalf of Suria Group, I would like to take the opportunity to record our sincere appreciationand acknowledgement to the leadership of the State Government and the authorities, particularly Sabah PortsAuthority, the State's Ministry of Infrastructure Development and Ministry of Industrial Development for theirguidance and assistance in supporting Suria Group particularly during its transformation years.

I also would like to express our gratitude to the shareholders, stakeholders, clients and business associates fortheir unfailing support and confidence in the Company as well as the Group.

Finally, my special thanks to my fellow Board Members, the Management and the Staff of Suria Group for theircontinuous dedication and commitment in our endeavor to move forward as a dynamic Group in order todeliver better results in the coming years.

Thank you.

Dividend

Corporate Governance

Appreciation

TAN SRI IBRAHIM MENUDINChairmanSuria Capital Holdings Berhad

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CORPORATE INFORMATIONRegistered Office:



Subsidiary Companies:

TRICUBES SURIA SDN BHD (634170-T)

(Formerly known as Prima Eraglobal Sdn Bhd)

Lot 9CF 01, 9 Floor, Block C, Kompleks Karamunsing,th

Km 2.4, Jalan Tuaran, 88300 Kota Kinabalu, Sabah, Malaysia.Tel : +(60)88-232 988, 249 588, 244 488 Fax: +(60)88-234 288Email : [email protected]

S.P. SATRIA SDN BHD (622494-V)

Lot 9CF 03-04, 9 Floor, Block C, Kompleks Karamunsing,th

Km 2.4, Jalan Tuaran, 88300 Kota Kinabalu, Sabah, Malaysia.Tel : +(60)88-235 787 Fax: +(60)88-231 086Email : [email protected]

SCHB ENGINEERING SERVICES SDN BHD (645642-W)

(Formerly known as Mega Intraway Sdn Bhd)


Km 2.4, Jalan Tuaran, 88300 Kota Kinabalu, Sabah, Malaysia.Tel : +(60)88-235 143, 236 143, 238 143, 243 143 Fax: +(60)88-317 109Email : [email protected]

SURIA BUMIRIA SDN BHD (633477-V)


Km 2.4, Jalan Tuaran, 88300 Kota Kinabalu, Sabah, Malaysia.Tel : +(60)88-235 787 Fax: +(60)88-231 050Email : [email protected]

SABAH PORTS SDN BHD (583073-H)

Ground , 1 & 3 Floors, SPA Headquarters Building, Jalan Tun Fuad,st rd

Tanjung Lipat, Locked Bag 75, 88992 Kota Kinabalu, Sabah, Malaysia.Tel : +(60)88-243 110, 243 102, 243 103 (9 lines) Fax : +(60)88-243 420Email : [email protected]

SABAHPORTSYOUR GATEWAY TO THE EAST

Lot 8CF 01-02, 8 Floor, Block C, Karamunsing Complex,th

Km 2.4, Jalan Tuaran, 88300 Kota Kinabalu, Sabah, Malaysia.Tel: +(60)88-257 788 (4 lines) Fax: +(60)88-256 410E-mail: [email protected]

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CORPORATE INFORMATION (CONTD.)

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Principal Bankers:

Auditors:

Share Registrars:

Stock Exchange Listing:

Quotation Data:

Alliance Bank Malaysia BerhadGround Floor, Menara AWisma Tun Fuad StephensJalan Tuaran, Karamunsing88100 Kota KinabaluSabah, Malaysia

Ernst & YoungSuite 1-10-W1, 10 FloorCPS Tower, Centre Point SabahNo. 1, Jalan Centre Point88000 Kota KinabaluSabah, Malaysia

PFA Registration Services Sdn. Bhd (19234W)1301 Level 13, Uptown 1No. 1, Jalan SS21/58Damansara Uptown47400 Petaling Jaya, Selangor Darul EhsanMalaysiaTel: +6(03)-7725 4888 / 7725 8046 Fax: +6(03)-7722 2311

Bursa Malaysia Securities Berhad (Main Board)

Reuters Code SURI.KL

Bloomberg Code SURIA MK

Bernama Code SURIA

BMSB Code 6521

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AmBank Berhad

Ground Floor, Wisma SESB,Jalan Tunku Rahman, 88673Kota Kinabalu, SabahMalaysia

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BOARD OF DIRECTORS STATUS

BOARD OF DIRECTORS



Chairman

Group Managing Director

Members

Group Company Secretary

Tan Sri Ibrahim Bin Menudin Non-Independent/Non-Executive Director

Datuk Hj. Abu Bakar @ Wahab Hj. Abas Non-Independent/Executive Director

Datuk Ismail Bin Awang Besar Non-Independent/Non-Executive Director

Datuk Dr. Mohd. Yaakub Hj. Johari, J.P. Non-Independent/Non-Executive Director

Hj. Abdul Kadir Bin Hj. Mohd. Kassim Independent/Non-Executive Director

Datuk Filik Bin Madan @ Esong Non-Independent/Non-Executive Director

Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P. Independent/Non-Executive Director

Mohd. Hasnol Bin Ayub Independent/Non-Executive Director

Datuk Dr. Hj. Patawari Bin Hj. Patawe Non-Independent/Non-Executive Director

Mohd Hanan Bin Ramli (LS. 005860)

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SENIOR REFERENCE DIRECTOR


STATUS



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NOMINATION/APPOINTMENT COMMITTEE

REMUNERATION COMMITTEE STATUS

AUDIT COMMITTEE STATUS

BOARD COMMITTEES

Chairman

Members

Secretary

Datuk Ismail Bin Awang Besar Non-Independent/Non-Executive Director



Mohd Hanan Bin Ramli (LS. 005860) Group Company Secretary

Chairman

Members

Secretary


Datuk Hj. Abu Bakar @ Wahab Hj. Abas Non-Independent/Executive Director


(resigned with effect from 25/2/2006)

effect from 25/2/2006)

Mohd Hanan Bin Ramli (LS. 005860) Group Company Secretary


Datuk Ismail Bin Awang Besar (appointed with Non-Independent/Non-Executive Director

Chairman

Secretary

Datuk Anthony Lai Vai Ming @ Lai Kheng

Mohd. Hasnol Bin Ayub Independent/Non-Executive

Ms. Dionysia Aloysius Kibat Group Internal Auditor

Independent/Non-Executive DirectorMing, J.P. (Member of Malaysian Institute

of Accountants)

Director


Members

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EXECUTIVE MANAGEMENT COMMITTEE STATUS

Chairman

Members

Secretary

Datuk Hj. Abu Bakar @ Wahab Hj. Abas Group Managing Director

Hj. Jainie @ Zainie Bin Abdul @ Abdul Aucasa Managing Director

(Suria Bumiria Sdn Bhd)

Steven Hooi Kok Hoe Chief Operating Officer

(SCHB Engineering Services Sdn Bhd)

Ms. Dionysia Aloysius Kibat Group Internal Auditor

Ms. Wong Lee Ken Senior Manager (Finance/Corporate)(Suria)

Datin Mariam Mahmun Manager (Corporate Affairs) (Suria)

Alias Nasip Manager (Risk Management) (Suria)

Mohd Hanan Bin Ramli Group Company Secretary

Hj. Ramli Abu Samah Chief Operating Officer

(Sabah Ports Sdn Bhd)

Loh Boon Hon Executive Director

(S. P. Satria Sdn Bhd)

Jamaludin Abu Bakar Executive Director

(Tricubes Suria Sdn Bhd)

Pascalis Claudius @ Raphael Manager (Human Resource/Admin)(Suria)

BOARD COMMITTEES (CONTD.)



16

DIRECTORS

DIRECTORSPROFILE OF DIRECTORS


Laporan Tahunan | Annual Report2005Suria Capital Holdings Berhad(96895-W)


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Graduated with a Bachelor of Commerce from University ofWestern Australia.

Currently a member of Institute of Chartered Accountants inAustralia, The Malaysian Institute of Certified Public Accountantsas well as the Malaysian Institute of Accountants.

Started his career in the Sabah State Civil Service and becameAccountant General of Sabah from 1976 to 1979. In 1980, heresigned from the Service to become the Chief Executive Officer ofBumiputra Investment Fund of Sabah until 1985.

Had also served as Chairman of Sabah Gas Industries Sdn Bhd,Deputy Chairman of Sabah Forest Industries Sdn Bhd and boardmember of other Sabah Government Corporations which involvedin finance, forestry, manufacturing, plantations, hotel and propertydevelopment.

Appointed as Group Chief Executive in 1986 of Malaysia MiningCorporation Berhad (MMC). Was also Chairman of the followingcompanies:-

- Malaysian Smelting Corporation Berhad- Gas Malaysia Sdn Bhd- Malakoff Berhad- Kulim th Highways Sdn Bhd- Tronoh Mines Malaysia Berhad- MMC Engineering Group Berhad- Board Member of Ashton Mining Limited (Australia)- Board Member of Plutonic Resources Ltd (Australia)

Had been a Director of Kompleks Kewangan, a financing subsidiaryof Permodalan Nasional Berhad (PNB). Following the impendingtake-over of MMC by private group from PNB, he took earlyretirement on 31 October 2001.

On 1 February 2002, he was appointed as the Special Advisor tothe Chief Minister of Sabah until March 2004.

Has been the Chairman of SURIA since 20 May 2002, Sabah PortsSdn Bhd since 23 December 2003 a

Currently, also the Deputy Chairman Cum Advisor of SabahForestry Development Authority (SAFODA).

Has no securities holding in SURIA and its subsidiaries and nofamily relationship with any director and/or major shareholder norany conflict of interest with SURIA.

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TAN SRI IBRAHIM BIN MENUDIN

Chairman / Non-Independent & Non-Executive Director


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DIRECTORS

DIRECTORSPROFILE OF DIRECTORS( .)CONTD




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DATUK HJ. ABU BAKAR @ WAHAB HJ. ABAS

Group Managing Director / Non-Independent Executive Director


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Graduated with a Bachelor of Economics (Hons) from UniversitiKebangsaan Malaysia. He had obtained his postgraduateDiploma in Economic Development from the UniversityCollege of Swansea, United Kingdom.

Began his career in 1980 with the Sabah State Civil Service servingthe State's Economic Planning Unit, the State's Ministry ofCommunication and Works and the State Ministry of Finance invarious positions. He was the Secretary General of the SabahBumiputra Chamber of Commerce (SBCC) in 1983 until 1988. Ayear later, he was attached to the Financial Review Section of theState Ministry of Finance until 1994. In 1995, he was appointed asSenior Confidential Secretary to the Chief Minister of Sabah underthe Chief Minister's Department. While in the State Civil Serviceand SBCC, he had chaired and sat on the Board of various publiccompanies as well as subsidiaries of SBCC.

Currently a Board Member of Sedcovest Sdn Bhd, a subsidiary ofSabah Economic Development Corporation (SEDCO), Sabah PortsSdn Bhd, Suria Bumiria Sdn Bhd and Hikmat Bumimaju Sdn Bhd.He is also the Chairman of SURIA's other subsidiary companies,namely S.P. Satria Sdn Bhd, SCHB Engineering Services Sdn Bhdand Tricubes Suria Sdn Bhd.

Appointed as Group Managing Director for SURIA on 1 February2004. Prior to this appointment, he held the post of ExecutiveDirector of SURIA.

Holds 115,000 shares in SURIA and has no family relationship withany director and/or major shareholder nor any conflict of interestwith SURIA.

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Conferred the State's Datukship by Tuan Yang Terutama YangDiPertua Negeri Sabah on 16 September 2005.

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DIRECTORS

DIRECTORS

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Graduated with a Bachelor of Arts (Hons.) majoring inInternational Studies from the University of Staffordshire,United Kingdom. He also has a postgraduate Diploma inDevelopment Administration from the University ofBirmingham.

Once a senior staff in the Sabah State's Civil Service undervarious appointments. In 1985, he joined SabahDevelopment Bank Berhad as a Training Manager andmoved his way up to Executive Director until he left in1998.

Had served as Chairman of Saham Sabah Berhad, astate-sponsored unit trust management company until 2001.

Appointed as Director of Suria Capital Holdings Berhad on 6 J u n e1996 and as Chairman from 1 July 2001 until 20 May 2002. Hewas made the Managing Director of SURIA from 14 September2001 until 1 February2004.

He is currently the Chairman of the Sabah Public ServiceCommission. He also sits on the board of Tricubes Suria Sdn Bhdand Suria Bumiria Sdn Bhd.

He has no securities holding in SURIA and its subsidiaries and nofamily relationship with any director and/or major shareholder norany conflict of interest with SURIA.

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DATUK ISMAIL BIN AWANG BESAR

Director / Non-Independent & Non-Executive


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Graduated with a Bachelor of Science (Hons) from theUniversity of Sussex and a Master of Science (LiberalStudies) from the University of Manchester, England. In 1982,he obtained his PhD in Sociology from the University of Salford,England.

Began his career as a part-time lecturer in Political Scienceat the MARA Institute of Technology and in 1983, he joinedthe Sabah State Civil Service as an Assistant Director(Research and Consultant) in the Sabah Chief Minister'sDepartment. He was made the Principal Assistant Director(Management Development) in 1984. He joined theInstitute of Development Studies, Sabah (IDS) as anAssociate Director (Social Affairs) in 1985 and later movedup to Deputy Chief Executive/Senior Research Fellow in1991. In 1994, he was promoted again to his currentposition as the Executive Director/Chief Executive of theInstitute.

Sits on the board of Warisan Harta Sabah Sdn Bhd, CreativeBusiness Services Sdn Bhd, IDS Infotech Sdn Bhd, BorneoNatural Products Sdn Bhd, KPS Sdn Bhd, FaradaleDevelopment (Sabah) Sdn Bhd and Sabah Techno-ParkCorporation Sdn Bhd. He is also the Chairman/ActingManaging Director of the Sabah Institute for Small andMedium Enterprise.

Appointed to the Board of SURIA on 24 August 1996.

Has no securities holding in SURIA and its subsidiaries and nofamily relationship with any director and/or major shareholder norany conflict of interest with SURIA.

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DATUK DR. MOHD. YAAKUB HJ. JOHARI, J.P.



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DIRECTORS

DIRECTORSPROFILE OF DIRECTORS( .)CONTD

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Graduated with a Bachelor of Economics (AppliedEconomics) from University of Malaya.

Began his career with the Sabah Civil Service on 9 June 1977assuming various posit ions such as the PrincipalAssistant Secretary to the State's Ministry of IndustrialDevelopment, Permanent Secretary of the Ministry ofAgriculture and Fisheries; Permanent Secretary of theMinistry of Resources and Information TechnologyDevelopment and the Government Printer.

Presently holding the post of the Deputy PermanentSecretary of the State's Ministry of Finance.


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HJ. ABDUL KADIR BIN HJ. MOHD. KASSIM

Director/Independent & Non-Executive


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Graduated with a Bachelor of Laws degree from University ofSingapore.

Had served in the Malaysian Administrative and DiplomaticService and in the Judicial and Legal Service between 1966and 1973, holding various positions.

Currently, the managing partner of Messrs Kadir, Andri &Partners. He is also a Director of United Engineers(Malaysia) Berhad, UEM World Berhad, TIME dotcomBerhad, Ho Hup Construction Company Berhad, ProtonHoldings Berhad and a few private companies, including beingChairman of the Committee of Labuan InternationalFinancial Exchange.


Has no securities holdings in SURIA and/or its subsidiariesand also has no family relationship with any director and/ormajor shareholders nor any conflict of interest with SURIA.

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DATUK FILIK BIN MADAN @ ESONG

Director / Non Independent & Non-Executive


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Holds CA (M), CPA (M), FCPA (Australia), FCIS (England), FTII andMI Management.

Had served as a Senior Accountant in 1968 until 1971 withTH Liew & Co, as a Chartered Accountant, ManagementConsultant cum Accountant in 1972 up to 1974 withSri Kedua Sdn Bhd.

Currently practising as a Chartered Accountant since 1974 withV.M. Lai & Co.

Also a director of V.M. Lai Tax Services Sdn Bhd, SabapakEco-Holdings Sdn Bhd, S.P. Satria Sdn Bhd, Sabah Ports Sdn B h dand the Chairman of Sabah Credit Corporation.


Has no securities holding in SURIA and its subsidiaries andno family relationship with any director and/or majorshareholder nor any conflict of interest with SURIA.

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Holds a postgraduate Diploma in Business Administration and aMasters Degree In Business Administration both from theUniversity of Wales, United Kingdom.

Currently, the Chairman of Abad Mesra Sdn Bhd and was aDirector of City Finance Bhd from 1994 to 2000.

Also the Managing Director of Jahsia Construction Sdn Bhd andJahsia Sdn Bhd and Director of Sabah Ports Sdn Bhd, S.P. Satria SdnBhd, Hikmat Bumimaju Sdn Bhd and Rumah Anak YatimTambunan.


Holds 5,000 shares in SURIA and has no family relationship withany director and/or major shareholder nor any conflict of interestwith SURIA.

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DATUK ANTHONY LAI VAI MING @ LAI KHENG MING, J.P.

Director / Independent & Non-Executive


MOHD HASNOL BIN AYUB

Director / Independent & Non-Executive


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DIRECTORS

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Holds a Fellow of Royal College of Surgeons (FRCS),Edinburgh, Scotland and he has been a practicing doctor since1982.

Previously the Assistant Minister of Resource Development andInformation Technology, Sabah, Assistant Ministe ofIndustrial Development, Sabah and Assistant Minister ofAgriculture and Food Technology, Sabah.

Appointed to the Board of SURIA on 12 October 2004.

Has no securities holding in SURIA and its subsidiaries andno family relationship with any director and/or majorshareholder nor any conflict of interest with SURIA.

� Presently an elected member of the Sabah State LegislativeAssembly for Sebatik Constituency and the Chairmanof Warisan Harta Sabah Sdn Bhd (WHSSB). He also holdsdirectorships in WHSSB Property Development Sdn Bhd andDamai Specialist Centre.

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DATUK DR. HJ. PATAWARI BIN HJ. PATAWE



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SURIAGROUP 1ST ANNIVERSARY NITE

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SURIAGROUP 1ST ANNIVERSARY NITE

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27

Mobile Harbour CranesGottwald Mobile Harbour Cranes for universaloperation have been developed for handlinggeneral cargo of all types and densities

Terminal TractorsIn terminal operations, terminal tractors arecommonly used for moving containers on trailersbetween the ship-to-shore cranes and containerstacking area. Trailers are specially built for insideterminal usage only and with corner guides, whichmake it easier to place containers on them.

PORT MACHINERIES

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Handling over ceremony of PortMachineries at Sandakan Port inAugust 2005.




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Shuttle CarrierHIGH SPEED DESIGN- Low overall height with good cornering stability- Low weight design, high power output- Simultaneous driving and hoisting- Independent suspension in all wheels

ContChampThe ContChamp is one of the most used machines inthe world for container handling, well known for itsefficiency and reliability

PORT MACHINERIES

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Handling over ceremony of PortMachineries at Kota Kinabalu Port inJuly 2005.




LAUNCHING OF 5S PROGRAMMESEIRI, SEITON, SEISO, SEIKETSU, SHITSUKE

(SISIH, SUSUN, SAPU, SERAGAM & SENTIASA AMAL)

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AGM & WEBSITE LAUNCHING

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S.P. SATRIA QUALITY NIGHT

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TRAINING ACTIVITIES

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INTERNATIONAL CEO’S CONFERENCE 2005




EAST MALAYSIA

MARITIME CONFERENCE 2005

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THAI PORTS CONFERENCE 2005, BANGKOK




VISIT TO PENANG PORT

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VISIT TO CHINA




SURIA MANAGEMENT RETREAT

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AUDIT COMMITTEE REPORT

1. COMPOSITION

2. MEMBERSHIP

Based on the requirement of Part C of Chapter 15 of Bursa Malaysia Securities Berhad(“BMSB”) Listing Requirements on Corporate Governance, the Committee was appointed fromamongst the Directors and no Alternate Director is a member of the Committee.

The Committee comprises of three (3) members, two of whom are Independent Directors andone Non-Independent Director. One (1) member of the Committee is a member of the MalaysianInstitute of Accountants (MIA), who is also the Chairman of the Committee.

Members of the Committee may relinquish their membership with prior written notice to theChairman and may continue to serve as Director of the Company. In the event of any vacancy inthe Committee, the vacancy shall be filled within 3 months and that the Nomination/AppointmentCommittee shall review and recommend for the Board's approval for another appropriateDirector to fill the vacancy.

The current members of the Committee and their respective designations are as follows :

The Company complies with the requirements on independent memberships in the AuditCommittee.

� Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P.,CA(M), CPA(M), FCPA (Aust), FCIS (Eng), FTII, MIM.Chairman & Member(Independent Non-Executive Director)(Member of the Malaysian Institute of Accountants)

Mohd. Hasnol Bin AyubMember(Independent Non-Executive Director)

Datuk Filik Madan @ EsongMember(Non-Independent Non-Executive Director)

Dionysia Aloysius Kibat, CA(M)Audit Committee SecretaryGroup Internal Auditor(Member of Malaysian Institute of Accountants)

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3. OBJECTIVES

4. TERMS OF REFERENCE

In compliance with Bursa Malaysia Securities Berhad ( BMSB ) Listing Requirements and Best

Practices of the Code on Corporate Governance, it is the objective of the Committee to assure theshareholders of the Company that the Directors have complied with specified financial standardsand required disclosure policies developed and administered by BMSB and other approvedaccounting standard bodies.

Further, the Committee shall ensure consistency with BMSB commitments to encourage highstandards of corporate disclosure and transparency. The Committee also endeavours to adoptpractices aimed at maintaining appropriate standards of corporate responsibility, integrity andaccountability to the Company's shareholders.

The principal duties and responsibilities of the Committee shall include:

To consider the appointment of a suitable accounting firm to act as the externalauditor. Amongst the factors considered for the appointment are the adequacy ofexperience and resources of the firm, the individuals assigned to the audits, andthe recommended audit fees payable.

To discuss the nature and scope of the audit with the external auditor (before the auditcommences) and ensure coordination (where more than one audit firm is involved).

To review the quarterly interim results, and annual financial statements of the Board,focusing particularly on

To discuss issues and concerns arising from the interim and final audits, and anyother matters the external auditor wishes to discuss, in the absence ofmanagement if necessary.

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4.1

4.2

4.3;

4.4

AUDIT COMMITTEE REPORT(CONTD.)

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Any changes in accounting policies and practices;Significant adjustments arising from the external audits;The going concern assumption; andCompliance with accounting standards and other legal requirements.

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4. TERMS OF REFERENCE(CONTD.)

4.5

4.6

4.7

4.8

4.9

4.10

To review the external auditor's management letter and management's response.

To review the assistance and co-operation given by the Company, its business units and itsofficers to auditors.

Upon establishment of the internal audit functions, to do the following:

To consider the major findings of internal audits and investigations, management's response,remedial actions taken and follow-ups.

To review any related party transactions and conflict of interest situation that may arise within theCompany or the business units.

To consider other functions as may be agreed to by the Committee and the Board.


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To review the adequacy of the scope, functions and resources of the internal auditfunction, and that it has the necessary authority to carry out its work;Review the internal audit programme and results of the internal audit process and wherenecessary ensure that appropriate action is taken on the recommendations of theinternal audit function;Review any appraisal or assessment of the performance of members of the internal auditfunction;Approve any appointment or termination of senior staff members of the internal auditfunction;andInform itself of resignations of internal audit staff members and provide the resigningstaff member an opportunity to submit his reasons for resigning.

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5. AUTHORITY

In conducting its duties and responsibilities, the Committee shall have the following rights:

Explicit authority to investigate any matter within its terms of reference;

Have adequate resources required to conduct its duties;

Have full, free and unrestricted access to any information, records properties andpersonnel of the Company and of any other companies within the Group;

Have direct communication channels with the external and internal auditors,

Able to obtain external independent professional advice and to invite external parties withrelevant experience to attend the Committee meetings for advice;

Have discretion to invite other Directors and/or employees of the Company to attend anyparticular Committee meeting to discuss specific issues; and

Able to convene meetings with external and internal auditors, excluding the attendanceof the executive members of the Committee if deemed necessary.

5.1

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6. MEETINGS AND OTHER ACTIVITIES

The Audit Committee met five times during the financial year ended 31 December 2005. Themeetings were held among other things to discuss, review and recommended to the Board thequarterly results and annual financial statements of the Company. After each Audit Committeemeeting, the Audit Committee reported to and updated the Board on significant issues andconcerns discussed during the Audit Committee meetings and where appropriate, made thenecessary recommendations to the Board.

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6. MEETINGS AND OTHER ACTIVITIES (CONTD.)

Details of Audit Committee meetings held during the financial year ended 31 December 2005are as follows:

16 February 2005 2.30pm 8 Floor, Block C, Kompleks Karamunsing, Km 2.4,Jalan Tuaran, 88300 Kota Kinabalu

14 April 2005 2.30pm 8 Floor, Block C, Kompleks Karamunsing, Km 2.4,Jalan Tuaran, 88300 Kota Kinabalu

13 May 2005 10.00am 8 Floor, Block C, Kompleks Karamunsing, Km 2.4,Jalan Tuaran, 88300 Kota Kinabalu

8 August 2005 9.00am 8 Floor, Block C, Kompleks Karamunsing, Km 2.4,Jalan Tuaran, 88300 Kota Kinabalu

11 November 2005 2.00pm 8 Floor, Block C, Kompleks Karamunsing, Km 2.4,Jalan Tuaran, 88300 Kota Kinabalu

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, Sabah, Malaysia

, Sabah, Malaysia

, Sabah, Malaysia

, Sabah, Malaysia

, Sabah, Malaysia


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The attendance of each Member is as follows:

Name of Audit Committee MemberNo. of Meetings

Attended% of

Attendance

Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P.,CA(M), CPA(M), FCPA (Aust), FCIS (Eng), FTII, MIM. 5/5 100

Mohd. Hasnol Bin Ayub 5/5 100

Datuk Filik Madan @ Esong 5/5 100

Members of Senior Management of the Group were also present by invitation. At least, once ayear, the External Auditors were also invited to attend and participated in the deliberations onrelevant items at the Audit Committee meetings conducted during the period under review.

During the financial year 2005, the Audit Committee carried out its duties as set out in the Termsof Reference. The Group had set up its Risk Management Department ( RMD ) in the second half

of 2005. A Risk Assessment Exercise facilitated by RMD had been carried out of whichconsequently, the Group had established a three year internal audit plan.

“ ”

40




7. INTERNAL CONTROLS

8. RISK MANAGEMENT

Internal controls are an integral self-regulated mechanism in enhancing corporate governance.The Group's internal audit function was set up during the last quarter of 2004 as an independentunit and reports directly to the Audit Committee. Please refer to Pages 42 and 43 of theStatement on Internal Control for an explanation of the mechanisms that exist to enable theAudit Committee to discharge its functions effectively.

In the second half of 2005, the Group had implemented a Risk Management Programme not onlyto assist the Board of Directors to fulfil their corporate governance responsibilities but also toenhance shareholders' value through a more thorough balance of risk and resources.

A summary of the key initiatives implemented since the implementation of the Risk ManagementProgramme is:

Establishment of a Risk Management Department to administer and coordinate therisk management programme and activities so as to ensure that the risk managementprocess is consistently adopted and implemented throughout the Group.

Establishment of Group Risk Management Committee ( GRMC ) at the group level.

Establishment of Risk Management Working Committees ( RMWC ) at subsidiary

levels.

Risk Management Awareness Training for members of GRMC and RMWC, and otherSenior Management of Suria Group (68 persons in total). A prominent speaker on RiskManagement was engaged to deliver the training.

Training of Risk Management Software (Risk Profiling, Reporting and MonitoringSystem) for all secretaries of the RMWC.

The first Risk Management Report is completed in the first week of March 2006.

The Group Risk Management Committee had sat twice, one discussing the Terms ofReference of the GRMC and Risk Management Policy, and the other, through the SuriaGroup Executive Management Committee, presenting risk profiles of one of thesubsidiary companies.

8.1

8.2

8.3

8.4

8.5

8.6

8.7

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INTRODUCTION

RESPONSIBILITY

KEY PROCESSES

The Malaysian Code on Corporate Governance requires listed companies to maintain a sound systemof internal controls to safeguard shareholders' investments and the Group's assets. Bursa MalaysiaSecurities Berhad ( BMSB ) Listing Requirements require Directors of listed companies to include in

its annual report a statement on the state of their internal controls. The BMSB's Statement onInternal Control: Guidance for Directors of Public Listed Companies ( Guidance ) provides guidance

for compliance with these requirements. Set out below is the Board's Internal Control Statement,which has been prepared in accordance with the Guidance.

The Board acknowledges its responsibility for the Group's system of internal control and for reviewingits adequacy and integrity. Due to the limitations that are inherent in any system of internal controls,this system in designed to manage, rather than eliminate, the risk of failure to achieve corporateobjectives. Accordingly, it can only provide reasonable and not absolute assurance against materialmisstatement or loss. The system of internal controls covers, inter alia, risk management, financial,operational and compliance controls.

The Group had in place an on-going process for identifying, evaluating, monitoring and managing thesignificant risks affecting the achievement of the Group's business objectives throughout the periodup to the date of this report. This process is regularly reviewed by the Board.

The Board recognises the need for continuous improvement in its system of internal controls, existingprocesses and procedures. In this regard, the Group had established its Risk ManagementDepartment with a plan to undertake a review of its Risk Management Framework in the second halfof 2005.

The Group Managing Director and his senior management team, through their day-to-dayinvolvement in the operations of the Group, ensure that on-going maintenance, monitoring,reviewing and reporting arrangements have been put in place to provide reasonable assurance thatthe structure of controls and operations is appropriate to the Group.

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STATEMENT ON INTERNAL CONTROL

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INTERNAL AUDIT FUNCTION

In accordance with Best Practices Provision BB VII in Part 2 of the Code the Group's internal auditfunction was set up as an independent unit during the last quarter of 2004, and reports directly tothe Audit Committee.

The purpose of internal audit function is to assist the Audit Committee, in obtaining sufficientassurance of regular review and appraisal of the effectiveness of the systems of internal controlswithin the Group. The objectives of the Group's internal audit function are set out to provideassurance to the Audit Committee so that internal audit activities are performed with impartiality,proficiency and due professional care.

A high level assessment of the Group's business risks was carried out by the Internal AuditDepartment based on the report prepared by Risk Management Department to facilitate thepreparation of internal audit plan. The audit plan was approved by the Audit Committee. With theadoption of risk-based approach, the internal audit function is able to focus its work on principal riskareas and processes of the business operation units.

The internal audit function undertakes systematic and timely review of the systems of internalcontrols in order to provide reasonable assurance that operation of such controls, includingsystems for compliance with applicable laws, regulations and guidelines are adequate, efficientand effective.

In its focus on continuous improvement for the Group, the internal audit function reviews criticalkey areas for improvement and thereafter assesses the extent of which its recommendations havebeen implemented.

Since the establishment of the internal audit function, the internal audit department has beenfacilitating the process of formalising policies and procedures for the key and support functions ofthe port operations. Various audit assignments have been carried out to assess the effectivenessof the systems of internal controls. Three audit reports had been tabled during the year,highlighting weaknesses and recommendations to the Audit Committees and the management.Such weaknesses, however, have not resulted in any material misstatement or loss.

STATEMENT ON INTERNAL CONTROL(CONTD.)

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INTRODUCTION

THE DIRECTORS

Composition and Balance of The Board

Principal Responsibility of the Board

The Board of Directors of SURIA adopts and practices high standard of corporate governance inconducting the affairs and business of the Group. The Board views this as a fundamental part of itsresponsibilities to protect and enhance long term shareholders' value and the financial performance ofthe Group, while taking into account the interests of other stakeholders.

In tandem with this, the Board is fully committed to the maintenance of a high standard of corporategovernance by supporting and implementing the best practices and principles as laid out in theMalaysian Code on Corporate Governance and Chapter 15 of Bursa Malaysia Securities Berhad( BMSB ).

The Board comprises experienced Directors with a wide and varied range of expertise. The Boardcurrently has nine (9) Directors consisting of one (1) Non-Independent Non-Executive Chairman, one(1) Non-Independent Executive Group Managing Director, four (4) Non-Independent Non-ExecutiveDirectors and three (3) Independent Non-Executive Directors. This complies with BMSB'srequirements in terms of the number of independent non-executive directors in the composition of theBoard. The individual Directors bring a diverse range of skills and backgrounds. In view of thecomposition of the Board, and having regard to the caliber of the Directors and their range ofexperience, the Board believes that the interests of investors including the Group's minorityshareholders and the public are adequately protected and advanced.

There is also a clear division of responsibilities between the Chairman and Group Managing Director toensure that there is a balance of power and authority in managing the Group. The Group ManagingDirector reports to the Board and seeks approval from the Board on major matters as and whennecessary. The Chairman, having the necessary skills and experience to manage the Board,encourages healthy debate and ensures that resolutions are put to a vote. Hence, Board decisionsreflect the collective will of the Board and not the views of an individual or group.

The Board maintains effective control of the Group. This includes responsibility for reviewing andadopting the Management's proposals on Group's operational policies, strategic business and actionplans, including setting the annual budget for the Group. The Board's other primary functions includeregular overseeing of the Group's business operations and performance; and ensuring the existence ofappropriate processes and internal controls to measure and manage business risks in general andspecifically, operational, credit, market and liquidity risk.

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STATEMENT OFCORPORATE GOVERNANCE

44




Principal Responsibility of the Board

Supply of Information

Directors' Training

(CONTD.)

At each regularly scheduled meeting, the Board will review the financial and operational performance ofthe Group against the annual budget previously approved by the Board for that year. Specificresponsibilities have been delegated to the Board's Committees, all of which have their clearly definedterms of reference. These Committees have the authority to examine the issues tabled before themand thereafter report back to the Board with recommendations and comments.

The Committees established are as follows:

Nomination/Appointment CommitteeRemuneration CommitteeAudit Committee

For further information on the roles of the Committees, kindly refer to Board Committees onPages 48 and 49 of the Annual Report.

All scheduled Meetings held during the year were preceded by a formal notice issued by the GroupCompany Secretary in consultation with the Chairman. The Chairman ensures that all Directors havefull and timely access to information, with Board Papers distributed in advance of Meetings. The noticeof each Meeting is accompanied by the minutes of preceding Board Meetings, together with relevantinformation and documents for matters on the agenda. Senior Management of the Group may beinvited to attend Board Meetings to provide detail explanations and clarifications on issues that areconsidered during the Meetings.

The Directors have access to all information within the Group in furtherance of their duty. They alsohave access to the advice and services of the Senior Management of the Group and the Group CompanySecretary, and independent professionals as and when required. From time to time, the Directors arealso provided with the latest update on the industry developments in which the Group is engaged onand on the rules and regulations relating to the day to day running of the Group that are imposed by therelevant regulatory authorities.

As required under the Listing Requirements of the BMSB, all the Directors have successfully attendedthe Mandatory Accredition Programme and the Continuous Education Programme ( CEP ) organised

by BMSB and other relevant regulatory authorities and professional bodies. The status of eachDirector's continuous compliance with the CEP requirements is monitored and updated. The Groupensures that the newly appointed Directors undergo the Mandatory Accredition Programme and CEP asprovided for under the Listing Requirements. In addition, the Directors are also briefed during BoardMeetings by Group staff on any changes in laws and regulations that are relevant to the Group'soperations.

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STATEMENT OFCORPORATE GOVERNANCE(CONTD.)

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Directors' Training

Appointments To The Board

Re-Election of Directors

Directors' Remuneration

(CONTD.)

The Directors appointed have vast experience, knowledge, skills and expertise from both the privateand public sectors, thus able to exercise independent judgement on issues of strategy, performance,resources and standard of conduct which are relevant to the port industry and its related businessactivities.

The Nomination/Appointment Committee is responsible for making recommendations for anyappointment to the Board including those of its subsidiaries. In making these recommendations, theNomination/Appointment Committee considers the required mix of skills and experience that theDirectors should bring to the Board.

In accordance with the Group's Articles of Association, at least one third of the Directors (except for theManaging Director) are subject to re-election by rotation at each Annual General Meeting. All Directorsshall retire from office once at least in each three (3) years.

The Nomination/Appointment Committee is responsible to recommend to the Board candidates for alldirectorships to be approved by the shareholders or the Board.

At the forthcoming Annual General Meeting, the Directors listed in the Notice of Annual General Meetingat Page 1 are due to retire and being eligible, had offered themselves for re-election.

The Remuneration Committee proposes the Directors' remuneration before tabling to the Board prior toendorsement by the members during the Group's Annual General Meeting. The RemunerationCommittee and the Board also makes necessary reference to industry practice involving comparableorganisations in making the recommendation. The Remuneration Committee ensures that theexecutive directors do not participate in making decisions on their own remuneration packages.


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- 1 - -

Non-Executive Directors:

Non-Executive Directors:


Directors’ Remuneration (CONTD.)

The details of the remuneration of directors of the Group and of the Company for the year 2005 are setout below.

Group Company

2005

RM’000

2004

RM’000

2005

RM’000

2004

RM’000

Executive Directors:

Salaries 856 418 350 310

Other emoluments 124 297 54 284

Benefits-in-kind 100 78 39 78

1,080 793 443 672

Fees 535 454 403 355

Other emoluments 40 28 40 28

Benefits-in-kind 23 26 23 26

598 508 466 409

1,678 1,301 909 1,081

The number of Directors of the Group and of the Company whose total remuneration during the year fell

within the following bands is analysed below:

Number of Directors

Group Company

2005 2004 2005 2004

Executive Directors:

Below RM50,000

RM50,001

RM150,001 – RM300,000

RM400,001 – RM450,000

Below RM50,000

RM50,001 RM100,000

RM100,001 – RM200,000

RM250,000 – RM300,000

* During the previous year, one of the Executive Directors was redesignated to become Non-ExecutiveDirector.

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Total Directors’ remuneration

RM150,000–

–

2 1 - -

2 - - -

1 1* 1 1*

8 10 6 6

3 1 1 1

1 1 1 1

- 1 - 1

THE BOARD COMMITTEES

Nomination/Appointment Committee

In line with the recommendations made under the Malaysian Code on Corporate Governance and therequirement for public listed companies to comply with corporate governance under the BMSB ListingRequirements, SURIA had formed the following committees to assist the Management in its operationtowards achieving the optimal governance framework:

Nomination/Appointment CommitteeRemuneration CommitteeAudit Committee

The Board had also appointed Hj. Abdul Kadir Bin Hj. Mohd. Kassim, a Senior IndependentNon-Executive Director of the Group as a Reference Director to whom concerns regarding the runningof the Group may be conveyed.

The Group Managing Director also has the service of the Executive Management Committee

to refer to in performing his day-to-day works.

With the establishment of these committees, the Board is well informed of the running of the Group'sbusiness and the various areas of risk management.

The Nomination/Appointment Committee is responsible to recommend to the Board candidates for alldirectorships to be filled for their approval and for submission to the Annual General Meeting forre-appointments or re-elections. The Committee also recommends the appointment of the Chief

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Recommend to the Board, candidates for all directorships to be filled by the Board;

Consider, in making its recommendations, candidates for directorships proposed by the Group

Managing Director and, within the bounds of practicability, by any other Senior Officer or any

Director or Shareholder;

Recommend to the Board, Directors to fill the seats on Board Committees;

Examine the size of the Board with a view to determine the number of directors on the Board in

relation to its effectiveness;

Ensure that at every Annual General Meeting, one-third (1/3) of the Directors for the time being

shall retire from the office;

Review annually its required mix of skills and experience and other qualities, including core

competencies which Non-Executive Directors should bring to the Board and disclose the same in

the annual report; and

Assess annually the effectiveness of the Board as a whole, the committees of the Board and the

contribution of each individual Director based on the process implemented by the Board.

REMUNERATION COMMITTEE

AUDIT COMMITTEE

SHAREHOLDERS

Dialogue With Shareholders and Investors

The Remuneration Committee is responsible to review and recommend to the Board the Group'sremuneration policy including that of the Group's Executive Directors to ensure that their remunerationreflects the industry practice and their contributions to the Group's growth and profitability. Theremuneration policy also supports the Group's objectives and Shareholders' interests.

The determination of the remuneration of the Non-Executive Directors which are paid in the form ofmonthly fees and attendance allowance is decided by the General Meeting of members based on therecommendation of the Board after making prior reference to industry practice involving comparableorganisation.

The Audit Committee, which was established as early as in 1996, meets with the External and theInternal Auditors at least 4 times annually to discuss the financial statements and their audit findings.It also meets with the External Auditors whenever it deems necessary.

The minutes of the Audit Committee meetings are formally tabled to the Board for noting and for actionwhen necessary.

In addition to the duties and responsibilities set out under its terms of reference, the Audit Committeeacts as a forum for discussion of internal control issues and contributes to the Board's review of theeffectiveness of the Group's internal control and risk management systems. The Audit Committee alsoconducts a review of the internal audit function to ensure the adequacy of the scope, functions andresources of Finance Division and that it has the necessary authority to carry out its work impartially.

The activities of the Audit Committee during the year ended 31 December 2005 are set out under theAudit Committee Report.

The Group acknowledges the importance of communicating to its shareholders, investors and analysts.The Board also recognises the importance of transparency and accountability to its shareholders andinvestors. This is done through the Annual General Meeting or the Extraordinary General Meeting thatserves as the main communication channel and principal forum for dialogue with Shareholders, alsothrough the distribution of Annual Report to the shareholders and investors.

The Group also makes the necessary announcements through the Bursa Malaysia Securities Berhad( BMSB ) of any material information, corporate proposals, financial results and any other

announcement required by BMSB. In addition to various announcements made during the year, theGroup also holds dialogues and presentations to the investors and analysts where appropriate toexplain the Group's strategy, performance and major developments undertaken by the Group.

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Annual General Meeting

Suria's Website, Briefings and Road-Shows

ACCOUNTABILITY AND AUDIT

Financial Reporting

Annual General Meeting has been the principal forum for dialogue with shareholders. Notices are sentout to shareholders at least 21 days before the date of the meeting. At each Annual General Meeting,the Board presents the progress and performance of the business and encourages the shareholders toparticipate in the question and answer session. The Chairman addresses the shareholders on theGroup's operation for the financial year and outlines the prospects of the Group for the subsequentfinancial year. A press conference is held immediately after the Annual General Meeting where theChairman advises the press on the resolutions passed and answers questions raised by the press on theGroup.

The Group ensures that any special business included in the Notice of Meeting will be accompanied by afull explanation of the effects of a proposed resolution in order to facilitate full understanding andevaluation of the issues by the shareholders.

The Group's External Auditors attend Annual General Meetings upon invitation and are available toanswer shareholder questions, where appropriate. Reasonable time is accorded for discussion at theAnnual General Meetings and the Group endeavors to ensure that questions and issues are given duedebate at the Annual General Meetings. All Meetings are recorded by the Group Company Secretary.Minutes of the Annual General Meetings are available for inspection at the registered office of theGroup.

The Group's Annual Report for year 2005, media releases, as well as market information are posted onthe Group's website, www.suriagroup.com.my. Going forward, the Group's website is expected to be akey source of information for the Group's shareholders and investors as it is planned to contain a widerange of useful information. In addition to convening General Meetings and the maintenance ofwebsite, the Group has and will continue with investor and analyst briefings and road-shows.

The Board is responsible for ensuring that the financial statements of the Group as reported in thequarterly announcements to BMSB and the Annual Report to Shareholders, are drawn up in accordancewith Companies Act, 1965 and applicable Approved Accounting Standards in Malaysia, and so as to givea true and fair view of the state of affairs of the Group as at the end of the reporting period.

The Audit Committee assists the Board in ensuring accuracy and adequacy of information by reviewingand recommending for adoption of information for disclosure.

The Statement of Directors' Responsibility for preparing the Annual Audited Financial Statementspursuant to Section 169 of the Companies Act, 1965 is set out on Page 60 of this Annual Report. R

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RESPONSIBILITY STATEMENTBY DIRECTORS

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RESPONSIBILITY STATEMENTBY DIRECTORS(CONTD.)

Internal Control

Relationship With Auditors

MATERIAL CONTRACT

IMPOSITION OF SANCTION/PENALT ON THE GROUPFOR THE FINANCIALYEAR ENDED 31 DECEMBER 2005

The Board are fully aware and acknowledged their responsibilities to maintain a sound system ofinternal control that covers not only the financial aspect but also the operation, risk management andcompliance control to safeguard Shareholders' investment and the Group's assets. The keymanagement personnel are tasked with responsibility to monitor, manage and provide reports to theBoard on compliance of procedures, the financial strength and the business activities of the Group.

An Internal Audit Function has been established to regularly review and appraise the effectiveness ofthe Group's system of internal controls. Audits are conducted based on operational, financial andadministrative controls and compliance to the Group's authority limits; policies and procedures;Securities Commission and BMSB's Listing Requirements; and other applicable laws and regulations.

The Group's Statement on Internal Control is set out on Pages 42 and 43 of this Annual Report.

The Board has appropriately established a formal and transparent relationship with the Group'sAuditors. The External Auditors has continued to report to members of the Group of their findings thatincluded as part of the Group's financial reports with respect to this year's audit on statutory financialstatements.

The Group has established a good working relationship with its auditors through the Audit Committeeand the Internal Audit Department. The Audit Committee has always maintained a professionalrelationship with the External Auditors by ensuring the Group taking the necessary action to addressthe key issues highlighted to the Group. Where necessary, Meetings with the External Auditors areheld. Under its terms of reference, the Audit Committee has express authority to communicate directlywith external and internal auditors. Meetings with external and internal auditors are held asappropriate to discuss the audit plan, audit findings and the financial statements. External Auditorsand Internal Auditors may, conversely, call for a meeting with the Audit Committee to discuss issuesrelating to the financial statements and other related matters. Other Directors and Senior Managementof the Group attend the Audit Committee Meetings upon invitation.

The Audit Committee also reviews the appointment of the Group's External Auditors and the feespayable to them on an annual basis. Whilst the External Auditors may be appointed by the Company orGroup to provide services in relation to non-audit matters, the relationship with the External Auditors ismonitored to ensure that their impartiality and independence remains unquestionable.

The detailed Audit Committee Report is set out in Pages 36 to 41 of this Annual Report.

There was no material contract entered into by the Group involving the Directors' and majorshareholders' interest subsisting at the end of the year.

There was no sanction o penalt imposed on the Group, Board Members and Management for thefinancial year ended 31 December 2005.

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51




The ICT support to port operations

S U R I A C A P I T A L H O L D I N G S B E R H A D

( C O M P A N Y N :O 9 6 8 9 5 - W )

Directors’ Report and Audited Financial Statements

31 December 2005


Laporan Tahunan | Annual Repor t2005Suria Capital Holdings Berhad(96895-W)

Laporan Tahunan | Annual Repor t2005

S CURIA APITAL HOLDINGS BERHAD(Company No: 96895-W)

Audited Financial Statements and Other Financial Information

DirectorsTan Sri Ibrahim Bin MenudinDatuk Ismail Bin Awang BesarDatuk Dr. Mohd Yaakub Hj. Johari, J.P.Datuk Hj. Abu Bakar Hj. AbasTuan Hj. Abdul Kadir Bin Hj. Mohd KassimDatuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P.Datuk Filik Bin Madan @ EsongMohd Hasnol Bin AyubDatuk Dr. Hj. Patawari Bin Hj. Patawe

SecretaryMohd Hanan Bin Ramli (LS 005860)

AuditorsErnst & Young

BankersAlliance Bank Malaysia BerhadAmBank Berhad

Index Pages

Directors’Report 55 - 59

Statement by Directors

Statutory Declaration by Officer

Report of the Auditors

Income Statements 63

Balance Sheets 64 - 65

Statements of Changes in Equity

Cash Flow Statements

Notes to the Financial Statements

54

60

60

61 - 62

66

67 - 68

69 - 107

S CURIA APITAL HOLDINGS BERHAD(Company No: 96895-W)(Incorporated in Malaysia)

Directors’Report

The directors have pleasure in presenting their report together with the audited financial statements of theGroup and of the Company for the financial year ended 31 December 2005.

PrincipalActivities

The principal activities of the Company are investment holding, property development and those ofengineering contractor.

The principal activities of the subsidiaries are investment holding, property development, operation of portsin Sabah and provision of other related services.

There have been no significant changes in the nature of these activities during the financial year.

ResultsGroup

RM’000Company

RM’000

Profit for the year 40,040 4,484

There were no material transfers to or from reserves or provisions during the financial year other than asdisclosed in the statements of changes in equity.

In the opinion of the directors, the results of the operations of the Group and of the Company during thefinancial year were not substantially affected by any item, transaction or event of a material and unusualnature.

Significant Event

On 5 February 2005, Sabah Ports Sdn. Bhd. (“SPSB”) entered into a loan agreement with the Sabah PortsAuthority (“SPA”), to secure a loan facility of RM193 million from SPA. This loan to SPSB is made inpursuant to the Loan Agreement made between the Government of Malaysia and SPA dated 31 December2004, wherein, the Government of Malaysia has agreed to make available a sum of RM193 million to SPA tobe on-lend to SPSB for the purpose of part financing the purchase of cargo handling equipment andconstruction of the Sapangar Bay Container Terminal.

During the current financial year, SPSB has since drawndown amounts totalling RM147 million. Theprincipal terms of the loan are disclosed in Note 31.




55

S CURIA APITAL HOLDINGS BERHAD(Company No: 96895-W)(Incorporated in Malaysia)Directors’Report

Dividends

The amount of dividends paid by the Company since 31 December 2004 were as follows:

RM’000

Interim dividend of 1% less 28% taxation on566,655,984 ordinary shares, declared on28 May 2005 and paid on 8 July 2005 4,080

Pursuant to a resolution of the Board of Directors on 24 February 2006, a final dividend in respect of thefinancial year ended 31 December 2005, of 1% less 28% taxation on 566,655,984 ordinary shares,amounting to a dividend payable of RM4,080,000 (0.72 sen net per ordinary share) will be proposed forshareholders’approval at the forthcoming Annual General Meeting. The financial statements for the currentfinancial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will beaccounted for in equity as an appropriation of retained profits in the financial year ending 31 December2006.

Directors

The names of the directors of the Company in office since the date of the last report and at the date of thisreport are:

Tan Sri Ibrahim Bin MenudinDatuk Ismail Bin Awang BesarDatuk Dr. Mohd Yaakub Hj. Johari, J.P.Datuk Hj. Abu Bakar Hj. AbasTuan Hj. Abdul Kadir Bin Hj. Mohd KassimDatuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P.Datuk Filik Bin Madan @ EsongMohd Hasnol Bin AyubDatuk Dr. Hj. Patawari Bin Hj. Patawe




56





Directors (Contd.)

In accordance with Articles 89 of the Company’s Articles of Association, Tan Sri Ibrahim Bin Menudin,Tuan Hj. Abdul Kadir Bin Hj. Mohd Kassim and Datuk Anthony Lai Vai Ming @ Lai Kheng Ming, J.P.retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

In accordance with Articles 86 of the Company’s Articles of Association, Datuk Hj. Abu Bakar Hj. Abas, thefull time Managing Director who was appointed with effect from 1 February 2004, shall not be subject toretirement by rotation while he continues to hold office of the Managing Director.

Directors’Benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement towhich the Company was a party, whereby the directors might acquire benefits by means of the acquisition ofshares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit(other than benefits included in the aggregate amount of emoluments received or due and receivable by thedirectors as shown in Note 7 to the financial statements or the fixed salary of a full-time employee of theCompany) by reason of a contract made by the Company or a related corporation with any director or with afirm of which he is a member, or with a company in which he has a substantial financial interest.

Directors’Interests

According to the register of directors’shareholdings, the interests of directors in office at the end of thefinancial year in shares in the Company and its related corporations during the financial year were asfollows:

Number of Ordinary Shares of RM1 EachAt At

1.1.2005 Acquired Disposed 31.12.2005

The CompanyDirect interest in ordinary shares

Datuk Hj. Abu Bakar Hj. Abas 115,000 - - 115,000Mohd Hasnol Bin Ayub 5,000 - - 5,000

57


Directors’Interests (Contd.)

None of the other directors in office at the end of the financial year had any interest in shares in theCompany or its subsidiary companies during the financial year.

Other Statutory Information

a) Before the income statements and balance sheets of the Group and of the Company were made out, thedirectors took reasonable steps:

i) to ascertain that proper action had been taken in relation to the writing off of bad debts and themaking of provision for doubtful debts and satisfied themselves that all known bad debts had beenwritten off and that adequate provision had been made for doubtful debts; and

ii) to ensure that any current assets which were unlikely to realise their value as shown in theaccounting records in the ordinary course of business had been written down to an amount whichthey might be expected so to realise.

b) At the date of this report, the directors are not aware of any circumstances which would render:

i) the amount written off for bad debts or the amount of the provision for doubtful debts in thefinancial statements of the Group and the Company inadequate to any substantial extent; and

ii) the values attributed to the current assets in the financial statements of the Group and of theCompany misleading.

c) At the date of this report, the directors are not aware of any circumstances which have arisen whichwould render adherence to the existing method of valuation of assets or liabilities of the Group and ofthe Company misleading or inappropriate.

d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with inthis report or the financial statements of the Group and of the Company which would render adherenceto the existing method of valuation of assets or liabilities of the Group and of the Company misleadingor inappropriate.




58




S CURIA APITAL HOLDINGS BERHAD

(Company No: 96895-W)

(Incorporated in Malaysia)

Directors’ Report

Other Statutory Information (Contd.)

e) As at the date of this report, there does not exist:

i) any charge on the assets of the Group and of the Company which has arisen since the end of the

financial year which secures the liabilities of any other person; or

ii) any contingent liability of the Group and of the Company which has arisen since the end of the

financial year.

f) In the opinion of the directors:

i) no contingent or other liability has become enforceable or is likely to become enforceable within

the period of twelve months after the end of the financial year which will or may affect the ability

of the Group and of the Company to meet their obligations when they fall due other than those as

disclosed in the notes to the financial statements; and

ii) no item, transaction or event of a material and unusual nature has arisen in the interval between

the end of the financial year and the date of this report which is likely to affect substantially the

results of the operations of the Group and of the Company for the financial year in which this

report is made.

Auditors

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors

UK HJ. ABU BAKAR HJ. ABASTAN SRI IBRAHIM BIN MENUDIN DAT

Kota Kinabalu, Malaysia

28 March 2006.

59

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Statement by Directors

Pursuant to Section 169(15) of the Companies Act, 1965

Signed on behalf of the Board in accordance with a resolution of the directors

TAN SRI IBRAHIM BIN MENUDIN DATUK HJ. ABU BAKAR HJ. ABAS


Statutory Declaration

Pursuant to Section 169(16) of the Companies Act, 1965

Subscribed and solemnly declared by

the abovenamed WONG LEE KEN

at Kota Kinabalu in the State of Sabah

on 28 March 2006.

WONG LEE KEN

Before me -

28 March 2006.




60

We, TAN SRI IBRAHIM BIN MENUDIN and DATUK HJ. ABU BAKAR HJ. ABAS, being two of the

directors of SURIA CAPITAL HOLDINGS BERHAD, do hereby state that, in the opinion of the

directors, the accompanying financial statements set out on pages 63 to 107 are drawn up in

accordance with the provisions of the Companies Act, 1965 and applicable MASB Approved

Accounting Standards in Malaysia so as to give a true and fair view of the financial position of the

Group and of the Company at 31 December 2005 and of the results and the cash flows of the Group

and of the Company for the year then ended.

I, WONG LEE KEN, being the officer primarily responsible for the financial management of SURIA

CAPITAL HOLDINGS BERHAD, do solemnly and sincerely declare that the accompanying

financial statements set out on pages 63 to 107 are in my opinion 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.

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Report of the Auditors to the Members of



We have audited the financial statements set out on pages 63 to 107. These financial statements are 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 contents of this report.

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by the directors, as well as evaluating the overall

presentation of the financial statements. We believe that our audit provides a reasonable basis for our

opinion.

In our opinion:

a) the financial statements have been properly drawn up in accordance with the provisions of the

Companies Act, 1965 and applicable MASB Approved Accounting Standards in Malaysia so as to give

a true and fair view of:

i) the financial position of the Group and of the Company at 31 December 2005 and of the results

and the cash flows of the Group and of the Company for the year then ended; and

ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial

statements; and

b) the accounting and other records and the registers required by the Act to be kept by the Company and by

its subsidiaries of which we have acted as auditors have been properly kept in accordance with the

provisions of the Act.

61

Report of the Auditors to the Members of



We are satisfied that the financial statements of the subsidiaries that have been consolidated with the

financial statements of the Company 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 auditors’ report on the financial statements of the subsidiaries were not subject to any qualification

material to the consolidated financial statements and did not include any comment required to be made under

Section 174(3) of the Act.

ERNST & YOUNG CHONG YEW HOONG

AF: 0039 1502/04/07(J)

Chartered Accountants Partner


28 March 2006.




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Income StatementsFor the Year Ended 31 December 2005

Group CompanyNote 2005

RM’000

2004As Restated

RM’000

2005

RM’000

2004As Restated

RM’000

Revenue 4 161,400 71,952 22,173 22,337Cost of sales 5 (84,004) (37,342) (9,181) (15,036)

Gross profit 77,396 34,610 12,992 7,301Other operating income 7,382 1,903 161 386Other operating expenses (5,246) (1,436) - -Administrative expenses (17,078) (11,608) (6,553) (6,710)

Profit from operations 6 62,454 23,469 6,600 977Finance costs 9 (55) (3) (18) (3)Share of results of associate - (9) - -

Profit before taxation 62,399 23,457 6,582 974Taxation 10 (21,466) (7,086) (2,098) (642)

Profit after taxation 40,933 16,371 4,484 332Minority interests (893) (5) - -

Profit for the year 40,040 16,366 4,484 332

Earnings per ordinaryshare (sen):

Basic 11 7.07 2.89

Diluted 7.07 2.89

The accompanying notes form an integral part of the financial statements.

63


Balance SheetsAs at 31 December 2005


RM’000

2004As Restated

RM’000

2005

RM’000

2004As Restated

RM’000Non-Current AssetsProperty, plant and equipment 12 307,261 178,024 33,676 24,938Investments in subsidiaries 13 - - 199,650 100,410Investment in associate 14 391 391 - -Intangible assets 15 110,185 115,904 - -Land held for development 16 31,113 32,153 31,113 31,266Loan to a subsidiary company 17 - - - 90,872

448,950 326,472 264,439 247,486

Current AssetsInventories 18 1,502 5,557 - 2,840Project development costs 19 2,761 - 1,068 -Trade receivables 20 14,100 11,919 4,920 6,039Other receivables 21 33,398 12,506 9,709 9,035Amount due from associate 22 - 519 - 519Marketable securities 23 15,666 14,282 14,159 14,282Fixed deposits withlicensed banks 24 158,438 108,002 57,236 63,896

Cash and bank balances 25 11,396 5,217 3,389 1,138

237,261 158,002 90,481 97,749

Current LiabilitiesTrade payables 26 16,655 6,681 4,561 -Other payables 27 33,007 24,542 6,224 1,681Amount due to Sabah PortsAuthority 28 19,600 87,398 - -Amount due to associate 22 198 - 198 -Hire purchase and financelease payables 29 1,177 21 7 21

Tax payable 1,661 5,357 - -

72,298 123,999 10,990 1,702

Net Current Assets 164,963 34,003 79,491 96,047

613,913 360,475 343,930 343,533




64




S CURIA APITAL HOLDINGS BERHAD(Company No: 96895-W)Balance Sheets


RM’000

2004As Restated

RM’000

2005

RM’000

2004As Restated

RM’000

Financed By:Share capital 30 566,656 566,656 566,656 566,656Share premium 131,884 131,884 131,884 131,884Accumulated losses (303,393) (339,353) (354,610) (355,014)

Shareholders’equity 395,147 359,187 343,930 343,526Minority interests 1,251 195 - -

396,398 359,382 343,930 343,526

Amount due to Sabah PortsAuthority 28 59,267 - - -Loan from Sabah PortsAuthority 31 149,421 - - -Hire purchase and financelease payables 29 4,769 7 - 7

Deferred tax liabilities

Non-current liabilities 217,515 1,093

613,913 360,475 343,930 343,533


32 4,058 1,086 - -

65

- 7


Statements of Changes in EquityFor the Year Ended 31 December 2005

Note

ShareCapital

RM’000

SharePremiumRM’000

AccumulatedLosses

RM’000Total

RM’000

Group

At 1 January 2004 566,656 131,884 (355,719) 342,821

Profit for the year - - 16,366 16,366

At 31 December 2004 566,656 131,884 (339,353) 359,187

Profit for the year - - 40,040 40,040Dividends 33 - - (4,080) (4,080)

At 31 December 2005 566,656 131,884 (303,393) 395,147

Company

At 1 January 2004 566,656 131,884 (355,346) 343,194

Profit for the year - - 332 332

At 31 December 2004 566,656 131,884 (355,014) 343,526

Profit for the year - - 4,484 4,484Dividends 33 - - (4,080) (4,080)

At 31 December 2005 566,656 131,884 (354,610) 343,930





66




67


Cash Flow StatementsFor the Year Ended 31 December 2005

Group Company2005

RM’000

2004As Restated

RM’000

2005

RM’000

2004As Restated

RM’000

Cash Flows From Operating ActivitiesProfit before taxation 62,399 23,457 6,582 974

Adjustments for:Amortisation of goodwill on business acquisition

157 52 - -Amortisation of ports concession rights 3,666 1,250 - -Bad debts written off 2 2 - 2Depreciation of property, plant andequipment 9,084 2,966 587 353

Finance costs 55 3 18 3Gain on disposal of equipment (126) (144) (110) (144)(Gain)/loss on disposal of marketablesecurities (28) 57 (28) 57

Interest income (3,481) (5,849) (1,786) (5,530)Plant and equipment scrapped 331 - - -Provision for diminution in valueof marketable securities 248 35 248 35

(Reversal)/provision for doubtful debts (277) 254 - -Share of results of associate - 9 - -

Operating profit/(loss) before workingcapital changes 72,030 22,092 5,511 (4,250)

Changes in working capital:Decrease in inventories 4,208 9,151 2,993 11,867(Increase)/decrease in receivables (20,739) 52,356 588 (6,153)Increase in project development costs (1,874) (887) (1,068) -Increase in marketable securities (1,604) (688) (97) (688)Increase/(decrease) in payables 14,385 115,636 9,104 (1,284)

Cash generated from/(used in) operationsTax paidTax refund

66,406 197,660 17,031 (508)(23,239) (1,501) (3,127) (1,501)

886 1,370 886 1,370

Net cash generated from/(used in) operatingactivities 44,053 197,529 14,790 (639)





68

S CURIA APITAL HOLDINGS BERHAD(Company No: 96895-W)Cash Flow Statements

Group Company2005

RM’000

2004As Restated

RM’000

2005

RM’000

2004As Restated

RM’000Cash Flows From Investing ActivitiesGoodwill arising from business acquisition - (117,206) - -Investment in associate - (400) - -Proceeds from issuance of shares to minorityinterest in subsidiaries - 190 - -

Payment of land held for development - (31,113) - (31,113)Investment in subsidiaries - - (9,240) (100,410)Purchase of property, plant and equipment (148,137) (180,014) (9,325) (24,317)Proceeds from disposal of equipment 7,718 149 110 149Interest received 3,481 5,849 1,786 5,530Repayments from/(advances to) subsidiaries - - 872 (22,401)Repayments from/(advances to) associate 717 (519) 717 (519)

Net cash use in investing activities (136,221) (323,064) (15,080) (173,081)

Cash Flows From Financing ActivitiesInterest paid (55) (3) (18) (3)Drawdowns of loan from Sabah PortsAuthority 147,000 - - -Drawdown of hire purchase 6,494 - - -Repayment of hire purchase and leasefinancing (576) (19) (21) (19)

Dividend paid (4,080) - (4,080) -

Net cash generated from/(used in) financingactivities 148,783 (22) (4,119) (22)

Net increase/(decrease) in cash and cashequivalents 56,615 (125,557) (4,409) (173,742)

Cash and cash equivalents at beginningof the year 113,219 238,776 65,034 238,776

Cash and cash equivalents at endof the year (Note 34) 169,834 113,219 60,625 65,034





69


Notes to the Financial Statements31 December 2005

1. Corporate Information

The principal activities of the Company are investment holding, property development and those ofengineering contractor.

The principal activities of the subsidiaries are investment holding, property development, operation of portsin Sabah and provision of other related services.

There have been no significant changes in the nature of these activities during the financial year.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on theMain Board of Bursa Malaysia Securities Berhad. The registered office and principal place of business issituated at Lot 8CF 01-02, 8 th Floor, Block C, Kompleks Karamunsing, Km 2.4, Jalan Tuaran, 88300 KotaKinabalu, Sabah.

The number of employees in the Group and in the Company at the end of the financial year were 890 (2004:828) and 46 (2004: 24) respectively.

The financial statements were authorised for issue by the Board of the Directors in accordance with aresolution of the directors on 28 March 2006.

2. Significant Accounting Policies

a) Basis of Preparation

The financial statements of the Group and of the Company have been prepared under the historicalcost convention and comply with the provisions of the Companies Act, 1965 and applicable MASBApproved Accounting Standards in Malaysia.

b) Basis of Consolidation

i) Subsidiaries

The consolidated financial statements include the financial statements of the Company and all itssubsidiaries. Subsidiaries are those companies in which the Group has a long term equityinterest and where it has power to exercise control over the financial and operating policies so asto obtain benefits therefrom.




70

S CURIA APITAL HOLDINGS BERHAD(Company No: 96895-W)Notes to the Financial Statements

2. Significant Accounting Policies (Contd.)

b) Basis of Consolidation (Contd.)

i) Subsidiaries (Contd.)

Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisitionmethod of accounting, the results of the subsidiaries acquired or disposed off during the financialyear are included in the consolidated income statement from the effective date of acquisition orup to the effective date of disposal, as appropriate. The assets and liabilities of the subsidiariesare measured at their fair values at the date of acquisition and these values are reflected in theconsolidated balance sheet.

The difference between the cost of an acquisition and the fair value of the Group’s share of thenet assets of the acquired subsidiary at the date of acquisition is included in the consolidatedbalance sheet as goodwill or negative goodwill arising on consolidation.

Intra-group transactions, balances and resulting unrealised gains are eliminated on consolidationand the consolidated financial statements reflect external transactions only. Unrealised losses areeliminated on consolidation unless costs cannot be recovered.

The gain or loss on disposal of a subsidiary is the difference between the net disposal proceedsand the Group’s share of its net assets together with any unamortised balance of goodwill andexchange differences.

Minority interests in the consolidated balance sheet consist of the minorities’share of the fairvalue of the identifiable assets and liabilities of the acquiree as at acquisition date and theminorities share of movements in the acquiree’s equity since then.

ii) Associates

Associates are those entities in which the Group exercises significant influence but not control,through participation in the financial and operating policy decisions of the entities.




71



b) Basis of Consolidation (Contd.)

ii) Associates (Contd.)

Investments in associates are accounted for in the consolidated financial statements by the equitymethod of accounting based on the audited or management financial statements of the associates.Under the equity method of accounting, the Group’s share of profits less losses of associatesduring the financial year is included in the consolidated income statement. The Group’s interestin associates is carried in the consolidated balance sheet at cost plus the Group’s share of post-acquisition retained profits or accumulated losses and other reserves.

Unrealised gains on transactions between the Group and the associates are eliminated to theextent of the Group’s interest in the associates . Unrealised losses are eliminated unless costcannot be recovered.

c) Investments in Subsidiaries and Associates

The Company’s investments in subsidiaries and associates are stated at cost less impairment losses.The policy for the recognition and measurement of impairment losses is in accordance with Note 2(q).

On disposal of such investments, the difference between the net disposal proceeds and their carryingamount is recognised in the income statements.

d) Property, Plant and Equipment and Depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.The policy for the recognition and measurement of impairment losses is in accordance with Note 2(q).

Leasehold lands are depreciated over the leases period of 99 years.




72



d) Property, Plant and Equipment and Depreciation (Contd.)

Depreciation of property, plant and equipment is provided for on a straight line basis to write off thecost of each asset to its residual value over the estimated useful life, at the following annual rates:

Buildings 3.33%Wharves and jetties 3.33%Cargo handling equipment 5% to 10%Motor vehicles, furniture and equipment 10% to 40%Office renovations 20%

Upon the disposal of an item of property, plant or equipment, the difference between the net disposalproceeds and the net carrying amount is recognised in the income statements.

With effect from the current financial year, the Group changed the annual depreciation rate for cargohandling equipment from 6.67% to rates ranging from 5.00% to 10.00% as to better reflect theirestimated useful lives. The effect on the financial statements of this change in accounting estimate isnot material.

e) Land Held for Development

Land held for development consists of land held for future development where no significantdevelopment has been undertaken, and is stated at cost. Cost includes cost of land and attributabledevelopment expenditure. Such assets are classi fied as development properties when significantdevelopment works have been undertaken and the development is expected to be completed within thenormal operating cycle.

f) Goodwill on business acquisition

Goodwill represents the excess of the cost of the acquisition over the fair values of the net identifiableassets and liabilities acquired and is stated at cost less accumulated amortisation and impairmentlosses. An impairment loss is also recognised when the Directors are of the view that there is adiminution in its value which is other than temporary.

Goodwill is amortised on a straight line basis over its estimated useful life of 30 years.




73



g) Port Concession Rights

Port concession rights represent the excess of the ascribed value of port operations paid by the Groupover the fair values of the Group’s share of the identified movable assets and liabilities acquired fromthe Sabah Ports Authority pursuant to the Privatisation Agreement with the Sabah State Governmentand Sabah Ports Authority in September 2003 (“Privatisation Agreement”). The ascribed value of portoperations inclusive of the port undertakings and existing movable assets is determined based on anindependent valuation carried out by an appointed consultant. The valuation was based on “as iswhere is”basis using the Discounting Cash Flow method of valuation and at a discount factor of11.5%.

Port concession rights is amortised and charged to the income statements on a straight line basis overthe port concession period of 30 years.

Port concession rights is stated at cost less accumulated amortisation and impairment losses.

h) Inventories

i) Completed propertiesCompleted properties are stated at the lower of cost and net realisable value. Cost isdetermined on the specific identification basis and includes costs of land, construction andappropriate development overheads. Net realisable value represents the estimated selling pricein the ordinary course of business less the estimated costs necessary to make the sale.

ii) Spare parts and consumable storesSpare parts and consumable stores are stated at the lower of cost (determined on the weightedaverage basis) and net realisable value. Cost includes the purchase price of inventoriesacquired and other attributable costs in bringing the inventories to their present locations andconditions. Net realisable value is the estimated selling price in the ordinary course ofbusiness less the estimated costs necessary to make the sale.

i) Project Development Costs

Where the outcome of a construction contract can be reliably estimated, contract revenue and contractcosts are recognised as revenue and expenses respectively by using the stage of completion method.The stage of completion is measured by reference to the proportion of contract costs incurred for workperformed to date to the estimated total contract costs.




74



i) Project Development Costs (Contd.)

Where the outcome of a construction contract cannot be reliably estimated, contract revenue isrecognised to the extent of contract costs incurred that it is probable will be recoverable. Contractcosts are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss isrecognised as an expense immediately.

When the total of costs incurred on construction contracts plus, recognised profits (less recognisedlosses), exceeds progress billings, the balance is classified as amount due from customers on contractswhen progress billings exceed costs incurred plus, recognised profits (less recognised losses), thebalance is classified as amount due to customers on contracts.

j) Cash and Cash Equivalents

For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and atbank, deposits at call and short term highly liquid investments which have an insignificant risk ofchanges in value, net of outstanding bank overdrafts, if any.

k) Leases

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks andrewards incident to ownership. All other leases are classified as operating leases.

i) Finance leasesAssets acquired by way of hire purchase or finance leases are stated at an amount equal to thelower of their fair values and the present value of the minimum lease payments at the inception ofthe leases, less accumulated depreciation and impairment losses. The corresponding liability isincluded in the balance sheet as borrowings. In calculating the present value of the minimumlease payments, the discount factor used is the interest rate implicit in the lease, when it ispracticable to determine; otherwise, the Group’s incremental borrowing rate is used.




75



k) Leases (Contd.)

i) Finance leases (Contd.)Lease payments are apportioned between the finance costs and the reduction of the outstandingliability. Finance costs, which represent the difference between the total leasing commitments andthe fair value of the assets acquired, are recognised as an expense in the income statements overthe term of the relevant lease so as to produce a constant periodic rate of charge on the remainingbalance of the obligations for each accounting period.

The depreciation policy for leased assets is consistent with that for depreciable property, plant andequipment as described in Note 2(d).

ii) Operating leasesOperating lease payments are recognised as an expense in the income statements on a straight linebasis over the term of the relevant lease.

l) Provisions for Liabilities

Provisions for liabilities are recognised when the Group has a present obligation as a result of a pastevent and it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed ateach balance sheet date and adjusted to reflect the current best estimate. Where the effect of the timevalue of money is material, the amount of a provision is the present value of the expenditure expectedto be required to settle the obligation.

m) Income Tax

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




76



m) Income Tax (Contd.)

Deferred tax is provided for, using the liability method, on temporary differences at the balance sheetdate between the tax bases of assets and liabilities and their carrying amounts in the financialstatements. In principle, deferred tax liabilities are recognised for all taxable temporary differences anddeferred tax assets are recognised for all deductible temporary differences, unused tax losses andunused tax credits to the extent that it is probable that taxable profit will be available against which thedeductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset isrealised or the liability is settled, based on tax rates that have been enacted or substantively enacted atthe balance sheet date. Deferred tax is recognised in the income statements, except when it arises froma transaction which is recognised directly in equity, in which case the deferred tax is also recogniseddirectly in equity.

n) Employee Benefits

i) Short term benefitsWages, salaries, bonuses and social security contributions are recognised as an expense in theyear in which the associated services are rendered by employees of the Group. Short termaccumulating compensated absences such as paid annual leave are recognised when services arerendered by employees that increase their entitlement to future compensated absences, and shortterm non-accumulating compensated absences such as sick leave are recognised when theabsences occur.

ii) Defined contribution plansAs required by law, companies in Malaysia make contributions to the Employees’ProvidentFund (“EPF”). Such contributions are recognised as an expense in the income statement asincurred.




77



o) Revenue Recognition

Revenue is recognised when it is probable that the economic benefits associated with the transactionwill flow to the Group and the amount of the revenue can be measured reliably.

i) Sale of completed propertiesRevenue relating to the sale of completed properties is recognised net of discounts upon thetransfer of risks and rewards.

ii) Revenue from port operationsRevenue from port operations are recognised on an accrual basis when the services areperformed.

iii) Sale of goodsRevenue relating to sale of goods is recognised net of discounts upon the transfer of risks andrewards.

iv) Revenue from servicesRevenue from services rendered is recognised net of discounts as and when the services areperformed.

v) Interest incomeInterest income is recognised on a time proportion basis that reflects the effective yield on theasset.

vi) Dividend incomeDividend income is recognised when the right to receive payment is establish.

p) Foreign Currencies

Transactions in foreign currencies are initially recorded in Ringgit Malaysia at rates exchange ruling atthe date of transaction. At each balance sheet date, foreign currency monetary items are translated intoRinggit Malaysia at exchange rates ruling at that date. All exchange rate differences are taken to theincome statements.




78



p) Foreign Currencies (Contd.)

The principal exchange rates used for each respective unit of foreign currency ruling at the balancesheet date are as follows:

2005RM

2004RM

United States Dollars 3.81 3.80Singapore Dollars 2.29 2.19Euro 4.50Renminbi 0.48

q) Impairment of Assets

At each balance sheet date, the Group reviews the carrying amounts of its assets, to determine whetherthere is any indication of impairment. If any such indication exists, impairment is measured bycomparing the carrying values of the assets with their recoverable amounts. Recoverable amount is thehigher of net selling price and value in use, which is measured by reference to discounted future cashflows.

An impairment loss is recognised as an expense in the income statement immediately.

r) Financial Instruments

Financial instruments are recognised in the balance sheets when the Group has become a party to thecontractual provisions of the instrument.

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

i) Marketable securitiesMarketable securities are carried at the lower of cost and market value, determined on anaggregate basis. Cost is determined on the weighted average basis while market value isdetermined based on quoted market values. Increases or decreases in the carrying amount ofmarketable securities are recognised in the income statement. On disposal of marketablesecurities, the difference between net disposal proceeds and the carrying amount is recognisedin the income statement.

--




79



r) Financial Instruments (Contd.)

ii) ReceivablesReceivables are carried at anticipated realisable values. Bad debts are written off whenidentified. An estimate is made for doubtful debts based on a review of all outstanding amountsat the balance sheet date.

iii) PayablesPayables are stated at cost which is the fair value of the consideration to be paid in the future forgoods and services received.

iv) Equity instrumentsOrdinary shares are classified as equity. Dividends on ordinary shares are recognised in equityin the period in which they are declared.

v) Interest-bearing borrowingsInterest-bearing borrowings are recorded at the amount of proceeds received, net of transactioncosts.

Borrowing costs directly attributable to the acquisition, construction or production of qualifyingassets, which are assets that necessarily take a substantial period of time to get ready for theirintended use or sale, are capitalised as part of the cost of those assets, until such time as theassets are substantially ready for their intended use or sale. The amount of borrowing costseligible for capitalisation is determined by applying a capitalisation rate which is the weightedaverage of the borrowing costs applicable to the Company’s borrowings that are outstandingduring the financial year, other than borrowings made specifically for the purpose of acquiringanother qualifying asset. For borrowings ma de specifically for the purpose of acquiringqualifying asset, amount of borrowing costs eligible for capitalisation is the actual borrowingcosts incurred on that borrowing during the period less any investment income on the temporaryinvestment of funds drawndown from that borrowing facility.

All other borrowing costs are recognised as an expense in the income statement in the period inwhich they are incurred.




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3. Significant Event

On 5 February 2005, Sabah Ports Sdn. Bhd. (“SPSB”) entered into a loan agreement with the Sabah PortsAuthority (“SPA”), to secure a loan facility of RM193 million from SPA. This loan to SPSB is made inpursuant to the Loan Agreement made between the Government of Malaysia and SPA dated 31 December2004, wherein, the Government of Malaysia has agreed to make available a sum of RM193 million to SPA tobe on-lend to SPSB for the purpose of part financing the purchase of cargo handling equipment andconstruction of the Sapangar Bay Container Terminal.

During the current financial year, SPSB has since drawndown amount s totalling RM147 million. Theprincipal terms of the loan are disclosed in Note 31.

4. Revenue

Revenue of the Group and of the Company comprises:

Group Company2005

RM’0002004

RM’0002005

RM’0002004

RM’000

Management fees - - 4,620 1,200Sale of completed properties 3,780 15,124 3,780 15,124Sale of land 114 - 114 -Dividend income from quotedshares (gross) 13 17 13 17

Dividend income from unittrust funds 479 466 479 466

Dividend income received from asubsidiary - - 6,800 -

Revenue from railway project 4,386 - 4,386 -Rental income 195 - 195 -Fixed deposits interest income 1,786 5,530 1,786 5,530Distributor’s fees 3,324 - - -Equipment assembling fees 234 - - -Income from port operations- At wharves 129,581 45,110 - -- Anchorage 16,841 5,463 - -- Ferry terminal 667 242 - -

161,400 71,952 22,173 22,337




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5. Cost of Sales

Cost of sales represents cost of completed properties and inventories sold and cost of services rendered.

6. Profit from Operations

Group Company2005

RM’0002004

RM’0002005

RM’0002004

RM’000Profit from operations is statedafter charging/(crediting):

Amortisation of goodwill onbusiness acquisition 157 52 - -

Amortisation of port concessionrights 3,666 1,250 - -

Auditors’remuneration:- Statutory audit- Other services

96-

56284

25-

20254

Bad debts written off 2 2 - 2Depreciation of property, plantand equipment 9,084 2,966 587 353

Directors’remuneration (Note 7) 1,678 1,301 909 1,081Plant and equipment scrapped 331 - - -Interest income on fixed deposits (3,291) (5,849) (1,786) (5,530)Gain on disposal of equipment (126) (144) (110) (144)(Gain)/loss on disposal ofmarketable securities (28) 57 (28) 57

Hire of equipment (8) (2) - -Leasing of equipment 2,443 1,114 - -Leasing of port land 1,000 333 - -Professional fees paid/payable toan associate of the Group’sauditors 1 1 - -

Provision for diminution invalue of marketable securities 248 35 248 35

Rental income (1,966) - (195) -Rental of office equipment 10 - - -Rental of office premises 282 472 281 288(Reversal)/provision fordoubtful debts (277) 254 - -

Staff costs (Note 8) 36,964 13,142 1,855 2,247




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7. Directors’Remuneration

Group Company2005

RM’0002004

RM’0002005

RM’0002004

RM’000

Executive directors:Salaries 856 418 350 310Other emoluments 124 297 54 284Benefits-in-kind 100 78 39 78

1,080 793 443 672

Non-executive directors:Fees 535 454 403 355Other emoluments 40 28 40 28Benefits-in-kind 23 26 23 26

598 508 466 409

Total directors’remuneration 1,678 1,301 909 1,081

The number of directors of the Group and of the Company whose total remuneration during the year fellwithin the following bands is analysed below:

Number of directorsGroup Company

2005 2004 2005 2004Executive directors:Below RM50,000 - 1 - -RM50,001 - RM150,000 2 1 - -RM150,001 - RM300,000 2 - - -RM400,001 - RM450,000 1 1* 1 1*

Non-executive directors:Below RM50,000 8 10 6 6RM50,001 - RM100,000 3 1 1 1RM100,001 - RM200,000 1 1 1 1RM250,000 - RM300,000 - 1 - 1

* In previous year, one of the executive directors was redesignated to become a non-executive director.




83


8. Staff CostsGroup Company

2005RM’000

2004RM’000

2005RM’000

2004RM’000

Salaries, wages and allowances 32,560 11,742 1,444 1,975Employees’Provident Fundcontributions 3,789 1,259 279 194

SOCSO contributions 291 70 10 7Bonuses 324 71 122 71

36,964 13,142 1,855 2,247

9. Finance Costs

Interest expense on:Hire purchase/finance lease 55 3 18 3Borrowings from Sabah PortsAuthority 2,421 - - -

2,476 3 18 3Less: Interest expense capitalised

in port development andancillary facilitiesconstruction in-progress(Note 12) (2,421) - - -

55 3 18 3

10. Taxation

Tax expense for the year:Malaysian income tax onresults for the year 17,951 6,148 2,254 790

Deferred tax relating toorigination and reversal oftemporary differences (Note 32) 2,972 1,086 - -

Under/(over) provision inprior year 543 (148) (156) (148)

21,466 7,086 2,098 642

Income tax is calculated at the Malaysian statutory income tax rate of 28% (2004: 28%) of the estimatedassessable profit for the year.

Pursuant to Paragraph 2A, Schedule 1, Part 1 of the Income Tax Act, 1967, the income tax rate applicable tothe first RM500,000 of the chargeable income of two of the subsidiaries in respect of the financial year ended31 December 2005 is 20% as the said subsidiaries are a small and medium scale company.




84


10. Taxation (Contd.)

A reconciliation of the income tax expense applicable to profit before taxation at the statutory income tax rateto income tax expense at the effective income tax rate of the Group and of the Company is as follows:

Group Company2005

RM’0002004

RM’0002005

RM’0002004

RM’000

Profit before taxation 62,399 23,457 6,582 974

Taxation at Malaysian statutory tax rateof 28% (2004: 28%) 17,472 6,568 1,843 273

Effect of income subject tolower tax rate (80) - - -

Income not subject to tax (129) (184) (126) (184)Expenses not deductible for taxpurposes 3,591 1,992 477 637

Deferred tax not recognised ondeductible temporary differences 69 64 60 64

Effect of utilisation of capitalallowances brought forward - (1,206) - -

Under/(over) provision of incometax in prior year 543 (148) (156) (148)

Tax expense for the year 21,466 7,086 2,098 642

Tax losses are analysed as follows:Tax savings recognised during the

year arising from:Utilisation of current year taxlosses 243 768 243 768

Unutilised tax losses carried forward3,195 2,508 2,508 2,508

Unabsorbed capital allowances areanalysed as follows:Unabsorbed capital allowances

carried forward 2,138 1,486 1,664 1,486




85


11. Earnings Per Ordinary Share (Sen)

a) Basic

Basic earnings per ordinary share is calculated by dividing the profit for the year by the number ofordinary shares in issue during the financial year.

Group2005 2004

Profit for the year (RM’000) 40,040 16,366Number of ordinary shares in issue (’000) 566,656 566,656Basic earnings per ordinary share (sen) 7.07 2.89

b) Diluted

The Company has no dilutive potential ordinary shares.

12. Property, Plant and Equipment

*Leaseholdland andbuildingsRM’000

Wharvesand

jettiesRM’000

Cargohandling

equipmentRM’000

Motorvehicles,

furniture,equipment

andrenovation

RM’000

Portdevelopmentand ancillary

facilitiesconstructionin-progress

RM’000Total

RM’000

Group

CostAt 1.1.2005 25,702 28,623 20,336 13,945 93,559Additions 8,992 1,570 51,930 4,632 79,120 146,244Scrapped - - (152) (342) - (494)Reclassified - - - 527 (527) -Disposals - - (7,413) (634) - (8,047)

At 31.12.2005 34,694 30,193 64,701 18,128 172,152 319,868

182,165




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12. Property, Plant and Equipment (Contd.)

*Leaseholdland andbuildingsRM’000

Wharvesand

jettiesRM’000

Cargohandling

equipmentRM’000

Motorvehicles,

furniture,equipment

andrenovation

RM’000

Portdevelopmentand ancillary

facilitiesconstructionin-progress

RM’000Total

RM’000AccumulatedDepreciation

At 1.1.2005 8 422 1,058 2,653 - 4,141Charge for the year 120 1,276 2,986 4,702 - 9,084Scrapped - - (35) (128) - (163)Disposals - - - (455) - (455)

At 31.12.2005 128 1,698 4,009 6,772 - 12,607

Net Book ValueAt 31.12.2005 34,566 28,495 60,692 11,356 172,152 307,261

At 31.12.2004 25,694 28,201 19,278 11,292 93,559 178,024

Depreciationcharge for 2004 8 422 1,058 1,478 - 2,966

*Leasehold land and buildings

Leaseholdland

RM’000BuildingsRM’000

TotalRM’000

CostAt 1.1.2005 25,118 584 25,702Additions 300 8,692 8,992

At 31.12.2005 25,418 9,276 34,694

Accumulated DepreciationAt 1.1.2005 - 8 8Charge for the year - 120 120

At 31.12.2005 - 128 128

Net Book ValueAt 31.12.2005 25,418 9,148 34,566

At 31.12.2004 25,118 576 25,694




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Leaseholdland

RM’000Buildings

RM’000

Officeequipment

RM’000

Furnitureand office

renovationsRM’000

MotorvehiclesRM’000

TotalRM’000

Company

Cost

At 1.1.2005 - - 1,017 1,378 589 2,984Prior year’sadjustment 23,482 - - - - 23,482

Additions 300 8,450 302 269 4 9,325Disposals - - - - (413) (413)

At 31.12.2005 23,782 8,450 1,319 1,647 180 35,378

AccumulatedDepreciation

At 1.1.2005 - - 469 616 443 1,528Charge for the year - 95 143 315 34 587Disposals - - - - (413) (413)

At 31.12.2005 - 95 612 931 64 1,702

Net Book Value

At 31.12.2005 23,782 8,355 707 716 116 33,676

At 31.12.2004 23,482 - 548 762 146 24,938

Depreciationcharge for 2004 - - 100 230 23 353

The prior year’s adjustment is in respect of a reclassification from land held for development as referred to inNote 16.




88



During the year, the Group and the Company acquired property, plant and equipment with an aggregate costof RM146,243,793 (2004: RM180,014,581) and RM9,324,990 (2004: RM24,316,783) respectively of whichRM7,158,780 (2004: Nil) were acquired by means of hire purchase and finance lease arrangements andRM136,647,299 and RM9,264,890 (2004: RM180,014,581 and RM835,063) by cash payments respectively.

The net book value of equipment held under hire purchase and finance lease arrangements is RM6,767,991(2004: RM50,083).

Included in additions of port development and ancillary facilities construction in-progress for the year isinterest expense amounting to RM2,421,041 (2004: Nil) capitalised as disclosed in Note 9.

13. Investments in Subsidiaries

Company2005

RM’0002004

RM’000At cost:

Unquoted ordinary shares 109,650 100,410Irredeemable preferences shares 90,000 -

199,650 100,410

Details of the subsidiary companies, which are all incorporated in Malaysia, as at 31 December 2005 are asfollows:

Name of subsidiaries Principal activitiesEquity Interest

Held (%)2005 2004

Sabah Ports Sdn. Bhd. Provision of port and related servicesin Sabah 100 100

Suria Bumiria Sdn. Bhd. Property developer 100 100

SCHB EngineeringServices Sdn. Bhd.

Construction contractor, provision ofproject management and technicalsupport services. 100 100




89


13. Investments in Subsidiaries (Contd.)


Held (%)2005 2004

S.P. Satria Sdn. Bhd. Distributor of port cargo handlingequipment and related spare parts, andprovision of equipment maintenanceservices 70 70

Tricubes Suria Sdn. Bhd. Supply of customised IT systems andprovision of related technical services 60 60

14. Investment in Associate

Group2005

RM’0002004

RM’000

Unquoted shares at cost 400 400Share of post-acquisition reserves (9) (9)

391 391

The Group’s interests in the associate is analysed as follows:

Share of net assets 391 391Share of goodwill in associate - -

391 391Goodwill on acquisition - -

391 391

Share of capital commitments - -

Share of contingent liabilities - -




90


14. Investment in Associate (Contd.)

Details of the associated company, which is incorporated in Malaysia, as at 31 December 2005 are asfollows:


Held (%)2005 2004

Hikmat BumimajuSdn. Bhd.

Rehabilitation and refurbishment of railway tracks40 40

15. Intangible Assets

Intangible assets comprise:

a) Port Concession RightsGroup

2005RM’000

2004RM’000

Purchase consideration 127,221 127,221

Less: Net assets acquired from SPA 14,709 14,709Adjustment for increase in surplus of current assets

over current liabilities acquired 1,896 -

16,605 14,709

110,616 112,512

Less: AmortisationAt 1 January (1,250) -Amortisation for the year (3,666) (1,250)

(4,916) (1,250)

At 31 December 2005 105,700 111,262

b) Goodwill on BusinessAcquisition

At 1 January 4,642 4,694

Less: Amortisation for the year (157) (52)

At 31 December 4,485 4,642

Total 110,185 115,904




91


16. Land Held for DevelopmentGroup Company

2005

RM’000

2004As restated

RM’000

2005

RM’000

2004As restated

RM’000

Lands, at cost 31,113 54,649 31,113 54Prior year’s adjustment - (23,482) - 31,113

31,113 31,167 31,113 31,167Development expenditure - 986 - 99

31,113 32,153 31,113 31,266

The prior year’s adjustment is in respect of a reclassification of land not held for development and resale toleasehold land.

One parcel of the land with a carrying amount of RM31,113,280 (2004: RM31,113,280) is currently zonedunder industrial and the title to it is in the process of being issued by the relevant authorities.

17. Loan to a Subsidiary Company

The loan given to a subsidiary company in previous year was unsecured and interest-free. It was given inpursuant to the provisions of the Privatisation Agreement.

During the year, the loan to subsidiary company was converted into 90,000,000 Irredeemable PreferenceShares of RM1 each at par in the said subsidiary company as referred to in Note 13.

18. InventoriesGroup Company

2005RM’000

2004RM’000

2005RM’000

2004RM’000

At cost -

Completed properties - 2,840 - 2,840Spare parts 1,482 2,691 - -Consumable stores 20 26 - -

1,502 5,557 - 2,840

There were no inventories stated at net realisable value at 31 December 2005.




92


19. Project Development Costs

This represents preliminary costs of property development projects.

20. Trade ReceivablesGroup Company

2005RM’000

2004RM’000

2005RM’000

2004RM’000

Trade receivables 14,214 12,173 4,920 6,039Less: Provision for doubtful debts (114) (254) - -

14,100 11,919 4,920 6,039

Trade receivables amounting to RM5,794,030 (2004: RM4,987,751) are secured by cash deposits placed withthe Group or bank guarantees made in favour of the Group.

The Group’s normal trade credit term ranges from 28 days to 90 days. Other credit terms are assessed andapproved on a case-by-case basis.

The Group has no significant concentration of credit risk that may arise from exposures to a single debtor orgroups of debtors.

21. Other ReceivablesGroup Company

2005

RM’000

2004As

RestatedRM’000

2005

RM’000

2004As

RestatedRM’000

Contractors advances 1,625 2,496 - -Amounts due from subsidiaries - - - 2,223Sundry receivables 7,282 4,234 4,815 1,984Sundry deposits 22,144 4,202 3,202 3,290Prepayments 721 111 86 75Tax recoverable 1,626 1,463 1,606 1,463

33,398 12,506 9,709 9,035

In previous year, the amount due from subsidiaries was unsecured and interest-free.




93


21. Other Receivables (Contd.)

Included in sundry deposits for the Group is an amount of RM18,236,039 being advance payment for thepurchase of seven units of shutter carriers which were taken delivery of subsequent to the end of the financialyear by the subsidiary company concerned.

22. Amount Due from/(to) Associate

The amount due from/(to) associate is unsecured, interest-free and has no fixed terms of repayment.

23. Marketable SecuritiesGroup Company

2005RM’000

2004RM’000

2005RM’000

2004RM’000

At cost:

Shares quoted in Malaysia 386 609 386 609Unit trust funds quoted in Malaysia 15,589 13,734 14,082 13,734

15,975 14,343 14,468 14,343Provision for diminution in value ofmarketable securities (309) (61) (309) (61)

15,666 14,282 14,159 14,282

Market value:

Shares quoted in Malaysia 238 580 238 580Unit trust funds quoted in Malaysia 15,434 13,702 13,927 13,702

15,672 14,282 14,165 14,282

24. Fixed Deposits with Licensed Banks

Fixed deposits amounting to RM2,175,000 (2004: RM2,175,000) are held under lien by a licensed bank tosecure the issuance of a bank guarantee in favour of the Sabah Ports Authority as security for lease rental ofport land payable to it.

Fixed deposits amounting to RM4,000,000 (2004: Nil) are held under lien by a licensed bank to secure theissuance of a performance bond in favour of the Ministry of Transport as security for the railwayrehabilitation and refurbishment contract.




94


24. Fixed Deposits with Licensed Banks (Contd.)

The effective interest rates on fixed deposits for the financial year range from 2.8% to 3.00% per annum.The fixed deposits are renewable on a monthly basis.

25. Cash and Bank Balances

Group Company2005

RM’0002004

RM’0002005

RM’0002004

RM’000

Cash and bank balances 11,396 5,148 3,389 1,069Housing Development account witha licensed bank - 69 - 69

11,396 5,217 3,389 1,138

The Housing Development Account is maintained in accordance with Section 7(A) of the HousingDevelopers (Control and Licensing) Act, 1966 and therefore, restricted from use in other operations.

26. Trade Payables

The normal trade credit terms granted to the Group range from 30 days to 90 days.

27. Other Payables

Group Company2005

RM’0002004

RM’0002005

RM’0002004

RM’000

Amount due to a subsidiary - - 1,620 -Sundry payables 4,797 983 4,401 808Accruals and provisions 8,492 7,755 203 873Deposits received 527 696 - -Amounts due to contractors 18,739 6,099 - -Retention monies of contractors 452 9,009 - -

33,007 24,542 6,224 1,681

The amount due to a subsidiary is unsecured, interest-free and has no fixed terms of repayment.




95


28. Amount due to Sabah Ports Authority

Group2005

RM’0002004

RM’000Analysed as:- Due within 12 months 19,600 87,398- Due after 12 months 59,267 -

78,867 87,398

The amount due represents mainly of reimbursements payable to Sabah Ports Authority (SPA) in respect ofpayments of capital expenditure which a subsidiary company, Sabah Ports Sdn. Bhd. is obliged to incurpursuant to the terms of the Privatisation Agreement.

On 24 January 2006, the repayment of the amount due to SPA was restructured in the following manner:

i) immediate repayment of RM20 million, for which RM0.4 million has been settled as at 31 December2005;

ii) the balance of RM59 million is repayable over ten years commencing from the sixth year after the loanhas been restructured; and

iii) interest bearing at 4% per annum and is payable annually.

29. Hire Purchase and Finance Lease Payables

Group Company2005

RM’0002004

RM’0002005

RM’0002004

RM’000

Minimum lease payments:

Not later than 1 year 1,501 23 7 23Later than 1 year and not later than 2 years 1,493 7 - 7Later than 2 years and not later than 5 years 3,736 - - -

6,730 30 7 30Less: Future finance charges (784) (2) - (2)

Present value of finance lease liabilities 5,946 28 7 28




96


29. Hire Purchase and Finance Lease Payables (Contd.)

Group Company2005

RM’0002004

RM’0002005

RM’0002004

RM’000

Present value of finance lease liabilities:

Not later than 1 year 1,177 21 7 21Later than 1 year and not later than 2 years 1,245 7 - 7Later than 2 years and not later than 5 years 3,524 - - -

5,946 28 7 28

Analysed as:

Due within 12 months 1,177 21 7 21Due after 12 months 4,769 7 - 7

5,946 28 7 28

The hire purchase and finance lease liabilities bear interest at the balance sheet date at rates between 3.3% to4.7% (2004: 14%) per annum.

30. Share Capital

Number of OrdinaryShare of RM1.00 Each Amount

2005 2004 2005RM’000

2004RM’000

Authorised:At 31 December 800,000,000 800,000,000 800,000 800,000

Issued and fully paid:At 31 December 566,655,984 566,655,984 566,656 566,656




97


31. Loan from Sabah Ports Authority

Group2005

RM’0002004

RM’000Comprises:

Amounts drawndown 147,000 -Interest capitalised 2,421 -

149,421 -

On 5 February 2005, a subsidiary company, Sabah Ports Sdn. Bhd. (“SPSB”), entered into a loan agreementwith the Sabah Ports Authority (“SPA ”), to secure a loan facility of RM193 million from SPA. This loan toSPSB is made in pursuant to the Loan Agreement made between the Government of Malaysia and SPA dated31 December 2004, wherein, the Government of Malaysia has agreed to make available a sum of RM193million to SPA to be on-lend to SPSB for the purpose of part financing the purchase of cargo handlingequipment and construction of the Sapangar Bay Container Terminal.

The principal terms of the loan are as follows:

Repayment Over a period of ten years commencing from the sixth year after the date ofthe first drawdown; and

Interest Shall bear interest at 4% per annum and interest for the first five years afterthe date of first drawdown shall be capitalised.

32. Deferred Tax Liabilities

Group2005

RM’0002004

RM’000

At 1 January 1,086 -Recognised in income statements (Note 10) 2,972 1,086

At 31 December 4,058 1,086

Presented after appropriate offsetting as follows:

Deferred tax assets (31) -Deferred tax liabilities 4,089 1,086

4,058 1,086




98


32. Deferred Tax Liabilities (Contd.)

The components and movements of deferred tax liabilities and assets during the financial year prior tooffsetting are as follows:

Deferred Tax Assets of the Group:Property, Plant and

EquipmentRM’000

At 1 January 2005 -Recognised in income statements (31)

At 31 December 2005 (31)

Deferred Tax Liabilities of the Group:

At 1 January 2005 1,086Recognised in income statements 3,003

At 31 December 2005 4,089

Deferred tax assets have not been recognised in respect of the following items:

Group and Company2005

RM’0002004

RM’000

Unutilised business losses 2,508 2,508Unabsorbed capital allowances 1,693 1,510Taxable temporary differences (454) (530)

3,747 3,488

Deferred tax assets have not been recognised in respect of these items as the utilisation of these tax assetsmay not be probable.




99


33. Dividends

AmountNet Dividend PerOrdinary Share

2005RM’000

2004RM’000

2005Sen

2004Sen

Interim1% less 28% taxation on 566,655,984ordinary shares, declared on 28 May 2005and paid on 8 July 2005 4,080 - 0.72 -

Pursuant to a resolution of the Board of Directors on 24 February 2006, a final dividend in respect of thefinancial year ended 31 December 2005, of 1% less 28% taxation on 556,655,984 ordinary shares, amountingto a dividend payable of RM4,080,000 (0.72 sen net per ordinary share) will be proposed for shareholders’approval at the forthcoming Annual General Meeting. The financial statements for the current financial yeardo not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted forin equity as an appropriation of retained profits in the financial year ending 31 December 2006.

34. Cash and Cash Equivalents

Group Company2005

RM’0002004

RM’0002005

RM’0002004

RM’000

Fixed deposits with licensed banks(Note 24) 158,438 108,002 57,236 63,896

Cash and bank balances (Note 25) 11,396 5,148 3,389 1,069Housing DevelopmentAccount withlicensed bank (Note 25) - 69 - 69

169,834 113,219 60,625 65,034




100


35. Contingent Liabilities

Group Company2005

RM’0002004

RM’0002005

RM’0002004

RM’000Unsecured:

Guarantees given to banks for creditfacilities granted to staff 1,629 11,703 - -

Claim for liquidated damages arising fromlate delivery of vacant possession ofproperties sold - 302 - 302

1,629 12,005 - 302

36. Significant Related Party Transactions

2005 2004Total

amount oftransactions

RM’000

OutstandingamountsRM’000

Totalamount of

transactionsRM’000


Group

Transactions with a minorityshareholder company

Tricubes Consulting Sdn. Bhd.:Sub-contract fees payable 2,873 2,470 - -




101


36. Significant Related Party Transactions (Contd.)

2005 2004Total

amount oftransactions

RM’000


Totalamount of

transactionsRM’000


Company

Transactions with subsidiarycompanies

Sabah Ports Sdn. Bhd.:Management feesreceivable 3,600 - 1,200 1,200Interim dividend received 6,800 - - -

Suria Bumiria Sdn. Bhd.:Management fees received 180 - - -

SCHB Engineering ServicesSdn. Bhd.:

Sub-contract fee payable (4,210) (190) - -Management fees received 300 - - -

S.P. Satria Sdn. Bhd.:Vehicle leasing chargespaid (28) - - -

Management feesreceivable 300 - - -

Tricubes Suria Sdn. Bhd.:Management fees received 240 - - -IT systems support andmaintenance fees paid (35) - - -

Purchase of computerequipment (161) - - -

IT training fees paid (5) - - -

The directors are of the opinion that the above transaction has been entered into in the normal course ofbusiness and has been established on terms and conditions that are not materially different from thoseobtainable in transactions with unrelated parties.




102


37. Capital CommitmentsGroup Company

2005RM’000

2004RM’000

2005RM’000

2004RM’000

Approved and contracted for:Upgrading of ferry terminal 4,850 - - -Purchase of equipment for indoor soccerfacilities 319 - - -

Acquisition of equipment and fittings 519 165 - -Installation and commission of electrical works 15 397 - -Project management consultancy fees for theSapangar Bay Container Terminal project 119,366 180,679 - -

Construction of Sandakan and Kunak Oil Jetties 28,877 - - -Renovation of office building 96 - - -Installation of customised IT systems 4,918 - - -

Approved but not contracted for:Purchase of equipment 485,000 580,000 - -Improvement to port infrastructure facilities 608,000 598,000 - -

1,251,960 1,359,241 - -

38. Comparatives

The presentation and classification of items in the current financial statements are consistent with theprevious financial year except that certain comparative amounts have been adjusted to conform with currentyear’s presentation:

Group

AsRestatedRM’000

ReclassificationsRM’000

AsPreviously

StatedRM’000

Property, plant and equipment 178,024 23,482 154,542Land held for development 32,153 (23,482) 55,635Cost of sales 37,342 (949) 38,291Other operating expenses 1,436 1,436 -Administrative expenses 11,608 (487) 12,095

Company

Property, plant and equipment 24,938 23,482 1,456Land held for development 31,266 31,113 153Amount due from subsidiaries - (56,818) 56,818Other receivables 9,035 2,223 6,812




103


39. Financial Instruments

a) Financial Risk Management Objectives and Policies

The Group’s financial risk management policy seeks to ensure that adequate financial resources areavailable for the development of the Group’s businesses whilst managing its interest, liquidity andcredit risks. The Group operates within clearly defined guidelines that are approved by the Board ofthe Directors and the Group’s policy is not to engage in speculative transactions.

b) Interest Rate Risk

The Group’s primary interest rate risk relates to interest-bearing debts, and the Group has nosubstantial long-term interest-bearing assets at 31 December 2005. The investment in financial assetsis short term in nature and they are not held for speculative purposes but have been mostly placed infixed deposits or occasionally, in short term commercial papers which yield better returns than cash atbank.

The information on maturity dates and effective interest rates of financial assets and liabilities aredisclosed in their respective notes.

c) Liquidity Risk

The Group actively manages its debt maturity profile, operating cash flows and the availability offunding so as to ensure that all repayment and funding needs are met. As part of its overall prudentliquidity management, the Group maintains sufficient levels of cash or cash convertible investments tomeet its working capital requirements.

d) Credit Risk

Credit risk is controlled by the application of credit approvals, limits and monitoring procedures.Credit risk is minimised through bank guarantees by customers and monitored by limiting the Group’sassociations to business partners with high creditworthiness. Trade receivables are monitored on anongoing basis via group management reporting procedures.

The Group does not have any significant exposure to any individual customer nor does it have anymajor concentration of credit risk related to any financial instruments.




104


39. Financial Instruments (Contd.)

e) Fair Values

The nominal/notional amount and net fair value of financial instruments not recognised in the balancesheet of the Group and of the Company as at the end of the financial year is:

Group CompanyNominal/notionalamountRM’000

Netfair

valueRM’000

Nominal/notionalamountRM’000

Netfair

valueRM’000

At 31 December 2005:Contingent liabilities (Note 35) 1,629 * - *

At 31 December 2004:Contingent liabilities (Note 35) 12,005 * 302 *

* It is not practicable to estimate the fair value of contingent liabilities reliably due to theuncertainties of timing, costs and eventual outcome.

The following methods and assumptions are used to estimate the fair values of the following:

i) Cash and cash equivalents, trade and other receivables and payablesThe carrying amounts approximate fair values due to the relatively short term maturity of thesefinancial instruments.

ii) Amounts due from/(to) subsidiariesIn the opinion of the directors, it is not practicable to determine the fair values of these amountsreliably due principally to a lack of fixed repayment terms entered by the parties involved andwithout incurring excessive costs. However, the Group does not anticipate the carrying amountsrecorded at the balance sheet date to be significantly different from the values that wouldeventually be received or settled.

iii) Marketable securitiesThe fair value of quoted shares and unit trust funds is determined by reference to stock exchangequoted market bid prices at the close of the business on the balance sheet date.

iv) Hire purchase and finance lease payableThe carrying value of the Group’s hire purchase and finance lease payable is deemed to equal thefair value, which the Group estimates based on incremental rates of comparable borrowingarrangements.




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2

AS AT 24 MARCH 2006th

1. ANALYSIS OF SHAREHOLDINGS

AUTHORISED SHARE CAPITAL

ISSUED AND FULLY PAID-UP

CLASS OFSHARES

NO.OFSHAREHOLDERS

VOTING RIGHTS

: RM800,000,000.00

: RM566,655,984.00

: Ordinary shares of OneRinggiteach

: 39,267

: One vote per ordinary share




Shareholders Information

108

2. DIRECTORS'SHAREHOLDINGSASAT24 MARCH 2006

Name ofDirectors Shareholdings %(Direct Interest)

Total 120,000 0.02

th

1. Tan Sri Ibrahim Bin Menudin - -

2. Datuk Hj. Abu Bakar @ WahabHj. Abas 115,000 0.02

3. Datuk Ismail Bin Awang Besar - -

4. Datuk Dr. MohdYaakub Hj. Johari, J. P. - -

5. Hj. Abdul Kadir Bin Hj. Mohd. Kassim - -

6. Datuk Anthony Lai Vai Ming @Lai Kheng Ming, J. P. - -

7. Mohd. Hasnol Bin Ayub 5,000 0.00

8. Datuk Filik Bin Madan @ Esong - -

9. Datuk Dr. Hj.Patawari Bin Hj. Patawe - -




109

3. ANALYSIS OF HOLDINGS AS AT 24/03/2006 (MALAYSIAN & FOREIGN – COMBINE)

-----------SIZE OF HOLDINGS--------- NO. OF HOLDERS % NO. OF SHARES %

1100

1,00110,001

100,00128,332,799

------

991,000

10,000100,000

28,332,798AND ABOVE **

*

1014,00721,5253,514

2081

0.0335.6754.828.950.520.00

20713,982,88989,569,40397,142,07294,926,405

270,915,008

0.002.47

15.8117.1416.7547.81

2 0.01 120,000 0.02TOTAL : 39,267 100.00 566,655,984 100.00

REMARK * LESS THAN 5% OF ISSUED SHARES** 5% AND ABOVE OF ISSUED SHARES

4. ANALYSIS OF HOLDINGS AS AT 24/03/2006 (MALAYSIAN & FOREIGN – SEPARATE)

----NO. OF HOLDERS– ----NO. OF SHARES---- --------------%------------

------SIZE OF HOLDINGS ----- MALAYSIAN FOREIGN MALAYSIAN FOREIGN MALAYSIAN FOREIGN

1100

1,00110,001

100,001

-----

991,000

10,000100,000

28,332,798 *

1013,91521,0233,334

180

092

50218028

20713,891,38986,902,30391,306,57281,663,305

091,500

2,667,1005,835,500

13,263,100

0.002.45

15.3416.1114.41

0.000.020.471.032.34

28,332,799 AND ABOVE ** 1 0 270,915,008 0 47.81 0.00DIRECTORS’HOLDINGS 2 0 120,000 0 0.02 0.00

TOTAL 38,465 802 544,798,784 21,857,200 96.14 3.86

----NO. OF HOLDERS---- ---NO. OF SHARES---- ---------%--------

GRAND TOTAL 39,267 566,655,984 100.00

REMARK * LESS THAN 5% OF ISSUED SHARES** 5% AND ABOVE OF ISSUED SHARES

5. HOLDER WITH HOLDING OF 5% AND ABOVE AS AT 24/03/2006

NO.

1. WARISAN HARTA SABAH SDN BHD 270,915,008 47.81




110

NAME HOLDINGS %

DIRECTORS’HOLDINGS




(WITHOUT AGGREGATING SECURITIES FROM DIFFERENT SECURITIES ACCOUNTS BELONGING TO THESAME PERSON)

NO. NAME NATIONALITY/ HOLDINGS %COUNTRYOFINCORPORATION

1. WARISANHARTA SABAH SDN BHD MALAYSIAN 270,915,008 47.81MALAYSIA

2. YAYASAN SABAH MALAYSIAN 22,497,000 3.97MALAYSIA

3. AMBANK (M) BERHAD MALAYSIAN 5,246,000 0.93PLEDGEDSECURITIES ACCOUNT MALAYSIAFOR NG LEONG HUAT (SMART)

4. TA NOMINEES(TEMPATAN) SDN BHD MALAYSIAN 3,255,000 0.57MALAYSIA

PLEDGEDSECURITIES ACCOUNT FORCHAN CHIN CHEUNG

5. TA NOMINEES(TEMPATAN) SDN BHD MALAYSIAN 2,318,600 0.41MALAYSIA

PLEDGEDSECURITIES ACCOUNTFOR GOHTAI SIANG

6. CITIGROUP NOMINEES(ASING) SDN BHD MALAYSIAN 2,200,000 0.39

7. HDM NOMINEES(ASING) SDNBHD MALAYSIAN 2,000,000 0.35DBS VICKERS SECS (S) PTE LTD MALAYSIAFOR RIVER ESTATES INCORPORATED

8. CIMSEC NOMINEES(ASING) SDNBHD MALAYSIAN 1,956,000 0.35

9. HSBC NOMINEES (TEMPATAN) SDN BHD MALAYSIAN 1,637,000 0.29

10. MANULIFE INSURANCE (MALAYSIA) MALAYSIAN 1,500,000 0.25BERHAD MALAYSIA

11. LYE KOK LOONG MALAYSIAN 1,426,000 0.24

UBS AG SINGAPOREFOR PACIFIC MALAYSIAINVESTMENT FUND

MITSUBISHI UFJSECURITIES MALAYSIA(HK) LIMITED FOR ISHIKAWAMITSUYO

PLEDGEDSECURITIES ACCOUNT MALAYSIAFOR NG FAAI @ NG YOKE PEI

111

6. LIST OF TOP 30 HOLDERS AS AT 24/03/2006





12. CARTABAN NOMINEES (ASING) SDNBHD MALAYSIAN 1,300,000 0.23STATE STREET LUXEMBOURG FUND MALAYSIAAA30FOR ALLIANZGLOBAL INVESTORS SELECTIONSRCM MALAYSIA FUND

13. HLB NOMINEES (TEMPATAN) SDN BHD MALAYSIAN 1,237,500 0.22PLEDGEDSECURITIES ACCOUNT MALAYSIAFOR KOAY EAN CHIM

14. CITIGROUP NOMINEES(ASING) SDN BHD MALAYSIAN 1,181,600 0.21CBNY FOR DFA EMERGING MARKETS MALAYSIAFUND

15. RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD MALAYSIAN 1,149,100 0.20PLEDGEDSECURITIES ACCOUNT MALAYSIAFOR SINHUANKWANG (471295)

16. TA NOMINEES(TEMPATAN) SDN BHD MALAYSIAN 1,000,000 0.18PLEDGEDSECURITIES ACCOUNT MALAYSIAFOR MOHAMMAD ABDUS SALIMBINS CASSIM

17. MAYBAN NOMINEES (TEMPATAN) SDN BHD MALAYSIAN 0.16PLEDGEDSECURITIES ACCOUNT MALAYSIAFOR SIAW TECK SIONG(178AW0250)

18. SYARIKAT SAIJAY SDNBHD MALAYSIAN 0.16MALAYSIA

19. AMANAH RAYA NOMINEES (TEMPATAN) SDNBHD MALAYSIAN 0.14PUBLIC SMALLCAP FUND MALAYSIA

20. BUMIPUTRA-COMMERCE NOMINEES MALAYSIAN 0.14(TEMPATAN) SDN BHD MALAYSIAPLEDGEDSECURITIES ACCOUNTFOR BENA CORPORATION SDNBHD(4742JTRK)

21. NG SEE FOOK MALAYSIAN 0.14MALAYSIA

22. RHB CAPITAL NOMINEES MALAYSIAN 0.13(TEMPATAN) SDN BHD MALAYSIAPLEDGEDSECURITIES ACCOUNTFOR WONG TACK PENG (LBU 1031)

23. YEOH KEAN HUA MALAYSIAN 708,000 0.12MALAYSIA

112

6. LIST OF TOP 30 HOLDERS AS AT 24/03/2006 (CONTD.)

912,200

896,987

794,000

792,707

775,300

731,200





SUMMARY

TOTAL NO.OF HOLDERS : 30

TOTAL HOLDINGS : 330,658,902

TOTAL PERCENTAGE (%) : 58.35

23. YEOHKEAN HUA MALAYSIAN 708,000 0.12MALAYSIA

24. RHB CAPITAL NOMINEES MALAYSIAN 662,600 0.12(TEMPATAN) SDN BHD MALAYSIASIN HUAN KWANG(T-471154)

25. TAN LEE HWA MALAYSIAN 660,000 0.12MALAYSIA

26. HSBC NOMINEES (TEMPATAN) MALAYSIAN 602,000 0.11SDN BHD MALAYSIAPLEDGEDSECURITIES ACCOUNTFOR LEE CHIN HWA

27. LOO GEOK ENG MALAYSIAN 600,000 0.11MALAYSIA

28. NG TENG SONG MALAYSIAN 573,200 0.10MALAYSIA

29. HLB NOMINEES (TEMPATAN) MALAYSIAN 566,800 0.10SDN BHD MALAYSIAPLEDGEDSECURITIES ACCOUNTFOR MAHKAR SIEW

30. SIAWTECK SIONG MALAYSIAN 565,100 0.10MALAYSIA

113

7. STATEMENT ONINFORMATION CONTAINED INTHEANNUAL REPORT

All the information provided in this Annual Report hadbeen made up to the date not earlier than six (6) weeks fromthe date of Notice of the Annual General Meeting.

6. LIST OF TOP 30 HOLDERS AS AT 24/03/2006 (CONTD.)




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Suria Capital Holdings Berhad - SuriaGroup Capital Holdings Berhad (96895-W) Laporan Tahunan |...

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Transcript of Suria Capital Holdings Berhad - SuriaGroup Capital Holdings Berhad (96895-W) Laporan Tahunan |...