LAPORAN TAHUNAN 2003 ANNUAL REPORT
Kuala Lumpur’s Premier Residences
SUNWAY CITY BERHAD (Co. No. 87564 - X) Positioned For The Future Contents
Corporate Directory 2 - 3
Corporate Information 4 - 5
Profile of Directors 6 - 10
Five-Year Group Financial Summary 11
Chairman’s Statement / Penyata Pengerusi 12 - 23
Corporate Governance Statement 24 - 28
Audit Committee Report 29 - 34
Statement on Internal Control 35 - 36
Financial Statements 37 - 119
List of Properties 120 - 125
Additional Compliance Information 126 - 127
Recurrent Related Party Transactions 128 - 133
Directors’Interests in Shares and Options 134
Analysis of Shareholdings 135 - 136
Notice of 21st Annual General Meeting 137 - 141
Statement Accompanying Notice of Annual General Meeting 142
Form of Proxy
SUNWAY CITY BERHAD 1 ( 8 7 5 6 4 - X ) Corporate Directory of Main Operating Companies
PROPERTY DEVELOPMENT SUNWAYAUSTRALIA UNIT TRUST HARTFORD LANE PTY LTD SUNWAYCITY BERHAD SUNWAYDAMANSARASDN BHD WALLGROVE ROAD, EASTERN CREEK SUNWAYD’MONT KIARA SDN BHD NSW 2766, AUSTRALIA TEL : 00-6102-98309100 SUNWAYRAHMAN PUTRASDN BHD FAX : 00-6102-96752002 SUNWAYMONTEREZ SDN BHD SUNWAYKINRARA SDN BHD PENAENTERPRISE SDN BHD PROPERTY INVESTMENT SUNWAYTOWNHOUSE SDN BHD SUNWAYPYRAMID SDN BHD SYARIKAT SHOIB PROPERTIES SDN BHD SUNWAYSPK HOMES SDN BHD LL1.10, SUNWAY PYRAMID SHOPPING MALL (Formerly known as Alternative Entity Sdn Bhd) NO. 3, JALAN PJS 11/15, BANDAR SUNWAY 46150 PETALING JAYA, SELANGOR LEVEL 1-3 MENARA SUNWAY TEL : (03) 7492-6668 JALAN LAGOON TIMUR, BANDAR SUNWAY FAX : (03) 7492-6333 46150 PETALING JAYA, SELANGOR TEL : (03) 5635-8886 MANAGEMENT & LETTING OF PROPERTY FAX : (03) 5636-5688 STELLAR DESTINY SDN BHD MENARA SUNWAYSDN BHD SUNWAYTUNAS SDN BHD SUNWAYBUKIT GAMBIER SDN BHD LEVEL 1-3, MENARA SUNWAY (Formerly known as Casa Fareast Sdn Bhd) JALAN LAGOON TIMUR, BANDAR SUNWAY SUNWAYCITY (PENANG) SDN BHD 46150 PETALING JAYA, SELANGOR GRANDEALTRADING CO. SDN BHD TEL : (03) 5635-8886 ALLIANCE PARADE SDN BHD FAX : (03) 5636-5688
NO. 1-D 4TH FLOOR DESARAHMAT, JALAN RELAU LEISURE & ENTERTAINMENT 11900 BAYAN LEPAS, PENANG TEL : (04) 643-9898 SUNWAYLAGOON SDN BHD FAX : (04) 644-1313 SUNWAYMONORAIL SDN BHD
3 JALAN PJS 11/11, BANDAR SUNWAY SUNWAYCITY (IPOH) SDN BHD 46150 PETALING JAYA, SELANGOR TEL : (03) 5635-8000 NO. 2A, PERSIARAN SCI 2/1, SUNWAYCITY IPOH FAX : (03) 5635-5050 31150 IPOH, PERAK TEL : (05) 548-6668 FAX : (05) 548-6868 SUNWAYTRAVEL SDN BHD
LOBBY LEVEL, MENARA SUNWAY SUNWAYSEMENYIH SDN BHD JALAN LAGOON TIMUR, BANDAR SUNWAY 46150 PETALING JAYA, SELANGOR NO. 103 JALAN 1/3, TEL : (03) 5632-5622 BANDAR TECHNOLOGY KAJANG FAX : (03) 5632-4781 43500 SEMENYIH, SELANGOR TEL : (03) 8723-3131 FAX : (03) 8723-3030
2 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Corporate Directory of Main Operating Companies (cont’d)
SUNWAYLAGOON CLUB BERHAD SUNWAYHOTEL PHNOM PENH LTD
3 JALAN LAGOON TIMUR, BANDAR SUNWAY 1, STREET 92 46150 PETALING JAYA, SELANGOR SANGKAT WAT PHNOM TEL : (03) 5636-1188 P.O. BOX 633 FAX : (03) 5636-4889 PHNOM PENH 12202 KINGDOM OF CAMBODIA TEL : 00-855-23-430333 PYRAMID BOWLSDN BHD FAX : 00-855-23-430339
LOT F2.22, SUNWAYPYRAMID SHOPPING MALL NO. 3, JALAN PJS 11/15, BANDAR SUNWAY ALLSON INTERNATIONAL HOLDINGS LTD 46150 PETALING JAYA, SELANGOR ALLSON HOTELS & RESORTS MANAGEMENT TEL : (03) 7492-6307/8/9 SDN BHD (Formerly known as Silk Consolidated FAX : (03) 7492-6310 Sdn Bhd) ALLSON INTERNATIONAL HOTELS & HOTELS & HOSPITALITY RESORTS (B.V.I.) LIMITED ALLSON INTERNATIONAL MANAGEMENT SUNWAYRESORT HOTEL SDN BHD LIMITED
PERSIARAN LAGOON, BANDAR SUNWAY LEVEL 15, SUNWAYLAGOON RESORT HOTEL 46150 PETALING JAYA, SELANGOR PERSIARAN LAGOON, BANDAR SUNWAY TEL : (03) 7492-8000 46150 PETALING JAYA, SELANGOR FAX : (03) 7492-8001 TEL : (03) 7492-5222 FAX : (03) 7492-0636
SUNWAYHOTEL (PENANG) SDN BHD HEALTHCARE 33 NEWLANE, GEORGETOWN 10400 PENANG SUNWAYMEDICAL CENTRE BERHAD TEL : (04) 229-9988 FAX : (04) 228-8899 NO. 5, JALAN LAGOON SELATAN BANDAR SUNWAY 46150 PETALING JAYA, SELANGOR SUNWAYHOTEL(SEBERANG JAYA) SDN BHD TEL : (03) 7491-9191 FAX : (03) 7491-8181 NO. 11, LEBUH TENGGIRI DUA PUSAT BANDAR BANDAR SEBERANG JAYA SEBERANG JAYA, 13700 PRAI TEL : (04) 370-7788 FAX : (04) 370-0555
SUNWAY CITY BERHAD 3 ( 8 7 5 6 4 - X ) Corporate Information
BOARD OF DIRECTORS EXECUTIVE COMMITTEE OF THE BOARD
Executive Chairman, Dato’ Wong Choon Kee (Chairman) Non-Independent Executive Director Yau Kok Seng Tan Sri Dato’Seri (Dr) Cheah Fook Ling Ngian Siew Siong Ngeow Voon Yean Deputy Executive Chairman, Ong Pang Yen Non-Independent Executive Director Lim Swe Guan Datuk Razman M Hashim Wang Yeong Khang (Alternate to Yau Kok Seng)
Managing Director, Non-Independent Executive Director NOMINATION COMMITTEE Dato’ Wong Choon Kee Tan Sri Dato’Ir Talha Bin Haji Mohd Hashim Deputy Managing Directors, (Chairman) Non-Independent Executive Directors Teo Tong How Ngian Siew Siong - Property Development Tan Siak Tee Ngeow Voon Yean - Property Investment
Non-Independent Non-Executive Directors REMUNERATION COMMITTEE Low Siew Moi (f) Lim Swe Guan Tan Sri Dato’Ir Talha Bin Haji Mohd Hashim (Chairman) Senior Independent Non-Executive Director Teo Tong How Tan Sri Dato’ Ir Talha Bin Haji Mohd Hashim Tan Sri Dato’Seri (Dr) Cheah Fook Ling
Independent Non-Executive Directors Teo Tong How GROUPRISK MANAGEMENT COMMITTEE Tan Siak Tee Dato’ Wong Choon Kee (Chairman) Ngian Siew Siong AUDIT COMMITTEE Ngeow Voon Yean Yuen Kam Wah Tan Sri Dato’ Ir Talha Bin Haji Mohd Hashim Lee Weng Keng (Chairman) Wang Yeong Khang Teo Tong How Tan Siak Tee Ngian Siew Siong COMPANY SECRETARIES
Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng EMPLOYEES’SHARE OPTION (MIA5601) SCHEME COMMITTEE Tan Kim Aun (MAICSA7002988)
Tan Sri Dato’Seri (Dr) Cheah Fook Ling (Chairman) Datuk Razman M Hashim Dato’ Wong Choon Kee
4 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Corporate Information (cont’d)
REGISTERED OFFICE SOLICITORS
Level 16, Menara Sunway David Lingam & Co. Jalan Lagoon Timur Helen & Co. Bandar Sunway Sidek Teoh Wong & Dennis 46150 Petaling Jaya Selangor Darul Ehsan Malaysia PRINCIPALBANKERS Tel No: (03) 5635-8889 Fax No: (03) 5634-1349 HSBC Bank Malaysia Berhad Malayan Banking Berhad Public Bank Berhad SHARE REGISTRAR United Overseas Bank (Malaysia) Berhad
Sunway Management Sdn Bhd (50661-X) Level 16, Menara Sunway STOCK EXCHANGE LISTING Jalan Lagoon Timur Bandar Sunway Main Board of Bursa Malaysia Securities Berhad 46150 Petaling Jaya (Formerly known as Malaysia Securities Exchange Selangor Darul Ehsan Berhad) Malaysia Tel No: (03) 5635-8889 Fax No: (03) 5634-1349 WEBSITE ADDRESS
www.sunway.com.my AUDITORS
Ernst & Young Chartered Accountants
SUNWAY CITY BERHAD 5 ( 8 7 5 6 4 - X ) Profile Of Directors
Tan Sri Dato' Seri (Dr) Cheah Fook Ling Executive Chairman, Non-Independent Executive Director Tan Sri Dato' Seri (Dr) Cheah Fook Ling, Malaysian, aged 58, is the Founder of the Sunway Group and Chairman of Sunway City Berhad (“SunCity”), Sunway Holdings Incorporated Berhad, Sunway Construction Berhad and Sunway Infrastructure Berhad which are a conglomerate of companies that are listed individually on the Main Board of Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad).
A Certified Public Accountant by profession, he was appointed a Board member of the Financial Reporting Foundation by the Minister of Finance in July 1997. He sits on the Board of The National Kidney Foundation and the Board of Trustees of the Malaysian Liver Foundation. In 1995, he was appointed a member of the Malaysian Business Council and in 1996, he was honored with the Chairmanship of Malaysian Industry- Government Group for High Technology (MIGHT) for Construction and Housing. He was appointed an EXCO member to the Malaysian Tourism Action Council by the Minister of Tourism Malaysia. In recognition of his outstanding contribution to education, the Minister of Education appointed him to the Higher Education Council in 1998. He was also conferred Honorary Doctorates by 8 leading universities worldwide and was voted the Property Man of the Year (Malaysia) 1993 as well as the CEO of the Year (Malaysia) 1996.
He was appointed to the Board of SunCity on 1 July 1992 and also serves as Chairman of the Employees’Share Option Scheme Committee and a Member of the Remuneration Committee.
His current directorships in other public companies include Federation of Public Listed Companies Berhad, Sunway Holdings Incorporated Berhad, Sunway Construction Berhad and Sunway Infrastructure Berhad.
He attended 5 out of the 6 Board Meetings held in the financial year.
Datuk Razman M Hashim Deputy Executive Chairman, Non-Independent Executive Director Datuk Razman M Hashim, Malaysian, aged 65, is a member of the Australian Institute of Bankers. He has more than 34 years of experience in the banking industry. He joined the Standard Chartered Bank Malaysia Berhad in 1964 and served in various capacities including secondments to the Bank’s branches in London, Europe, Hong Kong and Singapore. In 1994, he was appointed as Executive Director/Deputy Chief Executive of the Standard Chartered Bank Malaysia Berhad.
He was appointed to the Board of SunCity on 28 March 1996 and also serves as a Member of the Employees’Share Option Scheme Committee.
His current directorships in other public companies include Ranhill Berhad, Multi-Purpose Holdings Berhad, Sunway Infrastructure Berhad, Affin Bank Berhad and OYL Industries Berhad.
He attended all of the 6 Board Meetings held in the financial year.
6 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Profile Of Directors (cont’d)
Tan Sri Dato’Ir Talha Bin Haji Mohd Hashim Senior Independent Non-Executive Director
Tan Sri Dato’ Ir Talha Bin Haji Mohd Hashim, Malaysian, aged 68, is a Civil Engineer by profession. He graduated from Brighton Technical College, United Kingdom with a Diploma in Civil Engineering in 1959 and a Master in Management from Asian Institute of Management, Manila in 1976. He is a Professional Engineer registered with the Board of Engineers, Malaysia since 1974; Fellow of the Institution of Engineers, Malaysia since 1979; Chartered Engineer registered with the Engineering Council, United Kingdom since 1989; Fellow of the Institution of Civil Engineers, United Kingdom since 1989; Fellow of the Institution of Highways and Transportation, United Kingdom since 1990 and Member of the Association of Consulting Engineers, Malaysia since 1990. He is also a member of the Malaysian Institute of Management since 1975.
He started his career as a Civil Engineer with the Public Works Department, Malaysia in 1959 and after holding various posts at District, State and Branch levels, he was appointed Director-General of Public Works, Malaysia in 1985. He retired from the Government in 1990.
He was appointed to the Board of SunCity on 1 November 1990 and also serves as Chairman of the Audit, Nomination and Remuneration Committees.
His current directorships in other public companies include Gamuda Berhad, SHL Consolidated Berhad, Sapura Telecommunications Berhad, Hume Industries (M) Berhad, APPIndustries Berhad and Phillip Mutual Berhad.
He attended all of the 6 Board Meetings held in the financial year.
Dato’ Wong Choon Kee Managing Director, Non-Independent Executive Director
Dato’ Wong Choon Kee, Malaysian, aged 58, is a fellow member of the Royal Institution of Chartered Surveyors, United Kingdom as well as a member of the Institution of Surveyors, Malaysia and the Board of Valuers and Estate Agents, Malaysia. He has 30 years’ experience in Property Development and Project Management, both in Malaysia and overseas.
He is the founder Director of C.H. Williams, Talhar & Wong, a firm of Chartered Valuation Surveyors, Project Managers, Estate Agents and Property Managers, Malaysia.
Prior to joining SunCity, he was with Genting Berhad and Star Cruises PLC, in the capacity of Executive Vice President, with responsibilities in Hotel Operations and Corporate Affairs respectively, and added duties in Real Estate Development and Management.
He was the President and Chief Executive Officer of Abbey Woods Developments Ltd, a public company, whose core business is Property Development and Hospitality, listed on the Toronto Stock Exchange, Canada.
He was appointed to the Board of SunCity as Managing Director on 15 April 2000 and also serves as Chairman of the Executive Committee of the Board and Group Risk Management Committee as well as a Member of the Employees’ Share Option Scheme Committee. He has no directorships in other public companies.
He attended all of the 6 Board Meetings held in the financial year.
SUNWAY CITY BERHAD 7 ( 8 7 5 6 4 - X ) Profile Of Directors (cont’d)
Ngian Siew Siong Deputy Managing Director - Property Development, Non-Independent Executive Director Ngian Siew Siong, Malaysian, aged 52, attained a Bachelor of Science Degree (Honours) in Civil Engineering from University of Leeds, United Kingdom in 1976. He has 23 years’experience in the property development industry.
He was the Regional Operations Manager of MBf Holdings Bhd before joining SunCity. He joined SunCity in 1985 as Project Manager and held various senior posts before being promoted to Executive Director in January 1996. He is currently the head of the property development division of the Group.
He was appointed to the Board of SunCity on 29 December 1994 and also serves as a Member of the Audit Committee, Executive Committee of the Board and Group Risk Management Committee. He has no directorships in other public companies.
He attended all of the 6 Board Meetings held in the financial year.
Ngeow Voon Yean Deputy Managing Director - Property Investment, Non-Independent Executive Director Ngeow Voon Yean, Malaysian, aged 51, holds a Bachelor of Commerce Degree majoring in Business Studies and Economics from University of Auckland, New Zealand. He is a council member of the Malaysian Association of Hotel Owners (MAHO), a member of the International Council of Shopping Centers (ICSC) and a member of the ICSC Asia Pacific Advisory Committee.
With 23 years of working experience in property development and investment and management industry, he was the founder President of Shopping and Highrise Buildings Association in both Malaysia and Singapore. He has wide experience in the development and management of mixed-use developments. He began his career with Landmarks Holdings Bhd, the developer owner of Sungei Wang Plaza, Regent Hotel and Metroplex Holdings, the developer of The Mall. He then moved to Singapore to join Marina Centre Holdings Pte Ltd, the developer and manager of Marina square, a mixed-use waterfront development in Singapore. He later joined Suntec City Development Pte Ltd as the General Manager-Business Development/Retail, the developer and owner of Singapore’s largest private mixed-use development comprising convention, exhibition, shopping and office.
He was appointed to the Board of SunCity on 21 April 1997 and also serves as a Member of the Executive Committee of the Board and Group Risk Management Committee. He has no directorships in other public companies.
He attended all of the 6 Board Meetings held in the financial year.
8 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Profile Of Directors (cont’d)
Lim Swe Guan Non-Independent Non-Executive Director
Lim Swe Guan, Singaporean, aged 50, holds a Bachelor of Science (Estate Management) Second Class Honours Degree from University of Singapore. He also has a Master of Business Administration from Darden School of Business, University of Virginia, United States of America.
He is the Executive Vice President of GIC Real Estate Pte Ltd, the real estate investment arm of the Government of Singapore Investment Corporation Pte Ltd. He is a Chartered Financial Analyst and a member of the Association for Investment Management and Research. Among his achievements were the gold medals won from Singapore Institute of Valuers and Singapore Institute of Surveyors. He was a Director of Jones Lang Wootton Australia from 1989 to 1995. He was a Portfolio Manager, Property Division in Suncorp Investment Management before he joined GIC Real Estate Pte Ltd in 1997.
He was appointed to the Board of SunCity on 6 March 2002 and also serves as a Member of the Executive Committee of the Board. He has no directorships in other public companies.
He attended 4 out of the 6 Board Meetings held in the financial year.
Low Siew Moi Non-Independent Non-Executive Director
Low Siew Moi, Malaysian, aged 54, is an accountant by profession. She is a member of the Malaysian Institute of Accountants (MIA) and has 26 years of experience in the field of corporate finance and development.
She was appointed to the Board of SunCity on 3 December 1999. Her current directorships in other public companies include Kesas Holdings Berhad, PKNS Infra Berhad and Worldwide Holdings Berhad.
She attended all of the 6 Board Meetings held in the financial year.
Teo Tong How Independent Non-Executive Director
Teo Tong How, Singaporean, aged 61, holds a Bachelor of Architecture (Honours) Degree from University of Melbourne, Australia.
He is a member of SIA, RIBA, FRAIAand APAM (Architectural Bodies), Associate Member of SIP and APA (Planning Bodies) and a Registered Property Manager of International Real Estate Institute. Presently he is the Chairman of Tong Eng Brothers Group of Companies and the Chairman and Managing Director of Hong How Group of Companies. He is also a Director in Courts (Singapore) Limited, Popular Holdings Limited and Riyan Pte Ltd (a subsidiary of Pacific Century Regional Developments Ltd), all public listed companies in Singapore.
He was appointed to the Board of SunCity on 18 April 2001 and also serves as a Member of the Audit, Nomination and Remuneration Committees. He has no directorships in other public companies in Malaysia.
He attended 5 out of the 6 Board Meetings held in the financial year.
SUNWAY CITY BERHAD 9 ( 8 7 5 6 4 - X ) Profile Of Directors (cont’d)
Tan Siak Tee Independent Non-Executive Director
Tan Siak Tee, Malaysian, aged 63, holds a Bachelor of Commerce Degree from University of New South Wales, Australia. He is an Associate of the Institute of Chartered Accountants, Australia, an Associate of the Institute of Chartered Secretaries & Administrators and a Member of the Malaysian Institute of Certified Public Accountants.
He started his career as an Auditor in Coopers & Lybrand, Sydney and later seconded to Coopers & Lybrand, Kuala Lumpur. He has extensive experience in banking industry. He was the Chief Internal Auditor for Malaysian operations in Overseas Chinese Banking Corporation and Chung Khiaw Bank for the period from 1969 to 1971 and 1971 to 1973 respectively. He joined Lee Wah Bank Ltd in 1973 as Manager of Malaysia Central Office and was promoted to Director and Chief Executive Officer for Malaysian operations in 1975. He was a Director and Chief Executive Officer in United Overseas Bank (M) Berhad for the period from 1994 to 1997 after Lee Wah Bank Malaysian operations was incorporated in Malaysia in 1994. Before he joined Bank of China (Malaysia) Berhad in April 2000, he was a Director and Adviser in Asia Commercial Finance Berhad from 1997 to 1999.
He was appointed to the Board of SunCity on 26 November 2001 and also serves as a Member of the Audit and Nomination Committees.
His current directorships in other public companies include Bank of China (Malaysia) Berhad and Amsteel Corporation Berhad.
He attended 5 out of the 6 Board Meetings held in the financial year.
Notes:
1. Family Relationship with Director and/or Major Shareholder
None of the Directors has any family relationship with any director and/or major shareholder of SunCity.
2. Conflict of Interest
(a) Tan Sri Dato’ Seri (Dr) Cheah Fook Ling is a Director and Major Shareholder of Sunway Holdings Incorporated Berhad. He has deemed interest in Sunwaymas Sdn Bhd and its subsidiaries via Sunway Holdings Incorporated Berhad, whose principal activity is similar to SunCity Group namely property development.
(b) Low Siew Moi is a Director of Worldwide Holdings Berhad whose principal activity is similar to SunCity Group namely property development and investment.
Save as disclosed, none of the other Directors has any conflict of interest with SunCity Group.
3. Conviction for Offences
None of the Directors has been convicted for offences within the past 10 years other than traffic offences, if any.
4. Attendance of Board Meetings
The attendance of the Directors at Board of Directors’Meetings is disclosed in the Corporate Governance Statement.
10 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Five-Year Group Financial Summary
2003 2002 2001 2000 1999 (Restated) (Restated) (Restated) (Restated)
RM’000 RM’000 RM’000 RM’000 RM’000 REVENUE 728,640 659,428 587,519 480,304 479,586
PROFIT BEFORE TAXATION 107,134 156,544 34,860 7,895 21,203
TAXATION 35,440 27,244 22,392 23,468 3,364
PROFIT/(LOSS) AFTER TAXATION 71,694 129,300 12,468 (15,573) 17,839
MINORITY INTERESTS (46,214) (10,860) (6,186) 15,293 (4,213)
PROFIT/(LOSS) ATTRIBUTABLETO 25,480 118,440 6,282 (280) 13,626 SHAREHOLDERS
FIXED ASSETS 484,187 398,580 932,703 967,039 1,002,507
INVESTMENT PROPERTIES 318,584 309,517 374,528 369,340 376,474
LAND HELD FOR DEVELOPMENT 338,639 354,410 364,525 313,232 306,020
ASSOCIATED COMPANIES 1,597 35,460 11,779 11,594 13,757
INVESTMENT IN JOINTLY 10,836 ÐÐÐÐ CONTROLLED ENTITY
OTHER NON-CURRENT INVESTMENTS 466,203 392,840 Ð Ð Ð
CURRENTASSETS 637,803 556,774 438,478 406,437 361,086
GOODWILL & DEFERRED 19,875 36,263 12,429 9,646 475 INCOME TAX ASSETS
TOTALASSETS 2,277,724 2,083,844 2,134,442 2,077,288 2,060,319
CURRENT LIABILITIES 480,027 420,290 437,431 368,818 359,741
DEFERRED LIABILITIES 745,449 675,332 751,251 761,234 1,113,176
TOTALLIABILITIES 1,225,476 1,095,622 1,188,682 1,130,052 1,472,917
TOTALNETASSETS 1,052,248 988,222 945,760 947,236 587,402
MINORITY INTERESTS 289,390 253,213 342,153 346,565 158,363
SHAREHOLDERS' FUNDS 762,858 735,009 603,607 600,671 429,039
EARNINGS/(LOSS) 0.06 0.33 (0.01) (0.02) 0.05 PER SHARE (RM) (NET)
NET TANGIBLE ASSETS 1.87 1.77 1.43 1.42 1.43 PER SHARE (RM)
SUNWAY CITY BERHAD 11 ( 8 7 5 6 4 - X ) Chairman’s Statement
OPERATING BACKGROUND
The year 2003 started with an unexpected regional outbreak of SARS (Severe Acute Respiratory Syndrome), bringing a sharp decline to businesses associated with the tourism sector. Its adverse effect on the local economic front fortunately was shortlived, largely due to proactive efforts by the government to control the situation, which included the announcement of a RM7.3 billion economic stimulus package.
On the domestic front, despite uncertain economic conditions during the early part of the year, the Malaysian economy posted a commendable 5.2% Gross Domestic Product (GDP) growth in 2003, an increase over 4.2% achieved in 2002. The growth was attributable to improving exports, complemented by strengthening domestic demand. The low interest rate environment and high liquidity conditions in the country provided the support for the increasing business and consumer confidence.
On behalf of the Board of Sunway City FINANCIAL PERFORMANCE
Berhad, it is my pleasure to present the The Group managed to post a pre-tax profit of RM 107.1 million in 2003, despite the impact of the SARS outbreak Annual Report and the Financial on some of its businesses in 1st half of the year. This was lower than the RM 156.5 million pre-tax profit in 2002, Statements of the Company and the which was partly contributed by one-off gains from the non-operating results of RM 70.3 million. Turnover Group for the financial year ended however was higher at RM 728.6 million compared to RM 659.4 million in 2002, reflecting the continued 31 December 2003. growth in its business activities.
12 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Penyata Pengerusi
Bagi pihak Lembaga Pengarah Sunway Di arena tempatan, di sebalik keadaan ekonomi yang tidak menentu pada awal tahun, ekonomi Malaysia telah City Berhad, saya dengan sukacitanya mengalami pertumbuhan Keluaran Dalam Negeri Kasar (KDNK) yang menggalakkan pada kadar 5.2% pada membentangkan Laporan Tahunan dan 2003, meningkat berbanding pencapaian 4.2% pada 2002. Pertumbuhan ini adalah sumbangan daripada Penyata Kewangan bagi Syarikat dan peningkatan eksport digabung dengan permintaan domestik yang kukuh. Persekitaran kadar faedah yang Kumpulan untuk tahun kewangan rendah serta keadaan kecairan tunai yang tinggi di dalam negara telah turut menyokong peningkatan berakhir 31 Disember 2003. keyakinan perniagaan dan pengguna.
PRESTASI KEWANGAN
LATAR BELAKANG OPERASI Kumpulan telah berjaya mencatatkan keuntungan sebelum cukai berjumlah RM 107.1 juta pada 2003, di Tahun 2003, tanpa diduga telah bermula dengan sebalik kesan wabak SARS terhadap sebahagian tercetusnya wabak SARS (Sindrom Pernafasan Yang perniagaannya pada setengah tahun pert a m a Te ruk), mengakibatkan penurunan mendadak bagi berkenaan. Pencapaian ini adalah lebih re n d a h perniagaan-perniagaan yang berkait dengan sektor daripada keuntungan sebelum cukai berjumlah RM pelancongan. Namun begitu, kesan negatif terhadap 156.5 juta yang dicapai pada 2002, yang terh a s i l persekitaran ekonomi tempatan ini tidak kekal lama, sebahagiannya daripada suatu keuntungan luarbiasa disebabkan terutamanya oleh langkah-langkah proaktif bukan operasi bernilai RM 70.3 juta. Bagaimanapun, yang diambil oleh kerajaan untuk mengawal keadaan, kedudukan perolehan adalah lebih tinggi pada RM 728.6 termasuk pengumuman mengenai pakej rangsangan juta berbanding RM 659.4 juta pada 2002, ekonomi bernilai RM7.3 bilion. menggambarkan pertumbuhan yang berterusan dari segi aktiviti perniagaan.
SUNWAY CITY BERHAD 13 ( 8 7 5 6 4 - X ) PROPERTY DEVELOPMENT
PROPERTY DEVELOPMENT
Property development is the Group’s core earnings generator, contributing RM 80 million (80%) of its operating segment results. The strong showing arose from higher turnover of RM 367.1 million compared to RM 321.7 million in 2002, due largely to a combination of increased property launches, strong take-ups and timely delivery.
During the year, the Group launched properties worth RM 566 million for sale in 10 different locations in the Klang Valley, Penang and Ipoh, chalking up sales of RM 429 million. A total of 799 units of properties of RM 143 million in value were also completed and delivered.
As part of the Group’s strategy for sustainable growth, new landbanks at prime locations were continuously sourced. In 2003, it concluded the acquisition of lands with Gross Development Value (GDV) of RM 1.1 billion. With a total landbank in excess of RM 8.2 billion in GDV, the Group is poised for an accelerated growth in its property launches from 2004 onwards.
Kiara Hills – Sunway City Berhad’s signature project at Mont Kiara, Kuala Lumpur. The elevated site features 88 exclusive detached homes for the discerning and affluent elite. It’s the best and most exclusive development in Kuala Lumpur.
14 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) PEMBANGUNAN HARTANAH
Pembangunan hartanah merupakan penyumbang utama terhadap pendapatan tegar Kumpulan dengan sumbangan RM 80 juta (80%) daripada segmen hasil operasinya. Prestasi baik ini dihasilkan daripada perolehan yang lebih tinggi iaitu pada RM 367.1 juta berbanding RM 321.7 juta pada 2002, disebabkan terutamanya oleh gabungan faktor peningkatan pelancaran hartanah yang dilaksanakan, sambutan belian yang baik sert a penyerahan yang menepati masa. Bandar Sunway, Precinct Selatan, Master Planning and Dalam tahun berkenaan, Kumpulan telah Architectural Concept Competition.Tan Sri Dato’Seri (Dr) melancarkan hartanah bernilai RM 566 juta untuk Jeffrey Cheah with the International Panel of Judges and st jualan di 10 lokasi berbeza di Lembah Kelang, the 1 prize winner. Pulau Pinang dan Ipoh, dengan catatan jualan bernilai RM 429 juta. Disamping itu, sejumlah 799 unit hartanah bernilai RM 143 juta telah berjaya disiapkan dan diserahkan kepada pembeli.
Sebagai sebahagian daripada strategi Kumpulan untuk mengekalkan pertumbuhan yang berterusan, simpanan-simpanan tanah yang baru di lokasi- lokasi utama sedang dicari. Dalam 2003, ianya telah menyelesaikan proses pembelian tanah dengan Nilai Pembangunan Kasar (NPK) sebanyak RM 1.1 bilion. Dengan jumlah simpanan tanah keseluruhan melebihi NPK RM 8.2 bilion, Kumpulan kini bersedia untuk mencapai pertubuhan rancak Sunway City Berhad at the recent MAPEX exhibition in Kuala Lumpur. Prospective purchasers were menerusi pelancaran-pelancaran hartanahnya mulai impressed with the quality, layout and the locations dari 2004. of the properties offered.
Sunway Rahman Putra, adjoining the Rahman Putra Golf & Country Club, features upmarket tropical detached and courtyard homes and offers lifestyle living at its very best.
SUNWAY CITY BERHAD 15 ( 8 7 5 6 4 - X ) PROPERTY DEVELOPMENT
Sunway SPK Homes in Kuala Lumpur, a joint venture between Sunway City Berhad and Sharikat Permodalan Kebangsaan Berhad (SPKB), offers distinctively designed homes with quality finishes.
The Lakeside Terraces at Sunway Damansara, one of many innovative Sunway City Ipoh, Ipoh’s first integrated 1300 acres township is developments by Sunway Damansara Sdn Bhd, offers quality homes 10 minutes from Ipoh city. Country Bungalow homes and with landscaped gardens and lakeside frontage. Garden Villas, with a backdrop of scenic limestone hills have been well received by home purchasers.
16 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) PELABURAN HARTANAH
Hartanah pelaburan utama Kumpulan, Pusat Beli- keputusan Kumpulan pada masa hadapan. Dalam Belah Sunway Pyramid, telah mencapai prestasi pada itu, Kumpulan akan mengambil langkah “Put cemerlang dengan keuntungan sebelum cukai and Call Options” dengan suatu pihak tertentu berjumlah RM 42 juta. Di sini, kami telah berjaya untuk menjual harta-harta di persekitaran Taman membuka kawasan baru seluas 26,000 kaki persegi Tema berkenaan pada harga AUD 52.5 juta, dengan untuk disewa pada 2003 dengan pembukaan Fasa II AUD 10 juta dibayar sebagai deposit yang tidak Oasis Boulevard yang dibina untuk tujuan boleh dikembalikan. Hasil tunai daripada aktiviti ini menyediakan kawasan makan dan minum terbuka. apabila selesai kelak akan dapat digunakan, selaras Pusat Beli-Belah ini telah terus menjadi suatu dengan usaha bert e rusan Kumpulan, untuk destinasi membeli-belah yang popular dan berupaya memulihkan kedudukan hutang dan pinjamannya. menarik lebih ramai peruncit dan pelanggan baru, termasuk para pelancong asing.
Kumpulan akan memulakan aktiviti pembesaran Pusat Beli-Belah ini pada 2004 untuk satu kawasan tambahan seluas 690,000 kaki persegi dan dijangka siap untuk pembukaan pada April 2007. Ini akan membolehkan pusat ini untuk menjadi sebagai salah sebuah pusat beli-belah ternama di negara ini dengan reputasi antarabangsa.
RIADAH & ISTIREHAT
Segmen riadah dan istirehat Kumpulan telah Soon to be opened “Lost World of Tambun” - Plenty of fun menerima kesan negatif berikutan jangkitan wabak at the Sunway Lagoon Water Theme Park, Ipoh. SARS pada setengah tahun pertama 2003. Taman Tema Sunway Lagoon dan sedikit sebanyaknya, Taman Tema Wonderland Sydney di Australia, telah mengalami penyusutan mendadak dari segi bilangan pengunjung. Namun demikian, tindakan pro a k t i f yang telah diambil, termasuk langkah pengurangan kos, telah berjaya mengurangkan kesan negatif yang timbul.
Disebabkan oleh penggunaan perbelanjaan yang b e rt e rusan daripada sumber-sumber Kumpulan, Taman Tema Wonderland Sydney akan ditutup pada setengah tahun pertama 2004. Inisiatif ini akan memberikan kesan positif terhadap prestasi
Sunway Pyramid Shopping Centre, Malaysia’s first and only Themed Shopping and Entertainment Mall, won the FIABCI Award of Distinction for Retail Category.
SUNWAY CITY BERHAD 17 ( 8 7 5 6 4 - X ) PROPERTY INVESTMENT
PROPERTY INVESTMENT
The Group’s key investment property, the Sunway Pyramid Shopping Mall, achieved sterling results with RM 42 million in pre-tax profits. It successfully created another 26,000 sq ft of lettable space in 2003 with the opening of Oasis Boulevard Phase II for alfresco dining. The Mall continued to be a popular shopping destination, drawing new retailers and customers, including foreign tourists.
The Group will be commencing the expansion of the Mall in 2004 by another 690,000 sq ft, to be completed for opening in April 2007. This will set its position as one of the premier malls of Sunway Lagoon Theme Park offers an endless variety international acclaim in the country. of rides and attractions for everyone in the family. It is also home to the world’s largest surf wave pool which can generate waves up to heights of 8 feet. LEISURE Given the persistent drain on the Group’s resources, The Group’s leisure segment was adversely affected the Sydney Wonderland Theme Park will be closed by the SARS outbreak during the 1st half 2003. The by the 1st half of 2004. This initiative will have a Sunway Lagoon Theme Park and to a lesser extent, positive impact on the Group’s future results. At the the Sydney Wonderland Theme Park in Australia same time, the Group had also entered into Put and experienced a severe decline in visitorships. Call Options with an interested party to dispose of the Theme Park property for AUD 52.5 million, with However, the proactive actions that were taken, AUD 10 million being paid as non-refundable including cost reduction exercises, significantly deposit. The proceeds from the sale when concluded mitigated the negative impact arising. in January 2005 will be available for the Group’s continuous degearing exercise.
Architect’s perspective of the new Sunway Pyramid Shopping Mall annex, scheduled for completion in April 2007, offering 700,000 square feet of net rental space.
18 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) PERHOTELAN
Sektor perniagaan ini telah turut menerima kesan b u ruk akibat daripada jangkitan wabak SARS. Namun demikian, tindakan pantas serta penyusunan semula strategi yang dijalankan telah membantu hotel-hotel milik Kumpulan di dalam negara untuk melepasi krisis tersebut dengan pre s t a s i membanggakan.
Hotel Sunway Lagoon Resort, hotel utama dan m e rcutanda Kumpulan, telah berjaya mencapai Resort Suites situated in a breathtaking 31-storey tower with dramatic 15-storey landscaped atrium. These 280 studio, purata kadar penginapan 70% untuk 2003, 1 & 2 bedroom units offer an unrivalled lifestyle, memberikan gambaran tentang keutuhan dan plus world-class facilities at your doorstep. keunggulannya di dalam industri perh o t e l a n tempatan. Ianya terus menjadi lokasi pilihan untuk pasaran MICE dan juga untuk acara-acara korporat dan bankuet persendirian.
Disebabkan hotel tersebut kini menjalani operasi di bawah suatu amalan pajakan bersih berlanjutan daripada aktiviti ABS (Asset Backed Securitisation) yang dijalankan oleh Kumpulan pada 2002, pendapatan yang diterima akan sebahagian besarnya digunakan untuk bayaran sewa pajakan kepada pemajak seperti yang diperlukan.
The Villas, an exclusive 17 units tropical chalet development adjoining Sunway Lagoon Resort Hotel offers discerning hotel guests first class personal service and luxury accommodation.
SUNWAY CITY BERHAD 19 ( 8 7 5 6 4 - X ) PROPERTY INVESTMENT
HOSPITALITY
This business sector was also badly affected by the Sunway SARS outbreak. However, fast actions and re- Medical Centre strategising helped the Group’s hotels in the country Resort Suites to tide over the crisis to return a commendable Sunway Lagoon performance. Resort Hotel Pyramid The Sunway Lagoon Resort Hotel, the Group’s Sunway College & Tower Hotel Monash University flagship hotel, was able to achieve a 70% average Sunway Pyramid occupancy for 2003, reflecting its strength and Sunway Lagoon Shopping Mall Theme Park dominance in the local hospitality industry. It continues to be a preferred venue for the Meetings, Incentives, Conferences and Exhibitions (MICE) market as well as corporate and private banquet functions.
As it is now being operated under a net lease arrangement further to the ABS (Asset Backed Securitisation) exercise undertaken by the Group in 2002, its earnings will be substantially utilised for The new Sunway Pyramid Hotel & Resort Suites, the payment of lease rental to the lessor. scheduled for completion in July 2004, offers 549 rooms and 280 serviced apartments. HEALTHCARE
Sunway Medical Centre has been steadily growing since its inception in November 1999. Its results in 2003 exceeded its performance in 2002. Patient volume has been increasing and bed occupancy showed continuous growth. Turnover increased by 17% over 2002, turning in RM 53.2 million and it achieved a small operating profit of RM 0.6 million for the first time.
During the year, the hospital increased its bed capacity to 173, with the activation of the paediatrics ward (5B) adding another 25 beds. It became the only hospital in the country with the expertise and facilities to undertake the Deep Brain Stimulation (DBS) Surgery for Parkinson’s Disease, having treated 8 patients to date. It also received its ISO 9001:2000 certification in March 2003.
Award winning 5-Star Sunway Lagoon Resort Hotel continues to be recognised for its contribution to tourist arrivals in Malaysia.
20 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) PENJAGAAN KESIHATAN
Pusat Perubatan Sunway telah mengalami p e rtumbuhan yang bert e rusan sejak memulakan operasinya pada November 1999. Hasil keputusannya pada 2003 telah melebihi pencapaiannya pada 2002. Bilangan pesakit telah Polisi-polisi kewangan dijangka akan kekal bersifat terus meningkat dan kadar penggunaan katil telah membantu untuk menyokong persekitaran ekonomi menunjukkan pertumbuhan berterusan. Perolehan yang rancak. meningkat 17% berbanding 2002, pada jumlah RM 53.2 juta serta dengan catatan keuntungan Kumpulan kini bersedia untuk mengambil operasinya yang pertama sebanyak RM 0.6 juta. kesempatan ke atas keadaan-keadaan pasaran yang positif di dalam bidang niaganya, khususnya dalam Dalam tahun berkenaan, hospital ini telah pembangunan hartanah, di mana kami merancang meningkatkan bilangan kapasiti katilnya kepada untuk menggandakan bilangan pelancaran hartanah 173, dengan pembukaan wad pediatrik (5B) baru kami ke tahap melebihi RM 1.0 bilion dari segi membawa tambahan 25 buah katil. Ianya juga telah nilai pembangunan kasarnya pada 2004. Beberapa menjadi hospital tunggal di negara ini dengan pelancaran projek bernilai tinggi, sepert i kepakaran dan kemudahan untuk menjalankan pembangunan berprestij di Kiara Hills, dijangka pembedahan “Deep Brain Stimulation” (DBS) untuk akan memberi sumbangan besar terh a d a p penyakit Parkinson’s dan telah merawat 8 orang pendapatan masa hadapan. pesakit setakat ini. Ianya juga telah menerima pengiktirafan sijil ISO 9001:2000 pada Mac 2003.
TINJAUAN MASA HADAPAN
Dengan jangkaan ekonomi global yang positif pada 2004, khususnya di AS dan Jepun, pertumbuhan e k s p o rt dijangka akan mengalami peningkatan berikutan permintaan dan dagangan global yang meningkat untuk barangan elektronik. Keadaan ekonomi kelihatan bersedia untuk mengalami p e rtumbuhan yang lebih kukuh sebanyak 6%, disokong oleh permintaan domestik yang semakin meneguh. Keyakinan perniagaan dan pengguna umumnya turut meningkat sementara mandat kukuh yang diperolehi oleh gabungan pemerintahan Barisan Nasional sewaktu Pilihanraya Umum 2004 menjamin kemajuan dan perubahan ekonomi untuk seterusnya meningkatkan keyakinan para pelabur.
Sunway Medical Centre, a private hospital located in Bandar Sunway offers specialised health and tertiary care services.
SUNWAY CITY BERHAD 21 ( 8 7 5 6 4 - X ) The Group is poised to capitalise on the positive market conditions in its businesses, particularly in property development, where it is planning to double its property launches to exceed RM 1.0 billion in GDV in 2004. Some of the high-end launches, such as the prestigious Kiara Hills development, are expected to contribute substantially to its future earnings.
The continuing efforts of the Group to restructure its low yielding businesses to improve earnings and to degear will be further realised with the impending closure of the Theme Park operations in Sydney, Australia and the disposal of the 60ha property for AUD 52.5 million. With the completion of st Tan Sri Dato’Seri (Dr) Jeffrey Cheah, receiving the 1 prize the aforesaid proposal, coupled with strong award at the Ipoh Bougainvillea Parade 2004 from the Sultan of Perak, Paduka Seri Sultan Azlan Shah. improvement in earnings from operations, this has provided a strong platform for the Group to significantly enhance its shareholders’ value going forward. FUTURE OUTLOOK
With a positive global economic outlook in 2004, ACKNOWLEDGEMENT AND APPRECIATION particularly in the US and Japan, Malaysia’s export growth is expected to accelerate on rising global On behalf of the Board, I would like to express my trade and demand for electronics. The economy appreciation and gratitude to the management and looks set to achieve a stronger growth of 6% , staff of the Group for their dedication, commitment supported by strengthening domestic demand. and loyalty and to our valued customers, business General business and consumer confidence is associates, bankers, government authorities and increasing whilst the strong mandate given to the shareholders for their continued support and ruling Barisan Nasional coalition in the 2004 confidence in the Group. General Elections for further economic progress and reforms will strengthen investors’ c o n f i d e n c e . Monetary policies are expected to remain accommodative to support a robust economic environment.
Tan Sri Dato’ Seri (Dr) Cheah Fook Ling Executive Chairman
28 May 2004
22 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Usaha-usaha berterusan Kumpulan untuk menyusun semula beberapa perniagaan yang tidak memberikan pulangan memuaskan bagi tujuan meningkatkan pendapatan dan mengurangkan bebanan hutang akan menjadi kenyataan dengan rancangan untuk menutup operasi Taman Tema di Sydney, Australia dan penjualan hartanah 60 hektar disekitarnya pada harga AUD 52.5 juta. Dengan lengkapnya cadangan dan disokong oleh penambahbaikan pendapatan operasi yang kukuh, ianya telah menghasilkan landasan yang tegap untuk Kumpulan terus berupaya memastikan peningkatan nilai pegangan saham yang berterusan.
MAKLUMAN DAN PENGHARGAAN
Bagi pihak Lembaga Pengarah, saya ingin merakamkan penghargaan dan ucapan terima kasih saya kepada pihak pengurusan dan kakitangan Kumpulan di atas sikap dedikasi, komitmen dan kesetiaan mereka dan kepada para pelanggan, rakan-rakan niaga, ahli-ahli bank, pihak-pihak berkuasa kerajaan dan para pemegang saham yang kami hargai di atas sokongan dan keyakinan berterusan mereka terhadap Kumpulan.
Tan Sri Dato’Seri (Dr) Cheah Fook Ling Pengerusi Eksekutif
28 Mei 2004
SUNWAY CITY BERHAD 23 ( 8 7 5 6 4 - X ) Corporate Governance Statement
The Board is committed to ensure that good corporate governance is practised throughout the Group with the ultimate objective of protecting and enhancing shareholders’ value and the financial performance of the Company and of the Group.
The Board is committed to implementing the Malaysian Code on Corporate Governance wherever applicable in the best interest of the shareholders of the Company.
BOARD OF DIRECTORS
The Board provides strategic directions for the Group and regularly meets to review corporate strategies and the operations as well as financial performance of the operating units within the Group.
BOARD COMPOSITION
The Board currently consists of ten (10) members, three (3) or one-third (1/3) are Independent Non-Executive Directors. The composition reflects a balance of Executive and Non-Executive Directors with a mix of suitably qualified and experienced professionals in the fields of accountancy, banking and finance, architecture, civil engineering, real estate development and property management. This combination of different professions and skills working together enables the Board to effectively lead and control the Company.
There is clear segregation of responsibilities between the Executive Chairman and the Managing Director to ensure a balance of power and authority. The Managing Director is subject to the control of the Board of Directors.
Tan Sri Dato’ Ir Talha Bin Haji Mohd Hashim is the Senior Independent Non-Executive Director, to whom concerns relating to the affairs of the Group may be directed at.
A brief profile of each Director is presented on pages 6 to 10 of the Annual Report.
MEETINGS AND SUPPLY OF INFORMATION
Unless there are urgent matters, the Board normally meets quarterly to review financial, operational and business performances. Notices and agenda of meetings duly endorsed by the Executive Chairman together with relevant board papers are normally given at least one (1) week prior to the meetings for the Directors to study and evaluate the matters to be discussed.
In addition, all Directors have direct access to the advice and services of the joint Company Secretaries. They are also permitted to seek independent advice whenever deemed necessary at the Company’s expense.
24 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Corporate Governance Statement (cont’d)
The Board met six (6) times for the financial year ended 31 December 2003 and the attendance of the respective Directors was as follows:-
Total No. of Percentage of Meetings Attendance Name of Directors Attended (%) Tan Sri Dato’Seri (Dr) Cheah Fook Ling (Executive Chairman) 5/6 83 Datuk Razman M Hashim (Deputy Executive Chairman) 6/6 100 Tan Sri Dato’Ir Talha Bin Haji Mohd Hashim 6/6 100 Dato’ Wong Choon Kee 6/6 100 Ngian Siew Siong 6/6 100 Ngeow Voon Yean 6/6 100 Low Siew Moi 6/6 100 Teo Tong How 5/6 83 Tan Siak Tee 5/6 83 Lim Swe Guan 4/6 67
DIRECTORS’TRAINING
All the Directors had attended the Mandatory Accreditation Programme prescribed by Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad) [“Bursa Malaysia”]. During the year under review, most of the Directors had also attended the continuing education programmes and seminars in compliance with Practice Note No. 15/2003 of Bursa Malaysia Listing Requirements in order to equip themselves to effectively discharge their duties as Directors.
All Directors were constantly updated by the Company Secretary on changes to the relevant guidelines on the statutory and regulatory requirements.
RETIREMENT BY ROTATION AND RE-ELECTION
All Directors are subject to retirement by rotation at regular intervals of at least every three (3) years at the Annual General Meeting and they shall be eligible for re-election.
BOARD COMMITTEES
The Board has set up the following Committees and will periodically review their terms of reference and operating procedures. The Committees are required to report to the Board on all their deliberations and recommendations.
1. Executive Committee
The Executive Committee comprises six (6) members headed by the Managing Director and its primary role is to assist the Board in overseeing the financial and business affairs of the Group. During the year under review, the Executive Committee met six (6) times.
SUNWAY CITY BERHAD 25 ( 8 7 5 6 4 - X ) Corporate Governance Statement (cont’d)
2. Audit Committee
The Audit Committee is set up to play an active role in assisting the Board in discharging its governance responsibilities. The composition of the Committee, its terms of reference, attendance of meetings and a summary of its activities are set out on pages 29 to 34.
3. Employees’Share Option Scheme (“ESOS”) Committee
The ESOS Committee comprising Tan Sri Dato’Seri (Dr) Cheah Fook Ling, Datuk Razman M Hashim and Dato’ Wong Choon Kee, is responsible for implementing, allocating and administering the ESOS.
During the year under review, a meeting was held to consider and approve the allocation of share options to the employees of the Group pursuant to the new ESOS 2003/2013.
4. Nomination Committee
The Nomination Committee comprises three (3) wholly Independent Non-Executive Directors. The Chairman of this Committee is Tan Sri Dato’ Ir Talha Bin Haji Mohd Hashim. The other members of the Committee are Teo Tong How and Tan Siak Tee.
The Nomination Committee is responsible for identifying and making recommendations for any appointments and re-election of Board members. The Committee also assesses the effectiveness of the Board as a whole as well as the performance of each Director.
During the year under review, a meeting was held to table and discuss the evaluation process of board effectiveness.
5. Remuneration Committee
The Remuneration Committee comprises mainly Non-Executive Directors namely Tan Sri Dato’Ir Talha Bin Haji Mohd Hashim as Chairman, Teo Tong How and Tan Sri Dato’Seri (Dr) Cheah Fook Ling.
The Remuneration Committee recommends to the Board the remuneration for Directors with the aim of ensuring that the Company attracts and retains the Directors needed to run the Group successfully.
The remuneration of the Executive Directors is structured on the basis of linking rewards to corporate and individual performance. For Non-Executive Directors, the level of remuneration reflects the experience and degree of responsibilities.
The Remuneration Committee will meet as and when required. For the year under review, a meeting was held to evaluate the performance of the Executive Directors and to determine their annual increments and bonuses.
26 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Corporate Governance Statement (cont’d)
(a) The breakdown of the remuneration of the Directors during the financial year was as follows:-
Executive Non-Executive Total Directors Directors RM RM RM Fees Ð 72,000.00 72,000.00 Other Emoluments Ð 27,000.00 27,000.00 Salaries and other Remuneration 2,718,386.67 Ð 2,718,386.67 Bonus 759,000.00 Ð 759,000.00 Benefits-in-kind 140,737.71 Ð 140,737.71 Total: 3,618,124.38 99,000.00 3,717,124.38
(b) Number of Directors whose remuneration falls under the following bands:-
Range of Remuneration Executive Non-Executive Total Directors Directors Below RM50,000 Ð 5 5 RM200,001 to RM250,000 1 Ð 1 RM450,001 to RM500,000 1 Ð 1 RM500,001 to RM550,000 1 Ð 1 RM550,001 to RM600,000 1 Ð 1 RM1,800,001 to RM1,850,000 1 Ð 1 Total: 5 5 10
(c) Directors’Share Options pursuant to the Company’s ESOS:-
The movement of Directors’share options during the financial year ended 31 December 2003 is set out on page 42.
6. Group Risk Management Committee
The Group Risk Management Committee was established on 20 November 2003, comprising Dato’ Wong Choon Kee as Chairman, Ngian Siew Siong, Ngeow Voon Yean, Yuen Kam Wah, Lee Weng Keng and Wang Yeong Khang.
The Group Risk Management Committee is tasked with the responsibility to oversee the risk management activities of the Group, approving appropriate risk management procedures and measurement methodologies across the organization as well as identification and management of strategic business risks of the Group.
SUNWAY CITY BERHAD 27 ( 8 7 5 6 4 - X ) Corporate Governance Statement (cont’d)
RELATIONS WITH SHAREHOLDERS
The Board values constant dialogue and is committed to clear communication with its shareholders and investors. In this respect, as part of the Group’s active investor relations program, discussions and dialogues are held with fund managers, financial analysts, shareholders and the media to convey information about the Group’s performance, corporate strategy and other matters affecting shareholders’interests.
In addition to published Annual Report and Quarterly Reports announced to Bursa Malaysia, the Group has established a website at http://www.sunway.com.my from which investors and shareholders can access for information.
The participation of shareholders, both individuals and institutional at General Meetings on clarifications of pertinent and relevant information is encouraged.
DIRECTORS’RESPONSIBILITY STATEMENT ON ANNUALAUDITED FINANCIAL STATEMENTS
The Directors are responsible for the preparation of the Annual Audited Financial Statements of the Company and of the Group and will ensure that they are presented in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia.
INTERNAL CONTROL
The Statement on Internal Control set out on pages 35 and 36 of this Annual Report provides an overview of the state of internal controls within the Group.
RELATIONSHIPWITH THE AUDITORS
The Board maintains, via the Audit Committee, an active, transparent and professional relationship with its Auditors. The role of the Audit Committee in relation to the External Auditors is disclosed in the Audit Committee Report set out on pages 29 to 34.
28 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Audit Committee Report
FORMATION
The Audit Committee was formed by the Board of Directors at its meeting on 29 March 1996.
The objective of the Audit Committee is to assist the Board of Directors in fulfilling its fiduciary responsibilities relating to internal controls, financial and accounting records and policies as well as financial reporting practices of the Company and its subsidiaries (“the Group”).
COMPOSITION
The members of the Audit Committee during the financial year were:-
1. Tan Sri Dato’ Ir Talha Bin Haji Mohd Hashim - Chairman (Senior Independent Non-Executive Director)
2. Teo Tong How (Independent Non-Executive Director)
3. Tan Siak Tee (Independent Non-Executive Director)
4. Ngian Siew Siong (Deputy Managing Director - Property Development, Non-Independent Executive Director)
MEETINGS AND ATTENDANCE
The Audit Committee held five (5) meetings during the financial year. The attendance of the Committee members was as follows:-
Name of Committee Member Number of Meetings Attended Tan Sri Dato’Ir Talha bin Haji Mohd Hashim 5/5 Teo Tong How 5/5 Tan Siak Tee 5/5 Ngian Siew Siong 5/5
The Company Secretaries, the Internal Auditors, the Managing Director and the Group Financial Controller were present at all meetings. At three (3) of the meetings, the External Auditors were present.
TERMS OF REFERENCE
1. Membership
1.1 The Committee shall be appointed by the Board of Directors from amongst the Directors of the Company and shall consist of not less than three (3) members.
1.2 The majority of the members including the Chairman of the Committee shall be Independent Directors as defined in Chapter 1 of the Listing Requirements of Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad) [“Bursa Malaysia”].
SUNWAY CITY BERHAD 29 ( 8 7 5 6 4 - X ) Audit Committee Report (cont’d)
1.3 The Committee shall include at least one (1) person:-
(a) who is a member of the Malaysian Institute of Accountants; or
(b) who must have at least three (3) years’working experience and:-
(i) have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967; or
(ii) is a member of one (1) of the Associations specified in Part II of the 1st Schedule of the Accountants Act, 1967; or
(c) who must have at least three (3) years’ post qualification experience in accounting or finance and:-
(i) has a degree/masters/doctorate in accounting or finance; or
(ii) is a member of one (1) of the professional accountancy organizations which has been admitted as a full member of the International Federation of Accountants; or
(d) who must have at least seven (7) years’ experience being a chief financial officer of a corporation or having the function of being primarily responsible for the management of the financial affairs of a corporation.
1.4 No Alternate Director shall be appointed as a member of the Committee.
1.5 The members of the Committee shall elect a Chairman from amongst their number.
1.6 If a member of the Committee resigns, dies or for any reason ceases to be a member with the result that the number of members is reduced below three (3), the Board shall, within three (3) months appoint such number of new members as may be required to make up the minimum of three (3) members.
1.7 The terms of office and performance of the Committee and each of its members shall be reviewed by the Board no less than once every three (3) years. However, the appointment terminates when a member ceases to be a Director.
2. Meetings
2.1 The quorum for a Committee Meeting shall be at least two (2) members, the majority present must be Independent Directors.
2.2 The Committee shall meet at least four (4) times a year and such additional meetings as the Chairman shall decide.
2.3 Notwithstanding paragraph 2.2 above, upon the request of any member of the Committee, non-member Directors, the Internal or External Auditors, the Chairman shall convene a meeting of the Committee to consider the matters brought to its attention.
2.4 The External Auditors have the right to appear and be heard at any meeting of the Committee and shall appear before the Committee when required to do so.
30 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Audit Committee Report (cont’d)
2.5 The non-member Directors and employees of the Company and of the Group shall normally attend the meetings to assist in its deliberations and resolutions of matters raised. However, at least once a year, the Committee shall meet with the External Auditors without the presence of the executive members of the Committee.
2.6 The Internal Auditors shall be in attendance at all meetings to present and discuss the audit reports and other related matters as well as the recommendations relating thereto and to follow-up on all relevant decisions made.
2.7 The Company Secretary shall act as Secretary of the Committee and shall be responsible, with the concurrence of the Chairman, for drawing up and circulating the agenda and the notice of meetings together with the supporting explanatory documentation to members prior to each meeting.
2.8 The Secretary of the Committee shall be entrusted to record all proceedings and minutes of all meetings of the Committee.
2.9 In addition to the availability of detailed minutes of the Committee Meetings to all Board members, the Committee at each Board Meeting, will report a summary of significant matters and resolutions.
3. Rights And Authority
The Committee is authorised to:-
3.1 Investigate any matter within its terms of reference.
3.2 Have adequate resources required to perform its duties.
3.3 Have full and unrestricted access to information, records and documents relevant to its activities.
3.4 Have direct communication channels with the External and Internal Auditors.
3.5 Engage, consult and obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise it considers necessary.
4. Functions and Duties
4.1 To review and recommend for the Board’s approval, the Internal Audit Charter which defines the independent purpose, authority, scope and responsibility of the internal audit function in the Company and the Group.
4.2 To review the following and report to the Board:-
(a) With the External Auditors:-
(i) the audit plan and audit report and the extent of assistance rendered by employees of the Auditee;
(ii) their evaluation of the system of internal controls;
(iii) the audit fee and on matter concerning their suitability for nomination, appointment and re- appointment and the underlying reasons for resignation or dismissal as Auditors;
SUNWAY CITY BERHAD 31 ( 8 7 5 6 4 - X ) Audit Committee Report (cont’d)
(iv) the management letter and management’s response; and
(v) issues and reservations arising from audits.
(b) With the Internal Audit Department:-
(i) the adequacy and relevance of the scope, functions and resources of Internal Audit and the necessary authority to carry out its work;
(ii) the audit plan of work programme and results of internal audit processes including recommendations and actions taken;
(iii) the extent of cooperation and assistance rendered by employees of Auditee; and
(iv) the appraisal of the performance of the internal audit including that of the senior staff and any matter concerning their appointment and termination.
(c) The quarterly results and year end financial statements prior to the approval by the Board, focusing particularly on:-
(i) changes and implementation of major accounting policies and practices;
(ii) significant and unusual issues;
(iii) going concern assumption; and
(iv) compliance with accounting standards, regulatory and other legal requirements.
(d) The major findings of investigations and management response.
(e) The propriety of any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity.
4.3 To report any breaches of the Listing Requirements which have not been satisfactorily resolved, to Bursa Malaysia.
4.4 To prepare the Audit Committee Report for inclusion in the Company’s Annual Report covering:-
(a) the composition of the Committee including the name, designation and directorship of the members;
(b) the terms of reference of the Committee;
(c) the number of meetings held and details of attendance of each member;
(d) a summary of the activities of the Committee in the discharge of its functions and duties; and
(e) a summary of the activities of the internal audit function.
32 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Audit Committee Report (cont’d)
4.5 To review the following for publication in the Company’s Annual Report:-
(a) the disclosure statement of the Board on:-
(i) the Company’s applications of the principles set out in Part I of the Malaysian Code on Corporate Governance; and
(ii) the extent of compliance with the best practices set out in Part II of the Malaysian Code on Corporate Governance, specifying reasons for any area of non-compliance and the alternative measures adopted in such areas.
(b) the statement on the Board’s responsibility for the preparation of the annual audited financial statements.
(c) the disclosure statement on the state of the internal controls system of the Company and of the Group.
(d) the statement by the Audit Committee on the verification of allocation of share options to the Group’s eligible employees in compliance with the criteria set out in the Bye-Laws of the Company’s Employees’Share Option Scheme, at the end of each financial year.
(e) other disclosures forming the contents of annual report spelt out in Part A of Appendix 9C of the Listing Requirements of Bursa Malaysia.
The above functions and duties are in addition to such other functions as may be agreed to from time to time by the Committee and the Board.
5. Internal Audit Department
5.1 The Head of the Internal Audit Department shall have unrestricted access to the Committee Members and report to the Committee whose scope of responsibility includes overseeing the development and the establishment of the internal audit function.
5.2 In respect of routine administrative matters, the Head of Internal Audit Department shall report to the Group Executive Chairman or his designate.
ACTIVITIES OFTHE COMMITTEE FOR YEAR 2003
The summary of the activities of the Committee in the discharge of its duties and responsibilities included the following:-
(a) Reviewed the adequacy and relevance of the scope, functions, resources, risk based internal audit plan and results of the internal audit processes with the Internal Audit Department.
(b) Reviewed the audit activities carried out by the Internal Audit Department and the audit reports to ensure corrective actions were taken in addressing the risk issues reported.
(c) Reviewed with the assistance of the Internal Audit Department and management, the adequacy, appropriateness and compliance of the procedures established to monitor recurrent related party transactions.
(d) Reviewed with the External Auditors, the audit plan of the Company and of the Group for the year (inclusive of risk and audit approach, system evaluation, audit fees, issues raised and management responses) prior to the commencement of the annual audit.
(e) Reviewed the extent of assistance rendered by management and issues and reservations arising from audits with the External Auditors without the presence of management staff and the executive member of the Committee.
SUNWAY CITY BERHAD 33 ( 8 7 5 6 4 - X ) Audit Committee Report (cont’d)
(f) Reviewed the financial statements, the audit reports, issues and reservations arising from audits and the management letter with the External Auditors.
(g) Reviewed the quarterly and year end financial statements with management for recommendation to the Board of Directors for approval and release to Bursa Malaysia.
(h) Reviewed all related party transactions entered into by the Company and the Group at the Committee’s quarterly meetings to ensure that the transactions entered into were at arm’s length basis and on normal commercial terms.
(i) Reviewed the Circular to Shareholders in respect of the proposed Shareholders’ Mandate for Recurrent Related Party Transactions.
(j) Discussed the implications of any latest changes and pronouncements on the Company and the Group, which were issued by the accountancy, statutory and regulatory bodies.
(k) Reported to the Board on significant issues and concerns discussed during the Committee’s meetings together with applicable recommendations. Minutes of meetings were tabled, discussed and noted by all Board members.
(l) Reviewed and approved the Audit Committee Report for the year ended 31 December 2002 for inclusion in the Company’s 2002 Annual Report.
(m) Reviewed the disclosure statements on compliance of the Malaysian Code on Corporate Governance and Directors’ Responsibility Statement on the annual audited financial statements for inclusion in the Company’s 2002 Annual Report.
INTERNALAUDITACTIVITIES REPORT FOR YEAR 2003
The summary of the activities of the Internal Audit Department was as follows:-
(a) Prepared the annual audit plan for the approval of the Audit Committee.
(b) Regularly performed risk based audits on strategic business units of the Company and of the Group, which covered reviews of the internal control system, accounting and management information system and risk management.
(c) Issued audit reports to the Committee and management identifying weaknesses and issues as well as highlighting recommendations for improvements.
(d) Acted on suggestions made by the Committee and/or senior management on concerns over operations or controls.
(e) Followed up on management corrective actions on audit issues raised by the External Auditors.
(f) Reported to the Committee on review of the adequacy, appropriateness and compliance with the procedures established to monitor recurrent related party transactions.
(g) Reviewed on the appropriateness of the disclosure statements in regard to compliance with the Malaysian Code on Corporate Governance and the state on internal controls as well as the Audit Committee Report.
(h) Attended Committee’s meetings to table and discuss the audit reports and followed up on matters raised.
34 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Statement On Internal Control
INTRODUCTION The Malaysian Code on Corporate Governance stipulates that the Board of Directors of listed companies should maintain a sound system of internal control to safeguard shareholders’investment and Group assets. Set out below is the Board of Directors (“the Board”) of Sunway City Berhad’s (“the Group”) Statement on Internal Control (“Statement”) as a Group, made in compliance with Paragraph 15.27 of the Listing Requirements and the Statement on Internal Control: Guidance for Directors of Public Listed Companies.
THE BOARD’S RESPONSIBILITY The Board places importance on, and is committed to maintaining a sound system of internal control and effective risk management practices in the Group to ensure good corporate governance. The Board affirms its responsibility for reviewing the adequacy and integrity of the Group’s system of internal control and management information systems, including systems for compliance with applicable laws, rules, directives, guidelines and risk management practices. Notwithstanding, as with any internal control system, the Group’s system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives. It follows, therefore, that the system of internal control can only provide reasonable but not absolute assurance against material misstatement or loss.
THE GROUP’S SYSTEM OF INTERNALCONTROL Monitoring Mechanisms and Management Style Scheduled periodic meetings of the Board, Executive Committee (“EXCO”), Board Committees and Management represent the main platform by which the Group’s performance and conduct is monitored. The daily running of the business is entrusted to the Managing Director (“MD”), Deputy Managing Directors (“DMDs”) and their respective management teams. Under the purview of the Executive Chairman, MD and DMDs, the heads of the respective operating subsidiaries and departments of the Group are empowered with the responsibility of managing their respective operations. The MD and DMDs actively communicate the Board’s expectations to management at management meetings as well as through attendance at various project meetings/ owners meetings. At these meetings, operational and financial risks are discussed and dealt with. The Board is responsible for setting the business direction and for overseeing the conduct of the Group’s operations through its various Board Committees and management reporting mechanisms. Through these mechanisms the Board is informed of major control issues pertaining to internal controls, regulatory compliance and risk taking.
Enterprise Risk Management Framework In dealing with its stewardship responsibilities, the Board recognises that effective risk management is part of good business management practice. The Board acknowledges that all areas of the Group’s activities involve some degree of risk and is committed to ensuring that the Group has an effective risk management framework which will allow the Group to be able to identify, evaluate and manage risks that affect the achievement of the Group’s business objectives within defined risk parameters in a timely and effective manner. It is the Board’s view that the Group’s objectives, its internal organisation and the environment in which it operates continuously evolve; and as a result, the risks that it faces also change. A sound system of internal control therefore depends on a thorough and regular evaluation of the nature and extent of the risks to which the Group is exposed. During the year, the Group formalized its Enterprise Risk Management (“ERM”) framework, policy and oversight structure. The ERM framework entails the systematic identification, evaluation, management and reporting of principal business risks with the aid of a risk management technology enabler, the Corporate Risk Scorecard (“CRS”).
The Board entrusts the Group Risk Management Committee (“GRMC”), comprising the MD, DMDs and a team of senior management, with the overall responsibility for overseeing the risk management activities of the Group, approving appropriate risk management procedures and measurement methodologies, identification and management of strategic business risks of the Group. The GRMC is assisted by 2 sub-committees namely the Enterprise Risk Review Committee and Divisional Risk Management Committee which are responsible for the identification and management of operational risks at business divisions.
SUNWAY CITY BERHAD 35 ( 8 7 5 6 4 - X ) Statement On Internal Control (cont’d)
The GRMC is responsible for routine quarterly reporting and update of risk management activities of the Group to the Board.
Key Elements of the Group’s System of Internal Control The current system of internal control in the Group has within it, the following key elements: ¥ Clear Group vision, mission, corporate philosophy and strategic direction, which is communicated to employees at all levels. ¥ An effective Board which retains control over the Group with appropriate management reporting mechanisms which enable the Board to review the Group’s progress. ¥ Board approved annual budgets and management plans, prepared by each subsidiary company during the Business Plan exercise to consider the relevant strengths, weaknesses, opportunities and threats including competitor, market and broader environmental analysis. ¥ Relevant Board Committees with formal terms of references clearly outlining their functions and duties delegated by the Board. ¥ Comprehensive policies and procedure manuals that provide guidelines on, and authority limits over various operating, financial, human resource and health & safety matters. ¥ The use of the intranet as an effective means of communication and knowledge sharing. ¥ Regular divisional management meetings involving the review of the Group’s operations, financial performance, human resource matters and business plan. ¥ Communication of policies and guidelines in relation to human resource matters to all employees through a staff handbook which is also available on the intranet. ¥ A systematic performance appraisal system. ¥ Relevant training provided to personnel across all functions to maintain a high level of competency and capability. ¥ Continuous quality improvement initiatives such as ISO 9001:2000 certification. ¥ An internal audit function which carries out internal audits based on an annual risk based audit plan approved by the Audit Committee (see also Assurance Mechanisms below).
Assurance Mechanisms The Audit Committee (“AC”) is tasked by the Board with the duty of reviewing and monitoring the effectiveness of the Group’s system of internal control. In carrying out its responsibilities, the AC relies significantly on the support of the Group Internal Audit Division (“GIAD”) which carries out internal audits on various operating units within the Group based on a risk-based audit plan approved annually by the AC. Based on these audits, the GIAD provides the AC with periodic reports highlighting observations, recommendations and management action plans to improve the system of internal control. In addition, the AC also reviews and deliberates on any matters relating to internal control highlighted by the external auditors in the course of their statutory audit of the financial statements of the Group. Additionally, as part of the requirements of the ISO 9001:2000 certification accredited to the Group’s property development activities, Sunway Resort Hotel Sdn Bhd and Sunway Medical Centre Berhad, scheduled audits are conducted internally as well as by auditors of the relevant certification bodies. Results of the audits are reported to management. The Report of the AC is set out on pages 29 to 34 of the Annual Report.
THE BOARD’S COMMITMENT The Board recognises that the Group operates in a dynamic business environment in which the internal control system must be responsive in order to be able to support its business objectives. To this end, the Board remains committed towards maintaining a sound system of internal control and believes that a balanced achievement of its business objectives and operational efficiency can be attained.
36 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Financial Statements
Directors' Report 38 - 44
Statement by Directors 45
Statutory Declaration 45
Report of the Auditors 46
Balance Sheets 47 - 48
Income Statements 49
Statements of Changes in Equity 50 - 51
Cash Flow Statements 52 - 55
Notes to the Financial Statements 56 - 119
SUNWAY CITY BERHAD 37 ( 8 7 5 6 4 - X ) Directors’ Report
The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2003.
PRINCIPALACTIVITIES
The principal activities of the Company are those of property development and investment, and investment holding.
The principal activities of the subsidiary and associated companies are:
(i) property development and investment; (ii) operation of hotels, theme park and related activities; (iii) rendering recreational club facilities; (iv) operation of travel, tour business and related activities; (v) operation of a medical centre; and (vi) management and letting of property.
There have been no significant changes in the nature of these activities during the financial year.
RESULTS
Group Company RM'000 RM'000
Profit after taxation 71,694 8,884 Minority interests (46,214) Ð
Net profit for the year 25,480 8,884
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the statements of changes in equity.
In the opinion of the Directors, the results of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than as disclosed in Note 35 to the financial statements and the effects arising from a prior year adjustment resulting in a decrease in the Group's net profit for the year by RM4,025,000 (2002: RM3,048,000) as disclosed in Note 37 to the financial statements.
DIVIDENDS
On 24 February 2003, the following dividends were paid for the 6.6% cumulative convertible preference shares in respect of the period from September 2002 to February 2003:
(a) an amount of RM2,376,000 which was accrued in the previous financial year; and
(b) an amount of RM1,188,000 which was accrued in the current financial year.
On 30 April 2003, the Company paid an interim dividend of 1.5% less 28% taxation on 400,199,000 ordinary shares in issue amounting to RM4,322,000 (1.08 sen net per ordinary share) in respect of the financial year ended 31 December 2002 as disclosed in the Directors' Report of that year.
At the forthcoming Annual General Meeting, a final dividend of 1.0% less 28% taxation on ordinary shares in issue on the date of entitlement in respect of the financial year ended 31 December 2003 will be proposed for shareholders' approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in shareholders' equity as an appropriation of retained profit in the financial year ending 31 December 2004.
38 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Directors’ Report (cont’d)
SHARE CAPITAL
During the financial year, the issued and paid up share capital of the Company was increased from RM340,199,000 to RM400,252,000 by way of the issuance of the following shares:
(a) 53,000 new ordinary shares of RM1.00 each issued to eligible employees of the Group under the Employees' Share Option Scheme at RM1.00 per share for cash; and
(b) 60,000,000 new ordinary shares of RM1.00 each arising from the conversion of 108,000,000 6.6% Cumulative Convertible Preference Shares of RM1.00 each.
EMPLOYEES' SHARE OPTION SCHEME
On 22 September 2003, the Company implemented a new Employees' Share Option Scheme ("the Scheme") for the eligible employees (including Executive Directors) of the Company and its subsidiary companies. The new Scheme replaces the previous Scheme due to expire on 22 December 2004 but was terminated upon approval by the shareholders at an Extraordinary General Meeting held on 26 August 2003. The new ESOS is governed by the bye-laws which were approved by the shareholders on 26 August 2003.
The main features of the new Scheme are:
(a) The total number of new shares to be offered shall not exceed 10% of the issued and paid-up share capital of the Company (or such other higher percentage as may be permitted by the relevant regulatory authorities, from time to time) at the time of the offer of options under the Scheme.
(b) Only eligible Executive Directors and employees of the Company and of the Group will be eligible to participate in the Scheme.
(c) The price payable upon exercise of an option granted under the Scheme will be based on the five-day weighted average market price of the Company's shares at the time the offer is granted with a discount of not more than 10% if deemed appropriate or the par value of the Company's shares, whichever is higher.
(d) The duration of the Scheme is ten (10) years from the date of its commencement.
(e) The number of options to be offered to an eligible employee in accordance with the Scheme shall be determined based on seniority, performance and length of service and the offer shall be valid for acceptance by an employee for a period of thirty days from the date of offer.
(g) The options granted may be exercised in the following manner:
Number of options Maximum Percentage of granted Total Options Exercisable Year 1 Year 2 Year 3 Below 20,000 100% Ð Ð 20,000 and above 40%* 30% 30%#
* 40% or 20,000 options, whichever is higher # 30% or the remaining number of options unexercised
Options exercisable in a particular year but not exercised can be carried forward to the subsequent years provided that no options shall be exercised beyond the date of expiry of the Scheme.
SUNWAY CITY BERHAD 39 ( 8 7 5 6 4 - X ) Directors’ Report (cont’d)
EMPLOYEES' SHARE OPTION SCHEME (CONTD.)
The movement in the options to take up unissued new ordinary shares of RM1.00 each during the financial year was as follows:
Number of ordinary shares under option
At 1 January 2003 27,771,000 Forfeiture on resignations during the financial year Ð
27,771,000 Exercised during the financial year (53,000)
At 31 December 2003 27,718,000
At the end of the financial year, the unissued shares under option were as follows:
Number of ordinary shares Option price of RM1.00 each RM
First offer 27,718,000 1.00
The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the options held by the Executive Directors and the list of option holders and their holdings except for those holders (excluding Executive Directors) who have options of 500,000 ordinary shares and above, which are as follows:
Options over Ordinary Shares of RM1.00 each At Granted Terminated At 1.1.2003 During the year 31.12.2003
Yuen Kam Wah Ð 750,000# Ð 750,000# Puan Sri Datin Seri (Dr) Cheah Seok Cheng Ð 700,000# Ð 700,000# Wang Yeong Khang 300,000* 600,000# (300,000)* 600,000# Ong Ghee Bin 300,000* 500,000# (300,000)* 500,000# Ho Hon Sang 250,000* 500,000# (250,000)* 500,000#
* Options pursuant to the Sunway City Berhad Exployees’ Share Option Scheme 1999/2004 which was terminated on 26 August 2003.
# Options pursuant to the new Employees’ Share Option Scheme 2003/2013 which was implemented on 22 September 2003.
40 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Directors’ Report (cont’d)
DIRECTORS
The names of the Directors of the Company in office since the date of the last report and at the date of this report are:
Tan Sri Dato' Seri (Dr.) Cheah Fook Ling Datuk Razman M Hashim Tan Sri Dato' IR. Talha Bin Haji Mohd Hashim Dato' Wong Choon Kee Ngian Siew Siong Ngeow Voon Yean Low Siew Moi Teo Tong How Tan Siak Tee Lim Swe Guan
In accordance with Article 78 of the Company's Articles of Association, Tan Sri Dato' Seri (Dr.) Cheah Fook Ling, Ngeow Voon Yean and Teo Tong How retire by rotation from the Board at the forthcoming annual general meeting and, being eligible, offer themselves for re-election.
DIRECTORS' INTERESTS
According to the register of directors' shareholdings, the interests of Directors in office at the end of the financial year in shares and options in the Company and its related corporations during the financial year were as follows:
Ordinary Shares of RM1.00 each At At 1.1.2003 Bought Sold 31.12.2003
Tan Sri Dato' Seri (Dr.) Cheah * 145,283,017 14,720,000 Ð 160,003,017 Fook Ling 10,823,251 Ð Ð 10,823,251
Tan Sri Dato' IR. Talha Bin 10,000 Ð Ð 10,000 Haji Mohd Hashim
Datuk Razman M Hashim 30,000 Ð Ð 30,000
Dato' Wong Choon Kee 31,000 Ð Ð 31,000
Ngian Siew Siong 10,000 Ð Ð 10,000
* Denotes deemed interest
SUNWAY CITY BERHAD 41 ( 8 7 5 6 4 - X ) Directors’ Report (cont’d)
DIRECTORS' INTERESTS (CONTD.)
Options over Ordinary Shares of RM1.00 each At Granted Terminated At 1.1.2003 During the year 31.12.2003
Datuk Razman M Hashim 400,000* 700,000# (400,000)* 700,000
Dato' Wong Choon Kee Ð 700,000# Ð 700,000
Ngian Siew Siong 350,000* 700,000# (350,000)* 700,000
Ngeow Voon Yean 300,000* 700,000# (300,000)* 700,000
* Options pursuant to the Sunway City Berhad Employees' Share Option Scheme 1999/2004 which was terminated on 26 August 2003.
# Options pursuant to the new Employees' Share Option Scheme 2003/2013 which was implemented on 22 September 2003.
By virtue of his interest in shares in the Company, Tan Sri Dato' Seri (Dr.) Cheah Fook Ling is also deemed to have an interest in the shares of all other subsidiary companies of the Company to the extent that the Company has an interest.
DIRECTORS' BENEFITS
Neither at the end of the financial year, nor at any time during that year did there subsist any arrangement to which the Company was a party, whereby Directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate, other than as may arise from the share options to be granted pursuant to the ESOS.
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 the Directors as shown in the financial statements or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with any Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest except for Tan Sri Dato' Seri (Dr.) Cheah Fook Ling and Datuk Razman M Hashim who may be deemed to derive a benefit by virtue of those transactions, products, parts and other properties or any interest in any properties; and/or for the provision of services including but not limited to management and consultancy services, and/or provision of construction contracts, leases and tenancy; and/or the provision of treasury functions, advances and conduct of normal trading and/or other businesses and construction contracts respectively between the Company and its related corporations and corporations in which Tan Sri Dato' Seri (Dr.) Cheah Fook Ling and Datuk Razman M Hashim are deemed to have an interest.
42 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Directors’ Report (cont’d)
OTHER STATUTORY INFORMATION
(a) Before the balance sheets and income statements of the Group and of the Company were made out, the Directors took reasonable steps:
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written 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 the accounting records in the ordinary course of business had been written down to an amount which they 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 provision for doubtful debts inadequate to any substantial extent; and
(ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading.
(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(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 or 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 or of the Company to meet its obligations as and when they fall due; 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.
SUNWAY CITY BERHAD 43 ( 8 7 5 6 4 - X ) Directors’ Report (cont’d)
SIGNIFICANT EVENTS DURING THE FINANCIALYEAR
Significant events during the financial year are disclosed in Note 46 to the financial statements.
SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE
Significant event subsequent to the balance sheet date is disclosed in Note 47 to the financial statements.
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
Tan Sri Dato' Seri (Dr.) Cheah Fook Ling Dato' Wong Choon Kee
Petaling Jaya, Selangor Darul Ehsan 20 April 2004
44 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Statement By Directors Pursuant To Section 169(15) Of The Companies Act, 1965
We, Tan Sri Dato' Seri (Dr.) Cheah Fook Ling and Dato' Wong Choon Kee, being two of the Directors of Sunway City Berhad, do hereby state that, in the opinion of the Directors, the accompanying financial statements set out on pages 47 to 119 are drawn up in accordance with applicable Approved Accounting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2003 and of the results and the cash flows of the Group and of the Company for the year then ended.
Signed on behalf of the Board in accordance with a resolution of the Directors
Tan Sri Dato' Seri (Dr.) Cheah Fook Ling Dato' Wong Choon Kee
Petaling Jaya, Selangor Darul Ehsan 20 April 2004
Statutory Declaration Pursuant To Section 169(16) Of The Companies Act, 1965
I, Wang Yeong Khang, being the officer primarily responsible for the financial management of Sunway City Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 47 to 119 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.
Subscribed and solemnly declared by the abovenamed Wang Yeong Khang at Petaling Jaya in the State of Selangor Darul Ehsan on 20 April 2004
Wang Yeong Khang
Before me,
DAVID LINGAM A/L S. SOCKALINGAM Commissioner for Oaths SUNWAY CITY BERHAD 45 ( 8 7 5 6 4 - X ) Report Of The Auditors To The Members Of Sunway City Berhad (Incorporated in Malaysia)
We have audited the accompanying financial statements set out on pages 47 to 119. These financial statements are the responsibility of the Company's Directors. Our responsibility is to express an opinion on these financial statements based on our audit.
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 from 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 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 as at 31 December 2003 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 subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
We have considered the financial statements and the auditors' reports thereon of the subsidiary companies of which we have not acted as auditors as indicated in Note 45 to the financial statements, being financial statements that have been included in the consolidated financial statements.
We are satisfied that the financial statements of the subsidiary companies 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’ reports on the financial statements of the subsidiary companies 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 Yap Seng Chong AF: 0039 No. 2190/12/05 (J) Chartered Accountants Partner
Kuala Lumpur, Malaysia 20 April 2004
46 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Balance Sheets As At 31 December 2003
Group Company Note 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000 (Restated)
NON-CURRENTASSETS
Property, plant and equipment 4 484,187 398,580 25,753 28,298 Investment properties 5 318,584 309,517 20,240 20,240 Land held for development 6 338,639 354,410 4,581 4,581 Investments in subsidiary companies 7 Ð Ð 363,948 319,679 Amounts due from subsidiary companies 8 Ð Ð 861,936 755,287 Investments in associated companies 9 1,597 35,460 Ð 16,405 Investment in jointly controlled entity 10 10,836 Ð 10,872 Ð Other non-current investments 11 466,203 392,840 Ð Ð Goodwill on consolidation 12 15,042 23,914 Ð Ð Deferred tax assets 31 4,833 12,349 Ð Ð 1,639,921 1,527,070 1,287,330 1,144,490
CURRENTASSETS
Properties under development 13 309,399 250,497 36,039 33,302 Inventories 14 29,393 20,690 3,282 3,282 Trade receivables 15 106,867 61,801 8,513 10,116 Other receivables 16 48,445 22,977 5,959 6,912 Amounts due from associated companies 17 87 9,745 Ð 9,759 Taxation recoverable 3,411 4,813 608 636 Deposits with licensed banks 11,904 73,393 Ð Ð Cash and bank balances 18 128,297 112,858 23,615 13,187 637,803 556,774 78,016 77,194
CURRENT LIABILITIES
Trade payables 19 131,469 88,887 17,841 29,056 Other payables 20 278,730 269,639 62,628 37,572 Bank borrowings 21 57,093 47,447 21,857 21,254 Hire purchase and lease creditors 22 5,141 5,484 23 899 Dividend payable Ð 2,529 Ð 2,529 Taxation 7,594 6,304 1,931 2,659 480,027 420,290 104,280 93,969
NET CURRENTASSETS/(LIABILITIES) 157,776 136,484 (26,264) (16,775) 1,797,697 1,663,554 1,261,066 1,127,715
The accompanying notes form an integral part of these financial statements.
SUNWAY CITY BERHAD 47 ( 8 7 5 6 4 - X ) Balance Sheets As At 31 December 2003 (cont’d)
Group Company Note 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000 (Restated)
FINANCED BY:
Share capital 23 400,252 448,199 400,252 448,199 Share premium 24 158,363 110,363 158,363 110,363 Reserves 25 204,243 176,447 208,077 204,550 Shareholders' funds 762,858 735,009 766,692 763,112
Minority interests 26 289,390 253,213 Ð Ð Long term bank borrowings 27 460,502 338,436 359,670 282,267 Long term liabilities 28 218,647 283,647 Ð 29,000 Advances by minority shareholders of subsidiary companies 29 62,554 47,100 Ð Ð Amounts due to subsidiary companies 30 Ð Ð 134,704 53,330 Hire purchase and lease creditors 22 3,712 6,144 Ð 6 Deferred tax liabilities 31 34 5 Ð Ð 1,797,697 1,663,554 1,261,066 1,127,715
The accompanying notes form an integral part of these financial statements.
48 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Income Statements For The Year Ended 31 December 2003
Group Company Note 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000 (Restated)
Revenue 32 728,640 659,428 96,239 103,999 Cost of sales (352,119) (275,020) (60,067) (26,752) Gross profit 376,521 384,408 36,172 77,247 Other operating income 24,528 24,717 29,638 20,934 Distribution costs (20,938) (25,182) (888) (1,175) Administration expenses (87,199) (99,670) (9,902) (8,299) Other operating expenses (191,780) (141,894) (13,689) (12,917) Profit from operations 33 101,132 142,379 41,331 75,790 Finance costs 34 (37,055) (52,391) (25,984) (18,947) Share of results of associated companies 9 (321) 22,544 Ð Ð Share of results of jointly controlled entity 10 (36) Ð Ð Ð Results arising from other investing activities 35 43,414 44,012 (2,499) (17,798) Profit from ordinary activities before taxation 107,134 156,544 12,848 39,045 Taxation 36 (35,440) (27,244) (3,964) (11,540) Profit after taxation 71,694 129,300 8,884 27,505 Minority interests (46,214) (10,860) Ð Ð Profit attributable to members of the Company 25,480 118,440 8,884 27,505
EARNINGS PER SHARE (SEN) Basic 39 6.25 Ð - as restated Ð 32.72 - as previously reported Ð 33.62 Diluted 39 5.83 Ð - as restated Ð 29.60 - as previously reported Ð 30.36
The accompanying notes form an integral part of these financial statements.
SUNWAY CITY BERHAD 49 ( 8 7 5 6 4 - X ) Statements Of Changes In Equity For The Year Ended 31 December 2003
50 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Statements Of Changes In Equity For The Year Ended 31 December 2003 (cont’d)
COMPANY
Distributable Share Share Retained Note capital premium profit Total RM'000 RM'000 RM'000 RM'000
At 1 January 2002 448,199 110,363 184,173 742,735 Profit for the year Ð Ð 27,505 27,505 Dividends paid and accrued 38 Ð Ð (7,128) (7,128) At 31 December 2002 448,199 110,363 204,550 763,112 Issue of ordinary share capital 53 Ð Ð 53 Conversion of preference share capital to ordinary share capital (48,000) 48,000 Ð Ð Profit for the year Ð Ð 8,884 8,884 Dividends paid and accrued 38 Ð Ð (5,357) (5,357) At 31 December 2003 400,252 158,363 208,077 766,692
The accompanying notes form an integral part of these financial statements.
SUNWAY CITY BERHAD 51 ( 8 7 5 6 4 - X ) Cash Flow Statements For The Year Ended 31 December 2003
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000 Note
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 684,970 670,129 78,005 57,567 Payment to suppliers and contractors (340,344) (342,463) (14,942) (30,530) Payment of operating expenses (307,049) (220,298) (73,617) (23,449) Interest received from subsidiary companies Ð Ð 24,964 20,184 Interest received 5,226 4,097 959 669 Dividends received from subsidiary companies Ð Ð 9,438 33,561
Cash generated from operations 42,803 111,465 24,807 58,002 Taxation paid (25,405) (33,126) (561) (383)
Net cash generated from operating activities 17,398 78,339 24,246 57,619
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of property, plant and equipment 540 191,705 343 178 Proceeds from disposal of investment properties Ð 74,000 Ð Ð Proceeds from disposal of preference shares in a subsidiary company Ð 108,286 Ð 120,343 Proceeds on disposal of an associated company 2 Ð 2 Ð Acquisition of property, plant and equipment (a) (59,277) (44,195) (486) (680) Addition in investment properties (112) (105) Ð Ð Acquisition of remaining interest in an associated company, thereby making it a subsidiary company (b) (18,127) Ð (20,000) Ð Acquisition of additional interest in subsidiary companies Ð (15,000) Ð (15,303) Investment in subsidiary company Ð Ð (250) Ð Investment in joint venture entity (10,872) Ð (10,872) Ð Advances from/(repayment to) subsidiary companies Ð Ð 81,374 (260,998) (Advances to)/repayment from subsidiary companies Ð Ð (92,207) 20,297 (Advances to)/repayment from associated companies (189) 1,939 Ð 1,863
Net cash (used in)/generated from investing activities (88,035) 316,630 (42,096) (134,300)
The accompanying notes form an integral part of these financial statements.
52 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Cash Flow Statements For The Year Ended 31 December 2003 (cont’d)
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000 Note
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdown of term loans 69,180 57,010 Ð 49,600 Repayment of term loans (46,837) (348,454) (27,743) Ð Repayment of revolving credits (37,500) (16,500) (37,500) (16,500) Issuance of commercial papers and medium term notes 140,121 79,367 140,121 79,367 Drawdown/(repayment) of trade bills 479 (31,251) Ð Ð Repayments to hire purchase and lease creditors (5,227) (4,610) (990) (1,160) Interest paid (27,459) (37,986) (23,124) (15,560) Repayment to minority shareholders of subsidiary companies (583) (850) Ð Ð Repayment to long term creditors (34,706) Ð (13,999) Ð Redemption of preference shares held by minority shareholders of a subsidiary company (32,452) (1,500) Ð Ð Issuance of shares to minority shareholders of a subsidiary company 2,856 3,667 Ð Ð Issuance of shares under the Employees' Share Option Scheme 53 Ð 53 Ð Dividends paid - preference shareholders (3,564) (7,128) (3,564) (7,128) - ordinary shares (4,322) Ð (4,322) Ð - minority shareholders of subsidiary companies Ð (26,895) Ð Ð Net cash generated from/(used in) financing activities 20,039 (335,130) 28,932 88,619
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (50,598) 59,839 11,082 11,938
EFFECTS OF EXCHANGE RATE CHANGES 3,802 687 Ð Ð
CASH AND CASH EQUIVALENTS AT BEGINNING OFYEAR 180,091 119,565 12,533 595 CASH AND CASH EQUIVALENTS AT END OFYEAR (c) 133,295 180,091 23,615 12,533
The accompanying notes form an integral part of these financial statements.
SUNWAY CITY BERHAD 53 ( 8 7 5 6 4 - X ) Cash Flow Statements For The Year Ended 31 December 2003 (cont’d)
(a) Additions of property, plant and equipment during the year were acquired by way of:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Cash 59,277 44,195 486 680 Hire purchase and lease arrangements 2,355 1,799 108 Ð
61,632 45,994 594 680
(b) The effects of the acquisition of remaining equity interest in an associated company, Menara Sunway Sdn. Bhd. and its subsidiary company, MSW Parking Sdn. Bhd. (collectively "MSSB Group") during the year, thereby making them subsidiary companies are as follows:
RM'000
Net assets acquired: Property, plant and equipment 1,292 Other non-current investments 73,363 Inventories 25 Trade receivables 2,924 Other receivables 10,198 Cash and bank balances 1,873 Trade payables (396) Other payables (20,209) Hire purchase and lease creditors (97) Deferred income tax (204) Fair value of total net assets 68,769 Less: Share of net assets previously equity accounted for (33,599) Fair value of net assets acquired 35,170 Less: Reserve on consolidation (7,331) Total consideration 27,839
Satisfied by: Cash 20,000 Deferred payment 7,839 27,839
Net cash outflow arising from acquisition: Cash consideration 20,000 Cash and cash equivalents acquired (1,873) 18,127
The accompanying notes form an integral part of these financial statements.
54 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Cash Flow Statements For The Year Ended 31 December 2003 (cont’d)
(c) Cash and cash equivalents comprise the following balance sheet amounts:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Cash and bank balances 128,297 112,858 23,615 13,187 Deposits with licensed banks 11,904 73,393 Ð Ð Bank overdrafts (6,906) (6,160) Ð (654) 133,295 180,091 23,615 12,533
The accompanying notes form an integral part of these financial statements.
SUNWAY CITY BERHAD 55 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003
1. CORPORATE INFORMATION
The principal activities of the Company are those of property development and investment, and investment holding.
The principal activities of the subsidiary and associated companies are:
(i) property development and investment; (ii) operation of hotels, theme park and related activities; (iii) rendering recreational club facilities; (iv) operation of travel, tour business and related activities; (v) operation of a medical centre; and (vi) management and letting of property.
The 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 is listed on the Main Board of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan.
The principal place of business is located at Level 3, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan.
The financial statements are expressed in Ringgit Malaysia.
The numbers of employees as at 31 December 2003 in the Group and in the Company were 3,222 (2002: 3,035) and 172 (2002: 163) respectively.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 20 April 2004.
2. BASIS OF PREPARATION
The financial statements of the Group and of the Company are prepared under the historical cost convention modified to include the valuation of certain assets as indicated in Note 3(i) and Note 14 to the financial statements. The financial statements comply with the provisions of the Companies Act, 1965 and applicable Approved Accounting Standards in Malaysia.
3. SIGNIFICANTACCOUNTING POLICIES
(a) Basis of Consolidation
(i) Subsidiary Companies
The consolidated financial statements incorporate the financial statements of the Company and all its subsidiary companies. Subsidiary companies are those companies in which the Group has a long term equity interest and where it has power to exercise control over the financial and operating policies so as to obtain benefit therefrom.
56 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
3. SIGNIFICANTACCOUNTING POLICIES (CONTD.)
(a) Basis of Consolidation (Contd.)
(i) Subsidiary Companies (Contd.)
Subsidiary companies are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiary companies acquired or disposed during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. The assets and liabilities of a subsidiary company are measured at the fair values at the date of acquisition and these values are reflected in the consolidated balance sheet. The difference between the cost of an acquisition and the fair value of the Group's share of the net assets of the acquired subsidiary at the date of acquisition is included in the consolidated balance sheet as goodwill or negative goodwill arising on consolidation.
Intragroup transactions, balances and resulting unrealised gains are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are eliminated on consolidation unless costs cannot be recovered.
The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Group's share of its net assets together with any unamortised balance of goodwill and exchange differences which were not previously recognised in the consolidated income statement.
The financial statements of subsidiary companies are prepared for the same reporting period as the Company. In the preparation of the consolidated financial statements, the financial statements of the subsidiary companies are adjusted for the effects of any material dissimilar accounting policies.
Minority interest is measured at the minorities' share of the post acquisition fair values of the identifiable assets and liabilities of the acquiree.
(ii) Associated Companies
An associated company is an investee company that is not a subsidiary company and in which the Group has a long term equity interest of between 20% to 50% and where the Group is in a position to exercise significant influence over the financial and operating policies of the investee through Board representation.
Investments in associated companies are accounted for in the consolidated financial statements by the equity method of accounting based on the latest audited or management financial statements of the associated companies. Under the equity method of accounting, the Group's share of profits less losses of associated companies during the year is included in the consolidated income statement. The Group’s interest in associated companies is carried in the consolidated balance sheet at cost less impairment losses 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 associated companies are eliminated to the extent of the Group’s interest in the associated companies. Unrealised losses are eliminated unless costs cannot be recovered.
The Group's share of results and reserves of associated companies acquired or disposed of is included in the consolidated financial statements from the effective date of acquisition and up to the effective date of disposal.
SUNWAY CITY BERHAD 57 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
3. SIGNIFICANTACCOUNTING POLICIES (CONTD.)
(a) Basis of Consolidation (Contd.)
(iii) Jointly Controlled Entities
A jointly controlled entity is a joint venture that involves the establishment of a corporation, partnership or other entity in which the Group has joint control over its economic activity established under a contractual arrangement.
Investments in jointly controlled entities are accounted for in the consolidated financial statements by the equity method of accounting based on the latest audited or management financial statements of the jointly controlled entities. Under the equity method of accounting, the Group's share of profits less losses of jointly controlled entities during the year is included in the consolidated income statement. The Group’s interest in jointly controlled entities 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 its jointly controlled entities are eliminated to the extent of the Group’s interest in the jointly controlled entities. Unrealised losses are eliminated unless the transaction provides evidence of impairment of the assets transferred.
(b) Goodwill
Goodwill represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of subsidiary or associated companies or jointly controlled entities at the date of acquisition.
Goodwill is stated at cost less accumulated amortisation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(r). Goodwill arising on the acquisition of subsidiary companies is presented separately in the balance sheet while goodwill arising on the acquisition of associated companies and jointly controlled entities is included within the carrying amount of investments in associated companies and investments in jointly controlled entities respectively.
Goodwill is amortised on a straight-line basis over its estimated useful life of twenty (20) years.
(c) Investments in Subsidiary Companies, Associated Companies and Jointly Controlled Entities
Investments in subsidiary companies, associated companies and jointly controlled entities are stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(r).
On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in the income statement.
58 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
3. SIGNIFICANTACCOUNTING POLICIES (CONTD.)
(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 3(r).
Freehold land, capital work-in-progress and property under construction are not depreciated. Leasehold land and buildings are depreciated over the period of the respective leases which range from 66 years to 99 years. Depreciation of other property, plant and equipment is provided for on a straight line basis to write off the cost of each asset to its residual value over the estimated useful life at the following annual rates:
% Buildings 2 Renovations 10 Plant and machinery 5 - 20 Motor vehicles 10 - 20 Equipment, furniture and fittings 5 - 20
Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and the net carrying amount is recognised in the income statement.
(e) Investment Properties
The Group regards investment properties as land and buildings that are not substantially occupied for use by, or in the operations of, the Group and are held for their investment potential and rental income.
Investment properties are treated as long term investments and are stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(r).
Upon the disposal of an investment property, the difference between the net disposal proceeds and the carrying amount is recognised in the income statement.
(f) Hotel Properties
Hotel properties, comprising hotel building and integral plant and machinery, are stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(r). It is the Group's practice to maintain these properties at a high standard and condition such that the residual values are at least equal to book values and consequently, depreciation would be insignificant. Accordingly, no depreciation is provided on hotel properties with unexpired lease tenure of 50 years or more. The related maintenance expenditure is dealt with in the income statement.
Upon the disposal of an item of hotel properties, the difference between the net disposal proceeds and the carrying amount is recognised in the income statement.
SUNWAY CITY BERHAD 59 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
3. SIGNIFICANTACCOUNTING POLICIES (CONTD.)
(g) Land Held for Development
Land held for development consists of land held for future development and where no significant development has been undertaken.
Land held for development is stated at cost which includes land cost, incidental costs of acquisition, development expenditure and interest costs to put the land in a condition ready for development less provision for impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(r).
Such assets are transferred to properties under development when significant development work has been undertaken and are expected to be completed within the normal operating cycle.
(h) Properties under Development
Land and development expenditure whereby significant development work has been undertaken and is expected to be completed within the normal operating cycle is classified as properties under development.
Properties under development are stated at cost less provision for impairment losses, and where appropriate, include attributable profit less progress payments received and receivable. Cost includes land cost, development expenditure and interest costs relating to the development and an allocation of common project expenses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(r).
(i) Inventories
Property stocks are stated at the lower of cost and net realisable value. Cost includes the relevant cost of land, development expenditure and related interest costs incurred during the development period.
Trading inventories, food and beverage and consumables are stated at lower of cost and net realisable value after adequate provision for damaged, obsolete and slow moving items. Cost is determined on the weighted average method.
(j) Cash and Cash Equivalents
For the purposes of the cash flow statements, cash and cash equivalents represent cash on hand, demand deposits and other short term, highly liquid investments that are readily convertible to cash with insignificant risk of changes in value, against which bank overdraft balances, are deducted.
(k) Leases
A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. All other leases are classified as operating leases.
(i) Finance Leases
Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Company’s incremental borrowing rate is used.
60 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
3. SIGNIFICANTACCOUNTING POLICIES (CONTD.)
(k) Leases (Contd.)
(i) Finance Leases (Contd.)
Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are charged to the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.
The depreciation policy for leased assets is consistent with that for depreciable property, plant and equipment as described in Note 3(d).
(ii) Operating Leases
Operating lease payments are recognised as an expense in the income statement on a straight-line basis 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 past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.
(m) Income Tax
Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.
Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.
SUNWAY CITY BERHAD 61 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
3. SIGNIFICANTACCOUNTING POLICIES (CONTD.)
(n) Employee Benefits
(i) Short Term Benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group.
(ii) Defined Contribution Plans
As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund (“EPF”). Some of the Group's foreign subsidiary companies make contributions to their respective countries' statutory pension schemes. Such contributions are recognised as an expense in the income statement as incurred.
(iii) Equity Compensation Plans
The Sunway City Berhad Employees' Share Option Scheme allows the Group's employees to acquire the shares of the Company. No compensation cost or obligation is recognised. When the options are exercised, equity is increased by the amount of the proceeds received.
(o) Revenue Recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably.
(i) Properties under Development
Revenue from sale of properties under development is recognised based on the percentage of completion method, where outcome of the development projects can be reliably estimated. The percentage of completion is determined by reference to the costs incurred to date to the estimated costs where the outcome of the projects can be reliably estimated. Any foreseeable loss on a development project is provided for in full.
Revenue from sale of property stocks is recognised when significant risks and rewards have been passed to the purchasers.
(ii) Rental Income
Rental income including those from investment properties, is recognised on the accrual basis unless recoverability is in doubt, in which case, it is recognised on receipt basis.
(iii) Investment Income
Dividend income is recognised when the right to receive the dividend payment is established.
Interest income from short term deposits and advances is recognised on the accrual basis, unless when recoverability is in doubt, in which case, it is recognised on receipt basis.
Interest income on other non-current investments is recognised on receipt basis due to the uncertainty of the amount that may be recovered.
62 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
3. SIGNIFICANTACCOUNTING POLICIES (CONTD.)
(o) Revenue Recognition (Contd.)
(iv) Sale of Goods, Services and Rights of Enjoyment
Revenue from sale of goods is recognised based on invoiced value of goods sold and revenue from sale of services is recognised when services are performed.
Entrance fees collected for rights of enjoyment of facilities are recognised when tickets are sold.
(v) Club Subscription Fees
Club subscription fees are recognised on the accrual basis.
(p) Foreign Currencies
(i) Foreign Currency Transactions
Transactions in foreign currencies are initially recorded in Ringgit Malaysia at rates of exchange ruling at the date of the transaction. At each balance sheet date, foreign currency monetary items are translated into Ringgit Malaysia at exchange rates ruling at that date, unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. Non-monetary items initially denominated in foreign currencies, which are carried at historical cost are translated using the historical rate as of the date of transaction.
All exchange rate differences are taken to the income statement.
(ii) Foreign Entities
Financial statements of foreign consolidated subsidiary companies are translated at year-end exchange rates with respect to the assets and liabilities, and at exchange rates at the transaction dates with respect to the income statement. All resulting translation differences are included in the foreign exchange reserve in the shareholders' equity.
The principal exchange rates used for every unit of foreign currency ruling at the balance sheet date are as follows:
2003 2002 RM RM
United States Dollar 3.825 3.825 Australian Dollar 2.861 2.153 Hong Kong Dollar 0.490 0.500 Singapore Dollar 2.234 2.191
(q) Preliminary and Pre-Operating Expenses
Preliminary and pre-operating expenses are charged to the income statement in the year in which they are incurred.
SUNWAY CITY BERHAD 63 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
3. SIGNIFICANTACCOUNTING POLICIES (CONTD.)
(r) Impairment of Assets
At each balance sheet date, the Group reviews the carrying amounts of its assets, other than inventories, deferred tax assets and financial assets, to determine whether there is any indication of impairment. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows.
An impairment loss is recognised as an expense in the income statement immediately. Reversal of impairment losses recognised in prior years is recorded when the impairment losses recognised for the asset no longer exist or have decreased.
(s) Financial Instruments
Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.
(i) Other Non-Current Investments
Non-current investments other than investments in subsidiary companies, associated companies, jointly controlled entities and investment properties are stated at cost less provision for any permanent diminution in value. Such provision is made when there is a decline other than temporary in the value of investments and is recognised as an expense in the period in which the decline occurred. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the income statement.
(ii) Trade Receivables
Trade receivables are recognised and carried at original invoiced amount less an allowance for any irrecoverable amount. An estimation for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.
(iii) Trade Payables
Trade payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services rendered.
(iv) Interest-Bearing Borrowings
Interest-bearing bank borrowings are recorded at the amount of proceeds received, net of transaction costs.
Borrowing costs directly attributable to the acquisition and construction of property, plant and equipment, investment properties, land held for development and properties under development are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale.
64 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
3. SIGNIFICANTACCOUNTING POLICIES (CONTD.)
(s) Financial Instruments (Contd.)
(iv) Interest-Bearing Borrowings (Contd.)
All other borrowing costs are recognised as an expense in the income statement in the period in which they are incurred.
Commercial papers and medium term notes are stated at cost adjusted for amortisation of discount or coupon to maturity date. Amortisation of discount or coupon is included as interest expense.
(v) Share Capital
Ordinary shares are classified as equity instruments. Preference share capital is classified as an equity instrument if it is non-redeemable and dividends are at the option of the issuer.
The transaction costs of an equity transaction, other than in the context of a business combination, are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. Cost of issuing equity securities in connection with a business combination are included in the cost of acquisition.
Dividends on equity instruments are recognised in equity in the period in which they are declared.
Preference share capital is classified as a liability if it is redeemable on a specific date or at the option of the shareholders. The corresponding dividends on those shares are charged as interest expense in the income statement.
SUNWAY CITY BERHAD 65 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
66 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
SUNWAY CITY BERHAD 67 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
4. PROPERTY, PLANTAND EQUIPMENT (CONTD.)
Included in capital work-in-progress of the Group is interest capitalised during the year of RM2,851,000 (2002: RM1,280,000).
The net book values of property, plant and equipment of the Group pledged to financial institutions for bank borrowings granted to the Group are as follows:
Group 2003 2002 RM'000 RM'000
Freehold land 5,267 3,963 Long term leasehold land and buildings 93,154 69,823 Plant and machinery 52,421 17,606 Motor vehicles 242 550 Equipment, furniture and fittings 12,612 15,085 Capital work in progress 63,462 46
227,158 107,073
Net book values of property, plant and equipment of the Group and of the Company acquired under hire purchase and lease arrangements are as follows:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Motor vehicles 481 628 96 421 Equipment, furniture and fittings 8,254 10,075 12 229 8,735 10,703 108 650
5. INVESTMENT PROPERTIES
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
At cost: Long term leasehold land and buildings 318,584 309,517 20,240 20,240
The Directors are of the view that the fair values of the properties held at the balance sheet date are not significantly different from the carrying amounts shown in the financial statements.
Investment properties of the Group and of the Company of RM14,960,000 (2002: RM14,960,000) are pledged to banks as collaterals for revolving credit facilities granted to the Company.
68 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
6. LAND HELD FOR DEVELOPMENT
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
At cost: Freehold land 140,388 125,296 Ð Ð Long term leasehold land 127,899 148,894 2,671 2,671 Development expenditure 74,241 81,379 1,910 1,910 342,528 355,569 4,581 4,581 Less: Write down in value of land and development expenditure (3,889) (1,159) Ð Ð 338,639 354,410 4,581 4,581
Freehold land and related development expenditure of certain subsidiary companies costing RM24,471,000 (2002: RM18,227,000) are pledged for revolving credit and trade bill facilities granted to the Company and a subsidiary company respectively.
Long term leasehold land and related development expenditure of certain subsidiary companies costing RM25,445,000 (2002: RM25,129,000) are pledged to banks for revolving credit facilities granted to the Company.
Included in development expenditure of the Group is interest capitalised during the financial year of RM3,137,800 (2002: RM1,036,460).
7. INVESTMENTS IN SUBSIDIARY COMPANIES
Company 2003 2002 RM'000 RM'000
Unquoted shares at cost 371,303 326,819 Less: Accumulated impairment losses (7,355) (7,140)
363,948 319,679
Details of the subsidiary companies are set out in Note 45 to the financial statements.
SUNWAY CITY BERHAD 69 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
7. INVESTMENTS IN SUBSIDIARY COMPANIES (CONTD.)
During the financial year, the Company acquired the remaining equity interest which it did not own previously in MSSB Group, thereby making them subsidiary companies of the Company. The effects of the acquisition on the financial results and financial position of the Group for the year ended and as at 31 December 2003 respectively are summarised as follows:
RM'000
Revenue 5,764 Operating costs (5,332) Net profit 432
Net assets of subsidiary companies acquired 69,202 Reserve on consolidation (7,331)
Further details of the acquisition of remaining equity interest in MSSB Group are as disclosed in Note 46(b) to the financial statements.
The acquisitions of Casa Mujur Sdn. Bhd., Allson Hotels and Resorts Management Sdn. Bhd. (formerly known as Silk Consolidated Sdn. Bhd.) and Sunway Bukit Gambier Sdn. Bhd. (formerly known as Casa Fareast Sdn. Bhd.) during the financial year do not have any material effect on the financial results and financial position of the Group.
8. AMOUNTS DUE FROM SUBSIDIARY COMPANIES
Company 2003 2002 RM'000 RM'000
Interest bearing amounts 754,412 681,338 Non interest bearing amounts 155,964 122,273
910,376 803,611 Less: Provision for doubtful debts (48,440) (48,324)
861,936 755,287
The amounts due from subsidiary companies are unsecured and have no fixed terms of repayment. The interest bearing amounts bear interest at rates ranging from 3.46% to 7.40% (2002: 1.0% to 7.4%) per annum.
70 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
9. INVESTMENTS IN ASSOCIATED COMPANIES
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Unquoted shares at cost 5,782 22,687 2,000 18,905 Share of post-acquisition (losses)/reserves (3,760) 13,505 Ð Ð 2,022 36,192 2,000 18,905 Less: Accumulated impairment losses (425) (732) (2,000) (2,500) 1,597 35,460 Ð 16,405
Represented by: Share of net assets 1,597 35,460
Details of the associated companies are set out in Note 45 to the financial statements.
Included in the share of results from associated companies in the previous financial year was share of gain on disposal of an associated company's investment property of RM26,267,000 in connection with the asset-backed securitisation exercise as disclosed in Note 11 to the financial statements. The said associated company became a wholly owned subsidiary company of the Company during the financial year following the acquisition of the remaining equity interest in the associated company.
10. INVESTMENT IN JOINTLY CONTROLLED ENTITY
Group Company 2003 2003 Note RM'000 RM'000
Unquoted shares at cost 10,000 10,000 Share of post-acquisition losses (36) Ð
(a) 9,964 10,000 Share application monies (b) 872 872
10,836 10,872
Details of the jointly controlled entity are as follows:
Country of Principal Equity Interest Held Name of Company Incorporation Activity 2003 2002 %%
Sunway SPK Homes Sdn. Bhd. Malaysia Property 50 Ð (formerly known as Alternative Entity development Sdn. Bhd.)
SUNWAY CITY BERHAD 71 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
10. INVESTMENT IN JOINTLY CONTROLLED ENTITY (CONTD.)
(a) The Group's share of the assets, liabilities, income and expenses of the jointly controlled entity is as follows:
2003 RM'000
Current assets 17,427 Non-current assets 9,482 Current liabilities (16,510) Non-current liabilities (435) Net assets 9,964 Income Ð Expenses (36)
(b) Share application monies was paid to the jointly controlled entity for the subscription of redeemable preference shares in the said entity.
11. OTHER NON-CURRENT INVESTMENTS
Group 2003 2002 RM'000 RM'000
Subordinated Class D Notes ("SCDN") at cost 466,203 392,840
The above represents investment in SCDN issued by ABS Real Estate Berhad ("AREB"). The principal activities of AREB are those of implementation of securitisation transactions which involve the acquisition of properties and investments, the letting out of properties and the issuance of notes to the investors.
The increase in investment in SCDN during the financial year was due to the acquisition of the remaining equity interest in MSSB Group which the Company did not own previously, thereby making MSSB a wholly owned subsidiary company as disclosed in Note 7 to the financial statements.
On 30 October 2002, the Group and MSSB, its then associated company, completed an asset-backed securitisation exercise ("ABS exercise") involving the disposal of six (6) properties including the plant and equipment together with its lease rights, and redeemable preference shares (“properties and shares”) to AREB, a special purpose vehicle, (collectively “asset-backed securitisation”).
Pursuant to the ABS exercise, AREB has also issued Senior Class A, B, C1 and C2 Notes ("Senior Notes") to investors in the domestic debt capital markets to finance the cash settlement of the abovementioned acquisitions. The Senior Notes will be subject to redemption in part semi-annually, for which the amount will vary, and the balance not redeemed may be redeemed by AREB at its nominal value six (6) years ("legal maturity") from the date of issue of 30 October 2002 together with interest accrued or at the end of year five (5) ("early redemption") due to exercise of purchase options by the Company or entity nominated by the Company.
72 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
11. OTHER NON-CURRENT INVESTMENTS (CONTD.)
The SCDN's coupon rate of 20% is due semi-annually and the SCDN together with accrued interest of 20% can only be redeemed after all outstanding principal and interests due to the holders of the Senior Class A, B, C1 and C2 Notes issued by AREB have been fully repaid. In view of the uncertainty of the amount of interest that may be recovered, the interest income on the SCDN shall be recognised in the financial statements upon receipt. The SCDN shall be held solely by the Group or its respective nominees and may only be traded or transferred once within the Group or to Sunway Holdings Incorporated Berhad ("Suninc") Group. The relationship with Suninc Group is as disclosed in Note 41 to the financial statements.
Subsequent to the disposals, the Company entered into six (6) operating lease agreements with AREB whereby AREB has granted leases to the Company in respect of properties disposed of by the Group and its then associated company for a period of up to thirty-five (35) years, save for certain plant and equipment which will be leased for ten (10) years. Under the terms of each of the operating lease agreements, the Company has unilateral option to purchase or may nominate another person to purchase these leased properties for a price to be determined by an independent firm of professional valuers at the time of the exercise of the purchase options and the outstanding preference shares at the end of year five (5). If the Company does not exercise the purchase options granted within the option period, AREB may exercise its right to dispose of its interests in the properties and shares in the open market.
Concurrent with the execution of the operating lease agreements, the Company has entered into six (6) sub-lease agreements with its subsidiary companies for a term equal to the term of the operating lease agreements less one (1) day. Rent payments received by the Company in respect of the subleases will be paid into the Sublease Collections Account, a specified account opened by the Company, established for the purpose of receiving these payments. The Sublease Collections Account, as disclosed in Note 18 to the financial statements, of which a charge has been created in favour of the Trustee, will be operated solely by the Trustee, Mayban Trustees Berhad.
The commitments arising from the redeemable preference shares and operating leases and sub-leases are disclosed in Notes 28 and 43 to the financial statements.
12. GOODWILL ON CONSOLIDATION
Group 2003 2002 RM'000 RM'000
Goodwill: At 1 January 26,795 10,912 Arising from increase in equity interests in subsidiary companies Ð 15,883
26,795 26,795 Less: Accumulated amortisation (4,036) (2,495)
22,759 24,300
Reserve on consolidation: At 1 January (386) (386) Arising from acquisition of remaining equity interest in an associated company, thereby making it a subsidiary company (7,331) Ð
At 31 December (7,717) (386)
Total 15,042 23,914
SUNWAY CITY BERHAD 73 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
13. PROPERTIES UNDER DEVELOPMENT
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
At cost: Freehold land 164,267 169,944 Ð Ð Long term leasehold land 140,748 108,944 1,345 1,333 Development expenditure 926,355 691,989 138,581 121,438 1,231,370 970,877 139,926 122,771 Less: Write down in value of development expenditure (9,830) (9,830) Ð Ð 1,221,540 961,047 139,926 122,771 Add: Attributable profits 383,039 276,084 35,700 27,389 1,604,579 1,237,131 175,626 150,160 Less: Transfer to property stocks (11,195) Ð Ð Ð Less: Progress billings (1,283,985) (986,634) (139,587) (116,858) 309,399 250,497 36,039 33,302
Included in the Group's development expenditure is interest capitalised during the year of RM450,000 (2002: RM389,000).
Freehold land of certain subsidiary companies costing RM75,238,000 (2002: RM80,859,000) are pledged to banks for loan facilities granted to the Company and a subsidiary company.
Long term leasehold land of the Group and of the Company costing RM28,112,000 (2002: RM25,049,000) and RM4,658,000 (2002: RM4,658,000) respectively are pledged to banks for revolving credit and loan facilities granted to the Company and a subsidiary company respectively.
14. INVENTORIES
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
At cost: Property stocks 20,763 12,817 3,282 3,282 Trading inventories 5,989 4,958 Ð Ð Food and beverages 1,080 1,063 Ð Ð Consumables 326 1,852 Ð Ð
28,158 20,690 3,282 3,282 At net realisable value: Consumables 1,235 Ð Ð Ð 29,393 20,690 3,282 3,282
74 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
15. TRADE RECEIVABLES
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Trade receivables 113,609 71,738 11,414 12,715 Less: Provision for doubtful debts (6,742) (9,937) (2,901) (2,599) 106,867 61,801 8,513 10,116
Included in trade receivables are the following amounts owing by related parties:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Sunway Holdings Incorporated Berhad 3,494 3,444 1,559 1,534 Group ("Suninc Group") Dekon Sdn. Bhd. Group ("DSB Group") 18 19 Ð Ð PRK Builders Sdn. Bhd. ("PRK") 56 Ð Ð Ð
The amounts owing by the related parties are unsecured and interest free except for RM2,902,000 (2002: RM343,000) and RM338,000 (2002: RM338,000) owing by Suninc Group to the Group and the Company respectively which bear interests at 5% per annum. The relationship with the above related parties is as disclosed in Note 41 to the financial statements.
The Group and the Company's normal trade credit term ranges from 14 to 30 days. Other credit terms are assessed and approved on a case-by-case basis.
The Group and the Company have no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors.
16. OTHER RECEIVABLES
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Other receivables 32,635 23,294 8,918 9,590 Deposits 19,378 3,874 1,399 1,700 Prepayments 3,207 3,902 146 340 55,220 31,070 10,463 11,630 Less: Provision for doubtful debts (6,775) (8,093) (4,504) (4,718) 48,445 22,977 5,959 6,912
SUNWAY CITY BERHAD 75 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
16. OTHER RECEIVABLES (CONTD.)
Included in other receivables are the following amounts owing by related parties:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Sunway Holdings Incorporated Berhad 3,055 3,069 2,684 2,931 Group ("Suninc Group")
PRK Builders Sdn. Bhd. ("PRK") 473 Ð 473 Ð
The amounts owing by the related parties are unsecured and interest free except for RM523,000 (2002: RM523,000) and RM158,000 (2002: RM158,000) owing by Suninc Group to the Group and the Company respectively which bear interests at 5% per annum. The relationship with the related parties is as disclosed in Note 41 to the financial statements.
Deposits comprise deposits paid amounting to RM13,324,655 for the acquisition of land by certain subsidiary companies.
The Group and the Company have no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors.
17. AMOUNTS DUE FROM ASSOCIATED COMPANIES
The amounts due from the associated companies of the Group are stated net of provision for doubtful debts of RM1,862,000 (2002: RM1,773,000). The amounts due from associated companies are unsecured, interest-free and have no fixed terms of repayment.
18. CASH AND BANK BALANCES
Included in cash and bank balances of the Group is RM78,323,000 (2002: RM65,609,000) held under the Housing Development Accounts pursuant to Section 7Aof the Housing Developers (Control and Licensing) Act, 1966.
Included in cash and bank balances of the Group and the Company is an amount of RM8,266,000 (2002: RM8,166,000) held in a Sublease Collections Account, of which a charge has been created in favour of the Trustee, pursuant to the asset-backed securitisation exercise as disclosed in Note 11 to the financial statements.
76 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
19. TRADE PAYABLES
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Trade payables 126,985 88,887 17,841 29,056 Billings in excess of cost incurred 4,484 Ð Ð Ð 131,469 88,887 17,841 29,056
Included in trade payables are the following amounts owing to related parties:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Sunway Holdings Incorporated Berhad Group ("Suninc Group") 31,637 20,018 3,048 12,760 Dekon Sdn. Bhd. Group ("DSB Group") 18,480 305 2,182 Ð PRK Builders Sdn. Bhd. ("PRK") 6,682 Ð 968 Ð
The amounts owing to the related parties are unsecured and interest free except for RM3,797,000 (2002: RM12,180,000) and RM772,000 (2002: RM10,193,000) owing by the Group and the Company respectively to Suninc Group which bear interest at rates ranging from 7% to 8% (2002: 8%) per annum.
The relationship with the above related parties is as disclosed in Note 41 to the financial statements.
The normal trade credit term granted to the Group and the Company ranges from 15 to 90 days and 30 days respectively.
20. OTHER PAYABLES
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Other payables 109,413 86,933 23,268 12,699 Amounts due to contractors and consultants 96,886 96,719 35,340 19,502 Redeemable preference shares issued by a subsidiary company (Note 28) 32,620 32,452 Ð Ð Accruals 28,460 36,301 2,760 4,002 Refundable deposits 11,351 17,234 1,260 1,369 278,730 269,639 62,628 37,572
SUNWAY CITY BERHAD 77 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
20. OTHER PAYABLES (CONTD.)
Included in other payables are amounts owing to Sunway Holdings Incorporated Berhad ("Suninc") as follows:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Balance consideration for the acquisition of remaining equity interest in MSSB Group ("balance consideration") (Note 46(b)) 7,839 Ð 7,839 Ð Dividend in respect of previous financial years payable by MSSB Group ("dividend payable") 11,667 Ð Ð Ð
The balance consideration is unsecured and bears interest at 3% (2002: Nil) per annum whereas the dividend payable is unsecured and interest free.
Included in amounts due to contractors and consultants are the following amounts owing to related parties:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Sunway Holdings Incorporated Berhad Group ("Suninc Group") 91,746 73,452 34,980 9,684 Dekon Sdn. Bhd. Group ("DSB Group") 1,166 2,139 45 Ð
The amounts due to contractors and consultants are unsecured and interest free except for RM81,901,000 (2002: RM69,243,000) and RM11,275,000 (2002: RM Nil) owing by the Group and the Company respectively to Suninc Group which bear interest at 7% to 8% (2002: 8%) per annum.
The relationship with the above related parties is as disclosed in Note 41 to the financial statements.
21. BANK BORROWINGS
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Bank overdrafts - secured 4,867 3,596 Ð 654 - unsecured 2,039 2,564 Ð Ð Trade bills - secured 7,153 4,933 Ð Ð Current portion of : - term loans (Note 27) - secured 34,412 28,462 21,857 18,600 - unsecured 8,622 5,892 Ð Ð - unsecured revolving credits (Note 27) Ð 2,000 Ð 2,000
57,093 47,447 21,857 21,254
78 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
21. BANK BORROWINGS (CONTD.)
The bank overdrafts bear interest at rates ranging from 1.00% to 8.40% (2002: 3.50% to 8.40%) per annum.
The trade bills bear interest at rates ranging from 4.33% to 4.92% (2002: 4.33% to 4.92%) per annum.
Details of the assets on which the secured bank borrowings are secured are as disclosed in Note 27 to the financial statements.
22. HIRE PURCHASE AND LEASE CREDITORS
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Minimum lease payments: Not later than 1 year 5,804 6,515 32 936 Later than 1 year and not later than 2 years 2,469 4,838 Ð 6 Later than 2 years and not later than 5 years 1,599 1,902 Ð Ð Later than 5 years 33 Ð Ð Ð 9,905 13,255 32 942 Less: Future finance charges (1,052) (1,627) (9) (37) Present value of finance lease liabilities 8,853 11,628 23 905
Present value of finance lease liabilities: Not later than 1 year 5,141 5,484 23 899 Later than 1 year and not later than 2 years 2,216 4,396 Ð 6 Later than 2 years and not later than 5 years 1,465 1,748 Ð Ð Later than 5 years 31 Ð Ð Ð 8,853 11,628 23 905
Analysed as: Due within 12 months 5,141 5,484 23 899 Due after 12 months 3,712 6,144 Ð 6 8,853 11,628 23 905
Approximately RM9,079,000 (2002: RM13,096,000) and RM Nil (2002: RM848,000) of the gross amounts payable to hire purchase and lease creditors of the Group and of the Company are owing to a subsidiary company of Suninc, Sunway Credit & Leasing Sdn. Bhd. The relationship with the related party is as disclosed in Note 41 to the financial statements.
The hire purchase and lease liabilities bear interest at rates ranging from 3.50% to 11.50% (2002: 3.50% to 11.50%) per annum.
SUNWAY CITY BERHAD 79 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
23. SHARE CAPITAL
Group/Company Group/Company 2003 2002 2003 2002 No. of shares No. of shares RM’000 RM’000
Authorised: Ordinary shares of RM1.00 each 800,000 800,000 800,000 800,000 6.6% Cumulative Convertible Preference Shares of RM1.00 each 200,000 200,000 200,000 200,000
1,000,000 1,000,000 1,000,000 1,000,000
Issued and fully paid: Ordinary shares of RM1.00 each At 1 January 340,199 340,199 340,199 340,199 Issued under the Employees' Share Option Scheme 53 Ð 53 Ð Conversion of preference share capital 60,000 Ð 60,000 Ð At 31 December 400,252 340,199 400,252 340,199
6.6% Cumulative Convertible Preference Shares of RM1.00 each: At 1 January 108,000 108,000 108,000 108,000 Conversion to ordinary share capital (108,000) Ð (108,000) Ð At 31 December Ð 108,000 Ð 108,000
Total share capital 400,252 448,199 400,252 448,199
During the financial year, the Company increased its issued and paid-up share capital from RM340,199,000 to RM400,252,000 by way of the:
(a) issuance of 53,000 new ordinary shares of RM1.00 each to eligible employees of the Group under the Employees' Share Option Scheme at RM1.00 per share for cash; and
(b) conversion of the 108,000,000 6.6% Cumulative Convertible Preference Shares ("CCPS") of RM1.00 each to 60,000,000 new ordinary shares of RM1.00 each. The share premium arising amounting to RM48,000,000 has been credited to the share premium account as disclosed in Note 24 to the financial statements.
The new ordinary shares shall rank pari passu in all respects with the existing ordinary shares.
80 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
24. SHARE PREMIUM
Group/Company 2003 2002 RM'000 RM'000
At 1 January 110,363 110,363 Arising from issuance of new ordinary shares on conversion of 108,000,000 6.6% Cumulative Convertible Preference Shares (Note 23) 48,000 Ð
At 31 December 158,363 110,363
25. RESERVES
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Non distributable reserves: Capital reserve 21,594 20,428 Ð Ð Exchange reserve 15,855 8,182 Ð Ð Total non-distributable reserves 37,449 28,610 Ð Ð
Distributable reserve : Retained profit 166,794 147,837 208,077 204,550 Total reserves 204,243 176,447 208,077 204,550
Capital reserve represents share premium arising from shares issued by a subsidiary company to minority shareholders and the creation of capital redemption reserve arising from redemption of redeemable preference shares by certain subsidiary companies.
At 31 December 2003, the Company has tax exempt profits available for distribution of approximately RM131,231,000 (2002: RM131,231,000), subject to the agreement of the Inland Revenue Board.
The Company has sufficient tax credit under Section 108 of the Income Tax Act, 1967 and the balance in the tax exempt income account to frank the payment of dividends out of its entire retained profit as at 31 December 2003 without having to incur additional tax liability.
26. MINORITY INTERESTS
Included in minority interests are the following preference shares issued to minority shareholders of certain subsidiary companies:
(a) 5% cumulative redeemable preference shares "A" issued to minority shareholders of Sunway Damansara Sdn. Bhd. amounting to RM45,845,000 (2002: RM45,845,000). These shares confer on the holders the right to cumulative preferential dividends of 5% which rank in priority to ordinary dividends. These shares are redeemable at par in cash at any time after 16 May 1999.
SUNWAY CITY BERHAD 81 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
26. MINORITY INTERESTS (CONTD.)
(b) 5% cumulative redeemable convertible preference shares issued to minority shareholders of Sunway Tunas Sdn. Bhd. amounting to RM15,000,000 (2002: RM15,000,000). These shares confer on its holders a cumulative preference dividend of 5% per annum which ranks in priority to ordinary dividends. These shares are redeemable at par and in cash or convertible into ordinary shares on the basis of one convertible preference share of RM1.00 each for one ordinary share of RM1.00 each at any time after 16 May 1999.
(c) 5% non-cumulative redeemable preference shares issued to minority shareholders of Sunway Lagoon Sdn. Bhd. amounting to RM588,000 (2002: RM588,000). These shares confer on its holders a fixed non- cumulative preferential dividends of 5% per annum which rank in priority to ordinary dividends. These shares are redeemable at a premium of RM0.99 per share at any time.
27. LONG TERM BANK BORROWINGS
Group Company 2003 2002 2003 2002 Note RM'000 RM'000 RM'000 RM'000
Revolving credits (a) - secured 136,400 128,400 136,400 128,400 - unsecured Ð 45,500 Ð 45,500 136,400 173,900 136,400 173,900
Unsecured commercial papers (b) 69,447 79,367 69,447 79,367
Unsecured medium term notes (b) 153,823 Ð 153,823 Ð
Term loans - secured (c) - Type 1 21,857 49,600 21,857 49,600 - Type 2 4,731 Ð Ð Ð - Type 3 33,583 37,791 Ð Ð - Type 4 6,079 10,778 Ð Ð - Type 5 60,000 Ð Ð Ð
Term loans - unsecured - Type 6 15,602 21,340 Ð Ð - Type 7 2,014 2,014 Ð Ð 143,866 121,523 21,857 49,600
Total bank borrowings 503,536 374,790 381,527 302,867 Less: Amounts repayable within 1 year - term loans (Note 21) (43,034) (34,354) (21,857) (18,600) - revolving credits (Note 21) Ð (2,000) Ð (2,000) Amounts repayable after 1 year 460,502 338,436 359,670 282,267
82 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
27. LONG TERM BANK BORROWINGS (CONTD.)
(a) The revolving credits bear interest at rates ranging from 4.60% to 8.00% (2002: 4.50% to 8.15%) per annum. Secured revolving credits which are due to be repaid within the next twelve (12) months but are rolled over subsequent to the financial year end are treated as long term bank borrowings. Unsecured revolving credits of RM45,500,000 were repaid during the financial year from the utilisation of the proceeds from the issuance of three (3) year medium term notes.
(b) The unsecured commercial papers ("CPs") bear interest at rates ranging from 4.25% to 4.75% (2002: 4.25%) per annum and have maturity periods ranging from one (1) to three (3) months. The unsecured CPs were rolled over subsequent to the financial year end for the same tenure and the Company intends to roll over the CPs over its remaining availability period of six (6) years, when necessary. Accordingly, the CPs are classified as long term bank borrowings.
The unsecured medium term notes ("MTNs") bear interest at rates ranging from 6.30% to 6.60% (2002: Nil) per annum and have maturity periods ranging from two (2) to three (3) years. The Company intends to roll over the MTNs over its remaining availability period of six (6) years. Accordingly, the MTNs are classified as long term bank borrowings.
The tenure of the CP/MTN Programme (collectively, the "Notes") is for a period of seven (7) years from the date of the first issuance of the Notes on 10 December 2002. The Company may issue CPs with tenors of one (1), two (2), three (3), six (6), nine (9) months or such other period not exceeding three hundred and sixty five (365) days and MTNs with tenors of between twelve (12) months and seventy two (72) months provided that such Notes shall not mature beyond the tenure of the Notes Programme. The Notes may be issued at par or at a discount to or premium over par. In the case of where MTNs are issued on an interest- bearing basis, such MTNs will have attached to them the Coupons. The Coupons are payable monthly, quarterly, semi-annually or annually in arrears. The Coupons may (but need not) be detached and traded independently of the MTNs.
The Notes and the Coupons constitute direct, unconditional, unsecured and unsubordinated obligations of the Company. The Notes will rank at least equally and rateably in all respects to all other unsecured and unsubordinated obligations of the Company except liabilities which are preferred by mandatory provisions of law.
At 31 December 2003, Notes with nominal value of RM25 million have yet to be issued. The Notes have been fully issued subsequent to the financial year end for working capital purposes.
SUNWAY CITY BERHAD 83 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
27. LONG TERM BANK BORROWINGS (CONTD.)
(b) Details of the outstanding CPs and MTNs are as follows:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Unsecured commercial papers: Par value issued 70,000 80,000 70,000 80,000 Less: Discount on issuance, net of amortisation (553) (633) (553) (633) 69,447 79,367 69,447 79,367
Unsecured medium term notes: Par value issued 155,000 Ð 155,000 Ð Less: Coupon on issuance, net of amortisation (1,177) Ð (1,177) Ð 153,823 Ð 153,823 Ð
(c) The term loans are repayable as follows:
Not later than 1 year 43,034 34,354 21,857 18,600 Later than 1 year and not later than 2 years 14,554 48,914 Ð 31,000 Later than 2 years and not later than 5 years 77,997 25,574 Ð Ð Later than 5 years 8,281 12,681 Ð Ð 143,866 121,523 21,857 49,600
Details of the terms of repayment and effective interest rates are as follows:
Effective Repayment Loan Name of Companies Interest rate Terms Commencement Date
Type 1 Sunway City Berhad 6.81% 2 years September 2003 Type 2 Sunway City (Ipoh) 7.75% By way of February 2003 Sdn. Bhd. redemption Type 3 Sunway Medical Centre 8.40% 8 years January 2002 Berhad Type 4 Sunway Semenyih 7.65% By way of March 2001 Sdn. Bhd. redemption Type 5 Sunway Resort Hotel 6.50% 3 years June 2003 Sdn. Bhd. Type 6 Sunway Hotel Phnom 3.25% - 3.43% 9 years March 2001 Penh, Ltd. Type 7 Sunway Medical Centre 5.00% - 8.41% 2 years December 2003 Berhad
84 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
27. LONG TERM BANK BORROWINGS (CONTD.)
The secured term loans, revolving credits, bank overdrafts and trade bills of the Group and of the Company are secured by legal charges on land as well as fixed and floating charges on assets of the Group and of the Company amounting to RM395,384,000 (2002: RM271,297,000) and RM19,618,000 (2002: RM19,618,000) respectively as disclosed in Notes 4, 5, 6 and 13 to the financial statements.
28. LONG TERM LIABILITIES
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Preference shares issued by a subsidiary company At 31 December 195,206 227,658 Ð Ð Redeemable within 1 year (Note 20) (32,620) (32,452) Ð Ð Redeemable after 1 year 162,586 195,206 Ð Ð
Amounts payable to contractors and consultants 40,000 72,000 Ð 29,000 Refundable deposits 16,061 7,941 Ð Ð Other long term liabilities Ð 8,500 Ð Ð 218,647 283,647 Ð 29,000
Preference shares issued by a subsidiary company, Sunway Pyramid Sdn. Bhd., comprise 20% Cumulative Redeemable Preference Shares ("CRPS") of RM0.10 each issued to its minority shareholder and ABS Real Estate Berhad in connection with the asset-backed securitisation exercise as disclosed in Note 11 to the financial statements. The CRPS are to be mandatorily redeemed semi-annually at RM2.79 per share over a period of seven (7) years commencing April 2003 and bear an effective interest rate of 0.72% (2002: 0.72%) per annum. The redemption schedule of the CRPS is as follows:
Group 2003 2002 RM'000 RM'000
Not later than 1 year 32,620 32,452 Later than 1 year and not later than 2 years 32,789 32,620 Later than 2 years and not later than 5 years 99,386 98,875 Later than 5 years 30,411 63,711
195,206 227,658
SUNWAY CITY BERHAD 85 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
28. LONG TERM LIABILITIES (CONTD.)
The amounts payable to contractors and consultants are included as long term liabilities as the contractors and consultants have agreed not to demand repayment within the next 12 months. These contractors and consultants are member companies of Suninc Group. The relationship with the related parties is as disclosed in Note 41 to the financial statements. The balances are unsecured and interest free except for RM40,000,000 (2002: RM72,000,000) and RM Nil (2002: RM25,294,000) owing by the Group and the Company respectively which bear interest at 7% to 8% (2002: 8%) per annum.
The refundable deposits are in respect of deposits received by subsidiary companies for tenancy contracts for a tenure of two to three years.
Other long term liabilities in the previous year represent the balance of the purchase consideration of a piece of freehold land of a subsidiary company due to the vendor. The amount was fully repaid in the current financial year.
29. ADVANCES BY MINORITY SHAREHOLDERS OF SUBSIDIARY COMPANIES
The advances by minority shareholders of subsidiary companies are unsecured, interest free and have no fixed terms of repayment.
These advances are stated net of the minority shareholders' share of losses in a subsidiary company of RM39,871,000 (2002: RM40,581,000).
30. AMOUNTS DUE TO SUBSIDIARY COMPANIES
The amounts due to subsidiary companies are unsecured, have no fixed terms of repayment and bear interest at rates ranging from 3.70% to 6.50% (2002: 4.20% to 4.68%) per annum except for RM56,967,000 (2002: RM34,365,000) which is interest free.
31. DEFERRED INCOME TAX
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
At 1 January (12,344) 18,772 Ð 2,406 Prior year adjustment (Note 37) Ð (36,525) Ð Ð At 1 January (restated) (12,344) (17,753) Ð 2,406 Charged/(credited) to income statement (Note 36) 7,341 5,409 Ð (2,406) Acquisition of subsidiary company 204 Ð Ð Ð At 31 December (4,799) (12,344) Ð Ð
86 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
31. DEFERRED INCOME TAX (CONTD.)
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Presented after appropriate offsetting as follows: Deferred tax assets (4,833) (12,349) Ð Ð Deferred tax liabilities 34 5 Ð Ð (4,799) (12,344) Ð Ð
Deferred tax assets have been recognised by the Group as they may be used to offset future taxable profits based on the management's projected business plan.
The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:
Deferred Tax Liabilities of the Group
Accelerated Capital Allowances RM'000
At 1 January 2003 21,760 Charged to income statement 1,616 Acquisition of subsidiary company 204 At 31 December 2003 23,580
Deferred Tax Assets of the Group
(Credited)/ At charged to At 1 January income 31 December 2003 statement 2003 RM'000 RM'000 RM'000
Progress Billings (2,110) (546) (2,656) Provisions for Liabilities (134) 23 (111) Tax Losses, Unabsorbed Capital Allowances and Unused Tax Credits (31,747) 6,260 (25,487) Unrealised Profit (113) Ð (113) Others Ð (12) (12) (34,104) 5,725 (28,379)
SUNWAY CITY BERHAD 87 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
31. DEFERRED INCOME TAX (CONTD.)
Deferred tax assets have not been recognised in respect of the following items:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Unused tax losses 33,718 26,992 Ð Ð Unabsorbed capital allowances 43,295 42,815 6,019 5,368 Unused tax credits 105,311 105,311 Ð Ð 182,324 175,118 6,019 5,368
The unused tax losses, unabsorbed capital allowances and unused tax credits are available indefinitely for offset against future taxable profits of the subsidiary companies and the Company in which those items arose. Deferred tax assets have not been recognised in respect of these items as they may not be used to offset taxable profits of other subsidiary companies in the Group and they have arisen in subsidiary companies that have a recent history of losses.
32. REVENUE
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Sale of properties 364,241 321,176 21,676 31,166 Rental income 97,588 81,234 53,870 12,733 Sale of goods and services 262,772 254,345 Ð Ð Subscription fees and others 4,039 2,673 42 167 Gross dividends from: - subsidiary companies Ð Ð 20,651 50,159 - associated companies Ð Ð Ð 9,774 728,640 659,428 96,239 103,999
88 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
33. PROFIT FROM OPERATIONS
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
This is arrived at after charging/(crediting): Auditors' remuneration - audit - current year 507 468 89 78 - under provision in prior year 15 18 11 4 Auditors' remuneration - non-audit 6 163 Ð 25 Amortisation/write-off of goodwill 1,541 1,308 Ð Ð Bad debts written off 1,750 1,155 10 Ð Depreciation of property, plant and equipment 31,288 49,664 3,096 2,995 Development expenditure written off 511 16 511 Ð Directors' emoluments payable to - executive Directors of the Company 3,477 1,518 3,477 1,518 - non-executive Directors of the Company 27 34 27 34 Directors' fees payable to non-executive Directors of the Company 72 72 72 72 Inventories written off 22 431 Ð Ð Operating lease rentals 46,800 8,166 46,800 8,166 Provision for doubtful debts - due from subsidiary companies Ð Ð 260 Ð - due from associated companies 89 15 Ð Ð - others 846 1,275 311 322 Provision for slow moving inventories 96 214 Ð Ð Rental of - land and buildings 2,255 2,062 1,112 999 - equipment, plant and machinery 885 731 249 75 - others 24 83 Ð 81 Write down in value of - land held for development 2,730 1,159 Ð Ð - properties under development Ð 9,830 Ð Ð Write down in value of investment properties 222 76 Ð Ð Interest income - from subsidiary companies Ð Ð (24,964) (20,184) - others (5,226) (4,097) (959) (669) Provision for doubtful debts no longer required (2,517) (968) (296) Ð Rental income - equipment (3,033) (1,917) Ð Ð - others (4,321) (3,326) Ð Ð Realised exchange gain (80) (159) Ð Ð
SUNWAY CITY BERHAD 89 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
33. PROFIT FROM OPERATIONS (CONTD.)
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Staff costs: Wages and salaries 82,725 74,481 7,381 5,781 Pension costs - defined contribution plan 9,177 8,210 1,071 1,034 Other staff related expenses 28,322 24,790 2,936 3,451 120,224 107,481 11,388 10,266
The estimated monetary value of Executive Directors' benefits-in-kind of the Company is RM140,000 (2002: RM120,000).
34. FINANCE COSTS
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Dividend on redeemable preference shares issued by a subsidiary company 996 368 Ð Ð Interest expense: - hire purchase and lease arrangements 1,147 4,112 42 875 - inter-company balances Ð Ð 2,649 1,714 - related party balances 7,673 14,317 2,860 3,387 - commercial papers and medium term notes 10,583 205 10,583 205 - revolving credits 7,095 11,339 7,059 11,339 - term loans 9,298 20,760 2,734 1,037 - bank overdrafts 263 1,290 57 390 37,055 52,391 25,984 18,947
90 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
35. RESULTS ARISING FROM OTHER INVESTING ACTIVITIES
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Loss on disposal of associated company (2,426) Ð (2,426) Ð (Loss)/gain on disposal of property, plant and equipment (291) 6,658 142 9 Gain on disposal of investment properties Ð 113,912 Ð Ð Property, plant and equipment written off (6) (2,558) Ð Ð Investment properties written off Ð (76) Ð Ð Impairment losses on - property, plant and equipment Ð (73,192) Ð (17,807) - investment in subsidiary company Ð Ð (215) Ð - investment in associated company Ð (732) Ð Ð Write-back of impairment losses on property, plant and equipment 38,495 Ð Ð Ð Gain on compulsory acquisition of land and interest compensation by the government 7,642 Ð Ð Ð 43,414 44,012 (2,499) (17,798)
36. TAXATION
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Tax expense for the year
Malaysian income tax - current 28,863 21,544 3,514 13,898 - prior year (766) 24 450 48 28,097 21,568 3,964 13,946 Real property gains tax - current Ð 267 Ð Ð - prior year 2 Ð Ð Ð 2 267 Ð Ð Deferred income tax (Note 31): - current year relating to origination and reversal of temporary differences 7,518 7,582 Ð (62) - prior year (177) (2,173) Ð (2,344) 7,341 5,409 Ð (2,406) 35,440 27,244 3,964 11,540
SUNWAY CITY BERHAD 91 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
36. TAXATION (CONTD.)
Domestic income tax is calculated at the Malaysian statutory tax rate of 28% (2002: 28%) of the estimated assessable profit for the year except for the tax incentive of 8% exempted for the first RM100,000 taxable profit each granted to certain subsidiary companies by the Authority. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. During the financial year, the Group utilised tax losses brought forward of RM1,157,000 (2002: RM642,000) giving rise to tax savings of approximately RM324,000 (2002: RM180,000).
A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:
2003 2002 RM'000 RM'000
Group
Profit before taxation 107,134 156,544
Taxation at Malaysian statutory tax rate of 28% (2002: 28%) 29,998 43,832 Effect of income subject to tax rate of 20% (72) Ð Effect of different tax rates in other countries 115 102 Income subject to real property gains tax Ð (707) Income not subject to tax (12,713) (56,686) Expenses not deductible for tax purposes 11,356 15,465 Utilisation of unabsorbed tax losses and capital allowances previously not recognised as deferred tax assets (2,214) (2,855) Deferred tax assets not recognised during the year 9,911 30,242 Over provision of deferred tax liabilities in prior years adjusted in current year (122) (2,173) Under recognition of deferred tax assets in prior years adjusted in current year (55) Ð (Over)/under provision of income tax in prior years adjusted in current year (766) 24 Under provision of real property gains tax in prior years adjusted in current year 2 Ð
Tax expense for the year 35,440 27,244
Company
Profit before taxation 12,848 39,045
Taxation at Malaysian statutory tax rate of 28% (2002: 28%) 3,598 10,933 Income not subject to tax (1,680) (3,246) Expenses not deductible for tax purposes 945 659 Deferred tax assets not recognised during the year 651 5,490 Under provision of income tax in prior years adjusted in current year 450 48 Over provision of deferred tax liabilities in prior year adjusted in current year Ð (2,344)
Tax expense for the year 3,964 11,540
92 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
36. TAXATION (CONTD.)
The tax losses, capital allowances and tax credits for which the related tax effects have not been accounted for are as follows:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Tax losses 120,421 96,401 Ð Ð Capital allowances 154,625 152,909 21,496 19,171 Tax credits 376,111 376,111 Ð Ð 651,157 625,421 21,496 19,171
37. PRIOR YEAR ADJUSTMENT
In financial year ended 31 December 2002, on adoption of MASB 25 - Income Taxes, the financial statements of the previous year had been restated to provide for deferred tax liabilities on temporary differences at balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Although the Group has certain tax incentives which could be used to set-off against taxable profit, deferred tax assets that might arise from such tax incentives were not recognised in arriving at the deferred tax position of the Group.
During the year, a prior year adjustment ("PYA") was effected to take into account the above deferred tax assets. Details of the effect of the PYA to the Group are as follows:
Group 2003 2002 RM'000 RM'000
Effect on retained profit: At 1 January, as previously stated 131,892 17,644 Effect of PYA 15,945 18,993
At 1 January, as restated 147,837 36,637
Effect on net profit for the year: Net profit for the year, as previously stated 29,505 121,488 Effect of PYA (4,025) (3,048)
Net profit for the year, as restated 25,480 118,440
The reduction in net profit for the year was due to the reversal of temporary differences that gave rise to the deferred tax assets recognised arising from the PYA.
Further details of the comparative amounts at 31 December 2002 which have been restated as a result of the PYA are disclosed in Note 50 to the financial statements.
SUNWAY CITY BERHAD 93 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
38. DIVIDENDS
Group/Company 2003 2002 RM'000 RM'000
6.6% less 28% taxation on CCPS, paid in February 2003 1,188 Ð 6.6% less 28% taxation on CCPS, paid in February 2002 and August 2002 Ð 7,128 Interim dividend of 1.5% less 28% taxation on ordinary shares (1.08 sen net per share), paid in April 2003 4,322 Ð
5,510 7,128
6.6% less 28% taxation on CCPS - overprovision in prior year (153) Ð
5,357 7,128
39. EARNINGS PER SHARE
(a) Basic The calculation of the basic earnings per share for the Group is based on profit after taxation and minority interests of RM25,480,000 (2002: RM118,440,000) less preference shares dividend of RM1,035,000 (2002: RM7,128,000) and the weighted average number of ordinary shares in issue as at 31 December 2003 of 391,327,000 (2002: 340,199,000).
Comparative basic earnings per share has been restated to take into account the effect of the prior year adjustment on net profit for that financial year as disclosed in Note 37 to the financial statements.
(b) Diluted The calculation of the diluted earnings per share for the Group is based on profit after taxation and minority interests of RM25,480,000 (2002: RM118,440,000) less preference shares dividend of RM1,035,000 (2002: RM7,128,000), divided by the number of ordinary shares that would have been in issue upon conversion of the following into ordinary shares:
2003 2002 '000 '000
Weighted average number of ordinary shares in issue 391,327 340,199 Adjustment for assumed conversion of - share options under the Employees' Share Option Scheme ("ESOS") 27,718 Ð - 6.6% Cumulative Convertible Preference Shares ("CCPS") Ð 60,000
Adjusted weighted average number of ordinary shares that would have been in issue 419,045 400,199
94 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
39. EARNINGS PER SHARE (CONTD.)
The CCPS were converted into ordinary shares during the financial year as disclosed in Note 23 to the financial statements. In the previous financial year, the unissued share options under the Employees' Share Option Scheme were anti-dilutive and had not been taken into account in the calculation of diluted earnings per share.
Comparative basic earnings per share has been restated to take into account the effect of the prior year adjustment on net profit for that financial year as disclosed in Note 37 to the financial statements.
40. SIGNIFICANT INTER-COMPANYTRANSACTIONS
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Interest receivable from subsidiary companies Ð Ð (24,964) (20,184) Rent receivable from subsidiary companies Ð Ð (48,050) (8,016) Rent receivable from associated company Ð (1,300) Ð (1,300) Interest payable to subsidiary companies Ð Ð 2,649 1,714 Accounting services fees payable to subsidiary company Ð Ð 363 Ð Rent payable to associated company Ð 699 Ð 254 Rent payable to subsidiary company Ð Ð 495 Ð
41. RELATED PARTY TRANSACTIONS
During the year, the Group transacted with certain related parties. The transactions are principally payable to/(receivable from) the related parties in respect of: Group Name of Companies Nature of Transactions 2003 2002 RM’000 RM’000
(a) Sunway Holdings Construction costs 102,977 97,730 Incorporated Interest expense 9,546 14,317 Berhad Group Management fees 492 192 ("Suninc Group") Insurance premium 3,660 2,847 Lease rental 1,315 2,241 Rental of premises 690 1,485 Purchase of building materials 2,580 1 Rental income (2,891) (1,238) Hotel and related services (1,434) (1,115) Recreational services (78) (59) Ticketing and tour sales (529) (599) Medical services (713) (660) Accounting and related services (21) Ð Property management services Ð (118)
SUNWAY CITY BERHAD 95 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
41. RELATED PARTY TRANSACTIONS (CONTD.)
Group Name of Companies Nature of Transactions 2003 2002 RM’000 RM’000
(b) Buildtrend B.S.G. (M) Purchase of building materials 772 Ð Sdn. Bhd. Group Construction costs Ð 11 ("Buildtrend Medical services (4) Ð Group")
(c) Koperasi Tunas Construction costs 3,276 7,973 Muda Sungai Ara Berhad Group ("KTM Group")
(d) Sunway Technology Information systems products Sdn. Bhd. Group and consultancy fees 1,468 282 ("STSB Group") Hotel and related services (6) (2) Recreational services (1) (2) Ticketing and tour sales (46) (121) Medical services (40) (40) Rental income (163) Ð
(e) Perbadanan Purchase of building materials 8,726 9 Kemajuan Negeri Land and land related services 16,513 9,943 Selangor Group Medical services (1) Ð ("PKNS Group")
(f) Perusahaan Indah Property management services Ð (3) Sdn. Bhd. Group ("PISB Group")
(g) Sungei Way Hiring of machinery 3 Ð Enterprise (1988) Construction cost Ð 4 Sdn. Bhd. Rental income (224) (195) ("SWESB") Ticketing and tour sales (29) (13) Medical services (37) (17) Recreational services (1) Ð
(h) Adasia (M) Sdn. Bhd. Advertising fees 2,591 2,759 ("Adasia") Medical services (6) (1) Rental income (1) Ð
(i) CCM Chemicals Sdn. Purchase of chemicals and 270 537 Bhd. ("CCM") related products
(j) Infra-Melia Sdn. Bhd. Rental income Ð (98) ("IMSB") Recreational services Ð (18)
(k) Sunway College Sdn. Conference and seminar 1 Ð Bhd. Group Rental income (10,328) (10,322) ("SCSB Group") Recreational services (16) (13) Hotel and related services (205) (320) Ticketing and tour sales (651) (538) Medical services (302) (256)
96 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
41. RELATED PARTYTRANSACTIONS (CONTD.)
Group Name of Companies Nature of Transactions 2003 2002 RM’000 RM’000
(l) Asian Strategy & Conference and seminar 1 4 Leadership Ticketing and tour sales (57) (68) Incorporated Medical services (9) (2) Sdn. Bhd. ("ASLI") Recreational services (1) Ð Rental income (1) Ð
(m) Sunway Hydraulic Ticketing and tour sales (2) (16) Industries Sdn. Medical services (5) (3) Bhd. ("SHISB") Hotel and related services (1) Ð
(n) Dekon Sdn. Bhd. Construction costs 63,867 11,746 Group ("DSB") Landscaping services 1,118 928 Hotel and related services (2) (3) Ticketing and tour sales (2) (3) Medical services (16) (12) Recreational services (1) Ð Rental income (29) Ð
(o) Akitek Akiprima Sdn. Architectural consultancy 798 321 Bhd. ("AASB")
(p) PRK Builders Sdn. Construction cost 47,686 Ð Bhd. ("PRK") Hotel and related services (5) Ð Ticketing and tour sales (38) Ð Medical services (33) Ð Rental income (337) Ð
(q) Jef-San Enterprise Rental of properties 264 300 Sdn. Bhd. Ticketing and tour sales (1) Ð ("Jef-San")
The above parties are deemed related to the Group as follows:
(a) Suninc Group is deemed related to the Group by virtue of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling's common directorship and interests in Suninc Group and the Company.
(b) Buildtrend Group is deemed related to the Group by virtue of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling's deemed interest in Buildtrend Group and interest in the Company.
(c) KTM Group is deemed related to the Group by virtue of its substantial shareholding in Sunway Tunas Sdn. Bhd., a 70% owned subsidiary of the Company.
(d) STSB Group is deemed related to the Group by virtue of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling's deemed interest in STSB Group and interest in the Company. Puan Sri Datin Seri (Dr.) Susan Cheah Seok Cheng and Sarena Cheah Yean Tih, being the spouse and child of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling respectively also have deemed interests in STSB Group.
(e) PKNS Group is deemed related to the Group by virtue of its substantial shareholdings in the Company and Sunway Damansara Sdn. Bhd, a 60% owned subsidiary of the Company.
SUNWAY CITY BERHAD 97 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
41. RELATED PARTY TRANSACTIONS (CONTD.)
(f) PISB Group is deemed related to the Group by virtue of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling's and Puan Sri Datin Seri (Dr.) Susan Cheah Seok Cheng's deemed interests in PISB Group via Sungei Way Corporation Sdn. Bhd. where they have more than 15% shareholdings. Puan Sri Datin Seri (Dr.) Susan Cheah Seok Cheng is the spouse of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling.
(g) SWESB is deemed related to the Group by virtue of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling's deemed interest in SWESB and interest in the Company. Puan Sri Datin Seri (Dr.) Susan Cheah Seok Cheng and Sarena Cheah Yean Tih, being the spouse and child of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling respectively also have deemed interests in SWESB.
(h) Adasia is deemed related to the Group by virtue of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling's deemed interest in Adasia and interest in the Company. Puan Sri Datin Seri (Dr.) Susan Cheah Seok Cheng and Sarena Cheah Yean Tih, being the spouse and child of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling respectively also have deemed interests in Adasia.
(i) CCM is deemed related to the Group by virtue of Dato' Lim Say Chong's and Oh Kim Sun's deemed interests in CCM and direct interests in Sunway Lagoon Sdn. Bhd., a 51% owned subsidiary of the Company.
(j) IMSB is deemed related to the Group by virtue of Puan Sri Datin Seri (Dr.) Susan Cheah Seok Cheng's and Sarena Cheah Yean Tih's directorships and substantial shareholdings in IMSB. Puan Sri Datin Seri (Dr.) Susan Cheah Seok Cheng and Sarena Cheah Yean Tih are the spouse and child of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling respectively.
(k) SCSB Group is deemed related to the Group by virtue of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling's and Datuk Razman M Hashim's common directorships and deemed interests in SCSB Group via Sunway College Trust and interests in the Company.
(l) ASLI is deemed related to the Group by virtue of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling's direct and deemed interests in ASLI as well as interest in the Company. Puan Sri Datin Seri (Dr.) Susan Cheah Seok Cheng who is the spouse of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling also has deemed interest in ASLI.
(m) SHISB is deemed related to the Group by virtue of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling's deemed interest in SHISB and interest in the Company as well as Datuk Razman M Hashim's common directorship and interests in SHISB and the Company. Sarena Cheah Yean Tih, being the child of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling also has deemed interest in SHISB.
(n) DSB Group is deemed related to the Group by virtue of Datuk Razman M Hashim's deemed interest in DSB and interest in the Company.
(o) AASB is deemed related to the Group by virtue of Cheah Teik Jin's directorship and substantial shareholding in AASB. Cheah Teik Jin is the brother of Puan Sri Datin Seri (Dr.) Susan Cheah Seok Cheng who is the spouse of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling.
(p) PRK is deemed related to the Group by virtue of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling's deemed interest in PRK via Sungei Way Corporation Sdn. Bhd. where he has more than 15% shareholding, and his interest in the Company.
(q) Jef-San is deemed related to the Group by virtue of Puan Sri Datin Seri (Dr.) Susan Cheah Seok Cheng's and Sarena Cheah Yean Tih's directorships and substantial shareholdings in Jef-San. Puan Sri Datin Seri (Dr.) Susan Cheah Seok Cheng and Sarena Cheah Yean Tih are the spouse and child of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling respectively.
These transactions were undertaken at mutually agreed terms between the companies in the normal course of business and were established on terms and conditions not materially different from those obtainable in transactions with unrelated parties.
98 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
42. CAPITALCOMMITMENTS
Group 2003 2002 RM'000 RM'000
Capital expenditure - contracted but not provided for 124,209 95,847 - approved but not contracted for Ð 4,392
124,209 100,239
43. LEASE COMMITMENTS
Future minimum rentals payable under non-cancellable operating leases are as follows:
Group Company 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Less than one year 47,674 47,674 46,800 46,800 Between one and five years 143,021 190,695 140,399 187,199 190,695 238,369 187,199 233,999
The lease arrangements were entered into in connection with the asset-backed securitisation exercise as disclosed in Note 11 to the financial statements.
The leased properties have been subleased by the Company to certain subsidiary companies. One of the subsidiary companies in turn subleased the leased property to Sunway College Sdn. Bhd. Group, a related party. The relationship between the Group and the related party is as disclosed in Note 41 to the financial statements. Sublease income of the Group and of the Company of RM10,260,000 and RM46,800,000 respectively is expected to be received during the next financial year.
44. CONTINGENT LIABILITIES
Company 2003 2002 RM'000 RM'000
Guarantees given to licensed financial institutions for banking facilities granted to subsidiary companies 71,443 78,470
All the above contingent liabilities are unsecured.
SUNWAY CITY BERHAD 99 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
45. SUBSIDIARY AND ASSOCIATED COMPANIES
Details of the subsidiary and associated companies are listed below:
Country of Principal Equity Interest Held Name of Companies Incorporation Activities 2003 2002 %%
(a) Subsidiaries of Sunway City Berhad
Bintutara Sdn. Bhd. Malaysia Property 100 100 development and investment holding
Sunway Kinrara Sdn. Bhd. Malaysia Property 100 100 development
Sunway Hotel (Penang) Malaysia Hotel 100 100 Sdn. Bhd. business
Syarikat Shoib Malaysia Property 100 100 Properties Sdn. Bhd. development and investment holding
Sunway City (Penang) Malaysia Property 75 75 Sdn. Bhd. development and investment holding
Sunway Pyramid Sdn. Bhd. Malaysia Shopping mall 52 52 operator
Sunway Lagoon Sdn. Bhd. Malaysia Theme park 51 51 operator
Sunway Resort Hotel Malaysia Hotel 100 100 Sdn. Bhd. business
Sunway Lagoon Club Malaysia Recreational 83.6 83.6 Berhad club facilities
Sunway Travel Sdn. Bhd. Malaysia Travel and 87 87 tour agent
Sunway City (Ipoh) Malaysia Property 65 65 Sdn. Bhd. development and investment holding
Sunway Damansara Malaysia Property 60 60 Sdn. Bhd. development and investment holding
100 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
45. SUBSIDIARY AND ASSOCIATED COMPANIES (CONTD.)
Country of Principal Equity Interest Held Name of Companies Incorporation Activities 2003 2002 %%
(a) Subsidiaries of Sunway City Berhad (Contd.)
* Allson International British Hotel 100 100 Holdings Limited Virgin Islands management
Ekuiti Meranti (M) Sdn. Bhd. Malaysia Investment 100 100 holding
Sunway Monorail Malaysia Monorail 100 100 Sdn. Bhd. operator
Grandeal Trading Co. Malaysia Property 100 100 Sdn. Bhd. development
Pembinaan Objektif Malaysia Investment 100 100 (M) Sdn. Bhd. holding
Konsep Objektif Malaysia Investment 70 70 (M) Sdn. Bhd. holding
Suncity SSC Sdn. Bhd. Malaysia Provision of 100 100 shared services
Sunway City Malaysia Investment 76 76 (Cambodia) Sdn. Bhd. holding
Sunway Semenyih Sdn. Bhd. Malaysia Property 70 70 development
Sunway Tunas Sdn. Bhd. Malaysia Property 70 70 development
TAH Properties Sdn. Bhd. Malaysia Dormant 70 70
Sunway Medical Holdings Malaysia Investment 100 100 Sdn. Bhd. holding
Area Star Sdn. Bhd. Malaysia Dormant 100 100
Falcrest Sdn. Bhd. Malaysia Dormant 70 70
# Sunway City (S'pore) Singapore Promotion 100 100 Pte. Ltd. and marketing services
Sunway Resort Hotel Malaysia Dormant 100 100 Land Sdn. Bhd.
SUNWAY CITY BERHAD 101 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
45. SUBSIDIARY AND ASSOCIATED COMPANIES (CONTD.)
Country of Principal Equity Interest Held Name of Companies Incorporation Activities 2003 2002 %%
(a) Subsidiaries of Sunway City Berhad (Contd.)
Stellar Destiny Sdn. Bhd. Malaysia Management 100 100 and letting of property
Sunway Facilities Management Malaysia Dormant 100 100 Sdn. Bhd. (formerly known as Strategic Domain Sdn. Bhd.)
SLR Facilities Management Malaysia Dormant 100 100 Sdn. Bhd. (formerly known as Sun Event Management Sdn. Bhd.)
Emerald Tycoon Sdn. Bhd. Malaysia Investment 100 100 holding
Casa Mujur Sdn. Bhd Malaysia Dormant 100 Ð
Sunway Bukit Gambier Sdn. Bhd. Malaysia Property 100 Ð (formerly known as Casa development Fareast Sdn. Bhd.)
Menara Sunway Malaysia Management 100 Ð Sdn. Bhd. and letting of property
(b) Subsidiaries of Sunway City (Penang) Sdn. Bhd.
Fame Parade Sdn. Bhd. Malaysia Dormant 100 100
Era Primision Sdn. Bhd. Malaysia Dormant 100 100
Commercial Parade Sdn. Bhd. Malaysia Dormant 100 100
Sunway Hotel (Seberang Jaya) Malaysia Hotel 100 100 Sdn. Bhd. business
Lancar Gemilang Sdn. Bhd. Malaysia Dormant 100 100
Prime Delight Sdn. Bhd. Malaysia Dormant 100 100
Sejati Pesona Sdn. Bhd. Malaysia Dormant 100 100
102 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
45. SUBSIDIARY AND ASSOCIATED COMPANIES (CONTD.)
Country of Principal Equity Interest Held Name of Companies Incorporation Activities 2003 2002 %%
(b) Subsidiaries of Sunway City (Penang) Sdn. Bhd. (Contd.)
Associated Circle Sdn. Bhd. Malaysia Dormant 100 100
Alliance Parade Sdn. Bhd. Malaysia Property 100 100 development
(c) Subsidiary of Konsep Objektif (M) Sdn. Bhd.
# Sunway Hotel Phnom Cambodia Hotel 75 75 Penh Ltd business
(d) Subsidiary of Sunway Pyramid Sdn. Bhd.
Sunway Parking Management Malaysia Car park 100 100 Sdn. Bhd. operator
(e) Subsidiary of Syarikat Shoib Properties Sdn. Bhd.
Pena Enterprise Sdn. Bhd. Malaysia Property 100 100 development
(f) Subsidiaries of Sunway Lagoon Sdn. Bhd.
Sunway Arena Malaysia Dormant 55 55 Entertainment Sdn. Bhd.
Eastern Glory British Investment 60 60 Enterprises Ltd. Virgin Islands holding
Commercial Highlight Malaysia Dormant 55 55 Sdn. Bhd.
Sunway Townhouse Malaysia Property 100 100 Sdn. Bhd. development
Digital Splendour Sdn. Bhd. Malaysia Dormant 100 100
Esteem Crest Sdn. Bhd. Malaysia Dormant 100 100
Lambang Mujur Sdn. Bhd. Malaysia Dormant 100 100
SUNWAY CITY BERHAD 103 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
45. SUBSIDIARY AND ASSOCIATED COMPANIES (CONTD.)
Country of Principal Equity Interest Held Name of Companies Incorporation Activities 2003 2002 %%
(f) Subsidiaries of Sunway Lagoon Sdn. Bhd. (Contd.)
Lavender Acres Sdn. Bhd. Malaysia Dormant 100 100
Lestari Ganda Sdn. Bhd. Malaysia Dormant 100 100
Logic Square Sdn. Bhd. Malaysia Dormant 100 100
Perpetual Summer Sdn. Bhd. Malaysia Dormant 100 100
Platinum Success Sdn. Bhd. Malaysia Dormant 100 100
Splendid Crest Sdn. Bhd. Malaysia Dormant 100 100
Zenith Gateway Sdn. Bhd. Malaysia Dormant 100 100
(g) Subsidiaries of Allson International Holdings Limited
* Allson International Hong Kong Hotel 99.9 99.9 Hotels & Resorts management (H.K.) Limited
* Allson International British Hotel 100 100 Hotels & Resorts Virgin Islands management (B.V.I.) Limited
* Allson International British Hotel 100 100 Management Virgin Islands management Limited
Allson Hotels and Resorts Malaysia Hotel 100 Ð Management Sdn. Bhd. management (formerly known as Silk Consolidated Sdn.Bhd.)
(h) Subsidiaries of Emerald Tycoon Sdn. Bhd.
Sunway Rahman Putra Malaysia Property 100 100 Sdn. Bhd. development
Sunway D'Mont Kiara Malaysia Property 70 70 Sdn. Bhd. development
104 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
45. SUBSIDIARY AND ASSOCIATED COMPANIES (CONTD.)
Country of Principal Equity Interest Held Name of Companies Incorporation Activities 2003 2002 %%
(i) Subsidiaries of Sunway Medical Holdings Sdn. Bhd.
Sunway Medical Centre Malaysia Operator of a 60.8 60.8 Berhad medical centre
Sunway Gamma Knife Centre Malaysia Dormant 100 100 (Malaysia) Sdn. Bhd.
(j) Subsidiary of Sunway City (Cambodia) Sdn. Bhd.
Sunway City Cambodia Cambodia Dormant 80 80 Limited
(k) Subsidiaries of Sunway City (Ipoh) Sdn. Bhd.
Kinta Sunway Resort Malaysia Dormant 100 100 Sdn. Bhd.
Sunway Realty (Penang) Malaysia Dormant 100 100 Sdn. Bhd.
Sunway Lagoon Malaysia Dormant 100 100 Water Park Sdn. Bhd.
Lagoon Fantasy Sdn. Bhd. Malaysia Dormant 100 100
Semangat Kancil (M) Malaysia Dormant 100 100 Sdn. Bhd.
Ganda Antik Sdn. Bhd. Malaysia Dormant 100 100
Bandar Sunway Malaysia Dormant 100 100 (Melaka) Sdn. Bhd.
Permata Aktiviti (M) Malaysia Dormant 100 100 Sdn. Bhd.
Lagoon Café Sdn. Bhd Malaysia Dormant 100 100
Objektif Ekuiti (M) Malaysia Dormant 100 100 Sdn. Bhd.
Peluang Klasik (M) Malaysia Dormant 100 100 Sdn. Bhd.
SUNWAY CITY BERHAD 105 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
45. SUBSIDIARY AND ASSOCIATED COMPANIES (CONTD.)
Country of Principal Equity Interest Held Name of Companies Incorporation Activities 2003 2002 %%
(l) Subsidiaries of Sunway Damansara Sdn. Bhd.
Imbasan Intisari Sdn. Bhd. Malaysia Dormant 100 100
Tidal Elegance Sdn. Bhd. Malaysia Dormant 100 100
Park Symphony Sdn. Bhd. Malaysia Dormant 100 100
Pan Unicreation Sdn. Bhd. Malaysia Dormant 100 100
Winning Excellence Sdn. Bhd. Malaysia Dormant 100 100
Laudable Generations Malaysia Dormant 100 100 Sdn. Bhd.
Contemporary Deal Sdn. Bhd. Malaysia Dormant 100 100
Contemporary Factor Malaysia Dormant 100 100 Sdn. Bhd.
Petikan Tropika Sdn. Bhd. Malaysia Dormant 100 100
Cahaya Jejaka Sdn. Bhd. Malaysia Dormant 100 100
Seruan Istilah Sdn. Bhd. Malaysia Dormant 100 100
Sumber Dorongan Sdn. Bhd. Malaysia Dormant 100 100
Anggaran Salju Sdn. Bhd. Malaysia Dormant 100 100
Bisikan Seni Sdn. Bhd. Malaysia Dormant 100 100
Emerald Freight Sdn. Bhd. Malaysia Dormant 100 100
Sunway Monterez Malaysia Property 100 100 Sdn. Bhd. development
(m) Subsidiary of Menara Sunway Sdn. Bhd.
MSW Parking Sdn. Bhd. Malaysia Car park 100 Ð management
106 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
45. SUBSIDIARY AND ASSOCIATED COMPANIES (CONTD.)
Country of Principal Equity Interest Held Name of Companies Incorporation Activities 2003 2002 %%
(n) Subsidiaries of Eastern Glory Enterprises Limited
Estonia Enterprises British Investment 100 100 Limited Virgin Islands holding
* Hartford Lane Pty. Limited Australia Trustee 100 100
(o) Subsidiaries of Estonia Enterprises Limited
* International Theme Australia Theme park 100 100 Park Pty. Ltd. operator
* Sunway Australia Unit Trust Australia Unit trust 100 100
(p) Subsidiary of International Theme Park Pty. Ltd.
* Sydney Theme Park Australia Theme park 100 100 Pty. Ltd. licence holder
(q) Associated company of Sunway Damansara Sdn. Bhd.
Sunway D'Mont Kiara Malaysia Property 30 30 Sdn. Bhd. development
(r) Associated company of Sunway Travel Sdn. Bhd.
# OSC First Holidays Socialist Tour and 20 20 Co. Ltd. Republic tour agent of Vietnam
# Subsidiary and associated companies not audited by Ernst & Young
* Subsidiary companies audited by another member firm of Ernst & Young Global
SUNWAY CITY BERHAD 107 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
45. SUBSIDIARY AND ASSOCIATED COMPANIES (CONTD.)
Country of Principal Equity Interest Held Name of Companies Incorporation Activities 2003 2002 %%
(s) Associated companies of Sunway City Berhad
# Menara Sunway Malaysia Management Ð 49 Sdn. Bhd. and letting of property
Sistem Penyuraian Malaysia Dormant Ð 50 Trafik Kotaraya Sdn. Bhd.
Aktif-Sunway Sdn. Bhd. Malaysia Retailer 20 20
(t) Associated companies of Sunway Lagoon Sdn. Bhd.
Sunway Sayang Malaysia Dormant 50 50 Restaurant Sdn. Bhd.
Shochiku Sunway Malaysia Dormant 50 50 Lagoon Sdn. Bhd.
# Pyramid Bowl Sdn. Bhd. Malaysia Bowling alley 40 40 operator
# Associated company not audited by Ernst & Young.
46. SIGNIFICANT EVENTS DURING THE FINANCIALYEAR
Completed Events
(a) Proposed New ESOS
On 26 August 2003, the Company completed the termination of the existing employees' share option scheme ("Existing ESOS") which was scheduled to expire on 22 December 2004 ("Termination"). Pursuant to the Termination, the Company established a new ESOS ("New ESOS") that reflects the Revised Guidelines for the benefit of eligible Executive Directors and employees of the Group and of the Company based on the prevailing market price of the Company's ordinary shares of RM1.00 each. Shareholders' approval for the New ESOS was obtained on 26 August 2003. The principal features of the New ESOS are as follows:
(i) The total number of new shares to be offered pursuant to the New ESOS shall not exceed 10% of the issued and paid-up share capital of the Company (or such other higher percentage as may be permitted by the relevant regulatory authorities, from time to time) at the time of the offer of options under the New ESOS.
(ii) Only eligible Executive Directors and employees of the Company and of the Group will be eligible to participate in the New ESOS.
108 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
46. SIGNIFICANT EVENTS DURING THE FINANCIALYEAR (CONTD.)
Completed Events (Contd.)
(a) Proposed New ESOS (Contd.)
(iii) The price payable upon exercise of an option granted under the New ESOS will be based on the five- day weighted average market price of the Company's shares at the time the offer is granted with a discount of not more than 10% if deemed appropriate or the par value of the Company's shares, whichever is higher.
(iv) The duration of the New ESOS will be ten (10) years from the date of its commencement.
The Termination and establishment of the New ESOS did not have any material financial impact on the Group.
(b) Acquisition of remaining equity interest in Menara Sunway Sdn. Bhd.
On 28 January 2003, the Company entered into a conditional sale and purchase agreement with Sunway Holdings Incorporated Berhad ("Suninc"), a related party by virtue of Tan Sri Dato' Seri (Dr.) Cheah Fook Ling's common directorship and interests in Suninc and the Company, for the acquisition of 17,075,100 ordinary shares of RM1.00 each representing the remaining 51% equity interest, for which the Company had not already owned, in MSSB Group from Suninc for a cash consideration of RM20,000,000 and amount payable to Suninc of RM7,839,000.
Shareholders' approval for the above acquisition was obtained on 26 June 2003 and the acquisition was completed on 8 July 2003.
47. SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE
Event Pending Completion
Closure of Wonderland Sydney Theme Park, Australia and proposed disposal of its property
On 16 February 2004, the Company announced that International Theme Park Pty. Ltd. ("ITP"), a company incorporated in Australia and the operator of Wonderland Sydney in Australia will be closing its theme park operation by middle of 2004 as part of the Group's overall rationalization exercise to exit from non-performing business units.
ITP is a wholly-owned subsidiary of Estonia Enterprises Ltd. ("Estonia") which in turn is a wholly-owned subsidiary of Eastern Glory Enterprises Ltd. ("Eastern Glory"). Eastern Glory is a 60% owned subsidiary of Sunway Lagoon Sdn. Bhd. which in turn is a 51% owned subsidiary of the Company. Both Eastern Glory and Estonia are companies incorporated in the British Virgin Islands.
Hartford Lane Pty. Ltd. ("Hartford"), a company incorporated in Australia, had on 12 February 2004 entered into a Put and Call Option Deed (which is governed by the laws of New South Wales, Australia) with Paclib Industrial No. 5 Pty. Limited ("PIPL"), a company incorporated in Australia, to dispose the property known as Wonderland Sydney, Wallgrove Road, Eastern Creek, New South Wales ("the Property") to PIPL for a total consideration of AUD52.5 million, excluding Goods and Services Tax ("the Proposed Disposal").
Hartford is a wholly-owned subsidiary of Eastern Glory, and being the Trustee of Sunway Australia Unit Trust ("SAUT"), is the registered owner of the Property. All the ordinary shares issued by SAUT are held by Estonia.
The Property consists of a piece of land measuring 58.87 hectares (Lot 11, Plan 1025320) and buildings, structures and theme park rides thereon.
SUNWAY CITY BERHAD 109 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
47. SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE (CONTD.)
Event Pending Completion (Contd.)
Closure of Wonderland Sydney Theme Park, Australia and proposed disposal of its property (Contd.)
In consideration of a Call Option fee of AUD1.00 and the payment of the security amount of AUD10 million ("Security Amount"), Hartford has granted PIPLor its nominee a call option to purchase the Property on the terms to be set out in the contract for the sale of the Property ("Contract of Sale"). The Call Option period commences three (3) months from the date of the Option Deed and ends on 9 December 2004.
In consideration of the payment of a Put Option fee of AUD1.00, PIPL has also granted Hartford a Put Option to require PIPL to purchase the Property on the terms to be set out in the Contract of Sale. The Put Option period commences on 10 December 2004 and ends on 23 December 2004.
If neither the Call Option nor the Put Option is exercised, the Security Amount will be fully forfeited by Hartford.
If either option is exercised, the completion date for the Contract of Sale is set on 24 January 2005.
48. FINANCIAL INSTRUMENTS
(a) Financial Risk Management Objectives and Policies
The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its interest rate, foreign exchange, liquidity and credit risks. The Group operates within clearly defined guidelines that are approved by the Board 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 as the Group had no substantial long term interest-bearing assets as at 31 December 2003 except for the Other Non-Current Investments which bear interest at a fixed rate. The investments in other financial assets are mainly short term in nature and they are not held for speculative purposes but have been mostly placed in fixed deposits and in current accounts. The deposits with licensed banks as at 31 December 2003, which comprise deposits on call, bear interests at 2.71% to 3.50% (2002: 2.71% to 4.00%) per annum.
The Group actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against interest rate hikes.
The information on effective interest rates of financial liabilities are disclosed in their respective notes in the financial statements.
110 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
48. FINANCIAL INSTRUMENTS (CONTD.)
(b) Interest Rate Risk (Contd.)
The carrying amounts of financial instruments as at 31 December exposed to interest rate risks are analysed as follows:
At 31 December 2003:
Within 1 - 5 More than Total 1 year years 5 years RM'000 RM'000 RM'000 RM'000 Group
Financial Assets
Other non-current investments 466,203 Ð 466,203 Ð Trade receivables 2,902 2,902 Ð Ð Other receivables 523 523 Ð Ð Deposits with licensed banks 11,904 11,904 Ð Ð Cash and bank balances 128,297 128,297 Ð Ð
Financial Liabilities
Trade payables 3,797 3,797 Ð Ð Other payables 7,839 7,839 Ð Ð Amounts due to contractors and consultants 121,901 81,901 40,000 Ð Bank overdrafts 6,906 6,906 Ð Ð Trade bills 7,153 7,153 Ð Ð Term loans 143,866 43,034 92,551 8,281 Revolving credits 136,400 Ð Ð 136,400 Commercial papers 69,447 Ð Ð 69,447 Medium term notes 153,823 Ð Ð 153,823
Company
Financial Assets
Amounts due from subsidiary companies 754,412 754,412 Ð Ð Trade receivables 338 338 Ð Ð Other receivables 158 158 Ð Ð Cash and bank balances 23,615 23,615 Ð Ð
Financial Liabilities
Trade payables 772 772 Ð Ð Other payables 7,839 7,839 Ð Ð Amounts due to contractors and consultants 11,275 11,275 Ð Ð Term loans 21,857 21,857 Ð Ð Revolving credits 136,400 Ð Ð 136,400 Commercial papers 69,447 Ð Ð 69,447 Medium term notes 153,823 Ð Ð 153,823 Amounts due to subsidiary companies 56,967 56,967 Ð Ð
SUNWAY CITY BERHAD 111 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
48. FINANCIAL INSTRUMENTS (CONTD.)
(b) Interest Rate Risk (Contd.)
At 31 December 2002:
Within 1 - 5 More than Total 1 year years 5 years RM'000 RM'000 RM'000 RM'000
Group
Financial Assets
Other non-current investments 392,840 Ð Ð 392,840 Trade receivables 343 343 Ð Ð Other receivables 523 523 Ð Ð Deposits with licensed banks 73,393 73,393 Ð Ð Cash and bank balances 112,858 112,858 Ð Ð
Financial Liabilities
Trade payables 12,180 12,180 Ð Ð Amounts due to contractors and consultants 141,243 69,243 72,000 Ð Bank overdrafts 6,160 6,160 Ð Ð Trade bills 4,933 4,933 Ð Ð Term loans 121,523 34,354 74,488 12,681 Revolving credits 173,900 Ð Ð 173,900 Commercial papers 79,367 Ð Ð 79,367
Company
Financial Assets
Amounts due from subsidiary companies 681,338 681,338 Ð Ð Trade receivables 338 338 Ð Ð Other receivables 158 158 Ð Ð Cash and bank balances 13,187 13,187 Ð Ð
Financial Liabilities
Trade payables 10,193 10,193 Ð Ð Amounts due to contractors and consultants 25,294 Ð 25,294 Ð Bank overdrafts 654 654 Ð Ð Term loans 49,600 18,600 31,000 Ð Revolving credits 173,900 Ð Ð 173,900 Commercial papers 79,367 Ð Ð 79,367 Amounts due to subsidiary companies 34,365 34,365 Ð Ð
112 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
48. FINANCIALINSTRUMENTS (CONTD.)
(c) Foreign Exchange Risk
The Group is not significantly exposed to foreign currency risk as the majority of the Group's transactions, assets and liabilities are denominated in Ringgit Malaysia except for foreign exchange risks arising from countries in which certain foreign subsidiary companies operate. The currencies giving rise to this risk are primarily Australian Dollar and United States Dollar.
The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which the property or investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments. Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level.
(d) Liquidity Risk
The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and prudently balances its portfolio with some short term funding so as to achieve overall cost effectiveness.
(e) Credit Risk
Credit risk, or the risk of counterparties defaulting, is controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Group's associations to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via the Group's management reporting procedures.
The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instruments.
(f) Fair Values
The aggregate fair values of financial assets and financial liabilities carried on the balance sheet of the Group are as follows:
Group Carrying Amount Fair Value 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000
Financial Assets
Other Non-Current Investments - Subordinated Class D Notes 466,203 392,840 466,203 392,840
Financial Liabilities
Refundable deposits - long term portion 16,061 7,941 10,553 6,640 Other long term liabilities Ð 8,500 Ð 7,657
SUNWAY CITY BERHAD 113 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
48. FINANCIAL INSTRUMENTS (CONTD.)
(f) Fair Values (Contd.)
The fair value of the Subordinated Class D Notes has been determined by the fair value of the assets held by ABS Real Estate Berhad less the principal amount of the Senior Notes in connection with the ABS exercise as disclosed in Note 11 to the financial statements.
The fair values of refundable deposits and other long term liabilities are estimated using discounted cash flow analysis based on current incremental lending rates offered to the Group.
The carrying value of the borrowings of the Group and of the Company, all of which are variable rate borrowings, is considered to be a reasonable estimate of the fair value as the borrowings will be repriced immediately in the event of any changes to the market interest rates.
The carrying value of the CPs and MTNs of the Group and of the Company which are variable rate borrowings, is considered to be a reasonable estimate of the fair value as the CPs and MTNs will be repriced immediately upon maturity and their interest rates approximate those financial instruments of similar risk profile.
The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables, and other short term borrowings approximate fair values due to the relatively short term nature of these financial instruments.
It is not practical to determine the fair values of:
(i) amounts due from/to subsidiary, associated companies and jointly controlled entity, advances by minority shareholders and amounts due to contractors due principally to a lack of fixed repayment terms entered by the parties involved and without incurring excessive costs. However, the Group and the Company do not anticipate the carrying amounts recorded at the balance sheet date to be significantly different from the values that would eventually be received or settled.
(ii) preference shares issued by a subsidiary company because of a lack of available market information in respect of similar financing arrangement and the inability to estimate fair value without incurring excessive costs.
The fair values of all other financial assets and liabilities of the Group and the Company as at 31 December are not materially different from their carrying values.
114 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
49. SEGMENT INFORMATION
The Group's operating businesses are organised and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.
(a) Business Segments
The Group is organised on a worldwide basis into five major business segments:
(i) Property development - development of residential and commercial properties; (ii) Property investment - management and operation of shopping mall and letting of property; (iii) Leisure - operation of themeparks, rendering recreational club facilities and travel agent; (iv) Hospitality - management and operations of hotels; and (v) Healthcare - management and operation of a medical centre.
The Directors are of the opinion that all inter-segment transactions were entered into in the normal course of business and were established on terms and conditions not materially different from those obtainable in transactions with unrelated parties.
SUNWAY CITY BERHAD 115 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
116 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
SUNWAY CITY BERHAD 117 ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
49. SEGMENT INFORMATION (CONTD.)
(b) Geographical Segments
Revenue is attributed to geographic areas based on the location of the assets producing the revenue.
Asia (excluding Malaysia Malaysia) Australia Consolidated 2003 2002 2003 2002 2003 2002 2003 2002 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Total revenue from external customers 650,865 545,287 11,721 11,076 66,054 103,065 728,640 659,428 Operating segment results 109,117 113,858 881 145 (8,866) 28,376 101,132 142,379 Segment assets 2,108,272 1,877,886 41,647 45,135 126,431 108,201 2,276,350 2,031,222 Capital expenditure 60,388 44,485 142 957 1,214 657 61,744 46,099
118 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notes To The Financial Statements - 31 December 2003 (cont’d)
50 COMPARATIVES
(a) The following comparative figures of the Group and of the Company have been reclassified to conform with current year's presentation:
Group Company As previously As previously As restated reported As restated reported RM'000 RM'000 RM'000 RM'000
Land held for development 354,410 354,381 4,581 4,552 Goodwill on consolidation 23,914 24,300 ÐÐ Properties under development 250,497 250,526 33,302 33,331 Trade receivables 61,801 61,671 Ð - Other receivables 22,977 23,107 Ð - Reserves on consolidation - (386) Ð - Cost of sales - Ð (26,752) (18,586) Other operating expenses - Ð (12,917) (21,083) 713,599 713,599 (1,786) (1,786)
(b) Certain comparative figures of the Group have been restated to reflect the effects of the PYA as explained in Note 37 to the financial statements.
Group Company As previously As previously As restated reported As restated reported RM'000 RM'000 RM'000 RM'000
Deferred tax assets 12,349 2,889 - Ð Minority interests 253,213 238,494 - Ð Deferred tax liability 5 21,209 - Ð Taxation (27,244) (21,383) - Ð Minority interests (10,860) (13,673) - -
SUNWAY CITY BERHAD 119 ( 8 7 5 6 4 - X ) List Of Properties As At 31 December 2003
Location Address Land Area Owned by Existing use Age of Tenure Net Yearof (acre)/built up building Book Value Acquisition of area (sq.ft.) (years) RM’000 Land/Building
Investment Properties
PT 26, HS (D) 118330 4.075/43,917 Sunway Sunway Lagoon 10 Leasehold 9,157 1986/1993 PT 1487, HS (D) 118320 City Club expiring Bandar Sunway 01.04.2097 Daerah Petaling Selangor Darul Ehsan
PT 25, HS (D) 118329 59.893/728,326 Sunway Sunway Lagoon 11 Leasehold 43,199 1986/1992 PN 9493 Lot 37 City Theme Park expiring PT 15753, HS (D) 98453 Amphitheatre, 01.04.2097 Bandar Sunway Wavepool & & Daerah Petaling Elephant Walk 19.06.2094 Selangor Darul Ehsan
PT 1706, HS (D) 118324 0.499/21,482 Sunway Food Court 9 Leasehold 1,621 1986/1994 Bandar Sunway City Phase (10) expiring Daerah Petaling 01.04.2097 Selangor Darul Ehsan
PT 1406, HS (D) 118322 0.370/6,143 Sunway Food Court 11 Leasehold 607 1986/1992 Bandar Sunway City Phase (6A) expiring Daerah Petaling 01.04.2097 Selangor Darul Ehsan
PT 892, HS (M) 7031 4.33/221,000 Sunway Apartments 8 Leasehold 12,732 1986/1995 Bandar Sunway City Phase (8C) expiring MK Damansara 11.04.2093 Selangor Darul Ehsan & PN 8622-23, Lot 49359-60 01.12.2097 Bandar Sunway Daerah Petaling Selangor Darul Ehsan
PT 161, HS (D) 182798 13.22/2,500,000 Sunway Sunway Pyramid 6 Leasehold 383,258 1986/1997 Bandar Sunway Pyramid Shopping Mall expiring Daerah Petaling Cum Car Park 21.02.2102 Selangor Darul Ehsan
PT 37, HS (D) 118341 4.496/235,925 Sunway Sunway 4.5 Leasehold 48,690 1986/1999 PT 1489, HS (D) 118318 Medical Medical Centre expiring Bandar Sunway Centre 01.04.2097 Daerah Petaling Selangor Darul Ehsan
PT 162, HS (D) 182799 1.898/549,928 Sunway Sunway Ð Leasehold 66,944 2003/Ð Bandar Sunway Resort Pyramid expiring Daerah Petaling Hotel Hotel 21.02.2102 Selangor Darul Ehsan under contruction
120 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) List Of Properties As At 31 December 2003 (cont’d)
Location Address Land Area Owned by Existing use Tenure Net Year of (acre)/built up Book Value Acquisition of area (sq.ft.) RM’000 Land/Building
Properties Under Development & Land Held For Development
Lot 5497-5499, 7.999 Sunway City Sunway Leasehold 15,645 1992/Ð HS (D) 1816-1818 Penang Carnival expiring Daerah Seberang Perai Tengah Shopping Mall 21.10.2092 Pulau Pinang under construction
PT 33491-33494, 159.53 Sunway Mixed Leasehold 82,674 1995/Ð HS (D) 103054-103057 Damansara development expiring MK Sungei Buloh under 13.05.2095 Daerah Petaling construction Selangor Darul Ehsan
PT 3705, PT 3079 & PT2763 0.28 Sunway Tunas Mixed Freehold 2,006 1995/Ð HS (D) 9222 development MK 12 Daerah Barat Daya under Penang construction
PT 155845, HS (D) 72921 1,242.81 Sunway City Mixed Leasehold 28,539 1994/Ð PT 144881-897, Ipoh development expiring HS (D) 72888-72908 under 27.10.2097 PT 146128-139, construction HS (D) 72909-72921 Jalan Tambun MK Ulu Kinta Daerah Kinta Perak Darul Ridzuan
PT 24509, HS (D) 80095 2.8 Sunway Mixed Leasehold 2,532 1991/Ð MK Damansara Kinrara development expiring Daerah Petaling under 13.10.2092 Selangor Darul Ehsan construction
PT542, HS (D) 72591 91.73 Sunway Mixed Leasehold 28,531 2001/Ð Mukim Bukit Raja Monterez development expiring Daerah Petaling under 13.12.2091 Selangor Darul Ehsan construction
PN 8620, Lot 44457 2.98 Sunway Condominium Leasehold 25,846 1986/Ð PN 9530, Lot 39 City Phase D expiring Bandar Sunway under 01.04.2097 Daerah Petaling construction Selangor Darul Ehsan
PT 162, HS(D) 182799 1.898 Sunway Resort Leasehold 38,284 2003/Ð Bandar Sunway Resort Suites expiring Daerah Petaling Hotel under 21.02.2102 Selangor Darul Ehsan construction
SUNWAY CITY BERHAD 121 ( 8 7 5 6 4 - X ) List Of Properties As At 31 December 2003 (cont’d)
Location Address Land Area Owned by Existing use Tenure Net Yearof (acre)/built up Book Value Acquisition of area (sq.ft.) RM’000 Land/Building
Lot 1131, 1132 & 1391 1.94 Sunway Lowcost Leasehold 197 2000/Ð MK 9 Daerah Barat Daya Tunas Flat under expiring Pulau Pinang construction 10.08.2873
Lot 390, 391, 793 & 799 5.658 Sunway Tunas Residential Freehold 5,260 2001/Ð Mukim 12, Daerah Barat Daya development Pulau Pinang under construction
PT 4023, HS (D) 28648 644.59 Sunway Mixed Freehold 142,163 1996/Ð PT 4025-26, HS (D) 28650-51 Semenyih development PT 4028, HS (D) 28653 under PT 1696-97, HS (D) 39673-74 construction PT 14527, HS (D) 67894 MK Semenyih Daerah Ulu Langat Selangor Darul Ehsan
Lot 238, HS (D) 3477 10.771 Sunway Mixed Freehold 3,575 2000/Ð MK Semenyih Semenyih development Daerah Ulu Langat under Selangor Darul Ehsan construction
Lot 896, Geran No. 17426 1.427 Sunway Mixed Freehold 1,243 2000/Ð MK Semenyih Semenyih development Daerah Ulu Langat under Selangor Darul Ehsan construction
PN 11397-11417, Lot 6-31 103.79 Sunway Vacant Leasehold 73,002 1993/Ð Bandar Sunway Lagoon expiring Daerah Petaling 14.11.2096 Selangor Darul Ehsan
Lot 5781-84, HS (D) 5589-92 14.92 Sunway City Vacant Leasehold 15,534 1992/Ð Lot 5493, HS (D) 1814 Penang expiring Lot 5647, HS (D) 1823 21.10.2092 Lot 5646, HS (D) 1822 Lot 5648, HS (D) 1824 Seberang Perai Tengah, Prai
PN 9495 Lot 32 16.71 Sunway Vacant Leasehold 840 1986/Ð PN 9497 Lot 41 City expiring PN 9500 Lot 51175 01.04.2097 PN 9501 Lot 51172 PT 1408, HS (D) 118321 PT 638 HS (D) 174431 Bandar Sunway Daerah Petaling Selangor Darul Ehsan
122 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) List Of Properties As At 31 December 2003 (cont’d)
Location Address Land Area Owned by Existing use Age of Tenure Net Year of (acre)/built up building Book Value Acquisition of area (sq.ft.) (years) RM’000 Land/Building
PT 48633 HS (D) 47942 29.38 Sunway Residential Ð Freehold 82,651 2001/Ð PT 48636 HS (D) 49045 D’Mont Kiara development PT 48634 HS (D) 47943 under PT 48635 HS (D) 49044 construction Mukim District of Kuala Lumpur
PT 33388 - 33427 16.06 Sunway Rahman Residential Ð Freehold 30,036 2001/Ð Mukim District of Putra development Kuala Lumpur under construction
PT 1490, HS (D) 115836 1.537 Sunway Vacant Ð Leasehold 533 1986/Ð Bandar Sunway City expiring Daerah Petaling 28.12.2096 Selangor Darul Ehsan
Lot 4066, 4069 1,010.661 TAH Vacant Ð Freehold 6,359 1994/Ð MK Kampung Buaia Properties Daerah Kuala Kangsar Perak Darul Ridzuan
PT 12515-24 0.430 Area Star Vacant Ð Freehold 1,300 1996/Ð HS (D) 013845 S -54 S Daerah Kinta Bandar Ipoh Perak
PT 5013, HS (D) 118683 2.02 Syarikat Shoib Vacant Ð Leasehold 361 1991/Ð Mukim Petaling Properties expiring Selangor Darul Ehsan 25.05.2097
PT 9315, HS (D) 56708 37.561 Sunway Industrial unit 14 Leasehold 3,828 1986/1989 MK Damansara City and expiring Daerah Petaling batching plant 19.04.2086 Selangor Darul Ehsan
PT 14438 HS (M) 5491 1.315 Sunway Pyramid Vacant Ð Leasehold 12,160 2001/Ð Mukim Damansara expiring Daerah Petaling 14.03.2090 Selangor Darul Ehsan
PT 3, HS (D) 114889 1.51 Sunway Residential Ð Leasehold 2,082 2001/Ð Bandar Sunway Townhouse development expiring Daerah Petaling under 14.11.2096 Selangor Darul Ehsan construction
PT 17232, HS (D) 101378 53 Sunway Mixed Ð Freehold 53,817 2003/Ð PT 17233, HS (D) 101379 SPK Development Geran 27657, Lot 48593 Homes under Geran 27658, Lot 48594 construction Mukim of Batu (Parcel A) District of Kuala Lumpur State of Wilayah Persekutuan SUNWAY CITY BERHAD 123 ( 8 7 5 6 4 - X ) List Of Properties As At 31 December 2003 (cont’d)
Location Address Land Area Owned by Existing use Age of Tenure Net Year of (acre)/built up building Book Value Acquisition of area (sq.ft.) (years) RM’000 Land/Building
GM No. 554, Lot 366 8.49 Grandeal Vacant Ð Freehold 7,816 2003 GM No, 558, Lot 375 Trading GM No. 1076, Lot 613 Co. GM No. 488, Lot 764 Mukim 12 Dearah Barat Daya, Penang
GM No. 813, Lot 371 Lot Nos. 371 Mukim 12 Tempat Batu Maung Dearah Barat Daya, Penang
Completed Properties For Sale
PN 8618, Lot 38 5.134/14,587 Sunway Condominium 5 Leasehold 2,289 1986/1998 PN 8621, Lot 44456 City Phase E expiring Bandar Sunway (5 units) 01.04.2097 Daerah Petaling Selangor Darul Ehsan
PT 17230, HS (M) 9296 0.209/4,933 Sunway Residential 10 - 14 Leasehold 328 1986/1989-1993 PT 589, HS (M) 7116 City (3 units) expiring PT 1384, HS (M) 8437 11.03.2095 MK Damansara 11.04.2093 Daerah Petaling 30.10.2093 Selangor Darul Ehsan
PN 8617, Lot 38159 6.783/4,999 Sunway Palmville 8 Leasehold 664 1986/1995 PN 8619, Lot 44 City Condominium expiring MK Damansara (3 units) 01.04.2097 Daerah Petaling Selangor Darul Ehsan
Pajakan Negeri 6890 6.316/2,592 Bintutara Flatted industrial 8 Leasehold 261 1985/1995 Lot 93 Sek 20 factory expiring Bandar Petaling Jaya (1 unit) 24.10.2067 Selangor Darul Ehsan
PT 155 845 HS (D) 72921 1.293 Sunway Commercial & 4 Leasehold 7,946 1994/2000 PT 144 881-897, City industrial expiring HS (D) 72888-72908 Ipoh units 27.10.2097 PT 146128-139, (31 units) HS (D) 72909-72921 Jalan Tambun MK Ulu Kinta Daerah Kinta, Perak
PT 33491, HSD (L) 09 0.11 Sunway Shop office 4 Leasehold 2,321 1995/2000 Mukim Sg Buluh Damansara (2 units) expiring Selangor Darul Ehsan 13.05.2095
124 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) List Of Properties As At 31 December 2003 (cont’d)
Location Address Land Area Owned by Existing use Age of Tenure Net Year of (acre)/built up building Book Value Acquisition of area (sq.ft.) (years) RM’000 Land/Building
PT 3705, PT 3079, PT2774 0.03 Sunway Tunas 2-storey 3 Freehold 534 1995/2001 HS (D) 9222 Terrace House MK 12, Daerah Barat Daya (1 unit) Penang
PT 5645, HS (D) 1821 1.28 Sunway City Business Park 4 Leasehold 9,274 1992/2000 Daerah Seberang Perai Penang (60 units) expiring Tengah, Pulau Pinang 21.10.2092
PT 428, HS (D) 146653 1.25 Sunway Low Cost Flat/ 1 Leasehold 3,560 1991/2003 Mukim Pekan Puchong Jaya Kinrara Shop expiring Daerah Petaling (73 units/ 12.09.2100 Selangor 10 units)
PT 34 HS (D) 118338 0.2 Sunway Condominium D 3 Leasehold 2,112 1986/2001 PT 1906 HS (D) 118327 City (2 units) expiring Bandar Sunway 01.04.2007 Daerah Petaling Selangor Darul Ehsan
PT 3705, PT 3079, HS (D) 9222 0.03 Sunway 2-storey 2 Freehold 263 1995/2001 Mukim 12, Daerah Barat Daya Tunas shop office Penang (1 unit)
PT 32737 HS (D) 135828 0.25 Sunway 2-storey 2 Leasehold 1,055 Ð/2002 MK Sungei Buloh City Link Bungalow expiring Daerah Petaling (1 unit) 31.01.2099 Selangor Darul Ehsan
PT 4028 HS (D) 28653 0.11 Sunway 2-storey 2 Freehold 356 2000/2002 MK Semenyih Semenyih Link House Daerah Ulu Langat (2 units) Selangor Darul Ehsan
Overseas Properties
92nd Street and 51st Street 0.989/125,313 Sunway Hotel Sunway Hotel 5 Leasehold 32,617 1996/1996 Phnom Penh Cambodia Phnom Penh Phnom Penh expiring 28.04.2066
Lot 11 & 12, in Deposited Plan 480.2 Sunway Wonderland 20 Freehold 49,731 1997/1997 1025320 at Wallgrove Australia Sydney Local Government Unit Trust Area of Blacktown Parish of Melville County of Cumberland Sydney, Australia
SUNWAY CITY BERHAD 125 ( 8 7 5 6 4 - X ) Additional Compliance Information
The information set out below is disclosed in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad):-
1. STATUS OF UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSAL AS AT 30 APRIL 2004
Description Approved Actual Balance Remarks Utilisation Utilisation RM million RM million RM million
Issuance of Commercial 250.0 250.0 0 The Securities Commission Paper/Medium Term Notes by the had vide its letter dated Company of up to a nominal value 18 July 2002, approved of RM 250.0 million. the utilisation of proceeds.
2. SHARE BUY-BACK
The Company does not have a scheme to buy-back its own shares.
3. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES EXERCISED
The details on the exercise of options during the financial year ended 31 December 2003 pursuant to the Company’s Employees’ Share Option Scheme are disclosed on page 40 of this Annual Report. The Company did not issue any warrants or convertible securities.
4. AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”) PROGRAMME
The Company did not sponsor any ADR or GDR programme during the financial year ended 31 December 2003.
5. SANCTIONS AND/OR PENALTIES
There were no public sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year ended 31 December 2003.
6. NON-AUDIT FEES
The non-audit fees paid to the external auditors for the financial year ended 31 December 2003 amounted to RM6,000.
7. VARIATION IN RESULTS
There was no variance of 10% or more between the audited results for the financial year ended 31 December 2003 and the unaudited results previously announced by the Company. The Company did not release any profit estimate, forecast or projection for the financial year.
126 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Additional Compliance Information (cont’d)
8. PROFIT GUARANTEE
There was no profit guarantee given by the Company during the financial year ended 31 December 2003.
9. MATERIALCONTRACTS INVOLVING DIRECTORS’AND MAJOR SHAREHOLDERS’INTERESTS
The material contracts (not being contracts entered into in the ordinary course of business) entered into by the Company and/or its subsidiaries involving directors’and major shareholders’interests for the financial year ended 31 December 2003 were as follows:-
(a) Sale and Purchase Agreement dated 28 January 2003 between the Company and Sunway Holdings Incorporated Berhad (“SunInc”) for the acquisition of 17,075,100 ordinary shares of RM1.00 each in Menara Sunway Sdn Bhd, representing 51% of the total issued and paid-up share capital of Menara Sunway Sdn Bhd from SunInc for a cash consideration of RM27,216,000. The purchase price is subject to adjustment based on the final audited financial statements of Menara Sunway Sdn Bhd as at 31 December 2002.
(b) Agreement dated 6 October 2003 between the Company and Sunway Construction Berhad (“SunCon”) whereby SunCon delegates to the Company, its obligations as developer for the development of all that piece of land held under H.S.(D) 155806 P.T. No. 3789 in Mukim Bukit Raja, District Petaling, State of Selangor measuring approximately 40.4686 hectares on a profit-sharing basis in the proportion of 50:50.
Relationship of Related Parties for item (a) above
Tan Sri Dato’ Seri (Dr) Cheah Fook Ling is a Director and Major Shareholder of the Company and SunInc.
Relationship of Related Parties for item (b) above
Tan Sri Dato’Seri (Dr) Cheah Fook Ling is a Director and Major Shareholder of the Company and SunCon.
10. REVALUATION POLICYON LANDED PROPERTIES
The Company has not adopted a policy of regular revaluation of its landed properties.
11. STATEMENT BY AUDIT COMMITTEE IN RELATION TO THE EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”) ALLOCATION
In accordance with Bye-Law 4.6 of the ESOS Bye-Laws, the Company had appointed a firm of chartered accountants, Messrs Ernst & Young to verify the options offered to eligible employees as part of the Company’s annual audit.
With the assistance of Messrs Ernst & Young’s audit verification, the Audit Committee is satisfied that the allocation of options pursuant to the Company’s ESOS during the financial year ended 31 December 2003, has complied with the criteria set out in the ESOS Bye-Laws.
SUNWAY CITY BERHAD 127 ( 8 7 5 6 4 - X ) Recurrent Related Party Transactions Of Revenue Or Trading Nature Of Sunway City Berhad (“SunCity”) Group
The details of the Recurrent Related Party Transactions conducted pursuant to the Shareholders’ Mandate during the financial year ended 31 December 2003 are as follows:-
Classes of Nature of transactions Purchases Sales Related Parties RM’000 RM’000 Products/ Services
(a) Sunway Holdings - Procurement of building materials 1,706 Ð Incorporated Berhad - Construction & related services*. 2,738 Ð ("SunInc") Group - Share registration, secretarial & 492 Ð management services. - Insurance & related services. 3,660 Ð - Rental of office space/premises. (1) 690 Ð - Rental of premises/properties. (2) Ð 2,355 - Provision of hotel & related services Ð 647 and recreational facilities. - Provision of medical services. Ð 187 - Provision of ticketing & tour related Ð 332 services.
(b) Sunway Construction - Procurement of construction & 107,281 Ð Berhad ("SunCon") related services*. Group - Rental of premises/properties. (3) Ð 283 - Provision of hotel & related services Ð 848 and recreational facilities. - Provision of medical services. Ð 505 - Provision of ticketing & tour related Ð 165 services.
(c) Dolomite Corporation Berhad - Procurement of building materials. 874 Ð (Formerly known as - Procurement of construction & 2,504 Ð Sunway Building related services*. Technology Berhad) - Rental of premises/properties. (4) Ð 253 ("SunTech") Group - Provision of hotel & related services Ð 17 and recreational facilities. - Provision of medical services. Ð 21 - Provision of ticketing & tour related Ð 32 services.
(d) - Buildtrend B.S.G. - Procurement of building materials, 772 Ð (M) Sdn Bhd Group interior decorations & related - Sungei Way services. Enterprise (1988) - Rental of construction machineries. 3 Ð Sdn Bhd - Rental of premises/properties. (5) Ð 224 - Sunway Hydraulic - Provision of medical services. Ð 46 Industries Sdn Bhd - Provision of ticketing & tour related Ð 31 services. - Provision of hotel & related services Ð 2 and recreational facilities.
(e) Jef-San Enterprise Sdn Bhd - Rental of premises. (6) 264 Ð
128 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Recurrent Related Party Transactions Of Revenue Or Trading Nature Of Sunway City Berhad (“SunCity”) Group (Cont’d)
Classes of Nature of transactions Purchases Sales Related Parties RM’000 RM’000 Products/ Services
(f) Perbadanan Kemajuan - Procurement of construction & 25,239 Ð Negeri Selangor Group related services* and building materials.
(g) Koperasi Tunas - Procurement of construction & 3,276 Ð Muda Sungai Ara related services* and building Berhad Group materials.
(h) Adasia (M) Sdn Bhd - Procurement of advertising and 2,591 Ð related services. - Provision of medical services. Ð 6
(i) CCM Chemicals Sdn Bhd - Purchase of chemicals & related 270 Ð products.
(j) Asian Strategy & - Participation in seminars, events & 1 Ð Leadership Incorporated conferences. Sdn Bhd - Provision of medical services. Ð 9 - Provision of ticketing & tour related Ð 57 services. - Provision of hotel & related services Ð 1 and recreational facilities.
(k) Sunway Technology - Purchase of IT hardware, software, 1,468 Ð Sdn Bhd Group business solutions & related products and IT consultancy & related services. - Provision of hotel & related services Ð 7 and recreational facilities. - Provision of medical services. Ð 40 - Provision of ticketing & tour related Ð 46 services.
(l) Akitek Akiprima Sdn Bhd - Procurement of architectural related 798 Ð services.
(m) Dekon Sdn Bhd Group - Procurement of construction & 63,867 Ð related services*. - Procurement of landscaping services. 1,118 Ð - Provision of hotel & related services Ð 3 and recreational facilities. - Provision of medical services. Ð 16 - Provision of ticketing & tour related Ð 2 services.
SUNWAY CITY BERHAD 129 ( 8 7 5 6 4 - X ) Recurrent Related Party Transactions Of Revenue Or Trading Nature Of Sunway City Berhad (“SunCity”) Group (Cont’d)
Classes of Nature of transactions Purchases Sales Related Parties RM’000 RM’000 Products/ Services
(n) PRK Builders Sdn Bhd - Procurement of construction & related 47,686 Ð services.
(o) Sunway College Sdn - Rental of premises/properties. (7) Ð 10,328 Bhd Group - Provision of hotel & related services Ð 221 and recreational facilities. - Provision of medical services. Ð 302 - Provision of ticketing & tour related Ð 651 services.
(p) Suncity’s subsidiaries
- Sunway Damansara - Provision of hotel & related services Ð 17 Sdn Bhd and recreational facilities. - Provision of medical services. Ð 7
- Sunway Monterez - Provision of medical services. Ð 5 Sdn Bhd
- Sunway D’Mont Kiara - Provision of ticketing & tour related Ð 27 Sdn Bhd services. - Provision of medical services. Ð 1
- Sunway Pyramid - Provision of hotel & related services 2,343 174 Sdn Bhd and its and recreational facilities. wholly-owned - Provision of medical services. Ð 56 subsidiary, Sunway - Rental of premises/properties. (8) Ð 268 Parking Management - Provision of ticketing & tour related Ð 4 Sdn Bhd services.
Notes: * Include inter alia, main building works, piling works, substructure works, infra works, earth works, expenditure of prime cost sum ie. specialist sub-contractor works and supply contracts.
The addresses of the office space, premises and properties are: (1) Lobby Level, Levels 3, 19 & 20, Menara Sunway, Jalan Lagoon Timur, 46150 Petaling Jaya, Selangor Darul Ehsan. (2) Jalan PJS 7/16, Bandar Sunway, 46150 Petaling Jaya, Selangor and Jalan PJS 11/26, Bandar Sunway, 46150 Petaling Jaya, Selangor. (3) Jalan PJS 7/16, Bandar Sunway, 46150 Petaling Jaya, Selangor and Part of HS(D) 23567, PT 9315, Mukim Damansara, Daerah Petaling, Selangor. (4) Jalan PJS 7/16, Bandar Sunway, 46150 Petaling Jaya, Selangor and Part of HS(D) 23567, PT 9315, Mukim Damansara, Daerah Petaling, Selangor. (5) Jalan PJS 7/16, Bandar Sunway, 46150 Petaling Jaya, Selangor and Jalan PJS 11/26, Bandar Sunway, 46150 Petaling Jaya, Selangor. (6) No. 36, Lorong Bukit Pantai 8, Pantai Hill, 59100 Kuala Lumpur. (7) No. 5, Jalan Kolej, Bandar Sunway, 46150 Petaling Jaya, Selangor and Jalan PJS 7/16, Bandar Sunway, 46150 Petaling Jaya, Selangor. (8) Jalan PJS 7/16, Bandar Sunway, 46150 Petaling Jaya, Selangor and PT43, Jalan PJS 11/28A, Bandar Sunway, 46150 Petaling Jaya, Selangor.
130 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Recurrent Related Party Transactions Of Revenue Or Trading Nature Of Sunway City Berhad (“SunCity”) Group (Cont’d)
Provision of Financial Assistance Classes of Related Parties RM’000 SunCity’s Subsidiaries (a) Pooling of funds via a centralized treasury Sunway Damansara Sdn Bhd 492 management function or such similar Sunway Monterez Sdn Bhd 38 arrangements on a short or medium term basis Sunway D’Mont Kiara Sdn Bhd 206 (ie. for a duration not exceeding 3 years). (b) Provision of guarantee, indemnity or such other Sunway D’Mont Kiara Sdn Bhd 994 collateral to or in favour of another person w h i c h i s n e c e s s a r y i n o r d e r t o p r o c u r e a contract or secure work from the other person to commence and/or complete a contract or work for the SunCity Group.
Relationship of Related Parties
(a) SunInc Group Yau Kok Seng who is a Director of Sunway Medical Centre Berhad, a 61% owned subsidiary of SunCity, is also a Director with direct interest in SunInc. Tan Sri Dato’ Seri (Dr) Cheah Fook Ling is a Director and Major Shareholder of SunCity and SunInc. Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng, the spouse of Tan Sri Dato’Seri (Dr) Cheah Fook Ling, who is a Director of Sunway Lagoon Club Berhad, a 84% owned subsidiary of SunCity and a shareholder of SunCity, is also a Director of Sunway Management Sdn Bhd, a wholly-owned subsidiary of SunInc and she has direct as well as deemed interests in SunInc by virtue of her spouse’s direct and deemed interests in SunInc. Sarena Cheah Yean Tih, the child of Tan Sri Dato’ Seri (Dr) Cheah Fook Ling is a Director of Sunway Lagoon Club Berhad and she has direct as well as deemed interests in SunCity by virtue of her parent’s direct and deemed interests in SunCity.
(b) SunCon Group Tan Sri Dato’ Seri (Dr) Cheah Fook Ling who is a Director and Major Shareholder of SunCity, is also a Director with direct and deemed interests in SunCon via SunInc. Sarena Cheah Yean Tih who is a Director of Sunway Lagoon Club Berhad and a shareholder of SunCity, has direct and deemed interests in SunCon by virtue of her parent’s direct and deemed interests in SunCon.
(c) SunTech Group Yau Kok Seng who is a Director of Sunway Medical Centre Berhad, a 61% owned subsidiary of SunCity, was a Director of SunTech within the preceding 12 months. Tan Sri Dato’Seri (Dr) Cheah Fook Ling who is a Director and Major Shareholder of SunCity, was a deemed Major Shareholder of SunTech within the preceding 12 months.
(d) Buildtrend B.S.G. (M) Sdn Bhd Group Tan Sri Dato’Seri (Dr) Cheah Fook Ling has deemed interest in Buildtrend B.S.G. (M) Sdn Bhd via corporations where he has more than 15% shareholding. Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng has deemed interest in Buildtrend B.S.G. (M) Sdn Bhd by virtue of her spouse’s deemed interest in Buildtrend B.S.G. (M) Sdn Bhd.
(e) Sungei Way Enterprise (1988) Sdn Bhd Tan Sri Dato’ Seri (Dr) Cheah Fook Ling has deemed interest in Sungei Way Enterprise (1988) Sdn Bhd via corporations where he has more than 15% shareholding. Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng has deemed interest in Sungei Way Enterprise (1988) Sdn Bhd by virtue of her deemed interest as well as her spouse’s deemed interest in Sungei Way Enterprise (1988) Sdn Bhd. Sarena Cheah Yean Tih has deemed interest in Sungei Way Enterprise (1988) Sdn Bhd by virtue of her deemed interest as well as her parent’s deemed interest in Sungei Way Enterprise (1988) Sdn Bhd.
SUNWAY CITY BERHAD 131 ( 8 7 5 6 4 - X ) Recurrent Related Party Transactions Of Revenue Or Trading Nature Of Sunway City Berhad (“SunCity”) Group (Cont’d)
(f) Sunway Hydraulic Industries Sdn Bhd
Tan Sri Dato’ Seri (Dr) Cheah Fook Ling has deemed interest in Sunway Hydraulic Industries Sdn Bhd via a corporation where he has more than 15% shareholding. Sarena Cheah Yean Tih has deemed interest in Sunway Hydraulic Industries Sdn Bhd by virtue of her deemed interest as well as her parent’s deemed interest in Sunway Hydraulic Industries Sdn Bhd. Datuk Razman M Hashim, a Director of SunCity Group with 0.01% direct interest in SunCity, is also a Director and Major Shareholder of Sunway Hydraulic Industries Sdn Bhd.
(g) Jef-San Enterprise Sdn Bhd
Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng and Sarena Cheah Yean Tih are Directors of Jef-San Enterprise Sdn Bhd. Tan Sri Dato’Seri (Dr) Cheah Fook Ling and Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng are Major Shareholders of Jef-San Enterprise Sdn Bhd.
(h) Perbadanan Kemajuan Negeri Selangor Group
Perbadanan Kemajuan Negeri Selangor is a Major Shareholder of SunCity. Low Siew Moi is a nominee Director who represents Perbadanan Kemajuan Negeri Selangor’s interest in SunCity.
(i) Koperasi Tunas Muda Sungai Ara Berhad Group
Koperasi Tunas Muda Sungai Ara Berhad is a Major Shareholder with 30% direct interest in Sunway Tunas Sdn Bhd. Sunway Tunas Sdn Bhd is a 70% owned subsidiary of SunCity.
(j) Adasia (M) Sdn Bhd
Tan Sri Dato’ Seri (Dr) Cheah Fook Ling has deemed interest in Adasia (M) Sdn Bhd via corporations where he has more than 15% shareholding. Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng has deemed interest in Adasia (M) Sdn Bhd by virtue of her deemed interest as well as her spouse’s deemed interest in Adasia (M) Sdn Bhd. Sarena Cheah Yean Tih is a Director and has deemed interest in Adasia (M) Sdn Bhd by virtue of her deemed interest as well as her parent’s deemed interest in Adasia (M) Sdn Bhd.
(k) CCM Chemicals Sdn Bhd
Dato’Lim Say Chong and Oh Kim Sun are Directors and deemed Major Shareholders of CCM Chemicals Sdn Bhd via a corporation where they have more than 15% shareholdings. They also have 19% and 26% direct interests respectively in Sunway Lagoon Sdn Bhd, a 51% owned subsidiary of SunCity.
(l) Asian Strategy & Leadership Incorporated Sdn Bhd
Datuk Razman M Hashim and Tan Sri Dato’ Seri (Dr) Cheah Fook Ling are Directors of SunCity and Asian Strategy & Leadership Incorporated Sdn Bhd. Tan Sri Dato’Seri (Dr) Cheah Fook Ling is a Major Shareholder of Asian Strategy & Leadership Incorporated Sdn Bhd. Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng is a Director and she has deemed interest in Asian Strategy & Leadership Incorporated Sdn Bhd by virtue of her deemed interest as well as her spouse’s direct and deemed interests in Asian Strategy & Leadership Incorporated Sdn Bhd.
132 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Recurrent Related Party Transactions Of Revenue Or Trading Nature Of Sunway City Berhad (“SunCity”) Group (Cont’d)
(m) Sunway Technology Sdn Bhd Group
Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng and Sarena Cheah Yean Tih are Directors of Sunway Technology Sdn Bhd Group. Tan Sri Dato’Seri (Dr) Cheah Fook Ling has deemed interest in Sunway Technology Sdn Bhd via corporations where he has more than 15% shareholding. Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng has deemed interest in Sunway Technology Sdn Bhd by virtue of her deemed interest as well as her spouse’s deemed interest in Sunway Technology Sdn Bhd. Sarena Cheah Yean Tih has deemed interest in Sunway Technology Sdn Bhd by virtue of her deemed interest as well as her parent’s deemed interest in Sunway Technology Sdn Bhd.
(n) Akitek Akiprima Sdn Bhd
Cheah Teik Jin, the brother of Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng, is a Director and Major Shareholder of Akitek Akiprima Sdn Bhd.
(o) Dekon Sdn Bhd Group
Datuk Razman M Hashim who is a Director and shareholder of SunCity, has deemed interest in Dekon Sdn Bhd via a corporation where he has more than 15% shareholding.
(p) PRK Builders Sdn Bhd
Sungei Way Corporation Sdn Bhd is the Major Shareholder of PRK Builders Sdn Bhd. Tan Sri Dato’ Seri (Dr) Cheah Fook Ling is a deemed Major Shareholder of Sungei Way Corporation Sdn Bhd via corporations where he has more than 15% shareholding.
(q) Sunway College Sdn Bhd Group
Datuk Razman M Hashim and Tan Sri Dato’ Seri (Dr) Cheah Fook Ling are Directors of SunCity and Sunway College Sdn Bhd Group. Tan Sri Dato’ Seri (Dr) Cheah Fook Ling and Datuk Razman M Hashim have deemed interests in Sunway College Sdn Bhd via Sunway College Trust. Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng is a Director of Sunway College Sdn Bhd Group and she has deemed interest in Sunway College Sdn Bhd by virtue of her spouse’s deemed interest in Sunway College Sdn Bhd.
(r) Sunway Damansara Sdn Bhd, Sunway Monterez Sdn Bhd and Sunway D’Mont Kiara Sdn Bhd
Perbadanan Kemajuan Negeri Selangor, a Major Shareholder of SunCity is also a Major Shareholder with 40% interest in both Sunway Damansara Sdn Bhd and Sunway Monterez Sdn Bhd as well as 30% deemed interest in Sunway D’Mont Kiara Sdn Bhd by virtue of Section 6A of the Companies Act, 1965. SunCity has 60% interest each in Sunway Damansara Sdn Bhd and Sunway Monterez Sdn Bhd as well as 70% interest in Sunway D’Mont Kiara Sdn Bhd.
(s) Sunway Pyramid Sdn Bhd and Sunway Parking Management Sdn Bhd
Government of Singapore Investment Corporation Pte Ltd, a Major Shareholder of SunCity is also a Major Shareholder of Sunway Pyramid Sdn Bhd, a 52% owned subsidiary of SunCity. Government of Singapore Investment Corporation Pte Ltd has 48% deemed interests in Sunway Pyramid Sdn Bhd and Sunway Parking Management Sdn Bhd (a wholly-owned subsidiary of Sunway Pyramid Sdn Bhd) by virtue of Section 6A of the Companies Act, 1965.
SUNWAY CITY BERHAD 133 ( 8 7 5 6 4 - X ) Directors’ Interests In Shares And Options Of The Company And Its Subsidiary Companies As At 30 April 2004
Ordinary Shares of RM1.00 each No. %
Direct Interest
Tan Sri Dato’ Seri (Dr) Cheah Fook Ling 10,823,251 2.69 Datuk Razman M Hashim 30,000 0.01 Tan Sri Dato’ Ir Talha Bin Haji Mohd Hashim 10,000 # Dato’ Wong Choon Kee 31,000 0.01 Ngian Siew Siong 10,000 # Ngeow Voon Yean Ð Ð Low Siew Moi Ð Ð Teo Tong How Ð Ð Tan Siak Tee ÐÐ Lim Swe Guan Ð Ð
Deemed Interest
Tan Sri Dato’ Seri (Dr) Cheah Fook Ling * 160,003,017 39.70
Options over Ordinary Shares of RM1.00 each No.
Direct Interest
Tan Sri Dato’Seri (Dr) Cheah Fook Ling 1,000,000 Datuk Razman M Hashim 700,000 Dato’ Wong Choon Kee 700,000 Ngian Siew Siong 700,000 Ngeow Voon Yean 700,000
By virtue of Tan Sri Dato’ Seri (Dr) Cheah Fook Ling’s substantial interest in the shares of Sunway City Berhad ("SunCity"), he is also deemed to have a substantial interest in the shares of the subsidiary companies of SunCity to the extent SunCity has an interest.
Notes: # Negligible * Deemed interest through Active Equity Sdn Bhd, Active Builder Sdn Bhd, Jef-San Enterprise Sdn Bhd, Sungei Way Corporation Sdn Bhd, spouse and child
134 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Analysis Of Shareholdings As At 30 April 2004
Authorised Share Capital - RM1,000,000,000 comprising 800,000,000 Ordinary Shares of RM1.00 each and 200,000,000 Cumulative Convertible Preference Shares of RM1.00 each Issued and Fully Paid-up Capital - RM403,031,000 comprising 403,031,000 Ordinary Shares of RM1.00 each Class of Shares - Ordinary Share of RM1.00 each Voting Rights - One vote per share
DISTRIBUTION OF SHAREHOLDINGS
Size of No. of % of No. of % of Shareholdings Shareholders Shareholders Shares Held Shareholdings
Less than 100 55 0.60 2,476 0.00 100 - 1,000 4,768 51.73 4,757,921 1.18 1,001 - 10,000 3,905 42.37 14,269,412 3.54 10,001 - 100,000 408 4.43 11,011,400 2.73 100,001 - 20,151,549 (less 77 0.83 183,953,191 45.64 than 5% of issued shares) 20,151,550 (5%) and above 4 0.04 189,036,600 46.91
9,217 100.00 403,031,000 100.00
THIRTY LARGEST SHAREHOLDERS AS PER REGISTER OF DEPOSITORS
Name of Shareholders Name of Beneficial Owners No. of Shares %
1 Cartaban Nominees (Asing) Sdn Bhd Government of Singapore 100,000,000 24.81 - Government of Singapore Investment Corporation Pte Ltd 2 Mayban Nominees (Tempatan) Sdn Bhd Sungei Way 38,063,542 9.44 Corporation Sdn Bhd 3 Sungei Way Corporation Sdn Bhd - 27,928,058 6.93 4 Perbadanan Kemajuan Negeri Selangor - 23,045,000 5.72 5 Jef-San Enterprise Sdn Bhd - 15,801,045 3.92 6 Koperasi Tunas Muda Sungai Ara Berhad - 15,217,391 3.78 7 Sungei Jaya Sdn Bhd - 12,628,165 3.13 8 HSBC Nominees (Tempatan) Sdn Bhd Tan Sri Dato’ Seri (Dr) 10,813,251 2.68 Cheah Fook Ling 9 Mayban Nominees (Tempatan) Sdn Bhd Sharikat Lombong Anika 10,393,474 2.58 Serbaguna Sdn Bhd 10 AMMB Nominees (Tempatan) Sdn Bhd Active Equity Sdn Bhd 9,276,552 2.30 - AmInternational (L) Ltd 11 PAB Nominee (Tempatan) Sdn Bhd Sungei Way 9,000,000 2.23 Corporation Sdn Bhd 12 AMMB Nominees (Tempatan) Sdn Bhd Progressive Traders Sdn Bhd 7,958,490 1.97 - AmInternational (L) Ltd 13 Sungei Menderang Sdn Bhd - 7,958,490 1.97 14 RHB Capital Nominees (Tempatan) Swastaria Holdings Sdn Bhd 7,489,000 1.86 Sdn Bhd 15 Mayban Nominees (Tempatan) Sdn Bhd Wistaria Holdings Sdn Bhd 7,400,000 1.84 16 Perusahaan Dunia Sdn Bhd - 6,177,143 1.53 17 Timah Sini-Sana Sdn Bhd - 5,213,409 1.29
SUNWAY CITY BERHAD 135 ( 8 7 5 6 4 - X ) Analysis Of Shareholdings As At 30 April 2004 (Cont’d)
THIRTY LARGEST SHAREHOLDERS AS PER REGISTER OF DEPOSITORS (Cont’d)
Name of Shareholders Name of Beneficial Owners No. of Shares %
18 Employees Provident Fund Board Ð 4,684,000 1.16 19 Active Builder Sdn Bhd Ð 4,653,038 1.15 20 AMMB Nominees (Tempatan) Sdn Sungei Way 4,000,000 0.99 Bhd - AmInternational (L) Ltd Corporation Sdn Bhd 21 HSBC Nominees (Tempatan) Sdn Bhd Sungei Way 4,000,000 0.99 Corporation Sdn Bhd 22 Sunway Credit & Leasing Sdn Bhd Luwong Holdings Sdn Bhd 3,000,000 0.74 23 Sunway Credit & Leasing Sdn Bhd Allfresh Sdn Bhd 3,000,000 0.74 24 BBMB Securities Nominees (Tempatan Tekan Maju Sdn Bhd 2,520,000 0.63 Sdn Bhd - ECM Libra Securities Limited 25 Timah Dunia Dredging Sdn Bhd Ð 2,133,553 0.53 26 AMMB Nominees (Tempatan) Sdn Bhd Active Builder Sdn Bhd 1,870,892 0.46 - AmInternational (L) Ltd 27 Yeoh Kean Hua Ð 1,786,000 0.44 28 Cartaban Nominees (Asing) Sdn Bhd Parvest Asia 1,544,400 0.38 - BNP Paribas Securities Services Luxembourg 29 Luwong Holdings Sdn Bhd Ð 1,357,785 0.34 30 AMMB Nominees (Tempatan) Sdn Bhd JSSE Corporation Sdn Bhd 1,286,905 0.32 - AmInternational (L) Ltd
SUBSTANTIALSHAREHOLDERS
Name of Shareholders No. of Shares %
1 Tan Sri Dato’Seri (Dr) Cheah Fook Ling - Direct interest 10,823,251 2.69 - Deemed interest #a 160,003,017 39.70 2 Sungei Way Corporation Sdn Bhd - Direct interest 83,275,600 20.66 - Deemed interest #b 5,213,409 1.29 3 Government of Singapore Investment Corporation Pte Ltd 100,000,000 24.81 for Government of Singapore 4 Perbadanan Kemajuan Negeri Selangor 25,471,000 6.32 5 Timah Dunia Dredging Sdn Bhd - Direct interest 2,133,553 0.53 - Deemed interest #c 94,666,152 23.49 6 Active Equity Sdn Bhd - Direct interest 9,276,552 2.30 - Deemed interest #d 125,344,850 31.10
Notes: #a Deemed interest through Active Equity Sdn Bhd, Active Builder Sdn Bhd, Jef-San Enterprise Sdn Bhd, Sungei Way Corporation Sdn Bhd, spouse and child #b Deemed interest through Timah Sini-Sana Sdn Bhd #c Deemed interest through Perusahaan Dunia Sdn Bhd, Sungei Way Corporation Sdn Bhd and Timah Sini-Sana Sdn Bhd #d Deemed interest through Sungei Jaya Sdn Bhd, Sungei Menderang Sdn Bhd, Timah Dunia Dredging Sdn Bhd, Progressive Traders Sdn Bhd, Perusahaan Dunia Sdn Bhd, Sungei Way Corporation Sdn Bhd and Timah Sini-Sana Sdn Bhd
136 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notice Of 21st Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the 21st Annual General Meeting of SUNWAY CITY BERHAD (87564-X) will be held at Grand Bahamas, Level 12, Sunway Lagoon Resort Hotel, Persiaran Lagoon, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan on Tuesday, 29 June 2004 at 3.30 p.m. for the following purposes:-
AS ORDINARY BUSINESS
1. To receive the Audited Financial Statements for the financial year ended 31 December 2003 together with the Directors’and Auditors’ Reports thereon. (Resolution 1)
2. To declare a final dividend of 1% per share less 28% income tax for the financial year ended 31 December 2003 as recommended by the Directors. (Resolution 2)
3. To approve the payment of Directors’fees. (Resolution 3)
4. To re-elect the following Directors:-
4.1 Tan Sri Dato’Seri (Dr) Cheah Fook Ling retires by rotation pursuant to Article 78 of the Company’s Articles of Association and being eligible, offers himself for re-election. (Resolution 4)
4.2 Ngeow Voon Yean retires by rotation pursuant to Article 78 of the Company’s Articles of Association and being eligible, offers himself for re-election. (Resolution 5)
4.3 Teo Tong How retires by rotation pursuant to Article 78 of the Company’s Articles of Association and being eligible, offers himself for re-election. (Resolution 6)
5. To re-appoint Messrs Ernst & Young as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. (Resolution 7)
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following Ordinary and Special Resolutions:-
6. ORDINARY RESOLUTION : Authority to Issue Shares pursuant to Section 132D of the Companies Act, 1965
“ T H AT subject always to the Companies Act, 1965, the Company's Articles of Association and the approvals of the relevant government and/or regulatory authorities, the Directors be and are hereby authorised pursuant to Section 132D of the Companies Act, 1965 to allot and issue not more than 10% of the issued share capital of the Company at any time upon such terms and conditions and for such purposes as the Directors in their absolute discretion deem fit and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad) for the listing of and quotation for the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.” (Resolution 8)
SUNWAY CITY BERHAD 137 ( 8 7 5 6 4 - X ) Notice Of 21st Annual General Meeting (Cont’d)
7. ORDINARY RESOLUTION: Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature
“THAT approval be and is hereby given to the Company and/or its subsidiaries to enter into recurrent related party transactions from time to time, which are necessary for day- to-day operations as set out in Section 2D of the Circular to Shareholders dated 4 June 2004 which are of a revenue or trading nature and in the ordinary course of business and are on terms not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company, subject to the compliance with the Listing Requirements of Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad), Companies Act, 1965 (“the Act”), the Company’s Memorandum and Articles of Association and all other applicable laws, guidelines, rules and regulations.
THAT such authority shall commence upon the passing of this resolution and shall continue to be in force until:-
(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company at which time the mandate will lapse, unless by a resolution passed at the next AGM, the mandate is renewed; or
(b) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or
(c) revoked or varied by resolution passed by the shareholders in general meeting,
whichever is the earlier.
THAT authority be and is hereby given to the Directors of the Company to complete and do all such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution.” (Resolution 9)
8. ORDINARY RESOLUTION: Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature involving the interest of the Government of Singapore Investment Corporation Pte Ltd Group
“THAT approval be and is hereby given to the Company and/or its subsidiaries to enter into recurrent related party transactions from time to time with the Government of Singapore Investment Corporation Pte Ltd Group, which are necessary for day-to-day operations as set out in Section 2D of the Circular to Shareholders dated 4 June 2004 which are of a revenue or trading nature and in the ordinary course of business and are on terms not more favourable to the Government of Singapore Investment Corporation Pte Ltd Group than those generally available to the public and are not detrimental to the minority shareholders of the Company, subject to the compliance with the Listing Requirements of Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad), Companies Act, 1965 (“the Act”), the Company’s Memorandum and Articles of Association and all other applicable laws, guidelines, rules and regulations.
138 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notice Of 21st Annual General Meeting (Cont’d)
THAT such authority shall commence upon the passing of this resolution and shall continue to be in force until:-
(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company at which time the mandate will lapse, unless by a resolution passed at the next AGM, the mandate is renewed; or
(b) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or
(c) revoked or varied by resolution passed by the shareholders in general meeting,
whichever is the earlier.
THAT authority be and is hereby given to the Directors of the Company to complete and do all such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution.” (Resolution 10)
9. SPECIAL RESOLUTION: Proposed Amendment to Article 67(5) of the Company’s Articles of Association
“THATthe Company’s Articles of Association be hereby amended by deleting the existing Article 67(5) in its entirety and substituting the following new Article 67(5):-
Existing Article 67(5)
The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of such power or authority, shall be deposited at the Office or at such other place within Malaysia as is specified for that purpose in the notice convening the meeting, not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting, as the case may be, at which the person named as proxy in such instrument proposes to vote.
New Article 67(5)
The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of such power or authority, shall be legible and deposited at the Office or at such other place within Malaysia (if any) as is specified for that purpose in the notice convening the meeting either personally, by fax, electronic mail or by sending it through the post in a prepaid letter during business hours not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting, as the case may be, at which the person named as proxy in such instrument proposes to vote; otherwise the person so named shall not be entitled to vote in respect thereof. In the case where the Member is a corporation and the instrument appointing a proxy is delivered by fax or electronic mail, the original copy shall also be deposited at the Office either personally or by post not less than least forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting.” (Resolution 11)
SUNWAY CITY BERHAD 139 ( 8 7 5 6 4 - X ) Notice Of 21st Annual General Meeting (Cont’d)
NOTICE OF DIVIDEND ENTITLEMENTAND PAYMENT
NOTICE IS HEREBYGIVEN THAT subject to the approval of the shareholders at the 21st Annual General Meeting to be held on 29 June 2004, a final dividend of 1% per share less 28% income tax for the financial year ended 31 December 2003 will be paid on 28 July 2004 to Depositors whose names appear in the Record of Depositors on 30 June 2004.
A Depositor shall qualify for entitlement to the dividend only in respect of:
(a) Securities transferred into the Depositor’s securities account before 4.00 p.m. on 30 June 2004 in respect of transfers;
(b) Securities deposited into the Depositor’s securities account before 12.30 p.m. on 28 June 2004 in respect of securities exempted from mandatory deposit; and
(c) Securities bought on Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad) on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad).
By Order of the Board
PUAN SRI DATIN SERI (DR) SUSAN CHEAH SEOK CHENG (MIA 5601) TAN KIM AUN (MAICSA 7002988) Company Secretaries
Petaling Jaya 4 June 2004
NOTES: 1. A member of the Company entitled to attend and vote, is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company. 2. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing, or, if the appointer is a corporation, either under the corporation’s seal, or under the hand of an officer or attorney duly authorised. 3. If a member appoints 2 proxies, the appointment will be invalid, unless he states the percentage of his shareholding to be represented by each proxy. 4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.
140 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) Notice Of 21st Annual General Meeting (Cont’d)
EXPLANATORY NOTES ON SPECIAL BUSINESS:
1. Resolution 8 - Authority to Issue Shares pursuant to Section 132D of the Companies Act, 1965
The Company is always on the look out for investment opportunities to enhance the earnings potential of the Company. If any investment opportunities involve the issue of new shares, the Directors, under present circumstances, would have to convene a general meeting to approve the issue of new shares even though the number involved may be less than 10% of the issued capital.
In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that the Directors be empowered to issue shares in the Company, up to an amount not exceeding in total 10% of the issued share capital of the Company at any time, for such purpose. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company.
2. Resolutions 9 and 10 - Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature
The proposed Ordinary Resolutions 9 and 10, if passed, will allow the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature and in the ordinary course of business which are necessary for day-to-day operations pursuant to Paragraph 10.09(1) of the Listing Requirements of Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad). The details of the proposal are set out in the Circular to Shareholders dated 4 June 2004.
3. Resolution 11 - Proposed Amendment to Article 67(5) of the Company’s Articles of Association
The proposed amendment to Article 67(5) is to state that the instrument appointing a proxy (Proxy Form) shall be legible and may be deposited at the Registered Office of the Company either personally, by fax, electronic mail or post during business hours not less than 48 hours before the time appointed for holding the meeting or adjourned meeting.
In the case where the Member is a corporation and the instrument appointing a proxy is delivered by fax or electronic mail, the original copy shall also be deposited at the Registered Office either personally or by post not less than 48 hours before the time appointed for holding the meeting or adjourned meeting.
SUNWAY CITY BERHAD 141 ( 8 7 5 6 4 - X ) Statement Accompanying Notice Of Annual General Meeting
1. DIRECTORS WHO ARE STANDING FOR RE-ELECTION
(a) Tan Sri Dato’Seri (Dr) Cheah Fook Ling (b) Ngeow Voon Yean (c) Teo Tong How
The details of the above Directors who are standing for re-election are set out on pages 6 to 10 of this Annual Report. Their shareholdings in the Company and its related corporations are set out on page 134 of this Annual Report.
2. DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETINGS
Six (6) Board Meetings were held during the financial year ended 31 December 2003. The details of attendance of the Directors are set out on page 25 of this Annual Report.
3. DATE, TIME AND PLACE OF THE ANNUAL GENERAL MEETING
Date Time Place
Tuesday, 29 June 2004 3.30 p.m. Grand Bahamas, Level 12 Sunway Lagoon Resort Hotel Persiaran Lagoon, Bandar Sunway 46150 Petaling Jaya Selangor Darul Ehsan
142 SUNWAY CITY BERHAD ( 8 7 5 6 4 - X ) FORM OF PROXY 21st Annual General Meeting SUNWAY CITY BERHAD (87564-X) (Incorporated in Malaysia) Registered Office: Level 16,Menara Sunway Jalan Lagoon Timur Bandar Sunway 46150 Petaling Jaya Selangor Darul Ehsan Malaysia Tel:03-5635 8889/5630 5590 Fax:03-5634 1349
*I/We ______*NRIC No./Passport No./Company No. ______(Please use Block Letters) of ______being (a) member(s) of SUNWAY CITY BERHAD and entitled to vote hereby appoint ______* NRIC No./Passport No. ______of ______or failing *him/her, the Chairman of the Meeting as *my/our proxy to attend and vote for *me/us on *my/our behalf at the 21st Annual General Meeting of the Company to be held at Grand Bahamas, Level 12, Sunway Lagoon Resort Hotel, Persiaran Lagoon, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan on Tuesday, 29 June 2004 at 3.30 p.m.and at any adjournment thereof.
Dated this ______day of ______2004
Signature(s) ______COMMON SEAL Number of share(s) held
* Delete as appropriate.
Please indicate with an X in the space below how you wish your votes to be cast. If no specific direction as to voting is given,the proxy/ proxies will vote or abstain from voting on the resolutions at his/their discretion. RESOLUTION FOR AGAINST 1. To receive the Audited Financial Statements for the financial year ended 31 December 2003 together with the Directors’ and Auditors’ Reports thereon 2. To declare a final dividend of 1% per share 3. To approve the payment of Directors’ fees To re-elect the following Directors:- 4. Tan Sri Dato’ Seri (Dr) Cheah Fook Ling 5. Ngeow VoonYean 6. Teo Tong How 7. To re-appoint Messrs Ernst & Young as Auditors and to authorise the Directors to fix their remuneration 8. To authorise the issue of shares pursuant to Section 132D of the Companies Act,1965 9. To approve the Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature 10. To approve the Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature involving the interest of the Government of Singapore Investment Corporation Pte Ltd Group 11. To approve the Proposed Amendment to Article 67(5) of the Company’s Articles of Association
NOTES: 1. A member of the Company entitled to attend and vote, is entitled to appoint a proxy to attend and vote in his stead.A proxy may but need not be a member of the Company. 2. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing, or, if the appointer is a corporation,either under the corporation’s seal,or under the hand of an officer or attorney duly authorised. 3. If a member appoints 2 proxies, the appointment will be invalid,unless he states the percentage of his shareholding to be represented by each proxy. 4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 16,Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 46150 Petaling Jaya,Selangor Darul Ehsan,Malaysia not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. PLEASE FOLD HERE
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THE COMPANY SECRETARY
SUNWAY CITY BERHAD (87564-X) LEVEL 16, MENARA SUNWAY JALAN LAGOON TIMUR BANDAR SUNWAY,46150 PETALING JAYA SELANGOR DARUL EHSAN, MALAYSIA
TEL : 03-5635 8889 FAX : 03-5634 1349
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