annual report 2014 iskandar waterfront city berhad (8256-a)notice is hereby given that the 46th...

Annual Report 2014

Iskandar Waterfront City Berhad (8256-A)

NOTICE IS HEREBY GIVEN that the 46th Annual General Meeting of ISKANDAR WATERFRONT CITY BERHAD (formerly known as Tebrau Teguh Berhad) (Co. No. 8256-A) will be held at Danga Bay Convention Centre, Lot PTB21350, Batu 3½, Jalan Skudai, 80200 Johor Bahru, Johor Darul Takzim on Tuesday, 16 June 2015 at 11.00 a.m. for the following purposes:-

AGENDA

Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 31 December 2014 together with the Reports of the Directors and Auditors thereon.

[Please refer to Explanatory Note 8(i)]

2. To re-appoint the following directors who are over the age of 70, pursuant to Section 129 (6) of the Companies Act, 1965:-

(i) Mr. Khoo Boon Ho (Resolution 1)(ii) Mr. Cho Joy Leong @ Cho Yok Lon (Resolution 2)

3. To re-elect the following Directors who are retiring in accordance with Article 78 of the Company’s Articles of Association:

(i) Tan Sri Dato’ Lim Kang Hoo (Resolution 3)(ii) Mr. Bernard Hilary Lawrence (Resolution 4)(iii) En. Mohd Salleh bin Othman (Resolution 5)

4. To re-elect En. Izaddeen bin Daud who is retiring in accordance with Article 84 of the Company’s Articles of Association.

(Resolution 6)

5. To re-appoint Messrs. Ernst & Young as Auditors of the Company for the financial year ending 31 December 2015 and to authorise the Directors to fix their remuneration.

(Resolution 7)

Special Business

To consider and, if thought fit, to pass with or without any modification(s), the following Ordinary Resolutions:-

6. ORDINARY RESOLUTION (Resolution 8)- AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE

COMPANIES ACT, 1965

“That pursuant to Section 132D of the Companies Act, 1965, Articles of Association of the Company and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Directors be and are hereby empowered to issue shares in the Company at any time at such price and upon such terms and conditions and for such purposes and to such person or persons whomsoever as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares so issued does not exceed 10% of the issued capital of the Company for the time being and the Directors be and are also empowered to obtain the approval of Bursa Malaysia for listing of and quotation for the additional shares so issued and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

Annual Report 2014


7. ORDINARY RESOLUTION (Resolution 9)- PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT

RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE WITH THE RELATED PARTIES AS DISCLOSED UNDER PARAGRAPH 3.3 (1 TO 5) OF THE CIRCULAR TO SHAREHOLDERS

“THAT approval be and is hereby given pursuant to Paragraph 10.09 and Practice Note 12 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad for the Company and its subsidiaries to enter into the category of Recurrent Related Party Transactions of a revenue or trading nature as set out in Paragraph 3.3 of the Circular to Shareholders dated 25 May 2015 with those Related Parties as set out in paragraph 3.2 which are necessary for their day-to-day operations, in the ordinary course of business made on an arm’s length basis and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders; AND THAT the authority conferred by this Mandate shall commence immediately upon the passing of this Resolution and is subject to annual renewal. In this respect, the authority shall continue to be in force until:

i. the conclusion of the next Annual General Meeting of the Company at which time the authority will lapse unless the Authority is renewed by a Resolution passed at that Annual General Meeting;

ii. the expiration of the period within which the next Annual General Meeting after that date, is required to be held pursuant to section 143(1) of the Companies Act 1965 (but shall not extend to such extension as may be allowed pursuant to section 143(2) of the Companies Act 1965; or

iii. revoked or varied by resolution passed by the shareholders in general meeting;

whichever is the earlier;

FURTHER THAT the Directors and/or any of them be and are hereby authorised 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.”

8. ORDINARY RESOLUTION (Resolution 10)- CONTINUING IN OFFICE AS INDEPENDENT DIRECTOR

“That subject to passing of Ordinary Resolution 1, approval be and is hereby given to Mr Khoo Boon Ho who has served as Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years to continue to act as Senior Independent Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance 2012.”

9. To transact any other business for which due notice shall have been given in accordance with the Company’s Articles of Association and the Companies Act, 1965.

BY ORDER OF THE BOARDWOO MIN FONG (F)LIM AIK YONG (F)

SecretariesJOHOR BAHRU25 May 2015

Annual Report 2014


Notes:

1. A member entitled to attend and vote at the meeting is entitled to appoint not more than two proxies to attend and vote in his stead. A proxy need not be a member of the Company and the provisions of Section 149 (1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportion of his/her holdings to be represented by each proxy.

3. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

4. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

5. Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of an officer or attorney duly authorised.

6. The Proxy Form must be deposited with the Company Secretary at the Registered Office, Suite 1303, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor Darul Takzim, not less than 48 hours before the time set for the Meeting.

7. For the purpose of determining a member who shall be entitled to attend the 46th Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 54(2) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991 to issue a general meeting Record of Depositors as at 9 June 2015. Only a depositor whose name appears therein shall be entitled to attend the said meeting or appoint proxy(ies) to attend and/or vote on his/her stead.

8. Explanatory Notes on Agenda 1

(i) This item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 and the Company’s Articles of Association do not require a formal approval of the Shareholders and hence, is not put forward for voting.

Explanatory Notes on Special Business

(ii) Authority to Issue Shares pursuant to Section 132D of the Companies Act, 1965 The Resolution No. 8 proposed in Agenda 6 above, if passed, will empower the Directors of the Company from the date of

the above meeting until the next Annual General Meeting, unless earlier revoked or varied at a general meeting, to issue shares in the Company up to an aggregate number not exceeding ten per centum (10%) of the issued share capital of the Company for the time being for such purposes as they consider would be in the interest of the Company.

The renewal of the general mandate is to provide flexibility to the Company to issue new securities without the need to convene separate general meeting to obtain its shareholders’ approval so as to avoid incurring additional cost and time. The purpose of this general mandate is for possible fund raising exercise including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital, repayment of bank borrowings, acquisitions and/or for issuance of shares as settlement of purchase consideration.

The Company did not issue any shares under the mandate granted to the Directors at the last Annual General Meeting of the Company held on 24 June 2014 and which will lapse at the conclusion of the 46th Annual General Meeting of the Company.

(iii) Proposed Mandate For Recurrent Related Party Transactions Of Revenue Or Trading Nature The Resolution No. 9 proposed in Agenda 7 above if passed, will authorise the Company and each of its subsidiary

companies to enter into recurrent related party transactions of a revenue or trading nature in their ordinary course of business. This authority, unless revoked or varied by the shareholders of the Company at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

(iv) Continuing in Office as Independent Non-Executive Director The Ordinary Resolution No. 9 proposed in Agenda 7 if passed, will approve and authorise Mr. Khoo Boon Ho to continue

to act as Senior Independent Non-Executive Director of the Company.

The Nomination Committee has assessed the independence of Mr. Khoo Boon Ho who has served as an Independent Non-Executive Director of the Company for a cumulative term of nine (9) years and recommended him to continue to act as Senior Independent Non-Executive Director of the Company based on the following justifications:-

(a) his expertise in corporate and finance matters which has significant contribution to the effectiveness of the Board and the Committees;

(b) he has exercised his due care during his tenure as an Independent Non-Executive Director of the Company and has carried out his professional duties in the interest of the Company and the shareholders.

Annual Report 2014


1. Directors standing for re-appointment / re-election at the 46th Annual General Meeting of the Company are as follows:

The Directors who are standing for re-appointment are as follows:

i. Mr. Khoo Boon Ho (Senior Independent Non-Executive Director); and ii. Mr Cho Joy Leong @ Cho Yok Lon (Independent Non-Executive Director).

The Directors who are standing for re-election are as follows:

i. Tan Sri Dato’ Lim Kang Hoo (Executive Vice Chairman);

ii. Mr. Bernard Hilary Lawrence (Independent Non-Executive Director);

iii. En. Mohd Salleh bin Othman (Independent Non-Executive Director); and

iv. En. Izadeen bin Daud (Independent Non-Executive Director).

The details of the Directors who are standing for re-appointment/re-election are set out in the “Directors’ Profiles” section in this Annual Report.

Information on securities holdings in the Company and its subsidiaries by the directors standing for re-

appointment/re-election are set out in the Statement of Directors’ Interests in the Company and related corporation on page 39.

2. Attendance of Directors at Board Meetings held during the financial year ended 31 December 2014

A total of seven (7) Board of Directors’ Meetings were held during the financial year ended 31 December 2014, at the Iskandar Waterfront City Berhad Meeting Room, #G08 Block 8, Danga Bay, Jalan Skudai, 80200 Johor Bahru, Johor Darul Takzim.

The details of the attendance of Directors at the Board Meetings are disclosed in the Corporate Governance Statement in this Annual Report.

3. Date, time and Place of the 46th Annual General Meeting Date : 16 June 2015 Time : 11.00 a.m. Place : Danga Bay Convention Centre, Lot PTB21350, Batu 3½, Jalan Skudai, 80200 Johor Bahru, Johor

Darul Takzim

Annual Report 2014


Annual Report 2014


FINANCIAL RESULTS

Unaudited quarterly report on consolidated results for the financial period ended 31 December 2013

Annual Audited Accounts for the financial year ended 31 December 2013

Unaudited quarterly report on consolidated results for the financial period ended 31 March 2014

Unaudited quarterly report on consolidated results for the financial period ended 30 June 2014

Unaudited quarterly report on consolidated results for the financial period ended 30 September 2014

AGM &EGM

Circular to Shareholders in relation to:-Part A(I) Proposed ESOS; and (II) Proposed Change of Name

Part B(I) Proposed Joint Venture; and (II) Proposed Land Disposal;

ANDNotice of Extraordinary General Meeting

Notice of the 45th Annual General Meeting and issuance of Annual Report for financial year ended 31 December 2013 and Circular for Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

45th Annual General Meeting and Extraordinary General Meeting on the:-• Proposed ESOS;• Proposed Change of Name;• Proposed Joint Venture; and• Proposed Land Disposal

BOARDROOM CHANGES

Dato' Hj. Ayub bin Mion was redesignated from Non-Independent Non-Executive Chairman to an Independent Non-Executive Chairman

Appointment of Mr. Wong Khai Shiuan as an Executive Director

Professor Emeritus Azman bin Awang was redesignated from a Non-Independent Non-Executive Director to an Independent Non-Executive Director

Appointment of Mr. Khairudin bin Hasan as Alternate Director to Datuk Md Othman bin Hj Yusof

CORPORATE EXERCISE

Announcement in relation to its wholly-owned subsidiary, Tebrau Bay Sdn Bhd’s Proposed Land Exchange exercise, as approved by the Johor State Executive Council as follows:-

(i) surrender of 92.84 acres of leasehold land to the Johor State Government;

(ii) construction of 300 houses and surrender of 22.62 acres of leasehold land to the Johor State Government;

(iii) construction of 9 restaurants and surrender of 1.46 acres of leasehold land to the Johor State Government;

(iv) the award of 96.315 hectares of submerged land by the Johor State Government; and

(v) building of 4,008 units of low-cost/affordable housing located on 58.02 acres of leasehold land

CHANGE OF COMPANY NAME

Change of the Company’s name from Tebrau Teguh Berhad to Iskandar Waterfront City Berhad and change of Company’s Stock Short Name from TEBRAU to IWCITY

Annual Report 2014


Annual Report 2014


16 Apr 2014 Directors In-house Training16 Apr 2014 Directors In-house Trainingg

Handover of Sports Equipment toSK Tebrau Bakar Batu, Johor Bahru

24 Jun 2014 nt tomen

Balloting for Botanika units10 May 2014

Ceremony for handing over of keys to Taman Desa Belantik’s owners22 Mar 2014

n-house Training

y

Dinner for Persatuan Orang Cacat Johor Bahru

17 Aug 2014Johor

17 Aug 2014BahruJohor

Annual Report 2014


BOARD OF DIRECTORS

Dato’ Hj Ayub bin MionIndependent Non-Executive Chairman

Tan Sri Dato’ Lim Kang HooExecutive Vice Chairman

Lim Keng GuanExecutive Director

Wong Khai ShiuanExecutive Director

Izaddeen bin DaudNon-Independent

Non-Executive Director(Appointed w.e.f. 10 February 2015)

Khoo Boon HoSenior Independent

Non-Executive Director

Prof Emeritus Azman bin Awang, PhD.Independent Non-Executive Director

Bernard Hilary LawrenceIndependent Non-Executive Director

Cho Joy Leong @ Cho Yok LonIndependent Non-Executive Director

Mohd Salleh bin OthmanIndependent Non-Executive Director

Chow Yoon SamIndependent Non-Executive Director

Lim Foo SengIndependent Non-Executive Director

Datuk Md Othman bin Hj YusofNon-Independent

Non-Executive Director(Resigned w.e.f. 16 January 2015)

AUDIT COMMITTEE

Khoo Boon HoChairman

Dato’ Hj Ayub bin MionCho Joy Leong @ Cho Yok LonLim Foo Seng

NOMINATION COMMITTEE

Bernard Hilary LawrenceChairman

Dato’ Hj. Ayub bin MionKhoo Boon Ho

REMUNERATION COMMITTEE

Professor Emeritus Azman bin Awang, PhD.Chairman

Cho Joy Leong @ Cho Yok LonLim Foo Seng

ESOS COMMITTEE

Bernard Hilary LawrenceChairman

Khoo Boon HoLim Foo Seng

RISK MANAGEMENT COMMITTEE

Professor Emeritus Azman bin Awang, PhDChairman

Bernard Hilary LawrenceLim Foo Seng

TENDER AWARD COMMITTEE

Tan Sri Dato’ Lim Kang HooLim Keng Guan(Alternate to Tan Sri Dato’ Lim Kang Hoo)

Wong Khai ShiuanKhoo Boon Ho

COMPANY SECRETARIES

Woo Min Fong (MAICSA 0532413)Lim Aik Yong (MAICSA 7054965)(Appointed w.e.f. 3 March 2015)

Norliza binti Suleiman (MIA 11786)(Resigned w.e.f. 31 January 2015)

REGISTERED OFFICE

Suite 1301, 13th FloorCity Plaza, Jalan Tebrau80300 Johor BahruJohor Darul TakzimTel No : 07-3322088Fax No : 07-3328096

PRINCIPAL PLACE OF BUSINESS

G08, Block 8, Danga BayJalan Skudai, 80200 Johor BahruJohor Darul TakzimTel No : 07-2333888Fax No : 07-2333777

SHARE REGISTRAR

Messrs. Tricor Investor Services Sdn. Bhd.Level 17, The Gardens North TowerMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurTel No : 03-22643883Fax No : 03-22821886E-mail : [email protected]

AUDITORS

Ernst & Young11.2A Level 11, Menara PelangiJalan Kuning, Taman Pelangi80400 Johor BahruJohor Darul Takzim


PRINCIPAL BANKERS

Affin Bank Berhad1st Floor, No. 130 & 132Jalan Ros Merah 2/1781100 Johor Bahru

AmIslamic Bank BerhadBangunan Ambank Group55, Jalan Raja Chulan50200 Kuala Lumpur

Bank Kerjasama Rakyat Malaysia Berhad5th Floor, Bangunan Bank RakyatJalan Tangsi, P.O Box 1102450732 Kuala Lumpur

CIMB Bank Berhad39-03, Jalan Permas 10/2Bandar Baru Permas Jaya81750 Johor Bahru

RHB Bank BerhadGround Floor No 35 & 37Jalan Permas 10/2Bandar Baru Permas Jaya81750 Johor Bahru

SOLICITORS

Messrs Abdul Hakim Abdul Rahman & Co.Advocates & SolicitorsLot 7, 10th Floor, Menara Tabung HajiJalan Ayer Molek80000 Johor Bahru

Messrs. Abdul Rahman Saad & AssociatesAdvocates & SolicitorsLevel 12, Menara PelangiJalan KuningTaman Pelangi80400 Johor Bahru

Messrs Dennis Nik & WongSuite 601-602, Level 6 Bangunan ANGNo. 1, Jalan Jeram, Taman Tasek80200 Johor Bahru

Messrs. Halim Hong & QuekAdvocates & SolicitorsSuite 804 & 806, Level 8Merlin Tower, Jalan Meldrum80000 Johor Bahru

Messrs. Ikbal Salam & AssociatesAdvocates & Solicitors, Jalan No. 50A & 50B Molek 2/2Taman Molek81100 Johor Bahru

Messrs Kassim & Co.No. 42A, Tingkat 1, Jalan Padi 1Bandar Baru Uda81200 Johor Bahru

Messrs. T. J. Goh & Co.L4 - 76 Level 4Danga City MallJalan Tun Abdul Razak80000 Johor Bahru

Messrs. Tea, Kelvin Kang & Co.Suite 8-1, Level 8Menara PelangiJalan Kuning, Taman Pelangi80400 Johor Bahru

STOCK EXCHANGE LISTING

Main Market, Bursa Malaysia Securities BerhadStock Code : 1589Stock Name : IWCITYSector : Properties

WEBSITE

www.iwcity.com.my

Annual Report 2014

BOTANIKA FACADEartist impression of ongoing development

Annual Report 2014



Tebrau Bay Sdn Bhd (414710-X)

(Property Development)

100%

Tebrau Bay Constructions Sdn Bhd (42888-D)

(Construction)

100%

Bayou Bay Development Sdn Bhd (391682-P)


100%

Bayou Management Sdn Bhd (646470-K)

(Property Management)

100%

SUBSIDIARIES ASSOCIATES

Tropicana Danga Senibong Sdn Bhd(formerly known as Renown Dynamic Sdn Bhd) (1030663-X)


30%

Aset Nusantara Development Sdn Bhd(427374-T)

(In liquidation)

49%

Southern Crest Development Sdn Bhd (613683-D)

(Investment Holding)

100% Greenland Tebrau Sdn Bhd (1132314-P)


20%

IWCITY BAYSHOREartist impression of upcoming development

Annual Report 2014


Dato’ Hj. Ayub bin MionChairman

BOTANIKA VILLA FRONTartist impression of upcoming development

Dear Valued Shareholders,It gives me great pleasure to address you once again and with the exception of

where we laid strong foundations to transform the Group into a major property developer in the Iskandar Malaysia region for the years to come.

an Independent Non-Executive Chairman. Following the corporate restructuring

the major shareholder of the Company and my resignation from the Kumpulan

Executive Director whilst retaining my Chairmanship of the Board.


Annual Report 2014

IWCITY BAYSHOREartist impression for upcoming IWCity

Sales Gallery and HQ development

and preparing to embark on more property development projects, which although taking a longer time to realise, is ultimately more profitable.

As the landmark land sales to Greenland Group and Tropicana Corporation Berhad are fully realised, we are optimistic that we shall see higher revenue in 2015.

CORPORATE RESPONSIBILITIES: A STRONGER FOCUS ON CSR

As part of the new vision for the Group, we believe it is important for IWCity to be a more responsible corporate citizen and to give back to society in a more inclusive, holistic and direct way. In 2014, the Group has donated money to the building of schools, religious celebrations and also those with special needs. As a key stakeholder in the Permas Jaya area and firmly believing in the importance of contributing towards education purposes, the Group has committed to contribute towards the infrastructure for the benefit of SJK (C) Pei Hwa 2 in Permas Jaya, a contribution worth RM6.8 million.

OPPORTUNITIES: CONTINUOUS STRONG INTEREST FOR PRIME WATERFRONT LAND IN ISKANDAR MALAYSIA

The interest for waterfront land in Iskandar Malaysia continues to be on the uptrend, despite market sentiment of an oversupply of residential units. The entry of property developers from China entering Iskandar Malaysia in 2012 seeking prime waterfront land had provided an exciting prospect for the Group and synergising our marketing strength as part of the IWH family, we have achieved great success in bringing these investors to our land bank. We believe the interest for prime waterfront land will continue into 2015 and we are in a prime position to realize this into value for the Group.

OUTLOOK: CREATING A NEW DESTINATION IN TEBRAU BAY

I am pleased to announce as part of the re-envisioned strategy, the Group is planning for the creation of a new integrated waterfront destination in the Tebrau Bay region. Dubbed Bayshore, it is a 131-acre riverfront development fronting Sungai Plentong. As part of this initiative we shall clean and continuously dredge the river. Bayshore is our effort to transform the landscape and dynamics of Permas Jaya, as well as introducing a new river-centric lifestyle to the people of Johor Bahru. As part of our 1st Phase, which will be launched in 2015, the Group shall develop a show gallery, exhibition and convention hall, as well as commercial and retail units.

GROUP STRATEGY: BECOMING A WORLD CLASS PROPERTY DEVELOPER

IWH as our major shareholder has brought with it a new vision for the Group. The new members of management has been thorough in articulating this new vision into mission and from mission into executable strategies which would propel the Group to greater heights. These well thought strategies are a mix of short-term and long-term programmes and only being in the second year of this new management, we see ourselves in a transitionary process before value is realised.

The Board of Directors has full confidence in the management, given their expertise and track record in delivering value as part of the IWH family and looks forward to delivering results to the Shareholders.

A LANDMARK DEAL OF RM2.4 BILLION

We started 2015 by signing one of the country’s largest land deals to date with the Greenland Group, a Fortune 500 company based in Shanghai, China. The deal was a disposal of 128 acres of land by the Group to our joint venture company with Greenland Group at a value of RM2.4 billion.

This deal represents a significant success for the Group as we were able to secure a reputable international developer to invest in our land bank and also it would have positive financial effect on the Group in the coming years. With an estimated Gross Development Value of RM18.4 billion, we are excited to be able to participate in this mega property development project. This deal also serves as a pricing benchmark for all neighbouring lands and thus enhancing the overall value of our assets.

FINANCES: A TRANSITIONARY YEAR TO GREATER HEIGHTS

The Group achieved a Profit After Tax of RM3.4 million with revenue totalling RM157 million in 2014. Revenue reduced from RM253 million to RM157 million in 2014, representing a 38% decrease. Profit After Tax decreased from RM27 million to RM3.4 million, representing an 87% reduction.

We rationalise the revenue and profit reduction by the fact that 2013 was an extraordinary year as the construction business by nature tends to deliver cyclical earnings. As part of the new strategy, the Group wishes to transition from having a construction driven revenue to a property development driven revenue. Our transition from 2013 to 2014 has seen the Group winding down legacy construction contracts


Annual Report 2014

LIFETIME ACHIEVEMENTAWARD

UPDATES

Last year, reflecting the Group’s new status as a member of the IWH family, we had made the necessary applications to the authorities and sought Shareholders’ approval for the company to change its name from Tebrau Teguh Berhad to Iskandar Waterfront City Berhad. The name change was effected on 2nd July 2014 and we are now trading under the short stock name IWCITY.

We had signed with Tropicana Corporation Berhad last year for the disposal of land to our joint-venture company, a deal valued at RM444 million. The payment schedule of the deal is based on certain conditions being met and we are now in the process of completing the required Environmental Impact Assessment, which will be followed by the reclamation process. We fully expect the following tranches of the deal to be realised in 2015.

We had made a request to the Johor State Government to change the land status of 383-acres of our land bank from leasehold to freehold. I am pleased to note that the State Government has agreed to this arrangement subject to a conversion premium of RM104 million. We believe this is a good investment as freehold land is able to command a better market price and we are optimistic that we will be able to realise this value in the near future.

We had previously embarked on a Rights Issuance to finance the reclamation works of the Group. With the signing of the deal with Greenland Group at RM2.4 billion, the Group is now able to complete our reclamation works without burdening our shareholders thus, we have decided to call off this Rights Issuance.

STRONG CORPORATE GOVERNANCE

The Board firmly believes that strong corporate governance plays a key role in ensuring sustainability and stability for the Group’s continued success. As Chairman, I am proud to announce that the Group practises a high level of corporate governance. We have recently introduced our statement on the Code of Conduct, a Board Charter and a Whistleblower Policy, ensuring continuous improvement of governance practices.

For 2015, the Board comprises an Independent Director majority, ensuring good check-and-balance to the Group’s decisions and continuous good governance.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors of Iskandar Waterfront City Berhad, I would like to express my sincere gratitude to our business partners and customers for their continuous belief in our Group. Special thanks go out to our bankers and the State Government for the support they have given to enable us to deliver our new vision of transformation. I would like to thank the management for inspiring the Group to dream towards larger goals and I would like to also thank the staff for their perseverance and belief of this new vision. I am excited with this new vision and I look forward to growing this Group together with the management and staff.

On a personal note, I would like to thank my fellow Directors, who have been great colleagues and undoubtedly instrumental in steering this company to greater heights.

2014 saw changes in our Board membership. We bid farewell to Datuk Md Othman bin Yusof and bid welcome to En Izaddeen bin Daud. On behalf of the Board, I would like to thank Datuk Md Othman for his invaluable contributions to the Company and to En Izaddeen, the Board looks forward to working with you.

On behalf of the Board of Directors, I would like to also take this opportunity to wish my heartiest congratulations to our Executive Vice Chairman, Tan Sri Dato’ Lim Kang Hoo for his recently received “Lifetime Achievement Award” at the Sixth World Chinese Economic Forum at Chongqing, China in December 2014. As an award conferred at a global stage, this is indeed a remarkable achievement.

Last but not least, I would like to thank you, our esteemed Shareholders. The new Management embarked on this re-envisioning of the Group’s role, responsibility and potential so we may better deliver value to you, the Shareholders. As Chairman, I would like to say a huge thank you for your unwavering confidence in the Group and we hope to have your continued support as we endeavour to deliver this new vision and a better 2015.

DATO’ HJ AYUB BIN MIONCHAIRMAN

Annual Report 2014


DATO’ HJ. AYUB BIN MION(Independent Non-Executive Chairman)Malaysian, aged 67

Dato’ Ayub was appointed to the Board on 3 March 2004. He graduated with a Bachelor of Arts (Hons.) Degree from University Malaya in 1970. He joined the Johor State Civil Service on 14 June 1970 as Kota Tinggi Assistant District Officer and Assistant Collector of Land Revenue. He remained in the Land Administration for 17 years with his last post as Deputy Director of Land and Mines, Johor. He was appointed as lecturer on Land Laws at University Technology Malaysia for final year Land Survey students due to his vast and long practice in land laws. He authored more than a dozen Land Law Practice Guidelines for Land Officers in Johor, the most well known being Setiausaha Kerajaan Johor ‘Pekeliling Tetap’ No. 1 of 1983, The Procedure On One Stop Centre in the process of land conversion and subdivision by way of Surrender and Realienation which greatly improved the process time for approval. He retired as the State Secretary of Johor. Upon his retirement in 2003, he was appointed as Development Advisor to the State Government. At the same time he was appointed as the Chairman of Cahaya Jauhar Sdn Bhd, a joint venture company between the State Government and UEM Land Sdn Bhd. The company was responsible for planning and developing ‘Kota Iskandar’, the New Administrative Centre of Johor in Nusajaya. While he was the District Officer of Muar and the President of Muar District Council, he was awarded a scholarship for a 1 month stint at Columbia School of Business, Columbia University, USA for a certificate course on “Turn Around”. While he was the Johor State Director of the Economic Planning Unit, in collaboration with CDRC, he helped to turn around many of the state investment agencies and companies during the infamous economic downturn of late 90s and early 2000. Dato’ Ayub was appointed to QSR Brands Berhad/KFC Holdings (Malaysia) Berhad’s Board from 2011 till 2013. He also holds directorships in several private limited companies. Dato’ Ayub does not have any family relationships with any Director and/or major shareholder of the Company. He has no conflict of interest with Iskandar Waterfront City Berhad and has no convictions for any offences within the last ten years.

TAN SRI DATO’ LIM KANG HOO(Executive Vice Chairman)Malaysian, aged 59

Tan Sri Dato’ Lim was appointed to the Board on 3 July 2012.

Tan Sri Dato’ Lim is a businessman with over 37 years of experience in the construction industry. His dynamism and vision coupled with hard work saw the companies that he leads grow by leaps and bounds.

At present, he is the Executive Chairman of Ekovest Berhad, an Executive Director of Knusford Berhad and a Non-Independent Non-Executive Director of PLS Plantations Berhad, all of which are listed on the Main Market of Bursa Malaysia Securities Berhad and also a Director of several other private limited companies.

Tan Sri Dato’ Lim is the uncle of Mr. Lim Keng Guan and Mr. Wong Khai Shiuan. He has no conflict of interest with Iskandar Waterfront City Berhad and has no convictions for any offences within the last ten years.


MR LIM KENG GUAN(Executive Director)Malaysian, aged 51

Mr. Lim was appointed to the Board on 5 July 2013.

Mr. Lim holds a Diploma in Quantity Surveying and possesses more than 30 years of extensive commercial experience in property development, construction and construction-related activities; which includes building and civil engineering works, design and build, turnkey projects, trading in building materials, reconditioning and rental of machineries.

He was the Project Director of PLS Plantations Berhad, a public-listed company on the Main Market of Bursa Malaysia Securities Berhad, since its incorporation in 1988. In the year 2000, he joined the Iskandar Waterfront Holdings (“IWH”) Group of Companies.

Presently, Mr. Lim is the Group Head of Procurement and Contract Administration of IWH Group of Companies, which includes Iskandar Waterfront City Berhad. He is instrumental in the upgrading and reclamation works carried out by IWH Group of Companies. He holds directorships in several private limited companies.

Mr. Lim is the nephew of Tan Sri Dato’ Lim Kang Hoo and cousin of Mr. Wong Khai Shiuan. He has no conflict of interests in Iskandar Waterfront City Berhad nor convictions for any offences in the past ten years.

MR WONG KHAI SHIUAN(Executive Director)Malaysian, aged 33

Mr. Wong Khai Shiuan was appointed to the Board on 18 February 2014. He graduated in 2003 with a Bachelor of Arts in Business Information Systems & Accounting from the University of Middlesex, UK.

He has been with the Iskandar Waterfront Holdings (“IWH”) Group for the past nine years serving in various capacities and during his tenure has amassed considerable experience in management and property development & investment. Prior to joining the IWH Group he worked with Knusford Berhad in the marketing department. He is a director of Iskandar Waterfront Sdn Bhd and several other private companies.

He is the nephew of Tan Sri Dato’ Lim Kang Hoo and cousin of Mr. Lim Keng Guan. He has no conflict of interests with the Company and has not been convicted for any offences in the past 10 years.

Annual Report 2014


EN IZADDEEN BIN DAUD(Non-Independent Non-Executive Director)Malaysian, aged 47

He was appointed to the Board on 10 February 2015. He graduated in 1991 with a Bachelor Sc. (Hons) Degree in Accounting and Law from De Monfort University Leicester, United Kingdom.

At present, he is an Executive Director of Australasia LNG Pty Ltd, a Director of Iskandar Investment Berhad, Johor Corporation Berhad, Universiti Utara Malaysia and also a Director of several other private limited companies.

He served as Managing Director of MARA Incorporated Sdn Bhd from March 2008 to January 2010, the brainchild behind the incorporation of the Company that involves mainly in Investment via Private Equity, Mergers and Acquisitions and Quasi Investment. The major sectors that were introduced by him include Oil and Gas, Telecommunication and Property. He was the Chief Executive Officer of ASM Investment Services Berhad from 2006 to 2008, Assistant Vice President of Permodalan Nasional Berhad from 1999 to 2006, Senior Manager of Perwira Affin Merchant Bank Berhad from 1993 to 1998, Senior Officer of Oriental Bank Berhad and Junior Auditor of Ernst & Young between 1991 to 1993.

En Izaddeen does not have any family relationships with any Director and/or major shareholder of the Company. He has no conflict of interest with Iskandar Waterfront City Berhad and has no convictions for any offences.

MR KHOO BOON HO(Senior Independent Non-Executive Director)Malaysian, aged 75

Mr. Khoo was appointed to the Board on 15 July 2003. Mr. Khoo, an accountancy graduate from Australia was admitted as a member of the Australian Society of Accountants in 1962. He is also a Fellow of the Institute of Certified Public Accountants of Singapore. Upon graduation, he joined a Singapore Public Accountant firm, as an auditor before joining Boustead Holdings Berhad in 1963. He was the Group Financial Controller when he resigned in 1975 to join Boustead Singapore Limited, a public limited company. He was the Deputy Managing Director when he left Boustead Singapore. He also holds directorship in several private limited companies. Mr. Khoo does not have any family relationships with any Director and/or major shareholder of the Company. He has no conflict of interest with Iskandar Waterfront City Berhad and has no convictions for any offences.

Annual Report 2014


PROFESSOR EMERITUS AZMAN BIN AWANG(Independent Non-Executive Director)Malaysian, aged 67

Professor Emeritus Azman was appointed to the Board on March 3rd, 2004. He holds a Masters Degree from New York University, USA and a Doctor of Philosophy Degree in Industrial Economics from Reading University, United Kingdom. He is a member of the American Planning Association, USA, international member of the Royal Town Planning Institute, United Kingdom and a corporate member of the Malaysian Institute of Planners. Professor Emeritus Azman is currently a Board member of the Higher Education Leadership Academy (AKEPT) and Accelerated program For Excellence (APEX), both under the Ministry of Higher Education. He is also a Board member of University Teknologi Malaysia Holdings Sdn Bhd and Universiti Malaysia Kelantan Holdings Sdn Bhd; both holding companies which are responsible for the development and management of its respective assets. He holds directorship in several private limited companies. He has no family relationships with any director and /or major shareholder of the company, no conflict of interest with the company and has not been convicted of any offences in the past ten years.

MR BERNARD HILARY LAWRENCE(Independent Non-Executive Director)Malaysian, aged 48

Mr. Bernard was appointed to the Board on 1 September 2009.

Since graduating in 1990, Mr. Bernard has garnered considerable experience having served as Head of Legal Department for a local bank, as Legal Adviser to a subsidiary of Telekom Malaysia Berhad and as Group Legal Adviser to the Articulate Group of Companies. Since 2001, he has been the Managing Partner of Messrs B H Lawrence, Advocates & Solicitors. With his varied experience, Mr. Bernard has knowledge of corporate and legal, as well as a practicing advocate and solicitor.

Mr. Bernard holds a Bachelors Degree in Law (with Honours) from the University of Warwick, Coventry, England, a Masters Degree in Law from University of Malaya and is a Barrister of Grays Inn, London.

He does not have any family relationships with any Director and/or major shareholder of the Company. He also is an Independent Non-Executive Director of Knusford Berhad. He has no conflict of interest with Iskandar Waterfront City Berhad and has no convictions for any offences.

Annual Report 2014


MR CHO JOY LEONG @ CHO YOK LON(Independent Non-Executive Director)Malaysian, aged 72

Mr. Cho Joy Leong @ Cho Yok Lon was appointed to the Board on 18 March 2013.

He graduated with a Bachelor of Engineering (Hons) Degree from the Universiti Malaya in 1968.

He is a Registered Professional Engineer in Malaysia and a member of the Institution of Engineers, Malaysia. Upon graduation,he joined FELDA as an Engineer and served them until April 1998. Whilst with FELDA, he held various positions including that of Senior Regional Engineer, Chief Engineer and Director of the Engineering Department, General Manager (Technical) of Felda Engineering Services Sdn Bhd and the General Manager of Felda Construction Sdn Bhd, a construction company within the Felda Group of Companies. He was appointed as an Executive Director of Ekovest Berhad on 2 May 1998 and redesignated as Non-Executive Director on 1 January 2006 and as Independent Director on 26 May 2011 until his resignation on 16 May 2013.

He does not have any family relationships with any Director and/or major shareholder of the Company. He has no conflict of interest with Iskandar Waterfront City Berhad and has no convictions for any offences.

EN MOHD SALLEH BIN OTHMAN(Independent Non-Executive Director)Malaysian, aged 62

En. Mohd Salleh was appointed to the Board on 18 March 2013.

He graduated with a B.Sc. (Hons) Degree in Housing, Building and Planning from Universiti Sains Malaysia. After graduation, he joined Petroliam Nasional Berhad (“Petronas”) where he served in various departments and divisions for a span of approximately 15 years.

Some of the senior position he had held includes Management Executive of its Property Department from 1978 to 1981, Head of Building Section of its Special Projects Department from 1982 to 1984, Deputy Manager of its Property Development Department from 1985 to 1987, Manager of its Property Development Department from 1988 to 1989 and finally being promoted to Senior Manager of the same department in 1990.

During his employment in Petronas, he acquired skills and invaluable experience in property development, property management, property maintenance and also project management. He left Petronas in 1993 to join Kuala Lumpur City Centre Bhd as the Deputy General Manager of its Real Estate Division. He was later promoted to Project Director of the Project Management Division in 1995. He resigned from Kuala Lumpur City Centre in 1995 and thereafter, he joined Ekovest Berhad and resigned from Ekovest Berhad, a year later.


Annual Report 2014

Annual Report 2014


MR CHOW YOON SAM(Independent Non-Executive Director)Malaysian, aged 69

Mr. Chow Yoon Sam was appointed to the Board on 27 March 2013.

Mr. Chow graduated from University of Malaya in 1971 with a Bachelors Degree in Civil Engineering (Hons). He was a member of the Institute of Engineers Malaysia and Board of Engineers Malaysia.

He started his career in 1971 as a Project Engineer on design and construction of Felda oil palm mills and rubber factories. He rose to the rank of Deputy Director of Engineering in 1980, being involved in administration and management of Felda development projects.

In 1990, he became the Project Consultant and Project Manager for Felda joint venture projects and he retired as the Senior General Manager of Felda Ekovest Sdn Bhd in 2004.


MR LIM FOO SENG(Independent Non-Executive Director)Malaysian, aged 45

Lim Foo Seng is an Independent, Non-Executive Director of Iskandar Waterfront City Berhad appointed on 11 October 2013. He is a member of the Malaysian Institute of Certified Public Accountants and a member of the Malaysian Institute of Accountants. He has more than 25 years of experience in the finance and corporate sectors. From 1989 to 1995, he served in an international accounting firm, Deloitte Kassim Chan, where he acquired considerable knowledge, experience and exposure in management consultancy, taxation & accounting and auditing standards.

From 1995 till 2003, he had worked with Arab-Malaysian Corporation Berhad Group (“Amcorp Group”) where he played a key role in the business & strategic planning, venture capital activities, corporate investments, corporate audit, corporate restructuring, general management and monitoring of portfolio companies involved in various diversified businesses such as retail, mall management, radio broadcasting, point of sales advertisement, bonded warehouse, magazine publication, IT and manufacturing, in his capacity as Associate Director. He also served as a board member of various portfolio companies of Amcorp Group. He left Amcorp Group in 2003 where his last position with Amcorp Group was Chief Financial Officer of MCM Technologies Berhad, an IT incubator and a subsidiary of Amcorp that was previously listed on the ACE Market of Bursa Malaysia Securities Berhad in which he played an instrumental role in its initial public offering.

From 2003 to 2013, he held various senior management positions and served as a board member of various established private limited and public listed companies in Malaysia. Currently, he is the Finance Director cum Chief Strategy Officer of Winn Worldwide Sdn Bhd (“Winn Worldwide Group”). Winn Worldwide Group is principally involved in the business segment of the fashion industry and operates more than 20 retail stores nationwide under the concept store brand names of House-of-Leather, Country Hide and Kaufmann.

Currently, He also is a director of Asia Bioenergy Technologies Berhad and Knusford Berhad.

He does not have any family relationships with any Director or substantial shareholder of the company and has not been convicted of any offences within the past ten (10) years other than traffic offences and has no conflict of interest with Iskandar Waterfront City Berhad.

Annual Report 2014


The Board of Iskandar Waterfront City Berhad (‘IWCity’ or the “Company”) appreciates the importance of adopting high standards of corporate governance in the Company in order to safeguard stakeholders’ interests as well as enhancing shareholders value.

Pursuant to Paragraph 15.25 of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), this corporate governance statement (“Statement”) sets out how the Company has applied the 8 Principles and observed the 26 Recommendations, including Commentaries, of the Malaysian Code on Corporate Governance (“MCCG 2012”) for the financial year ended 31 December 2014. Where a specific Recommendation of the MCCG 2012 has not been observed during the financial year, the non-observation, including reasons thereof, and the alternative practice adopted, if any, is mentioned in this Statement.

PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT

The Board recognises its key role in charting the strategic direction of the Company and has assumed the following principal responsibilities in discharging its fiduciary and leadership functions:

• review, evaluate, adopt and approve the strategic plans and policies for the Group;• oversee and monitor the conduct of the businesses and financial performance and major capital commitments of

the Group;• review and adopt budgets and financial results of the Group, monitor compliance with applicable accounting

standards and the integrity and adequacy of financial information disclosure;• review and approve any major corporate proposals, new business ventures or joint ventures of the Group;• review, evaluate and approve any material acquisitions and disposals of undertakings and assets in the Group;• identify principal risks and assess the appropriate risk management systems to be implemented to manage these

risks;• establish and oversee a succession planning programme for the Group, including the remuneration and

compensation policy thereof;• establish, review and implement corporate communication policies with the shareholders, investors, other key

stakeholders and the public;• review and determine the adequacy and integrity of the internal control systems and information management of

the Group; and• develop a corporate code of conduct to address, amongst others, any conflicts of interest relating to Directors,

major shareholders and/or Management.

To assist in the discharge of its stewardship role, the Board has established Board Committees, namely the Audit Committee, Nomination Committee, Remuneration Committee, Risk Management Committee and Tender Award Committee to examine specific issues within their respective terms of reference as approved by the Board and report to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board.

The number of meetings of the Board and Board Committees held during the year were:

Types of meeting No. of meetings

Board of Directors 7

Audit Committee 5

Nomination Committee 3

Remuneration Committee 1

Risk Management Committee 2

Tender Award Committee 15

Annual Report 2014


PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT cont’d

The roles of the Independent Non-Executive Chairman of the Board and the Executive Vice Chairman (“EVC”) are separate with each having a clear scope of duties and responsibilities. The distinct and separate roles of the Chairman and the EVC, with a clear division of functions and responsibilities, ensure a balance of power and authority, such that no one individual has unfettered powers of decision making. This crucial partnership dictates the long term success of the Group. The Chairman plays a crucial and pivotal role in ensuring the leadership, effectiveness, conduct and governance of the Board, whilst the EVC has overall responsibility for the operational and business units, organisational effectiveness, implementation of Board policies, directives, strategies and decisions. The Board has delegated to the EVC the day-to-day management of the Group, supported by two Executive Directors and a team of experienced managers. The EVC is responsible for the executive function of the Group’s business and leading Management in implementing decisions and pursuing corporate objectives as approved by the Board. He may however delegate some of the day-to-day management to the Executive Directors while Non-Executive Directors do not participate in the day-to-day management of the Company, they contribute their expertise and experience to the development and monitoring of its corporate strategy.

Board Charter

The Board is aware of the need to clearly demarcate the duties and responsibilities of the Board, Board Committees and Management, including the limits of authority accorded, in order to provide clarity and guidance to Directors and Management. At the date of this Statement, it has adopted a Board Charter, setting out, inter-alia, the roles of the Board, Board Committees, Executive and Non-Executive Directors and Management. The Charter serves as a reference point for Board activities to enable Directors to carry out their stewardship role and discharge their fiduciary duties towards the Company. The Board is aware of the need to make public its Charter and to upload the Charter on the Company’s website at www.iwcity.com.my in line with Recommendation 1.7 of the MCCG 2012.

Code of Conduct and Whistle-Blower Policy

The Board recognises the importance of having in place a Code of Conduct, setting out the standards of conduct expected from Directors and employees, to engender good corporate behaviour and has formalised such a Code, including uploading the same on the Company’s website. Meanwhile, the Board Charter sets out provisions for disclosure and conflict of interest to be observed by Directors. The Company’s Terms and Conditions of Service for employees also include provisions on conduct, which highlight, amongst others, the need to refrain from accepting any forms of gifts or inducement from interested or potentially interested party.

The Board has also established and adopted a Whistle-Blowing Policy and Procedures document, which outlines when, how and to whom a concern may be properly raised about the actual or potential corporate fraud or breach of regulatory requirements involving employee, Management or Director in the Group.

Sustainability of Business

The Board is mindful of the importance of business sustainability and, in conducting the Group’s business, the impact on the environmental, social and governance aspects is considered in the Group’s corporate strategies.

The sustainability initiatives and activities undertaken by the Group for the financial year ended 31 December 2014 are disclosed in the “Statement on Corporate Social Responsibility”, provided in this Annual Report. Supply of, and Access to, Information

The Board is supplied with relevant information and reports on financial, operational, corporate, regulatory, business development and audit matters, by way of Board reports or upon specific requests, for decisions to be made on an informed basis and for an effective discharge of the Board’s responsibilities.

Timely dissemination of meeting agenda, including the relevant Board and Board Committee papers to all Directors prior to the Board and Board Committee meetings to give effect to Board decisions and to deal with matters arising from such meetings, is observed. Board members are furnished with pertinent explanation and information on relevant issues and recommendations by Management. The issues are then deliberated and discussed thoroughly by the Board before a decision is made.

Annual Report 2014


PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT cont’d

Supply of, and Access to, Information cont’d

In addition, Board members are updated on the Group’s activities and its operations on a regular basis. All Directors have access to information of the Company on a timely basis in an appropriate manner and quality necessary to enable them to discharge their duties and responsibilities.

Senior Management of the Group and external advisers are invited to attend Board meetings to provide additional insights and professional views, advice and explanations on specific items on the meeting agenda. Besides direct access to Management, Directors may obtain independent professional advice at the Company’s expense, if considered necessary, in furtherance of their duties. This procedure is formalised in the Company’s Board Charter.

Directors have unrestricted access to the advice and services of the Company Secretaries to enable them to discharge their duties effectively. The Board is regularly updated and advised by the Company Secretaries, who are qualified, experienced and competent on statutory and regulatory requirements, on the resultant implications of any changes in regulatory requirements to the Company and Directors in relation to their duties and responsibilities. The Company Secretaries, who oversee adherence to Board policies and procedures, brief the Board on the proposed contents and timing of material announcements to be made to regulators. The Company Secretaries attend all Board and Board Committee meetings and ensure that meetings are properly convened, and that accurate and proper records of the proceedings and resolutions passed are taken and maintained accordingly. The removal of the Company Secretaries, if any, is a matter for the Board, as a whole, to decide.

PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD

The Board currently comprises of twelve (12) members, made up of three (3) Executive Directors. one (1) Non-Independent Non-Executive Director, and eight (8) Independent Non-Executive Directors. This composition fulfills the requirements as set out under MMLR of Bursa Malaysia, which stipulates that at least two (2) Directors or one-third of the Board, whichever is higher, must be Independent. The profile of each Director is set out in this Annual Report. The Directors, with their different backgrounds and specialisations, collectively bring with them a wide range of experience and expertise in areas such as public administration, property development, construction, quantity surveying, building and civil engineering, information systems, accounting and audit, and legal.

Nomination Committee

The Nomination Committee, established by the Board with specific terms of reference, comprises the following Directors as its members:

• Mr. Bernard Hilary Lawrence• Mr. Khoo Boon Ho• Dato’ Hj Ayub bin Mion

The Nomination Committee is primarily responsible for recommending suitable appointments to the Board, taking into consideration the Board structure, size, composition and the required mix of expertise and experience which the Director should bring to the Board. It is also tasked to assess the effectiveness of the Board as a whole, the Board Committees and the contribution of each Director.

The final decision on the appointment of Director in respect of a candidate recommended by the Nomination Committee rests with the Board. The Company Secretaries ensure that all appointments are properly made upon obtaining all necessary information from the Director. During the financial year under review, the Nomination Committee met three (3) times, attended by all members to carry out the following activities:

• evaluated and recommended to the Board the independence of Directors for the purpose of re-designation and re-appointment as Independent Non-Executive Directors; and

• evaluated the candidature for Executive Director and recommended the same to the Board for approval.

The Nomination Committee has carried out an assessment of the Board, Board Committees and individual Directors in relation to their performance and contribution towards meeting the needs of the Company. The evaluation took into consideration the competency, experience, character, integrity and time availability, including the mix of skills, of the Directors concerned.

Annual Report 2014


PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD cont’d

Nomination Committee cont’d

The Nomination Committee also recommended to the Board those Directors who are retiring at the forthcoming Annual General Meeting for re-election, including the continuation in office of the Independent Non-Executive Director who has exceeded the 9-year tenure. For the purpose of assessing the independence of Independent Non-Executive Directors, the criteria set out in Paragraph 1.01 of the MMLR of Bursa Malaysia were used. A Board diversity policy has been formalised to ensure that the Board comprises Directors of the required mix of skills and experience to assist the Company in achieving its objectives. However, insofar as Board diversity is concerned, the Board does not intend to set out any specific policy on targets for female Directors, age or ethnicity composition in the Board. The Board believes that the on-boarding process of Directors should not be based on any gender, age or ethnicity discrimination. As such, the evaluation of suitable candidates is solely based on the candidates’ competency, character, time availability, integrity and experience in meeting the needs of the Company, including, where appropriate, the ability of the candidates to act as Independent Non-Executive Directors, as the case may be.

Remuneration Committee

The Remuneration Committee, established by the Board with specific terms of reference, comprises the following Independent Non-Executive Directors:

• Prof. Emeritus Azman bin Awang • Mr. Cho Joy Leong@ Cho Yok Lon• Mr. Lim Foo Seng

The Remuneration Committee (“RC”) assists the Board in recommending the remuneration of Executive Directors. The RC meets as and when required to review Directors’ remuneration. However, at the request of the Executive Directors of the Company, they do not benefit from any remuneration package except for the Directors’ allowance, at the same amount received by the Non-Executive Directors (other than the Chairman). In the case of Non-Executive Directors, the level of remuneration is determined by the Board as a whole and reflects the experience and level of responsibilities undertaken by the Non-Executive Directors concerned. In all instances, the deliberations are conducted with the Directors concerned abstaining from discussions on their individual remuneration. During the year, the Committee met once attended by all members.

In compliance with the MMLR, the remuneration paid to directors, in aggregation and analysed into bands of RM50,000 are as per Note 10, page 77 of the Financial Statements.

Tender Award Committee

The Tender Award Committee (“TAC”), established by the Board, comprises the following directors of the Company, one of which is an Independent Non-Executive Director:

• Tan Sri Dato’ Lim Kang Hoo• Mr Lim Keng Guan (alternate to Tan Sri Dato’ Lim Kang Hoo)• Mr. Khoo Boon Ho• Mr. Wong Khai Shiuan

Besides, there are some senior management acting as members of the TAC to assist the Board in the deliberation of the relevant tenders. The TAC meets regularly to review and award tenders for expenditure in excess of RM25,000.

The TAC invites and considers Tenders for the supply of goods or services or works to be undertaken which are necessary for carrying out the objective of Procurement and Contract Administration and shall make decisions or recommendations on the acceptance or rejection of such Tenders.

The TAC ensures that procurement is geared to achieve the high quality of goods, services and construction which commensurate with the objectives. The TAC ensures accountability and transparency in all matters pertaining to tendering, procurement and contracting and also ensures the selection of all contractors and service providers is made on transparent, fair and cost-effective basis.


Annual Report 2014

PRINCIPLE 3 – REINFORCE INDEPENDENCE OF THE BOARD

The Independent Non-Executive Directors bring to bear objective and independent views, advice and judgment on interests, not only of the Company, but also of shareholders and stakeholders. Independent Non-Executive Directors are essential for protecting the interests of shareholders and can make significant contributions to the Company’s decision making by bringing in the quality of detached impartiality. The Board has appointed Mr. Khoo Boon Ho as the Senior Independent Non-Executive Director to whom concerns may be conveyed by shareholders and other stakeholders.

The Board recognizes the importance of establishing criteria on independence to be used in the annual assessment of its Independent Non-Executive Directors. The definition on independence accords with the MMLR of Bursa. The independent directors also have made declaration of their Independence Status on a yearly basis through the Nomination Committee to the Company. At end of the financial year, only one Independent Non-Executive Director, namely Mr. Khoo Boon Ho, has served for a cumulative period exceeding nine (9) years. Following an assessment on the tenure and independence of all Independent Non-Executive Directors, Mr. Khoo Boon Ho, who has served as Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years as at the end of the financial year under review, has been recommended by the Board to continue to act as Independent Non-Executive Director. Key justifications for his recommended continuance as Independent Non-Executive Director are as follows:

• he fulfills the criteria under the definition of Independent Non-Executive Director as stated in the MMLR and, therefore, is able to bring independent and objective judgment to the Board;

• his skills, competence and experience are pivotal in relation to the needs of the Board, Audit Committee, Nomination Committee and also TAC in their deliberations;

• his time commitment to the Company as evidenced by his meeting attendance at Board, Board Committee meetings and TAC Meetings; and

• he has been with the Company long enough to understand the Group’s business operations which enable him to contribute actively during deliberations or discussions at the Board, Audit Committee, Nomination Committee, and TAC.

Additionally, the Board is of the view that the independence of Directors cannot be assessed only based on the length of service, but that the true independence emanates from intellectual honesty, manifested through a genuine commitment to serve in the best interests of the Company.

PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS

The Board ordinarily meets at least four (4) times a year, scheduled well in advance before the end of the preceding financial year to facilitate the Directors in planning their meeting schedule for the year. Additional meetings are convened when urgent and important decisions need to be made between scheduled meetings. Board and Board Committee papers, which are prepared by Management, provide the relevant facts and analysis for the convenience of Directors. The meeting agenda, relevant reports and Board papers are furnished to Directors and Board Committee members well before the meeting to allow the Directors sufficient time to study for effective discussion and decision making during meetings. At the quarterly Board meetings, the Board reviews the business performance of the Group and discusses major strategic, operational and financial issues. The Chairman of the Audit Committee briefs the Directors at each Board meeting the salient matters noted by the Audit Committee and which require the Board’s attention or direction. All pertinent issues discussed at Board meetings in arriving at decisions and conclusions are properly recorded by the Company Secretaries by way of minutes of meetings.


Annual Report 2014

PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS cont’d

Board Meetings

There were seven (7) Board meetings held during the financial year ended 31 December 2014, with details of Directors’ attendance set out below:

Name of Director Attendance

Dato’ Hj. Ayub bin Mion 7/7

Tan Sri Dato’ Lim Kang Hoo 4/7

Mr. Lim Keng Guan 7/7

Mr. Wong Khai Shiuan (appointed w.e.f. on 18 February 2014) 5/5

Mr. Izaddeen bin Daud (appointed w.e.f. on 10 February 2015) N/A

Mr. Khoo Boon Ho 7/7

Prof. Emeritus Azman Bin Awang 5/7

Mr. Bernard Hilary Lawrence 6/7

Mr. Cho Joy Leong 7/7

En. Mohd Salleh bin Othman 7/7

Mr. Chow Yoon Sam 7/7

Mr. Lim Foo Seng 7/7

Datuk Md. Othman Bin Hj. Yusof (resigned w.e.f. on 16 January 2015) 6/7

It is the practice of the Company for Directors to devote sufficient time and effort to carry out their responsibilities. All the Directors have met the stipulations of the MMLR on attendance at Board meeting.

Directors’ Training – Continuing Education Programmes

The Board is mindful of the importance for its members to undergo continuous training to be apprised of changes to regulatory requirements and the impact such regulatory requirements have on the Group.

All the Directors of the Company have attended the Mandatory Accreditation Programme conducted by Bursa Malaysia Training Sdn Bhd within the stipulated timeframe required by the MMLR of Bursa Malaysia.

During the financial year, Directors attended two (2) in-house trainings organised by Tricor Knowledge House Sdn Bhd and Burstara Sdn Bhd, entitled “Common Breaches of the Listing Requirements with Case Studies” and “Detecting, Preventing and Reporting Fraud and Financial Irregularities”, respectively.

In addition, the Directors also attended several seminars as follows:-

Name of Director Training attended

(a) Mr. Wong Khai Shiuan • Mandatory Accreditation Programme (MAP) for Director of Public Listed Companies

(b) Mr Bernard Hilary Lawrence • Briefing Session on Corporate Governance Guide : Towards Boardroom Excellence (2nd Editon)

(c) Mr Lim Foo Seng • Share Valuation Techniques for Directors The Directors continue to undergo relevant training programmes to further enhance their skills and knowledge in the discharge of their stewardship role. Moving forward, training needs analysis will be conducted on individual Directors, considering the results of the assessment on the Board, Board Committees and individual Directors, to enable training programs to be developed.


Annual Report 2014

PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING BY THE COMPANY

It is the Board’s commitment to present a balanced and meaningful assessment of the Group’s financial performance and prospects at the end of each reporting period and financial year, primarily through the quarterly announcement of Group’s results to Bursa Malaysia, the annual financial statements of the Group and Company as well as the message to shareholders in the Annual Report.

Audit Committee

In assisting the Board to discharge its duties on financial reporting, the Board has established an Audit Committee, comprising exclusively Independent Non-Executive Directors as below:

• Mr. Khoo Boon Ho• Dato’ Hj Ayub bin Mion• Mr. Cho Joy Leong @ Cho Yok Lon• Mr. Lim Foo Seng

The detailed composition of the Audit Committee, including its roles and responsibilities, are set out in the Audit Committee Report of page 28 in this Annual Report. One of the key responsibilities of the Audit Committee in its specific terms of reference is to ensure that the financial statements of the Group and Company comply with applicable financial reporting standards in Malaysia. Such financial statements comprise the quarterly financial report announced to Bursa and the annual statutory financial statements.

A policy governing the provision of non-audit services by the external auditors, in view of maintaining their independence and objectivity, has been developed and adopted by the Audit Committee.

In assessing the independence of external auditors, the Audit Committee requires written assurance by the external auditors, confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the International Federation of Accountants and the Malaysian Institute of Accountants.

PRINCIPLE 6 – RECOGNISE AND MANAGE RISKS OF THE GROUP

The Board has established a risk management process to identify, evaluate, control, report and monitor significant risks faced by the Group. Periodic reporting of risk issues, including mitigating measures, is made by Management to the Risk Management Committee.

Risk Management Committee

The Risk Management Committee, established by the Board with specific terms of reference, comprises the following Independent Non-Executive Directors:

• Professor Emeritus Azman bin Awang• Mr. Bernard Hilary Lawrence• Mr. Lim Foo Seng

The risk management framework of the Group seeks to, amongst others, formalise the Board’s risk appetite, use of key risk indicators and risk parameters, risk treatment plans and the formation of a Risk Management Committee, assisted by the management to follow up on risk management matters as well as action plans to address the findings raised by the internal auditors and external auditors.

The internal audit function of the Group is outsourced to an independent professional firm, which undertakes regular reviews of the adequacy and operating effectiveness of the Group’s system of risk management and internal controls. The internal audit function reports directly to the Audit Committee. Further details on the internal audit function can be seen in the Audit Committee Report and the Internal Control Statement included in this Annual Report.


Annual Report 2014

PRINCIPLE 7 – ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

The Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive, accurate and timely disclosures relating to the Company and its subsidiaries to be made to the regulators, shareholders and stakeholders. Accordingly, the Board has formalised pertinent policies and procedures not only to comply with the disclosure requirements as stipulated in the MMLR of Bursa Malaysia, but also identify the persons responsible to approve and disclose material information to the regulators, shareholders and stakeholders.

To augment the process of disclosure, the Board has earmarked a dedicated section for corporate governance on the Company’s website where information on among others, the Company’s announcements to the regulators, rights of shareholders, the Company’s Annual Report, may be accessed.

PRINCIPLE 8 – STRENGTHEN RELATIONSHIP BETWEEN THE COMPANY AND ITS SHAREHOLDERS

Shareholder participation at general meeting

The Annual General Meeting (“AGM”), which is the principal forum for shareholder dialogue, allows shareholders to review the Group’s performance via the Company’s Annual Report and pose questions to the Board for clarification. At the AGM, shareholders participate in deliberating resolutions being proposed or on the Group’s operations in general. At the last AGM, a question and answer session was held where the Chairman invited shareholders to raise questions with responses from the Board.

The Notice of AGM is circulated at least twenty one (21) days before the date of the meeting to enable shareholders to go through the Annual Report and papers supporting the resolutions proposed. Shareholders are invited to ask questions both about the resolutions being proposed before putting a resolution to vote as well as matters relating to the Group’s operations in general. All Special Resolutions passed by the shareholders at the previous AGM held on 24 June 2014 were voted by poll whereas other resolutions were voted by a show of hands.

Going forward, the Board will give due consideration on the mode of voting on any resolutions at the AGM and/or Extraordinary General Meeting, including voting by way of a poll, particularly if the proposals are of a substantive nature.

Communication and engagement with shareholders

The Board recognises the importance of being transparent and accountable to the Company’s investors and, as such, has various channels to maintain communication with them. The various channels are through the quarterly announcements on financial results to Bursa Malaysia, relevant announcements and circulars, when necessary, the Annual and Extraordinary General Meetings and through the Group’s website where shareholders can access pertinent information concerning the Group.

This Statement has been approved by the Board dated 15 April 2015.

STATEMENT OF DIRECTORS’ RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENTS

The Group’s financial statements have been drawn up in accordance with the applicable approved accounting standards in Malaysia and the Companies Act, 1965. The financial statements give a true and fair view of the state of the affairs of the Group at the end of the financial year, and of the profit and cash flows for the financial year.

In preparing the financial statements, the Directors are also responsible for:

• the adoption of suitable accounting policies and applying them consistently;• making judgments and estimates that are reasonable and prudent;• ensuring that all applicable financial reporting standards have been followed; and• preparing financial statements on the going concern basis as the Directors have reasonable expectation, having

made enquiries that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.

The Directors have the responsibility of ensuring that the Company maintains adequate accounting records and sufficient internal controls to safeguard the assets and to prevent and detect fraud or other irregularities in the Group.


Annual Report 2014

1. COMPOSITION

The Audit Committee (the “Committee”), which was established by the Board, comprises the following Directors as its members:

Chairperson : Mr. Khoo Boon Ho (Senior Independent Non-Executive Director) Members : Dato’ Hj Ayub bin Mion (Independent Non-Executive Director) Mr. Cho Joy Leong @ Cho Yok Lon (Independent Non-Executive Director) Mr. Lim Foo Seng (Independent Non-Executive Director)

2. ROLE OF THE AUDIT COMMITTEE

The Audit Committee has been entrusted by the Board with the following responsibilities that encompass overseeing the financial reporting process and the audit processes:

• to review the Group’s quarterly financial statements; • to assess the Group’s internal control system; • to review the independence of the Group’s internal and external auditors and the processes adopted by the

auditors; and • to review the Recurrent Related Party Transactions to ensure they are not detrimental to the minority as well

as any conflict of interest situations.

3. KEY FUNCTIONS AND RESPONSIBILITIES

The key functions and responsibilities of the Audit Committee are to review the following and report the same to the Board:

• the audit plan, evaluation of the system of internal controls and the audit report with the external auditors, including the assistance given by employees of the Group to the external auditors;

• review any management letter sent by the external auditors to the Company and Management’s response to such letter;

• review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work. This includes determining whether the internal audit function deploys internal auditing standards that are recognised by professional bodies;

• review the internal audit programmes, processes, the major findings and results of the internal audit or investigations undertaken and whether or not appropriate action is taken on the recommendation of the internal audit function;

• the quarterly results and year-end financial statements, prior to approval by the Board of Directors, focusing on:

- any changes in accounting policies and practice; - major judgmental areas; - significant adjustments resulting from the audit - going concern assumptions; - compliance with accounting standards, stock exchange and other legal requirements; - assess the quality and effectiveness of internal control system; and - any significant transactions which are not a normal part of the Group’s business; • any related party transactions and conflict of interest situations that may arise within the Company and

Group, including any transaction, procedure or course of conduct that raises questions of management integrity;

• any letter of resignation from external auditors; • whether there is any reason (supported by grounds) to believe that external auditors are not suitable for re-

appointment, including the assessment of their professional independence and performance; • recommend the nomination of person or persons as external auditors;


Annual Report 2014

3. KEY FUNCTIONS AND RESPONSIBILITIES cont’d

The key functions and responsibilities of the Audit Committee are to review the following and report the same to the Board: cont’d

• establish a policy on the provision of non-audit services by the external auditors and/or their network members firms/companies to minimize the risk of the external auditors’ independence and objectivity from being impaired;

• approve any appointment or termination of senior staff members of the internal audit function and review any appraisal or assessment of the performance of its members; where applicable and

• any other function as may be required by the Board from time to time.

4. INTERNAL AUDIT FUNCTION

The Company outsourced its internal audit function to an independent professional firm, which reports directly to the Audit Committee. The internal audit function assists the Audit Committee in reviewing the adequacy and operating effectiveness of the system of governance, risk management and internal control, based on an internal audit plan approved by the Audit Committee before internal audit work is carried out. The scope of internal audit covers all operating units, including key subsidiaries, as set out in the letter of appointment of the internal audit function. Further details of the internal audit function and its activities are mentioned in the Statement on Risk Management and Internal Control included in the Annual Report.

5. SUMMARY OF ACTIVITIES UNDERTAKEN BY THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR

The Audit Committee met five (5) times during the financial year ended 31 December 2014, attended by all the members.

The Audit Committee members were served with meeting agenda and relevant Board papers which were distributed, with adequate notice, before the meeting to enable them to go through the matters to be deliberated at the meeting. The Company Secretary is the secretary of the Audit Committee.

During the financial year under review, the Audit Committee carried out the following activities:

• reviewed the quarterly financial announcements of the Group before recommending the same to the Board of Directors for approval;

• reviewed the audit plan of the external auditors; • reviewed the performance of the external auditors in terms of their capability and professionalism before

recommending them to be considered for re-appointment at the Annual General Meeting; • reviewed the audited annual financial statements of the Group and the Company before recommending the

same to the Board of Directors for approval; • reviewed the internal audit reports and the recommendations on internal audit observations, including follow-

up by the internal audit function on the status of Management’s implementation of action plans to address issues highlighted in previous reports of the internal audit function;

• reviewed the performance of the internal audit function and approved the renewal of their appointment; • reviewed recurrent related party transactions within the Group; • reported to the Board on its activities and significant findings and results.

This Audit Committee Report has been approved by the Board dated 15 April 2015.


Annual Report 2014

INTRODUCTION

Paragraph 15.26 (b) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa”) stipulates that a listed issuer must ensure that its board of directors makes a statement about the state of internal control of the listed issuer as a group. Accordingly, the Board of Directors (“Board”) is pleased to furnish the statement, which outlines the nature and scope of the risk management and internal control system in the Group (comprising the Company and its subsidiaries) for the financial year ended 31 December 2014 and up to the date of approval of this Statement for inclusion in the Annual Report of the Company. For the purpose of disclosure, this statement takes into consideration the “Statement on Risk Management and Internal Controls - Guidelines for Directors of Listed Issuers” (the Guidelines”), issued by the Task Force on internal control with the support and endorsement of Bursa.

The Board acknowledges its overall responsibility for the Group’s system of risk management and internal control to safeguard shareholders’ investment and the Group’s assets as well as reviewing its adequacy and operating effectiveness in meeting the Group’s objectives. The Board is mindful of the need to establish clear roles and responsibilities in discharging its fiduciary and leadership functions in line with Recommendation 1.2 of the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”). Accordingly, the Board is aware that its principal responsibilities, as outlined in the Commentaries of the same Recommendation of the MCCG 2012, include, inter-alia, the following:

• to identify principal risks faced by the Group and ensure the implementation of appropriate controls and mitigation measures to address the risks; and

• to review the adequacy and integrity of the management information and internal control system of the Group. The Board is also mindful of its role under Recommendation 6.1 of the MCCG 2012 in establishing a sound framework to manage risk. The Group has in place a risk management process to identify and evaluate significant risks, comprising strategic, financial and operational risks as well as a system of internal control to mitigate such risks. In view of the limitations inherent in any system of risk management and internal control, the system is designed to manage, rather than eliminate, the risk of failure to achieve the Group’s objectives. The system can, therefore, only provide reasonable, but not absolute assurance, against any material misstatement or loss.

RISK MANAGEMENT PROCESS

The Board recognizes the importance of risk management to safeguard shareholders’ investment and the Group’s assets. Accordingly, it has deployed a process, during the financial year under review, to identify and evaluate significant business risks faced by the Group with a view to manage them. Management is entrusted to identify such risks for onward reporting to the Board so that remedial measures may be taken to mitigate the risks as appropriate. For each risk identified, the risk management process includes assessing the likelihood of its occurrence and the impact thereof. The significant risks faced by the Group, including action plans to mitigate risks within acceptable levels, are reported by Management to the Board annually.

As part of the Group’s Risk Management Process, a Risk Management Committee (“RMC”), chaired by an Independent Non-Executive Director, has been established to perform, amongst others, the following:

• overseeing the risk management structure; • reviewing and recommending risk management strategies, policies and framework for identifying, measuring,

monitoring and controlling risks;• developing and implementing internal compliance and control systems and procedures to manage risks; and• communicating and monitoring risk assessment results to the Board.

The RMC meets periodically to consider principal risks evaluated by the respective risk owners that may impede the Group from achieving its strategic and operational objectives, as well as develop action plans to mitigate such risks.

During the financial year under review, the results of risk updates deliberated at the RMC meetings, i.e. the internal controls to address key risks identified, were used as the basis to develop a risk-based internal audit plan for the financial year ended 31 December 2014, which was approved by the Audit Committee.

The risk management process has been in place for the financial year under review and up to the date of approval of this Statement for inclusion in the Annual Report of the Company.


Annual Report 2014

INTERNAL CONTROL SYSTEM

The Group has an established organisational structure with clearly defined lines of responsibilities and appropriate levels of delegation and authority. Key duties are segregated amongst different personnel of major business divisions, such as operations, financial management and reporting, capital expenditure management and investments. A process of hierarchical reporting is established which provides for a documented and auditable trail of accountability.

The system of internal control entails, inter-alia, the proper delegation of duties and responsibilities from the Board to the Executive Vice Chairman, Executive Directors and Senior Management (collectively, the “Management”), with specified limits of authority, in running the key operations of the Group. In this respect, Management essentially comprises personnel with significant years of experience and who are in a position to identify and manage business risks relevant to the Group and design appropriate internal controls to manage these risks.

On a regular basis, the Executive Vice Chairman communicates the Board’s strategy on risks and control throughout the Group which encompasses the Company values and policies, Management’s philosophy and risk attitude, as well as organisational structure together with the respective authority and responsibility of each employee.

The Board and Management also establish broad operating strategies whereby annual budgets are developed in line with these strategies. Progress made towards achieving business objectives and operating results are monitored on a regular basis by the Executive Directors and Executive Vice Chairman via various management and operational discussions as well as the review of financial and operational reports. Any matters arising are promptly and efficiently dealt with, drawing on the experience and knowledge of employees throughout the Group. The Executive Directors and Executive Vice Chairman, in turn, will update the Board on any significant matters which require the latter’s attention.

Other salient features of the system of internal control within the Group are as follows:

• defined management structure of the Group and clear delegation of authority to Board Committees and Management where authority levels have been formalised;

• regular reporting to the Executive Vice Chairman and Senior Management on operational matters and financial results as well as key performance indicators;

• regular Management and departmental discussions where operating strategies, initiatives and financial matters are deliberated;

• an annual budgetary process where each subsidiary has to submit a budget and a business plan to the Group management for review and approval, which is then tabled to the Board for deliberation; and

• established operating policies and procedure, code of conduct and other relevant human resource policies are contained within the Group’s policies and operating procedures and Terms and Conditions of employment.

INTERNAL AUDIT FUNCTION

The Group’s internal audit function is outsourced to an independent professional firm, which adopts the International Professional Practices Framework (“IPPF”) of the Institute of Internal Auditors (“IIA”), an international professional association of internal auditors, in carrying out internal audit assignments on the Group. The IPPF includes, inter-alia, the attribute and performance standards for internal auditing promulgated by the IIA. The internal audit function, which reports directly to the Audit Committee, assists the Board in assessing the adequacy and operating effectiveness of the internal control system established by Management based on an agreed scope of work as outlined in an Annual Internal Audit Plan tabled to, and approved by, the Audit Committee during the financial year. There was no restriction placed upon the scope of the Internal Audit function’s work and the internal auditor was allowed full and unrestricted access to the records pertinent for the internal audit and relevant personnel of the Group.

During the financial year under review, the Audit Committee reviewed the work of the internal audit function, its observations and recommendations to ensure that the Audit Committee obtained the necessary level of assurance with respect to the adequacy and operating effectiveness of the system of governance, risk management and internal control. The internal audit function its observations, including Management’s response and action plans thereof, directly to the Audit Committee. The internal audit function also followed up and reported to the Audit Committee the status of implementation by Management on recommendations highlighted in its previous internal audit reports.

The costs incurred for the internal audit function for the financial year amounted to approximately RM54,000.

Annual Report 2014


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IWCITY BAYSHORE’S ENTRANCE STATEMENTartist impression of upcoming development

ASSURANCE BY THE MANAGEMENT

The Board has also received reasonable assurance from the Executive Vice Chairman as the Company’s highest ranking executive that the Group’s risk management and internal control system has operated adequately and effectively, in all material aspects, for the financial year under review and up to the date of approval of this Statement for inclusion in the Annual Report.

BOARD’S COMMENTS ON THE ADEQUACY AND EFFECTIVENESS OF THE GROUP’S RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM

The Board, through its Audit Committee, has reviewed the adequacy and operating effectiveness of the risk management and internal control system of the Group and that relevant actions have been or are being taken, as the case may be, to remedy internal control weaknesses identified from the review, which was largely based on the outcome of observations raised by the internal audit function and external auditors directly to the Audit Committee.

The Board is of the view that there have been no weaknesses in the system of risk management and internal control that resulted in material losses, contingencies or uncertainties that would require mention in the Company’s Annual Report. The Board, through Management, continues to take measures to strengthen the Group’s risk management and internal control system from time to time based on recommendations of the internal audit function as well as the external auditors.

The external auditors have reviewed this Statement according to Paragraph 15.23 of the MMLR of Bursa and reported that nothing has come to their attention that causes them to believe that the Internal Control Statement intended to be included in the Annual Report of the Company is not prepared, in all material respects, in accordance with the disclosures required by paragraphs 41 and 42 of the Guidelines to be set out, nor is factually inaccurate.

This Statement has been approved by the Board dated 15 April 2015.


Annual Report 2014

The Company and its Group (“the Group”) is the land owner of 992 acres in the Tebrau-Plentong region. The Group acts as the master developer of the area and thus, our stakeholders include the people who live in the surrounding area. The Group believes in responsible and inclusive development and we believe this transformative work that we do is for the benefit of the people of Johor Bahru.

The Group strongly believes that a robust and effective Corporate Social Responsibility (“CSR”) Framework would deliver greater value to the Group’s business. CSR creates value to the Group’s stakeholders by enhancing business reputation, brand awareness, and staff engagement levels.

The Group believes that CSR initiatives are an integral part of good Corporate Governance. As we aspire to greater corporate governance and profit generation, we believe it is imperative that we contribute back to the community, the environment and improve the welfare of the employees.

The Group is proud to announce that we have high standards in ensuring the environment is handled responsibly, in ensuring high levels of employee engagement and in ensuring adherence to market requirements. We are also proud to announce that in 2014, we have contributed to the cause of several local societies.

THE ENVIRONMENT

The Group recognizes the importance of responsible development with regards to environment preservation and protection, which we believe is important taking into consideration the fast pace of growth of Iskandar Malaysia. We are vigilant in protecting and preserving the surrounding environment at every stage of our development. To ensure this, the Group has had regular dialogues and feedback sessions with the government agencies and the Department of Environment with the objective of ensuring our developments comply with all government regulations.

THE WORKPLACE

The Group believes that human capital plays a substantial role in the success of our Group and that people are our greatest assets. We believe in mutual trust and respect at all levels and we believe that a high performance culture is nurtured through embracing diversity and teamwork, which in turn inspires the employee to aspire more for the company. In order to attract talent, we have provided competitive benefits, provided health and hospitalisation packages for employees and offer an engaging career path, advancing them professionally with appropriate training to keep the staff up-to-date with the latest industry knowledge and skills. In Year 2014, 89 employees attended training for a total of 950 hours, as below:

a. Executive GST Briefing;b. Public Private Partnership Conference 2014;c. Amendments & Changes to Several MFRS;d. Construction Site Management;e. Behaviour Based Safety and Process Safety;f. Construction Safety and Healthy Training;g. International Conference on Moving towards JB World City by 2020;h. Understanding an ISO 9001:2008 Quality Management System; i. Training on Safety and Quality Management; andj. GST implementation.

The Group believes in achieving gender diversity at the workplace and we strive to strike a balance between male and female employees. As at the end of Year 2014, we have a satisfactory composition of 56% male and 42% female employees.

We encourage open communication between our employees and the management. We welcome employees’ comments and feedback so we may better the Group as a whole. We have put in place a whistleblower policy, encouraging employees to report on any illegal, improper or unfair practices they may encounter in their work and dealing with the management.

We strongly believe that with the right people at the right place with the right skills, we are able to promote an innovative and a high performance culture which will make the Group more competitive in the market.


Annual Report 2014

THE MARKETPLACE

The Group has over the years, maintained a high standard of integrity by its adherence to the Malaysian Code on Corporate Governance and the Overseeing of the Group Operations by the respective Committees. Details are available in the “Corporate Governance Statement” and “the Statement on Risk Management and Internal Control” of this annual report.

The Group maintains regular communication with its stakeholders. We ensure that they are kept informed of all major developments of the Group through timely announcements and various disclosures, press releases, Company’s annual reports and circulars to shareholders. Additionally, the General Meetings serves as a platform for the shareholders to interact with the Board face-to-face to seek clarifications on any issues and to better understand the Group’s business strategy and performance. A website at www.iwcity.com.my is also maintained and regularly updated for the stakeholders to retrieve information on the Group and our products. We welcome any feedback from the public via our website or our investor relations email adress at [email protected].

The Group has also received the ISO 9001 certificate, demonstrating our drive for quality and transparency in our product delivery.

THE COMMUNITY

The Group and its employees are passionate and mindful about giving back to the community. In recent years we have participated in various local community activities. The Group views that community-based initiatives help to promote positive values of a caring multi-racial society. In Year 2014, the Group has given sponsorships and donations to several societies. The recipients of our donation and sponsorship are as follows:

Recipients

• Kesatuan Pelajar Islam Johor• PIBG SK Tebrau Bakar Batu Johor Bahru• Persatuan Ummah Barakah Selangor • Penduduk Blok A Desa Belantik Sri Stulang Johor Bahru • UMNO Bahagian Johor Bahru• Madrasah Tahfiz Al-Jauhar Kota Tinggi Johor Darul Takzim• Sekolah Kebangsaan Tebrau Bakar Batu Johor Bahru• Persatuan Orang Cacat Johor Bahru• Parlimen Johor Bahru

The Group looks forward to continue to make CSR initiatives a feature of our company as we develop our land bank. We wholeheartedly believe that our development will both be profitable to the shareholders and at the same time beneficial to the people of Johor Bahru and we look forward to deliver a better 2015.


Annual Report 2014

DURING THE FINANCIAL YEAR UNDER REVIEW,

Utilisation of Proceeds

There were no proceeds raised by the Company from any corporate proposal.

Share Buybacks

There were no share buybacks by the Company.

Depository Receipts Programme

The Company did not sponsor any Depository Receipts Programme.

Impositions of Sanctions/Penalties

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the regulatory bodies.

Profit Guarantee

There was no profit guarantee given by the Company.

Material Contracts

There were no material contracts of the Company and its subsidiaries involving directors’ and major shareholders’ interest.

Contracts Relating to Loan

There were no contracts relating to a loan by the Company and its subsidiaries in respect of the preceding item.

Related Party Transactions

There were related party transactions entered into by a subsidiary company of the Company which involve Directors’ and major shareholders’ interest either still subsisting at the end of the financial year ended 31 December 2014 or entered into since the end of the previous financial year.

Options, Warrants or Convertible Securities

There were no options, warrants or convertible securities issued by the Company being exercised.

Non-Audit Fees

The amount of non-audit fees incurred for services rendered to the Group and the Company by the External Auditors was RM5,000.

Variation in Results

There were no material variation between the audited results for the financial year ended 31 December 2014 and the unaudited results previously released for the financial quarter ended 31 December 2014.


Annual Report 2014

2014 2013 2012 2011 2010

A PROFITIBILITY (RM’000)

1 Revenue 157,951 253,058 180,711 113,409 108,973

2 Earnings before interest, taxes, depreciation and amortisation (“EBITDA”)

6,696 35,096 16,683 3,306 3,825

3 Profit Before Taxation 6,183 34,614 16,145 2,663 3,075

4 Profit attributable to equity holders 3,362 26,661 13,026 2,581 3,631

B KEY BALANCE SHEET DATA (RM’000)

1 Total assets 1,035,982 863,574 739,546 667,546 681,772

2 Cash & Bank Balances 59,166 78,303 46,297 37,825 36,175

3 Total borrowings 206,773 65,028 17,589 4,199 5,222

4 Total liabilities 489,836 320,790 223,423 164,449 181,256

5 Share capital 334,864 334,864 334,864 334,864 334,864

6 Shareholders’ equity 546,146 542,784 516,123 503,097 500,516

C FINANCIAL STATISTICS

1 EBITDA Margin (%) 4.24% 13.87% 9.23% 2.92% 3.51%

2 Return on equity (%) 0.62% 4.91% 2.52% 0.51% 0.73%

3 Return on assets (%) 0.32% 3.09% 1.76% 0.39% 0.53%

4 Debt/equity (Times) 0.90 0.59 0.43 0.33 0.36

D SHARE INFORMATION

1 Per Share (sen)

Earnings 0.50 3.98 1.94 0.39 0.54

Net Assets 81.55 81.05 77.06 75.12 74.73

2 Share Price (RM)

High 1.78 1.77 0.98 0.99 0.87

Low 1.07 0.70 0.63 0.56 0.58

Closing 1.27 1.29 0.70 0.70 0.74

E NUMBER OF EMPLOYEES 84 81 78 78 83

BOTANIKA VILLA FRONTartist impression of

upcoming development

Annual Report 2014


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 2014.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding.

The principal activities of the subsidiaries are described in Note 16 to the financial statements.

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

CHANGE OF NAME

On 2 July 2014, the Company changed its name from Tebrau Teguh Berhad to Iskandar Waterfront City Berhad.

RESULTS

Group Company

RM’000 RM’000

Profit net of tax 3,362 50,998

Attributable to:

Owners of the parent 3,362 50,998

There were no material transfers to or from reserves or provisions during the financial year.

In the opinion of the directors, the results of the operations 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 the reversal of impairment loss on investment in a subsidiary of RM51.1 million in the financial statements of the Company as disclosed in Note 16 to the financial statements.

DIVIDENDS

No dividend has been paid or declared by the Company since the end of the previous financial year. The directors do not recommend the payment of any dividend in respect of the current financial year.

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:

Dato’ Ayub Bin MionTan Sri Dato’ Lim Kang HooLim Keng GuanWong Khai ShiuanKhoo Boon HoDr Azman Bin AwangBernard Hilary LawrenceChow Yoon SamCho Joy Leong @ Cho Yok LonMohd Salleh Bin OthmanLim Foo SengIzaddeen Bin Daud (Appointed on 10 February 2015)Datuk Md Othman Bin Hj Yusof (Resigned on 16 January 2015)Khairudin Bin Hasan (Appointed on 24 October 2014; and (Alternate director to Datuk Md Othman Bin Hj Yusof) Resigned on 16 January 2015)

Annual Report 2014


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 the directors might acquire benefits by means of the acquisition of shares in, or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive any benefits (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full time employee of the Company as shown in Note 9 and Note 10 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a Company in which he has a substantial financial interest, except as disclosed in Note 36 to the financial statements.

DIRECTORS’ INTERESTS

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

Number of ordinary shares of 50 sen each

1 January 2014 Bought Sold

31 December 2014

The Company

Direct Interest

Wong Khai Shiuan 10,000 - - 10,000

Holding company

Iskandar Waterfront Holdings Sdn. Bhd.

Deemed interest*

Tan Sri Dato’ Lim Kang Hoo 315,846,069 - - 315,846,069

Company in which a director has interests

Lim Seong Hai Holdings Sdn. Bhd.

Deemed interest*

Lim Keng Guan 776,000 - - 776,000

By virtue of his interest in the shares of the Company, Tan Sri Dato’ Lim Kang Hoo is also deemed interested in the shares of the subsidiaries during the financial year to the extent that the Company has an interest.

None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.

* Deemed interested by virtue of his interests in Iskandar Waterfront Holdings Sdn. Bhd. and/or Lim Seong Hai Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965 and Section 134 of the Companies (Amendment) Act 2007.

Annual Report 2014


EMPLOYEE SHARE OPTION SCHEME

At an Extraordinary General Meeting held on 24 June 2014, shareholders approved the proposed establishment of an Employees’ Share Option Scheme (“ESOS”) for the granting of non-transferable options that are settled by physical delivery of the ordinary shares of the Company, to eligible directors and employees respectively.

The committee administering the ESOS comprises three directors, Khoo Boon Ho, Bernard Hilary Lawrence and Lim Foo Seng.

The main features of the ESOS are:

(i) The total number of new ordinary shares to be issued by the Company under the ESOS shall not exceed 15% of the total issued and paid up ordinary shares of the Company.

(ii) Not more than 10% of the shares available under ESOS is to be allocated to any individual Director or employee who, either singly or collectively through his/her associates, holds 20% or more in the issued and paid up capital of the Company.

(iii) Only employees and Directors of the Group who are above 18 and not an undischarged bankrupt nor subject to any bankruptcy proceedings are eligible to participate in the scheme.

(iv) The option price under the ESOS is the five (5) days weighted average market price of the shares of the Company at the time the option is granted, subject to a discount of not more than ten percent (10%), which the Company may at its discretion decide to give, or the par value of the shares of the Company of RM1, whichever is the higher.

(v) An option holder may, in a particular year, exercise up to such maximum number of shares as specified in the option.

(vi) The persons to whom the options are granted have no right to participate by virtue of the options in any shares of any other company within the Group.

(vii) Eligible employees are those who have been employed and is confirmed in full time service in any company within the Group for a continuous period of at least 12 months.

No share options were granted or exercisable during the financial year.

OTHER STATUTORY INFORMATION

(a) Before the statements of comprehensive income and statements of the financial position 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 values 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 amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and

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

Annual Report 2014


OTHER STATUTORY INFORMATION cont’d

(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 or 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 their 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 or of the Company for the financial year in which this report is made.

SIGNIFICANT EVENTS

Details of significant events are disclosed in Note 41 to the financial statements.

SUBSEQUENT EVENTS

Details of subsequent events are disclosed in Note 42 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 dated 15 April 2015.

Dato’ Ayub Bin Mion Tan Sri Dato’ Lim Kang Hoo

Annual Report 2014


I, Liow Fui Fui, being the officer primarily responsible for the financial management of Iskandar Waterfront City Berhad (formerly known as Tebrau Teguh Berhad), do solemnly and sincerely declare that the accompanying financial statements set out on pages 45 to 107 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )the abovenamed Liow Fui Fui at Johor )Bahru in the State of Johor Darul Ta’zim )on 15 April 2015 ) Liow Fui Fui

Before me,

We, Dato’ Ayub Bin Mion and Tan Sri Dato’ Lim Kang Hoo, being two of the directors of Iskandar Waterfront City Berhad (formerly known as Tebrau Teguh Berhad), do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 45 to 106 are drawn up in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2014 and of their financial performance and cash flows for the year then ended. The information set out in Note 44 on page 107 to the financial statements have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 15 April 2015.

Dato’ Ayub Bin Mion Tan Sri Dato’ Lim Kang Hoo

Annual Report 2014


REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Iskandar Waterfront City Berhad (formerly known as Tebrau Teguh Berhad), which comprise the statements of financial position as at 31 December 2014 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 45 to 106.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and the Company as at 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act.

(b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(c) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

Annual Report 2014


OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 44 on page 107 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Lee Ming LiAF 0039 2983/03/16 (J)Chartered Accountants Chartered Accountant

Johor Bahru, Malaysia Date: 15 April 2015

Annual Report 2014


Group Company

Note 2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Revenue 4 157,951 253,058 1,586 1,200

Cost of sales 5 (141,495) (207,943) - -

Gross profit 16,456 45,115 1,586 1,200

Other items of income

Other income 6 100 3,082 51,100 -

Interest income 4,290 532 138 17

Other items of expenses

Administrative expenses (8,560) (12,048) (1,372) (1,149)

Selling and marketing expenses (4,759) (1,340) - -

Finance costs 7 (1,344) (727) (51) (2)

Profit before tax 8 6,183 34,614 51,401 66

Income tax expense 11 (2,821) (7,953) (403) -

Profit net of tax, representing total comprehensive income for the year 3,362 26,661 50,998 66

Profit attributable to:

Owners of the parent 3,362 26,661 50,998 66

Earnings per share attributable to owners of the parent (sen):

Basic, for profit for the year 12 0.50 3.98

Diluted, for profit for the year 12 0.50 3.98

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Annual Report 2014


Group CompanyNote 2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

AssetsNon-current assetsProperty, plant and equipment 13 1,770 1,048 459 181 Land held for property development 14(a) 115,829 316,038 - - Investment properties 15 400 340 - - Investment in subsidiaries 16 - - 546,217 495,117 Investment in associates 17 150 - - - Available-for-sale investment 18 90 90 - - Deferred tax assets 32 1,303 1,365 - -

119,542 318,881 546,676 495,298

Current assetsProperty development costs 14(b) 746,694 267,677 - - Inventories 19 182 182 - - Trade and other receivables 20 74,070 183,611 195,613 3,323 Other current assets 21 33,794 12,197 740 1 Tax recoverable 2,534 2,723 1,785 2,506 Cash and bank balances 23 59,166 78,303 9,512 1,349

916,440 544,693 207,650 7,179

Total assets 1,035,982 863,574 754,326 502,477

Equity and liabilitiesCurrent liabilitiesBorrowings 24 6,269 63,619 - - Trade and other payables 26 157,692 97,351 3,805 2,954 Other current liabilities 27 5,236 27,655 - - Provisions 28 3,860 8,540 - - Income tax payable 69 4,854 - -

173,126 202,019 3,805 2,954

Net current assets 743,314 342,674 203,845 4,225

Non-current liabilitiesBorrowings 24 200,504 1,409 200,000 - Deferred tax liabilities 32 116,206 117,362 - -

316,710 118,771 200,000 -

Total liabilities 489,836 320,790 203,805 2,954

Net assets 546,146 542,784 550,521 499,523

Annual Report 2014


Group Company

Note 2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Equity attributable to owners of the parent

Share capital 29 334,864 334,864 334,864 334,864

Share premium 30 225,821 225,821 225,821 225,821

Accumulated losses 31 (14,539) (17,901) (10,164) (61,162)

Total equity 546,146 542,784 550,521 499,523

Total equity and liabilities 1,035,982 863,574 754,326 502,477


Annual Report 2014


Non- distributable

Share capital

Share premium

Accumulated losses Total

RM’000 RM’000 RM’000 RM’000

Group

Opening balance at 1 January 2014 334,864 225,821 (17,901) 542,784

Total comprehensive income - - 3,362 3,362

Closing balance at 31 December 2014 334,864 225,821 (14,539) 546,146




Company





Total comprehensive income - - 66 66



Annual Report 2014


Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Operating activities

Profit before tax 6,183 34,614 51,401 66

Adjustments for:

Bad debts written off - 122 - -

Depreciation 272 338 60 63

Dividend income - - (1,586) (1,200)

Fair value adjustment of investment properties (60) (32) - -

Interest expenses 241 144 51 2

Interest income (2,104) (376) (138) (17)

Impairment loss on other receivables - 135 - -

Loss on disposal of property, plant and equipment 9 - - -

Reversal of allowance for impairment loss on investment in a subsidiary - - (51,100) -

Unwinding of discount for payables 1,103 583 - -

Unwinding of discount for receivables (2,186) (156) - -

Impairment of/(Reversal of impairment) loss on trade receivables 812 (300) - -

Provision/(reversal of provision) for legal claim 220 (3,035) - -

Provision for eviction cost - 4,356 - -

(Reversal of)/provision for project cost - net (544) 399 - -

Property, plant and equipment written off - 35 - -

Operating profit/(loss) before changes in working capital 3,946 36,827 (1,312) (1,086)

Property development costs (245,952) (3,104) - -

Receivables 110,915 (105,546) (193,029) 95,375

Payables 54,882 21,177 851 511

Other current assets (21,597) 28,305 - (1)

Other current liabilities (22,419) 13,147 - -

Cash flows (used in)/from operating activities (120,225) (9,194) (193,490) 94,799

Interest paid (241) (144) (51) (2)

Taxes paid (9,049) (5,927) - -

Taxes refunded 538 1,347 318 -

Net cash flows (used in)/from operating activities (128,977) (13,918) (193,223) 94,797

Annual Report 2014


Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Investing activities

Interest received 2,104 376 138 17

Dividends received - - 1,586 900

Addition in land held for property development (32,856) (1,680) - -

Proceed from disposal of property, plant and equipment 5 - - -

Purchase of property, plant and equipment (586) (82) (338) (59)

Investment in an associate (150) - - -

Subscription of redeemable preference shares in subsidiaries - - - (95,000)

Net cash flows (used in)/from investing activities (31,483) (1,386) 1,386 (94,142)

Financing activities

Placement of other deposits not for short-term financing requirements (2,921) (2,919) (1,383) -

Drawdown of borrowings 208,501 63,500 200,000 -

Repayment of short term borrowings (72,000) (8,008) - -

Repayment of obligations under finance leases (90) (178) - -

Net cash flows from financing activities 133,490 52,395 198,617 -

Net (decrease)/increase in cash and cash equivalents (26,970) 37,091 6,780 655

Cash and cash equivalents at beginning of year 52,747 15,656 1,349 694

Cash and cash equivalents at end of year (Note 23) 25,777 52,747 8,129 1,349


Annual Report 2014


1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Suite 13.01, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor Darul Takzim. The principal place of business of the Company is located at G08, Block 8, Danga Bay, Jalan Skudai, 80200 Johor Bahru, Johor Darul Takzim.

The holding company of the Company is Iskandar Waterfront Holdings Sdn. Bhd., a company incorporated and domiciled in Malaysia. Related companies are companies within the Iskandar Waterfront Holdings Sdn. Bhd. Group.

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are described in Note 16. There have been no significant changes in the nature of the principal activities during the financial year.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements have also been prepared on a historical basis.

The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year as follows:

On 1 January 2014, the Group and the Company adopted the following new and amended FRSs and IC Interpretation mandatory for annual financial periods beginning on or after 1 January 2014.

Description

Effective for annual periods

beginning on or after

Amendments to FRS 132: Offsetting Financial Assets and Financial Liabilities 1 January 2014

Amendments to FRS 10, FRS 12 and FRS 17: Investment Entities 1 January 2014

Amendments to FRS 136: Recoverable Amount Disclosure for Non-financial Assets 1 January 2014

Amendments to FRS 139: Novation of Derivatives and Continuance of Hedge Accounting 1 January 2014

IC Interpretation 21 Levies 1 January 2014

Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Group and the Company.

Annual Report 2014


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d

2.3 Standards issued but not yet effective

The standards and interpretations that are issued but not yet effective to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

Description

Effective for annual periods

beginning on or after

Amendments to FRS 119: Defined Benefit Plans: Employee Contributions 1 July 2014

Annual Improvements to FRSs 2010–2012 Cycle 1 July 2014

Annual Improvements to FRSs 2011–2013 Cycle 1 July 2014

Annual Improvements to FRSs 2012–2014 Cycle 1 January 2016

Amendments to FRS 116 and FRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation

1 January 2016

Amendments to FRS 116 and FRS 141: Agriculture: Bearer Plants 1 January 2016

Amendments to FRS 10 and FRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

1 January 2016

Amendments to FRS 11: Accounting for Acquisitions of Interest in Joint Operations 1 January 2016

Amendments to FRS 127: Equity Method in Separate Financial Statements 1 January 2016

Amendments to FRS 101: Disclosure Initiatives 1 January 2016

Amendments to FRS 10, FRS 12 and FRS 128: Investment Entities: Applying the Consolidation Exception

1 January 2016

FRS 14 Regulatory Deferral Accounts 1 January 2016

FRS 9 Financial Instruments 1 January 2018

Based on the directors’ preliminary assessment, they are of opinion that the standards and amendments above will have no material impact on the financial statements in the year of initial adoption except as discussed below:

Amendments to FRS 116 and FRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation

The amendments clarify that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through the use of an asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets.

The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group as the Group has not used a revenue-based method to depreciate its non-current assets.

Annual Report 2014



2.3 Standards issued but not yet effective cont’d

Amendments to FRS 127: Equity Method in Separate Financial Statements

The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associate in their separate financial statements. Entities already applying FRS and electing to change to the equity method in its separate financial statements will have to apply this change retrospectively. For first-time adopters of FRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to FRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s and the Company’s financial statements.

Amendments to FRS 101: Disclosure Initiatives

The amendments to FRS 101 include narrow-focus improvements in the following five areas:

- Materiality;

- Disaggregation and subtotals;

- Notes structure;

- Disclosure of accounting policies; and

- Presentation of items of other comprehensive income arising from equity accounted investments.

The Directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group’s and the Company’s financial statements.

Amendments to FRS 10, FRS 12 and FRS 128: Investment Entities: Applying the Consolidation Exception

The amendments clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. The amendments further clarify that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated. In addition, the amendments also provides that if an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries.

The amendments are to be applied retrospectively and are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s and the Company’s financial statements.

FRS 9 Financial Instruments

In November 2014, MASB issued the final version of FRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces FRS 139 Financial Instruments: Recognition and Measurement and all previous versions of FRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. FRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of FRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but no impact on the classification and measurement of the Group’s financial liabilities.

Annual Report 2014




Annual Improvements to FRSs 2010–2012 Cycle

The Annual Improvements to FRSs 2010-2012 Cycle include a number of amendments to various MFRSs, which are summarised below. The Directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s and the Company’s financial statements.

(a) FRS 2 Share-based Payment

This improvement clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions, including:

- A performance condition must contain a service condition;

- A performance target must be met while the counterparty is rendering service;

- A performance target may relate to the operations or activities of an entity, or those of another entity in the same group;

- A performance condition may be a market or non-market condition; and

- If the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service condition is not satisfied.

This improvement is effective for share-based payment transactions for which the grant date is on or after 1 July 2014.

(b) FRS 3 Business Combinations

The amendments to FRS 3 clarifies that contingent consideration classified as liabilities (or assets) should be measured at fair value through profit or loss at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of FRS 9 or FRS 139. The amendments are effective for business combinations for which the acquisition date is on or after 1 July 2014.

(c) FRS 8 Operating Segments

The amendments are to be applied retrospectively and clarify that:

- an entity must disclose the judgements made by management in applying the aggregation criteria in FRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics used to assess whether the segments are similar; and

- the reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker.

(d) FRS 116 Property, Plant and Equipment and FRS 138 Intangible Assets

The amendments remove inconsistencies in the accounting for accumulated depreciation or amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amendments clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses.

Annual Report 2014




Annual Improvements to FRSs 2010–2012 Cycle cont’d

(e) FRS 124 Related Party Disclosures

The amendments clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. The reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services.


The Annual Improvements to FRSs 2011-2013 Cycle include a number of amendments to various FRSs, which are summarised below. The Directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s and the Company’s financial statements.

(a) FRS 3 Business Combinations

The amendments to FRS 3 clarify that the standard does not apply to the accounting for formation of all types of joint arrangement in the financial statements of the joint arrangement itself. This amendment is to be applied prospectively.

(b) FRS 13 Fair Value Measurement

The amendments to FRS 13 clarify that the portfolio exception in FRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of FRS 9 (or FRS 139 as applicable).

(c) FRS 140 Investment Property

The amendments to FRS 140 clarify that an entity acquiring investment property must determine whether:

- the property meets the definition of investment property in terms of FRS 140; and

- the transaction meets the definition of a business combination under FRS 3,

to determine if the transaction is a purchase of an asset or is a business combination.


The Annual Improvements to FRSs 2012-2014 Cycle include a number of amendments to various FRSs, which are summarised below. The Directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s and the Company’s financial statements.

(a) FRS 5 Non-current Assets Held for Sale and Discontinued Operations

The amendment to FRS 5 clarifies that changing from one of these disposal methods to the other should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. There is therefore no interruption of the application of the requirements in FRS 5.

The amendment also clarifies that changing the disposal method does not change the date of classification. This amendment is to be applied prospectively to changes in methods of disposal that occur in annual periods beginning on or after 1 January 2016, with earlier application permitted.

Annual Report 2014




Annual Improvements to FRSs 2012–2014 Cycle cont’d

(b) FRS 7 Financial Instruments: Disclosures

The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance for continuing involvement in FRS 7 in order to assess whether the disclosures are required.

In addition, the amendment also clarifies that the disclosures in respect of offsetting of financial assets and financial liabilities are not required in the condensed interim financial report.

(c) FRS 119 Employee Benefits

The amendment to FRS 119 clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used.

(d) FRS 134 Interim Financial Reporting

FRS 134 requires entities to disclose information in the notes to the interim financial statements ‘if not disclosed elsewhere in the interim financial report’.

The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time.

Malaysian Financial Reporting Standards

On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework).

The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer (herein called ‘Transitioning Entities’).

Transitioning Entities are allowed to defer the adoption of the new MFRS Framework and may in the alternative, apply Financial Reporting Standards (FRS) as its financial reporting framework for annual periods beginning on or after 1 January 2017.

The Group falls within the scope definition of Transitioning Entities and has opted to defer adoption of the new MFRS Framework. Accordingly, the Group will present its first set of MFRS financial statements when the MFRS Framework is mandated by the MASB. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.

The Group has not completed its assessment of the financial effects of the differences between Financial Reporting Standards and accounting standards under the MFRS Framework. Accordingly, the financial performance and financial position as disclosed in these financial statements for the year ended 31 December 2014 could be different if prepared under the MFRS Framework.

Annual Report 2014



2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances.

The Company controls an investee if and only if the Company has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

(iii) The ability to use its power over the investee to affect its returns.

When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee;

(i) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

(ii) Potential voting rights held by the Company, other vote holders or other parties;

(iii) Rights arising from other contractual arrangements; and

(iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of an investment in an associate.

Annual Report 2014



2.5 Subsidiaries

A subsidiary is an entity over which the Group has all the following:

(i) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

(iii) The ability to use its power over the investee to affect its returns.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

2.6 Associate

An associate is an entity in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control over those policies.

On acquisition of an investment in associate, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss for the period in which the investment is acquired.

An associate is equity accounted for from the date on which the investee becomes an associate.

Under the equity method, on initial recognition the investment in an associate is recognised at cost, and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate after the date of acquisition. When the Group’s share of losses in an associate equal or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group’s financial statements only to the extent of unrelated investors’ interest in the associate. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The financial statements of the associate are prepared as of the same reporting date as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group applies FRS 139 Financial Instruments: Recognition and Measurement to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the associate. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with FRS 136 Impairment of Assets as a single asset, by comparing its recoverable amount (higher of value in use and fair value less cost to sell) with its carrying amount. Any impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

In the Company’s separate financial statements, investments in associate are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

Annual Report 2014



2.7 Current versus non-current classification

Assets and liabilities in the statement of financial position are presented based on current/non-current classification. An asset is current when it is:

- Expected to be realised or intended to be sold or consumed in normal operating cycle;

- Held primarily for the purpose of trading;

- Expected to be realised within twelve months after the reporting period; or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current. A liability is current when:

- It is expected to be settled in normal operating cycle;

- It is held primarily for the purpose of trading;

- It is due to be settled within twelve months after the reporting period; or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

2.8 Foreign currency

(a) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

(b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

Annual Report 2014



2.9 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Renovation 10 years Plant, equipment, fittings and motor vehicles 4 - 10 years

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.

2.10 Investment properties

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value which reflects market conditions at the reporting date. Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise.

A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.9 up to the date of change in use.

Annual Report 2014



2.11 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

2.12 Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

(a) Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

Annual Report 2014



2.12 Financial assets cont’d

(a) Financial assets at fair value through profit or loss cont’d

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date.

(b) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

(c) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.

(d) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group and the Company’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

Annual Report 2014



2.12 Financial assets cont’d

(d) Available-for-sale financial assets

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

The Group does not have financial assets classified as fair value through profit and loss and held-to-maturity investments financial assets during 2014 and 2013.

2.13 Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

(a) Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(b) Unquoted equity securities carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

Annual Report 2014



2.13 Impairment of financial assets cont’d

(c) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.

2.14 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.

2.15 Construction contracts

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

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that are likely to be recoverable. Contract costs are recognised as expense in the period in which they are incurred.

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

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.

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

Annual Report 2014



2.16 Land held for property development and property development costs

(i) Land held for property development

Land held for property development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses.

Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.

(ii) Property development costs

Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.

When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the period in which they are incurred.

Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately.

Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower of cost and net realisable value.

The excess of revenue recognised in the profit or loss over billings to purchasers is classified as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in profit or loss is classified as progress billings within trade payables.

2.17 Inventories

Inventories of completed commercial and residential properties are stated at the lower of cost and net realisable value. Cost is determined on the specific identification basis and includes cost of land, construction and appropriate development overheads. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

2.18 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Annual Report 2014



2.19 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.

(b) Other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

2.20 Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

Annual Report 2014



2.21 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

2.22 Employee benefits

Defined contribution plans

The Group makes contributions to the Employee Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

2.23 Leases

(a) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(b) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.24(e).

Annual Report 2014



2.24 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(a) Sales of properties

Revenue from sale of properties is accounted for by the stage of completion method as described in Note 2.16(ii).

(b) Construction contracts

Revenue from construction contracts is accounted for by the stage of completion method as described in Note 2.15.

(c) Interest income

Interest income is recognised using the effective interest method.

(d) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

(e) Rental income

Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

2.25 Income taxes

(a) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Annual Report 2014



2.25 Income taxes cont’d

(b) Deferred tax cont’d

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

2.26 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 40, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.27 Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

Annual Report 2014



2.28 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event not wholly within the control of the Group.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

3.1 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Impairment of investment in subsidiaries

The Company determines whether investment in subsidiaries are impaired at least on an annual basis. This requires an estimation of the recoverable value of the cash-generating units (“CGU”) to which the subsidiaries are allocated. An asset’s recoverable value is the higher of an asset’s fair value less cost to sell and its value in use. Estimating the value-in-use required the Company to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of investment in subsidiaries of the Company as at 31 December 2014 were RM546,217,480 (2013 : RM495,117,480). Further details are disclosed in Note 16.

(b) Deferred tax assets

Deferred tax assets are recognised for all unutilised tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depends on estimates of future development projects. Judgment is also required about application of income tax legislation. These judgment and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.

Annual Report 2014


3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES cont’d

3.1 Key sources of estimation uncertainty cont’d

(c) Property development

The Group recognises property development revenue and expenses in the statements of comprehensive income by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

Significant judgment is required in determining the stage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the property development costs. In making the judgment, the Group evaluates based on past experience and by relying on the work of specialists.

(d) Construction contracts

The Group recognises revenue and expenses from construction activities in the statements of profit or loss and other comprehensive income by using the stage of completion method. The stage of completion is determined by the proportion that contract costs incurred for work performed to date relative to the estimated total contract costs.

Significant judgment is required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contract revenue and costs, as well as the recoverability of the contract. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.

(e) Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables at the reporting date is disclosed in Note 20.

3.2 Critical judgements made in applying accounting policies

(a) Provision for Liquidated Ascertained Damages

A subsidiary of the Company, namely Tebrau Bay Constructions Sdn. Bhd. (“TBCSB”), has construction projects that are not completed by the contractual deadline and assessed by management as largely due to factors not within the TBCSB’s scope of works or responsibility. The projects are still in progress and the customer is still working with TBCSB on a revised schedule for the project.

Nevertheless, TBCSB had received Liquidated Ascertained Damages (“LAD”) claim from its customer amounting to RM14.3 million as of the reporting date. TBCSB has obtained professional advice and is of the opinion that TBCSB is not liable for the said LAD as notice of non-compliance has not been issued by the customer prior to the issuance of LAD. As such, the LAD raised is not in accordance with the construction agreement and therefore no provision for the LAD is required.

Annual Report 2014


3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES cont’d

3.2 Critical judgements made in applying accounting policies cont’d

(b) Provision for rectification of defects

TBCSB was appointed as contractor for a design and build contract for the construction of residential units at Pengerang (“Pengerang Project”).

During the financial year, there were construction flaws and defects identified on the completed units due to soil settlement. TBCSB has taken remedial action in getting the subcontractors to remedy the defects and engaged professional engineers and other relevant consultants (“the consultants”) to study the underpinning cause of the defects. As of the date of this report, the consultants are in the midst of carrying out studies on the soil movement and structural test.

The cost of making good the defects by TBCSB is depending on the results of the studies of soil movement and structural test and the costs of rectifying the defects which are claimable from the subcontractors. Pending the results of the consultant’s reports, the costs of rectification can not be reliably measured as of the reporting date, accordingly no provision is made and the Group has disclosed the costs of rectification as contingent liabilities in Note 35.

4. REVENUE

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Development properties 2,761 6,137 - -

Construction contracts 154,417 245,455 - -

Marketing and management services 773 1,466 - -

Dividend income from subsidiaries - - 1,586 1,200

157,951 253,058 1,586 1,200

5. COST OF SALES

Group

2014 2013

RM’000 RM’000

Property development costs 3,687 4,809

Marketing and management services costs 652 1,235

Construction contracts costs 137,156 201,899

141,495 207,943

Annual Report 2014


6. OTHER INCOME

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Fair value adjustment of investment properties 60 32 - -

Reversal of provision for legal claim - 3,035 - -

Reversal of allowance for impairment loss on investment in a subsidiary - - 51,100 -

Rental income 11 - - -

Sundry income 29 15 - -

100 3,082 51,100 -

7. FINANCE COSTS

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Interest expense on:

Bank borrowings 2,943 5,220 51 2

Less : Amount capitalised in :

Property development costs (Note 14) (383) (92) - -

Construction contract costs (Note 22) (2,319) (4,984) - -

241 144 51 2

Unwinding of discount for payables 1,103 583 - -

1,344 727 51 2

Annual Report 2014


8. PROFIT BEFORE TAX

The following amounts have been included in arriving at profit before tax:

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Employee benefits expense (Note 9) 3,808 4,307 218 384

Auditors’ remunerations

- Statutory audit 113 103 36 35

- Underprovision in prior years 4 8 - 4

- Other services 5 5 5 5

Bad debts written off - 122 - -

Depreciation (Note 13) 272 338 60 63

Direct operating expenses of investment properties:

- non-revenue generating 1 1 - -

Fair value adjustment of investment properties (Note 15) (60) (32) - -

Impairment loss on other receivables - 135 - -

Impairment/(reversal of impairment) loss on trade receivables

- net (Note 20(a)) 812 (300) - -

Reversal of allowance for impairment loss on investment in a subsidiary - - (51,100) -

Interest expense (Note 7) 241 144 51 2

Interest income:

- Interest income from licensed bank (2,104) (376) (138) (17)

- Unwinding of discount for receivables (2,186) (156) - -

(Reversal of)/provision for project costs - net (Note 28) (544) 399 - -

Provision for eviction costs (Note 28) - 4,356 - -

Provision/(reversal of provision) for legal claim (Note 28) 220 (3,035) - -

Property, plant and equipment written off - 35 - -

Loss on disposal of property, plant and equipment 9 - - -

Rental income (11) - - -

Annual Report 2014


9. EMPLOYEE BENEFITS EXPENSE

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Wages and salaries 3,279 3,398 142 350

Social security contributions 23 21 - -

Defined contribution plan 303 255 6 2

Other staff related expenses 203 633 70 32

3,808 4,307 218 384

Included in employee benefits expense of the Group and of the Company is executive directors’ remuneration amounting to RM79,786 (2013 : RM58,065) with further details disclosed in Note 10.

10. KEY MANAGEMENT PERSONNEL COMPENSATION

The remuneration of key management during the year was as follows :

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Directors of the Company

Executive:

Allowances 80 58 80 58

80 58 80 58

Non-executive:

Salaries and other emoluments - 494 - -

Allowances 293 270 293 270

293 764 293 270

Directors of the subsidiaries

Non-executive:

Allowances 78 80 - -

Total 451 902 373 328

Analysis:

Total executive directors (Note 9) 80 58 80 58

Total non-executive directors 371 844 293 270

Total directors’ remunerations 451 902 373 328

Annual Report 2014


10. KEY MANAGEMENT PERSONNEL COMPENSATION cont’d

The number of directors of the Company whose total remuneration during the year fell within the following bands is as follows:

Number of Directors

2014 2013

Executive directors:

Below RM50,000 3 3

Non-executive directors:

Below RM50,000 8 9

RM50,001 - RM100,000 1 1

RM500,001 - RM550,000 - 1

11. INCOME TAX EXPENSE

Major components of income tax

The major components of income tax for the years ended 31 December 2014 and 2013 are:

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Statement of comprehensive income:

Current income tax:

Malaysian income tax 3,638 10,484 - -

Under/(over)provision in prior years 277 (696) 403 -

3,915 9,788 403 -

Deferred tax (Note 32):

Relating to origination and reversal of temporary differences (1,066) (1,993) - -

(Over)/underprovision in prior years (28) 158 - -

(1,094) (1,835) - -

Income tax expense recognised in profit or loss 2,821 7,953 403 -

Annual Report 2014


11. INCOME TAX EXPENSE cont’d

Reconciliation between income tax and accounting profit

The reconciliation between income tax and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2014 and 2013 are as follows:

2014 2013

RM’000 RM’000

Group

Profit before tax 6,183 34,614

Tax at Malaysian statutory tax rate of 25% (2013 : 25%) 1,546 8,654

Adjustments:

Effect of different tax rate (232) -

Non-deductible expenses 1,629 791

Income not subject to tax (372) (856)

Deferred tax assets not recognised - (98)

Utilisation of previously unrecognised tax losses 1 -

Under/(over)provision of income tax in prior years 277 (696)

(Over)/underprovision of deferred tax in prior years (28) 158

Income tax expense recognised in profit or loss 2,821 7,953

Company

Profit before tax 51,401 66

Tax at Malaysian statutory tax rate of 25% (2013 : 25%) 12,850 17

Adjustments:

Non-deductible expenses 63 129

Income not subject to tax (12,913) (14)

Deferred tax assets not recognised - (132)

Underprovision of income tax in prior year 403 -

Income tax expense recognised in profit or loss 403 -

Domestic income tax is calculated at the statutory tax rate of 25% (2013 : 25%) of the estimated assessable profit for the year. The domestic statutory tax rate will be reduced to 24% from the current year’s rate of 25%, effective year of assessment 2016. The computation of deferred taxation of the Group and the Company as at 31 December 2014 have taken into the change in corporate tax rate.

Annual Report 2014


12. EARNINGS PER SHARE

Basic and diluted earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares in issue during the financial year.

The following reflect the profit used in the computation of basic and diluted earnings per share for the year ended 31 December:

2014 2013

Net profit attributable to owners of the parent (RM’000) 3,362 26,661

Weighted average number of shares in issue (‘000) 669,727 669,727

Basic earnings per share (sen) 0.50 3.98

Diluted earnings per share (sen) 0.50 3.98

13. PROPERTY, PLANT AND EQUIPMENT

Renovation

Plant, equipment

and fittings Motor

vehicles Total

RM’000 RM’000 RM’000 RM’000

Group

Cost

At 1 January 2013 392 2,231 2,215 4,838

Additions - 60 152 212

Disposal - - (4) (4)

Written off - - (280) (280)

At 31 December 2013 and 1 January 2014 392 2,291 2,083 4,766

Additions - 328 680 1,008

Disposal - - (103) (103)

At 31 December 2014 392 2,619 2,660 5,671

Accumulated depreciation

At 1 January 2013 329 1,734 1,566 3,629

Charge for the year (Note 8) 59 107 172 338

Disposal - - (4) (4)

Written off - - (245) (245)

At 31 December 2013 and 1 January 2014 388 1,841 1,489 3,718


Disposal - - (89) (89)

At 31 December 2014 389 1,943 1,569 3,901

Net carrying amount

At 31 December 2013 4 450 594 1,048

At 31 December 2014 3 676 1,091 1,770

Annual Report 2014


13. PROPERTY, PLANT AND EQUIPMENT cont’d

Motor vehicles

Furniture and

equipment Computer Total

RM’000 RM’000 RM’000 RM’000

Company

Cost

At 1 January 2013 - 141 462 603

Additions - 42 17 59

At 31 December 2013 and 1 January 2014 - 183 479 662

Additions 85 215 38 338

At 31 December 2014 85 398 517 1,000

Accumulated depreciation

At 1 January 2013 - 76 342 418

Charge for the year (Note 8) - 17 46 63

At 31 December 2013 and 1 January 2014 - 93 388 481


At 31 December 2014 6 109 426 541

Net carrying amount

At 31 December 2013 - 90 91 181

At 31 December 2014 79 289 91 459

During the year, the Group acquired property, plant and equipment at an aggregate costs of RM1,008,450 (2013 : RM211,895) of which RM422,000 (2013 : RM130,000) were acquired by means of finance leases.

Included in property, plant and equipment of the Group are motor vehicles with net carrying amount of RM999,027 (2013 : RM507,695) held under finance lease.

Annual Report 2014


14. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS

Group

(a) Land held for property development

Leasehold land

Development expenditure Total

RM’000 RM’000 RM’000

Cost

At 1 January 2014 315,937 101 316,038

Cost incurred during the year 32,856 - 32,856

Transfer to property development costs (233,065) - (233,065)

At 31 December 2014 115,728 101 115,829

Cost

At 1 January 2013 188,815 101 188,916

Addition during the year 1,680 - 1,680

Transfer from property development costs 196,904 - 196,904

Transfer to property development costs (71,462) - (71,462)

At 31 December 2013 315,937 101 316,038

(b) Property development costs

At 31 December 2014

Cumulative property development costs

At 1 January 2014 263,902 134,179 398,081

Costs incurred during the year 71,144 178,495 249,639

Transfer from land held for property development 233,065 - 233,065

At 31 December 2014 568,111 312,674 880,785

Cumulative costs recognised in profit or loss

At 1 January 2014 (26,433) (103,971) (130,404)

Recognised during the year - (3,687) (3,687)

At 31 December 2014 (26,433) (107,658) (134,091)

Property development costs at 31 December 2014 541,678 205,016 746,694

Annual Report 2014


14. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS cont’d

Group cont’d

(b) Property development costs cont’d

Leasehold land

Development expenditure Total

RM’000 RM’000 RM’000

At 31 December 2013

Cumulative property development costs

At 1 January 2013 392,936 187,220 580,156

Costs incurred during the year - 6,958 6,958

Transfer to land held for property development (196,904) - (196,904)

Transfer from land held for property development 69,966 1,496 71,462

Development costs written off - (966) (966)

Reversal of completed projects (2,096) (60,529) (62,625)

At 31 December 2013 263,902 134,179 398,081

Cumulative costs recognised in profit or loss

At 1 January 2013 (28,285) (161,856) (190,141)

Recognised during the year (244) (3,665) (3,909)

Development costs written off - 1,021 1,021

Reversal of completed projects 2,096 60,529 62,625

At 31 December 2013 (26,433) (103,971) (130,404)

Property development costs at 31 December 2013 237,469 30,208 267,677

Leasehold land registered under the name of a shareholder

By a Development Agreement dated 23 March 1999 signed between certain subsidiaries and a shareholder, the subsidiaries have been granted the beneficial ownership of the leasehold land. Subsequently, on 28 December 2006, part of land titles have been registered under the subsidiaries. The balance of the leasehold land and development expenditure with carrying value of RM133,533,883 (2013 : RM109,445,529) is still registered under the name of the shareholder. The exemption for the land from being registered under the subsidiaries’ name has been approved by the Securities Commission on 19 May 2006.

Leasehold land pledged as securities for banking facilities

Leasehold land and development expenditure with carrying value of RM22,799,093 (2013 : RM22,110,778) are pledged as security for bank facilities as stated in Note 24.

Included under the development expenditure are interest on term loan and bridging loan incurred during the year amounting to RM383,446 (2013 : RM91,750).

Annual Report 2014


14. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS cont’d

Rehabilitation of abandoned project

Included in land held for development is a parcel of land with carrying amount of RM6,965,017 (2013 : RM6,469,620) in respect of which the Company had previously granted power of attorney to Aset Nusantara Development Sdn. Bhd. (“ANDSB”), an associated company of the Group, to develop the said land pursuant to a development agreement (“Development Agreement”). The Development Agreement was terminated in year 2006, and the power of attorney granted was terminated on 6 April 2010. ANDSB is currently in the process of liquidation. In the previous financial year, the said development was classified as abandoned project. During the financial year, a liquidator had been appointed by Kementerian Perumahan & Kerajaan Tempatan to rehabilitate the said development. The directors are of opinion that there will be no significant unfavorable financial impact to the financial statements.

Conversion of leasehold land to freehold land

During the financial year, a subsidiary of the Company, namely Tebrau Bay Sdn. Bhd. has paid RM103,992,363 land premium for the purpose of converting certain parcels of leasehold land to freehold land. As of 31 December 2014, the titles of these leasehold land amounted to RM453,790,028 included in land held for future development and property development costs were in the midst of converting to freehold land.

15. INVESTMENT PROPERTIES

Group

2014 2013

RM’000 RM’000

At 1 January 340 308

Fair value adjustment (Note 8) 60 32

At 31 December 400 340

Investment properties are stated at fair value, which has been determined based on valuations at the reporting date. Valuations are performed by accredited independent valuers, Raine & Horne. The valuations are based on comparison method by comparing and adopting as a yardstick recent transactions and sale evidences involving other similar properties in the vicinity. The Group has assessed that the highest and best use of its properties do not differ from their current use.

Significant unobservable valuation input:

Range

Price per square foot RM40 - RM70

The investment properties with carrying value of RM40,000 (2013 : RM40,000) are yet to be issued strata titles.

Annual Report 2014


16. INVESTMENT IN SUBSIDIARIES

Company

2014 2013

RM’000 RM’000

Unquoted shares, in Malaysia, at cost 460,192 460,192

Unquoted redeemable preference shares, in Malaysia, at cost 95,000 95,000

Less: Impairment losses (8,975) (60,075)

546,217 495,117

Details of the subsidiaries are as follows:

Name of subsidiariesCountry in corporation Principal activities

Proportion of ownership interest

2014 2013

% %

Bayou Bay Development Sdn. Bhd. Malaysia Property development 100 100

Tebrau Bay Sdn. Bhd. Malaysia Property development and construction

100 100

Tebrau Bay Constructions Sdn. Bhd. Malaysia Construction of infrastructure and buildings

100 100

Bayou Management Sdn. Bhd. Malaysia Property management 100 100

Southern Crest Development Sdn. Bhd. Malaysia Investment holding 100 100

Impairment tests for investment in subsidiaries

The management of Company carried out a review of the recoverable amount of investment in Tebrau Bay Constructions Sdn. Bhd. (“TBCSB”) during the current financial year because TBCSB recorded profits for the current year. This is an indication that the previously recognised impairment loss may no longer be required. The review resulted in a reversal of impairment loss previously recognised amounted to RM51.1 million.

The recoverable amount of RM72,552,200 for investment in TBCSB, as at 31 December 2014, has been determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management. The pre-tax discount rate applied to cash flow projection is 13.41%.

Sensitivity to changes in assumptions

With regard to the assessment of value-in-use, the management believes that no reasonable possible change in any of the above key assumptions would cause the carrying value of investment in subsidiary to materially exceed the recoverable amount.

Annual Report 2014


16. INVESTMENT IN SUBSIDIARIES cont’d

Subscription of redeemable preference shares in subsidiaries

In previous financial year, the Company subscribed the redeemable preference shares of the below subsidiaries at par value of RM0.01 each at an issue price of RM1 per share:

RM’000

Bayou Bay Development Sdn. Bhd. 26,000

Tebrau Bay Sdn. Bhd. 64,000

Tebrau Bay Constructions Sdn. Bhd. 5,000

95,000

These redeemable preference shares are classified as equity instrument as the redemption are at the option of the subsidiaries.

17. INVESTMENT IN ASSOCIATES

Group

2014 2013

RM’000 RM’000

Unquoted shares, at cost 273 123

Share of post-acquisition reserves 2,553 2,553

Less: Impairment losses (2,676) (2,676)

150 -

Name of associatesCountry in corporation Principal activities

Proportion of ownership interest

2014 2013

% %

Held by Tebrau Bay Sdn. Bhd.:

Aset Nusantara Development Sdn. Bhd. Malaysia Under liquidation 49 49

Tropicana Danga Senibong Sdn. Bhd. (formerly known as Renown Dynamic Sdn. Bhd.) Malaysia

Property development (dormant) 30 -

During the financial year, a subsidiary of the Company, namely Tebrau Bay Sdn. Bhd., has subscribed for 150,000 ordinary shares of Tropicana Danga Senibong Sdn. Bhd. (formerly known as Renown Dynamic Sdn. Bhd.)(“TDSSB”) of RM1 each at an issue price of RM1 for total consideration of RM150,000, which represents 30% shareholding in TDSSB.

Annual Report 2014


17. INVESTMENT IN ASSOCIATES cont’d

Aggregate information of associates that are not individually material

2014 2013

RM’000 RM’000

Carrying value of the Group’s interest in all immaterial associates 150 -

Group’s share of loss before tax from continuing operations - -

18. AVAILABLE FOR SALE INVESTMENT

Group

2014 2013

RM’000 RM’000

At cost:

Club membership 90 90

19. INVENTORIES

Group

2014 2013

RM’000 RM’000

Cost:

Development properties held for sale 182 182

Annual Report 2014


20. TRADE AND OTHER RECEIVABLES

Group CompanyNote 2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Trade receivables

Third parties 73,244 182,915 - -

Less: Allowance for impairment (2,938) (2,126) - -

Trade receivables, net (a) 70,306 180,789 - -

Other receivables

Due from subsidiaries (b) - - 195,581 3,311

Due from a related company 4 - - -

Deposits 626 689 16 8

Sundry receivables (c) 16,499 15,498 16 4

17,129 16,187 195,613 3,323

Less: Allowance for impairment (13,365) (13,365) - -

Other receivables, net 3,764 2,822 195,613 3,323

Total trade and other receivables (current) 74,070 183,611 195,613 3,323

Add: Cash and bank balances (Note 23) 59,166 78,303 9,512 1,349

Total loans and receivables 133,236 261,914 205,125 4,672

(a) Trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 60 day (2013 : 30 to 60 day) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables is as follows:

2014 2013

RM’000 RM’000

Neither past due nor impaired 5,828 39,676

1 to 30 days past due not impaired 385 83,874

31 to 60 days past due not impaired - 7,194

61 to 90 days past due not impaired - -

91 to 120 days past due not impaired - -

More than 121 days past due not impaired 64,093 49,233

64,478 140,301

Impaired 2,938 2,938

73,244 182,915

Annual Report 2014


20. TRADE AND OTHER RECEIVABLES cont’d

(a) Trade receivables cont’d

Trade receivables that are neither past due nor impaired

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Trade receivables that are past due but not impaired

The Group has trade receivables amounting to approximately RM64,477,078 (2013 : RM140,301,000) that are past due at the reporting date but not impaired.

The trade receivables that are past due but not impaired are creditworthy debtors. These amounts are unsecured in nature.

Receivables that are impaired

The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Collectively impaired Individually impaired

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Trade receivables

- nominal amounts - 1,297 2,938 1,641

Less : Allowance for impairment - (485) (2,938) (1,641)

- 812 - -

Movement in allowance accounts :

2014 2013

RM’000 RM’000

At 1 January 2,126 2,426

Charge for the year (Note 8) 812 -

Reversal of impairment loss (Note 8) - (300)

At 31 December 2,938 2,126

(b) Amount due from subsidiaries

The amounts due from subsidiaries mainly arose from the cost of the leasehold land assigned from Kumpulan Prasarana Rakyat Johor Sdn. Bhd., expenses paid on behalf and loan granted to finance reclamation of land. The amounts due are unsecured, non-interest bearing and are repayable on demand, except for the loan granted bears interest of 5.56% per annum.

The other related parties transaction is as disclosed in Note 36.

Annual Report 2014


20. TRADE AND OTHER RECEIVABLES cont’d

(c) Other receivables

Other receivables that are impaired

The Group’s other receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

2014 2013

RM’000 RM’000

Individually impaired

Other receivables -nominal amounts 13,365 13,365

Less : Allowance for impairment (13,365) (13,365)

- -

These amounts are not secured by any collateral or credit enhancements. There has been no movement in this allowance account for the financial years ended 31 December 2014 and 2013.

21. OTHER CURRENT ASSETS

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Amount due from customers for contracts (Note 22) 32,463 12,192 - -

Prepayments 1,331 5 740 1

33,794 12,197 740 1

Annual Report 2014


22. DUE FROM/(TO) CUSTOMERS IN CONTRACTS

Group

2014 2013

RM’000 RM’000

Construction contract costs incurred to date 951,255 815,326

Attributable profits 116,974 99,169

1,068,229 914,495

Less: Progress billings (1,039,893) (929,959)

28,336 (15,464)

Due from customers on contracts (Note 21) 32,463 12,192

Due to customers on contracts (Note 27) (4,127) (27,656)

28,336 (15,464)

Retention sums on construction contracts, included in trade receivables 996 978

The costs incurred to date on construction contracts include the following charges made during the financial year:

Group

2014 2013

RM’000 RM’000

Interest expenses 2,319 4,984

23. CASH AND BANK BALANCES

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Cash on hand and at banks 20,292 40,024 8,078 1,149

Restricted cash balances 2,805 645 - -

Short term deposits with licensed bank 36,069 37,634 1,434 200

59,166 78,303 9,512 1,349

Less: Bank overdraft (Note 24) (4,912) - - -

54,254 78,303 9,512 1,349

The restricted bank balances represent monies maintained pursuant to Section 7A of the Housing Developers (Control and Licensing) Act, 1966 and therefore restricted from use in other operations.

Included in deposits with licensed bank of the Group and the Company are amounts of approximately RM28,477,087 (2013 : RM25,556,235) and RM1,382,500 (2013: RM Nil) respectively are pledged as security for bank guarantees issued to subsidiaries and bank facilities granted to the Company and certain subsidiaries.

Annual Report 2014


23. CASH AND BANK BALANCES cont’d

The weighted average of interest rate during the year and the maturities of deposits were as follows:

Group Company

2014 2013 2014 2013

Weighted average interest rate (%) 3.22 2.77 to 3.05 3.22 2.77

Maturities (days) 30 to 90 30 to 90 30 30

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following at each reporting date:

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Cash and short term deposits 59,166 78,303 9,512 1,349

Deposits with licensed bank pledged with for banking facilities (28,477) (25,556) (1,383) -

Bank overdrafts (Note 24) (4,912) - - -

Cash and cash equivalents 25,777 52,747 8,129 1,349

24. BORROWINGS

Group Company

Maturity 2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Current

Secured:

Bank overdraft (Note 23) On demand 4,912 - - -

Revolving credit 2014 - 63,500 - -

Bridging loan 2015 1,113 - - -

Obligations under finance leases (Note 25) 2015 244 119 - -

6,269 63,619 - -

Non-current

Secured:

Bridging loan 2015 - 1,112 - -

Revolving credit 2015 - 2020 200,000 - 200,000 -

Obligations under finance leases (Note 25) 2015 - 2018 504 297 - -

200,504 1,409 200,000 -

Total loans and borrowings 206,773 65,028 200,000 -

Annual Report 2014


24. BORROWINGS cont’d

The remaining maturities of the loans and borrowings as at 31 December 2014 and 2013 are as follows:

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

On demand or within one year 6,269 63,619 - -

More than 1 year and less than 2 years 238 1,234 - -

More than 2 years and less than 5 years 200,266 175 200,000 -

206,773 65,028 200,000 -

The weighted average effective interest rates at the reporting date for borrowings, excluding obligations under finance lease are as follows:

% %

Bank overdraft 7.35 to 8.10 7.35

Bridging loan 7.70 7.70

Revolving credit 5.56 5.13

Bank overdraft

Bank overdraft is secured by the deposits with licensed bank (Note 23).

Bridging loan

Bridging loan is by third party legal charge on certain leasehold land in Mukim Plentong, Johor Bahru registered under Kumpulan Prasarana Rakyat Johor Sdn. Bhd. (Note 14).

Revolving credit at COF + 1.75%

During the financial year, the Company obtained Islamic Revolving Credit facility of RM200,000,000 to finance reclamation of subsidiaries’ land. The revolving credit of the Company is secured by the following:

(a) Third party first and second legal charge over a leasehold land in Mukim Plentong, Johor Bahru; and

(b) Assignment and charge over the Escrow Account and any Land Sale Proceeds to be credited into a designated escrow account maintained with the Bank; and

(c) Memorandum of Deposit over Term Deposit-I (Note 23).

Revolving credit at COF + 1.75%

In prior year, a subsidiary of the Company had obtained Islamic Revolving Credit facility of RM73,000,000 to finance its construction projects in prior year. The revolving credit of the subsidiary was secured by the following:

(a) Assignment of contract proceeds from The Johor State Economy Planning Unit (“UPENJ”) in respect of the Punggai Project Phase 2 to be credited into a designated escrow account maintained with the Bank; and

(b) Assignment of contract proceeds from UPENJ in respect of the Rimbunan Kaseh Project to be credited into a designated escrow account maintained with the Bank.

This revolving credit has been fully settled during the financial year.

Annual Report 2014


25. FINANCE LEASE COMMITMENTS

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

Group

2014 2013

RM’000 RM’000

Minimum lease payments:

Not later than 1 year 277 134

Later than 1 year and not later than 2 years 264 134

Later than 2 years and not later than 5 years 272 182

Total minimum lease payments 813 450

Less: Amount representing finance charges (65) (33)

Present value of minimum lease payments 748 416

Present value of payments:

Not later than 1 year 244 119

Later than 1 year and not later than 2 years 245 123

Later than 2 years and not later than 5 years 259 175

Present value of minimum lease payments 748 416

Less : Amount due within 12 months (Note 24) (244) (119)

Due after 12 months (Note 24) 504 297

These obligations are secured by a charge over the leased assets (Note 13). The interest rates in the lease at the reporting dates are between 2.40% to 3.25% (2013 : 2.40% to 3.88%) per annum.

Annual Report 2014


26. TRADE AND OTHER PAYABLES

Group Company

Note 2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Current

Trade payables

Third parties (a) 116,588 59,845 - -

Other payables

Due to a shareholder (b) 1,824 1,750 1,823 1,750

Due to related companies (b) 860 430 699 264

Deposit received (c) 31,102 31,102 - -

Sundry payables and accruals 7,318 4,224 1,283 940

41,104 37,506 3,805 2,954

Total trade and other payables 157,692 97,351 3,805 2,954

Add : Loans and borrowings (Note 24) 206,773 65,028 - -

Total financial liabilities carried at amortised cost 364,465 162,379 3,805 2,954

(a) Trade payables and other payables

These amounts are non-interest bearing. Trade payables are normally settled on 30 to 90 day (2013 : 30 to 90 day) terms.

(b) Amounts due to a shareholder and related companies

The amounts due to a shareholder and related companies mainly arose from expenses paid on behalf which are unsecured, interest free and are repayable on demand. Other related party transactions are disclosed in Note 36.

(c) Deposit received

Being 10% deposit received for the disposal of a piece of land. Details of the sales are disclosed in Note 41(a).

27. OTHER CURRENT LIABILITIES

Group

2014 2013

RM’000 RM’000

Progress billings in respect of property development cost 1,109 -

Amount due to customers for contracts (Note 22) 4,127 27,655

5,236 27,655

Annual Report 2014


28. PROVISIONS

Project costs

Legal claim

Eviction costs Total

RM’000 RM’000 RM’000 RM’000

At 1 January 2014 4,184 - 4,356 8,540

Addition during the year - 220 - 220

Utilised during the year - - (4,356) (4,356)

Provisions written back (544) - - (544)

At 31 December 2014 3,640 220 - 3,860

At 1 January 2013 3,785 4,650 - 8,435

Addition during the year 400 - 4,356 4,756

Utilised during the year - (1,615) - (1,615)

Provisions written back (1) (3,035) - (3,036)

At 31 December 2013 4,184 - 4,356 8,540

(a) Project costs

Included in the project costs is the provision for liquidated ascertained damages amounting to RM3 million (2013 : RM3 million), which was made in the ordinary course of business in respect of defects and delay in the completion of a construction contract.

(b) Legal claim

During the financial year, a subsidiary of the Company, namely Bayou Bay Development Sdn. Bhd. (“BBDSB”) received a notification to compensate the villagers amounted to RM220,000 for the damages suffered from the flood as a result of the development project.

(c) Eviction cost

In the previous financial year, Destination Marine Services Sdn. Bhd. (“DMS”) commenced a legal suit against BBDSB and Kumpulan Prasarana Rakyat Johor Sdn. Bhd. (“KPRJ”), a shareholder of the Company for specific performance of the Sale and Purchase Agreement (“SPA”) entered with DMS on 10 November 2003 to dispose a parcel of land (“Land”) to DMS for a cash consideration of RM1,219,690 and to lease that Land until the completion of the SPA.

This legal claim has been settled on 19 February 2014, BBDSB has paid DMS a sum of RM4,356,000 as costs of relocation.

Annual Report 2014


29. SHARE CAPITAL

Number of ordinary shares of RM0.50 each Amount

2014 2013 2014 2013

‘000 ‘000 RM’000 RM’000

Authorised:

As at 1 January/31 December 1,000,000 1,000,000 500,000 500,000

Issued and fully paid:

As at 1 January/31 December 669,727 669,727 334,864 334,864

30. SHARE PREMIUM

The share premium represents excess of consideration received over the par value of shares issued. The share premium is a statutory restricted reserve but available for purposes as specified under the Companies Act, 1965.

31. ACCUMULATED LOSSES

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

At 1 January 17,901 44,562 61,162 61,228

Total comprehensive income (3,362) (26,661) (50,998) (66)

At 31 December 14,539 17,901 10,164 61,162

32. DEFERRED TAXATION

Group

2014 2013

RM’000 RM’000

At 1 January 115,997 117,832

Recognised in profit or loss (Note 11) (1,094) (1,835)

At 31 December 114,903 115,997

Presented after appropriate offsetting as follows:

Deferred tax assets (1,303) (1,365)

Deferred tax liabilities 116,206 117,362

114,903 115,997

Annual Report 2014


32. DEFERRED TAXATION cont’d

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

Deferred tax liabilities of the Group

Property, plant and

equipment

Land and development expenditure

at Group cost Total

RM’000 RM’000 RM’000

At 1 January 2014 - 117,362 117,362

Recognised in profit or loss 10 (1,156) (1,146)

Offsetting (10) - (10)

At 31 December 2014 - 116,206 116,206

At 1 January 2013 182 118,128 118,310

Recognised in profit or loss (40) (766) (806)

Offsetting (142) - (142)

At 31 December 2013 - 117,362 117,362

Deferred tax asset of the Group

2014 2013

Others RM’000 RM’000

At 1 January (1,365) (478)

Recognised in profit or loss 52 (1,029)

Offsetting 10 142

At 31 December (1,303) (1,365)

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

Group

2014 2013

RM’000 RM’000

Unutilised business losses 1,736 1,142

Unabsorbed capital allowances 54 54

Annual Report 2014


33. COMMITMENTS

Group

2014 2013

RM’000 RM’000

Approved and contracted for :

Purchase of motor vehicle 148 -

34. EMPLOYEE SHARE OPTION SCHEME

At an Extraordinary General Meeting held on 24 June 2014, shareholders approved the proposed establishment of an Employees’ Share Option Scheme (“ESOS”) for the granting of non-transferable options that are settled by physical delivery of the ordinary shares of the Company, to eligible directors and employees respectively. No share options were granted or exercisable during the financial year.

35. CONTINGENT LIABILITIES

Tebrau Bay Constructions Sdn. Bhd (“TBCSB”), a subsidiary of the Company has been appointed as contractor for a design and build contract for the construction of residential units at Pengerang (“Pengerang Project”).

During the financial year, there were construction flaws and defects identified on the completed units due to soil settlement. TBCSB has taken remedial action in getting the subcontractors to remedy the defects and engaged professional engineers and other relevant consultants (“the consultants”) to study the underpinning cause of the defects. As of the date of this report, the consultants are in the midst of carrying out studies on the soil movement and structural test.

The cost of making good the defects by TBCSB is depending on the results of the studies of soil movement and structural test and the costs of rectifying the defects which are claimable from the subcontractors. Pending the results of the consultant’s reports, the costs of rectification can not be reliably measured and no provision is made as of the reporting date. Nevertheless, the Group has assessed the cost of rectification to be approximately RM10.8 million if the affected units are to be demolished and rebuilt and no reimbursement of cost incurred from the subcontractors.

Annual Report 2014


36. RELATED PARTY DISCLOSURES

In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year:

Group Company

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Dividends received

Subsidiary - - 1,586 1,200

Purchase of raw materials

Directors’ related company 5,246 7,534 - -

Management fees payable to

A corporate shareholder - 118 - 118

A related company 180 431 180 431

Directors’ related company

The Group has purchased raw materials from Wengcon Marketing Sdn. Bhd, a subsidiary of a company of which certain directors of the Company have interests.

The directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are mutually agreed upon.

37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include interest rate risk, liquidity risk and credit risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Executive Vice Chairman, Chief Operating Officer and Heads of Departments. The risk management provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken and do not apply hedge accounting.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group and the Company have no significant interest-bearing financial assets, the Group and the Company’s income and operating cash flows are substantially independent of changes in market interest rates. The Group and the Company’s interest-bearing financial assets are mainly short term in nature and have been mostly placed in fixed deposits.

Annual Report 2014


37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d

(a) Interest rate risk cont’d

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held constant, the Group’s profit net of tax would have been RM1,275,000 (2013 : RM99,000) higher/lower arising from interest income on short term deposits with licensed bank net off short term borrowings.

(b) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group and the Company actively manage 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 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 at 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 balances its portfolio with some short term funding so as to achieve overall cost effectiveness.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

2014 2013

RM’000 RM’000

Group

On demand or within one year

One to five years

On demand or within one year

One to five years

Financial liabilities

Trade and other payables 157,692 - 97,351 -

Borrowings 6,302 200,536 63,634 1,427

Total financial liabilities 163,994 200,536 160,985 1,427

Company

Financial liabilities

Trade and other payables 3,805 - 2,954 -

Borrowings - 200,000 - -

Total financial liabilities 3,805 200,000 2,954 -

Annual Report 2014


37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d

(c) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations.

The Group’s credit risk primarily attributable to trade and other receivables. The receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents with a maximum exposure equal to the carrying amount of these financial assets.

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 assets.

Exposure to credit risk

At the reporting date, the Group’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position.

At the reporting date, the Company’s maximum exposure to credit risk is represented by:

- the carrying amount of each class of financial assets recognised in the statements of financial position;

- an amount of RM15,150,000 (2013 : RM88,150,000) relating to a corporate guarantee provided by the Company to bank for credit facilities granted to subsidiaries secured on deposits with licensed banks (Note 24).; and

- an amount of RM28,416,000 (2013 : RM28,416,000) relating to a performance guarantee issued for construction projects being carried out by subsidiaries and the guarantee is secured on land under property development costs (Note 14(b)).

Financials assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired disclosed in Note 20.

38. FAIR VALUES

Determination of fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Note

Trade and other receivables (current) 20

Trade and other payables (current) 26

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values due to their short-term nature.

For the purpose of the above estimates of fair value of financial instruments, ‘short term nature’ is defined as a period within 1 year.

Annual Report 2014


38. FAIR VALUES cont’d Determination of fair value cont’d

Financial guarantees

The value of financial guarantees provided by the Company to its subsidiaries is determined by reference to the difference in the interest rates, by comparing the actual rates charged by the bank if these guarantees has not been available. The directors have assessed the fair value of these financial guarantees to have no material financial impact on the results and the accumulated losses of the Company.

Fair value hierarchy

The table below analyses recurring assets and liabilities carried at fair value. The different levels are defined as follows.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: unobservable inputs for the asset or liability.

Level 1 Level 2 Level 3

RM’000 RM’000 RM’000

At 31 December 2014

Real estate for capital appreciation - - 400

Total investment properties - - 400

At 31 December 2013

Real estate for capital appreciation - - 340

Total investment properties - - 340

During the reporting period ended 31 December 2014 and 2013, there were no transfers between the hierarchy of fair value measurement.

39. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payments to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2014 and 31 December 2013.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Net debt comprises borrowings and trade and other payables, less cash and bank balances whereas total capital comprises the equity attributable to equity holders of the Group.

Annual Report 2014


39. CAPITAL MANAGEMENT cont’d

Group Company

Note 2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Borrowings 24 206,773 65,028 200,000 -

Trade and other payables 26 157,692 97,351 3,805 2,954

Less:

Cash and bank balances 23 (59,166) (78,303) (9,512) (1,349)

Net debt 305,299 84,076 194,293 1,605

Equity 546,146 542,784 550,521 499,523

Total capital 546,146 542,784 550,521 499,523

Capital and net debt 851,445 626,860 744,814 501,128

Gearing ratio 35.9% 13.4% 26.1% 0.3%

40. SEGMENT INFORMATION

(a) For management purposes, the Group is organised into business units based on their products and services, and has three reportable operating segments as follows :

(i) Property development - the development of residential and commercial properties;

(ii) Construction; and

(iii) Property management.

Other operations of the Group mainly comprises of property investment and investment holding, neither of which constitutes a separately reportable segment.

(b) Allocation basis

Segment results, assets and liabilities include directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and expenses.

The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties. These transactions are eliminated on consolidation.

Annual Report 2014


40. SEGMENT INFORMATION cont’d

The following table provides an analysis of the Group’s revenue, results, assets, liabilities and other information by business segment :

Property Development Construction

Property Management Eliminations

Consolidated

RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2014

Revenue Revenue 3,534 154,417 - - 157,951 Inter-segment sales - 5,007 - (5,007) -

Total revenue 3,534 159,424 - (5,007) 157,951

RESULTSegment results (6,270) 17,132 (9) (2,089) 8,764 Unallocated corporate

expenses (1,237)

Profit from operations 7,527 Finance costs (1,344)Income tax expense (2,821)

Profit after tax 3,362

ASSETSSegment assets 888,492 233,721 17 (295,147) 827,083 Investment properties 400 Other investments 90 Investment in associate 150 Unallocated corporate assets 208,259

Consolidated total assets 1,035,982

LIABILITIESSegment liabilities (141,530) (439,109) (538) 295,147 (286,030)Unallocated corporate liabilities (203,806)

Consolidated total liabilities (489,836)

OTHER SEGMENT INFORMATIONSegment capital expenditure 249 421 - 670 Unallocated corporate capital

expenditure 338

Consolidated total capital expenditure 1,008

Segment depreciation 96 116 - 212 Unallocated corporate

depreciation 60

Consolidated total depreciation 272

Annual Report 2014


40. SEGMENT INFORMATION cont’d

Property Development Construction

Property Management Eliminations

Consolidated

RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2013

Revenue Revenue 7,603 245,455 - - 253,058 Inter-segment sales - 2,155 - (2,155) -

Total revenue 7,603 247,610 - (2,155) 253,058

RESULTSegment results (147) 39,697 (17) (3,058) 36,475 Unallocated corporate

expenses (1,134)

Profit from operations 35,341 Finance costs (727)Income tax expense (7,953)

Profit after tax 26,661

ASSETSSegment assets 607,364 266,332 18 (17,929) 855,785 Investment properties 340 Other investments 90 Unallocated corporate assets 7,359

Consolidated total assets 863,574

LIABILITIESSegment liabilities (128,569) (206,670) (526) 17,929 (317,836)Unallocated corporate liabilities (2,954)

Consolidated total liabilities (320,790)

OTHER SEGMENT INFORMATION

Segment capital expenditure 1 152 - 153 Unallocated corporate capital

expenditure 59

Consolidated total capital expenditure 212

Segment depreciation 158 117 - 275 Unallocated corporate

depreciation 63

Consolidated total depreciation 338

Annual Report 2014


41. SIGNIFICANT EVENTS

(a) Shareholders Agreement (“SA”) and sale of land

On 23 December 2013, a subsidiary of the Company, namely Tebrau Bay Sdn. Bhd. (“TBSB”), entered into a SA with Golddust United Sdn. Bhd. (“GUSB”) to form a special purpose vehicle known as Tropicana Danga Senibong Sdn. Bhd. (formerly known as Renown Dynamic Sdn. Bhd.) (“TDSSB”) for the purpose of acquisition of land and carrying out property development activity.

Pursuant to the SA, the agreed shareholding in TDSSB to be held by GUSB and TBSB shall be 70% and 30% respectively at all times.

On the same date, TBSB also entered into a conditional Sale and Purchase agreement with TDSSB for the sale of a piece of land for a total consideration of RM444,312,000. On 24 March 2014, TBSB has subscribed its shareholdings of 30% in TDSSB and TDSSB becomes an associate of Group. As of the date of this report, certain Conditions Precedent have not been fulfilled and therefore the sale of land has yet to be completed.

b) Proposed land exchange

On 6 May 2014, the Company has announced that the Johor State Executive Council has approved the following:

a) TBSB to surrender 92.84 acres of leasehold land held under titles PTD 194799 and a portion of PTD194801 located in Mukim Plentong, Johor Bahru, to the Johor State Government at a price to be determined;

b) TBSB to construct 300 houses and surrender 22.62 acres of leasehold land held under a portion of title PTD 194801 and a portion of PTD 194795 Mukim Plentong, Johor Bahru to the Johor State Government at a price to be determined;

c) TBSB to construct 9 commercial units and surrender 1.46 acres of leasehold land held under PTD 194795 Mukim Plentong, Johor Bahru to the Johor State Government; and

d) Johor Bahru Land Administration Office vide its letter dated 25 September 2014 approved the award of 96.315 hectares of submerged land to TBSB on a freehold basis, subject to payment of a premium of RM50 per square feet within 3 months from the date of the said letter.

On 26 October 2014, Johor Bahru Land Administration Office vide its letter informed that TBSB is only required to pay land premium for the Replacement Land based on an area of 228.76 acres (92.576 hectares) instead of 238 acres (96.315 hectares). This reduction has taken into consideration the 9.231 acres of utility pathway reserves on the Replacement Land.

On 26 January 2015, Johor Bahru Land Administration Office vide its letter approved TBSB’s application for an extension of time until 26 April 2015 for the premium payment of the Replacement Land.

Annual Report 2014


42. SUBSEQUENT EVENTS

(a) Proposed renounceable rights issue of up to 669,727,143 new ordinary shares of RM0.50 each in the Company (“Proposed Rights Shares”) together with up to 334,863,571 warrants of RM0.50 each in the Company (“Warrants”)

On 26 December 2013, the Company announced its proposal to undertake a renounceable rights issue of up to 669,727,143 Rights Shares on the basis of one Rights Share for every one existing ordinary shares of RM0.50 each at an issue price of RM1.00 per Rights Shares (“Issue Price”) together with up to 334,863,571 Warrants on the basis of one free Warrant for every two Rights Shares subscribed, held by the shareholders of the Company on an entitlement date to be determined later.

On 27 February 2015, the approval from Bursa Securities for the extension of time to implement the Proposed Rights Issue with Warrants has lapsed and the Proposed Rights Issue was discontinued after careful deliberation in view of the incoming sales proceeds from the proposed sale of land as disclosed in Note 42(b).

(b) Proposed sale of land and joint venture for land development

On 21 January 2015, a subsidiary company, namely Southern Crest Development Sdn. Bhd. (“SCSB”), entered into a Shareholders Agreement (“SA”) with Greenland Malaysia Real Estate Operator Sdn. Bhd. (“GMSB”) to form a special purpose vehicle known as Greenland Tebrau Sdn. Bhd. (“GTSB”) for the purpose of acquisition of land and carrying out of property development activity.

Pursuant to the SA, the agreed shareholding in GTSB to be held by GMSB and SCSB shall be 80% and 20% respectively at all times.

Pursuant to the SA, a separate sale and purchase agreement (“SPA”) shall be entered between GTSB and its fellow subsidiary, Tebrau Bay Sdn. Bhd. for the sale of few pieces of land. On 3 April 2015, TBSB had entered into a conditional Sale and Purchase agreement with GTSB for the sale of few pieces of land for a consideration approximately RM2.37 billion.

As of the date of this report, certain Conditions Precedent of the SPA had not been fulfilled and therefore the sale of land has yet to be completed.

43. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

The financial statements for the year ended 31 December 2014 were authorised for issue in accordance with a resolution of the directors on 15 April 2015.

Annual Report 2014


44. SUPPLEMENTARY INFORMATION - BREAKDOWN OF ACCUMULATED LOSSES INTO REALISED AND UNREALISED

The breakdown of the accumulated losses of the Group and of the Company as at 31 December 2014 into realised and unrealised losses is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group

2014 2013

RM’000 RM’000

Total accumulated profit/(losses)

- Realised 5,706 2,493

- Unrealised 54,564 2,383

60,270 4,876

Less: Consolidation adjustments (74,809) (22,777)

Accumulated losses as per financial statements (14,539) (17,901)

Company

2014 2013

RM’000 RM’000

Total accumulated losses

- Realised (10,164) (61,162)

- Unrealised - -

Accumulated losses as per financial statements (10,164) (61,162)

Annual Report 2014


NoLocation (Lot No)

Location (Title No)

Tenure Land Area UsageNet Book

Value (RM)

Date of Acquisition/ Revaluation

1 PTD 181552 /PTD 156543

HS(D) 376617 Leasehold (Expiring 27

December 2105)

330.97 ha Residential and

Commercial Development

757,829,470 16 April 2003

2 PTD 192018 HS(D) 421925

3 PTD 192051 HS(D) 421955

4 PTD 194780 HS(D) 437858

5 PTD 194781 HS(D) 437859

6 PTD 194782 HS(D) 437860

7 PTD 194784 HS(D) 437862

8 PTD 194785 HS(D) 437863

9 PTD 194786 HS(D) 437864

10 PTD 194787 HS(D) 437865

11 PTD 194788 HS(D) 437866

12 PTD 194790 HS(D) 437868

13 PTD 194798 HS(D) 437847

14 PTD 194799 HS(D) 437848

15 PTD 194800 HS(D) 437849

16 PTD 194801 HS(D) 437850

17 PTD 194802 HS(D) 437851

18 PTD 194776 HS(D) 437854 JV Paradise Realty

Leasehold (Expiring 27

December 2105)

19 PTD 194792 HS(D) 437843 Conversion Leasehold to Freehold

(Premium paid for conversion)

20 PTD 194793 HS(D) 437844

21 PTD 194794 HS(D) 437845

22 PTD 194795 HS(D) 437846

23 PTD 194796 HS(D) 437869

24 PTD 194797 HS(D) 437870

Annual Report 2014


NoLocation (Lot No)

Location (Title No)


Value (RM)


25 PTD 166482 HS(D) 351596 Leasehold (Expiring 21

January 2097)

4.81 ha Rehabilitation 93,304,136 16 April 2003

26 PTD 166483 HS (D) 351597

27 PTD 166479 HS (D) 351593 54.29 ha Residential and


28 PTD 166480 HS (D) 351594

29 PTD 166481 HS (D) 351595

30 PTD 166484 HS (D) 351598

31 PTD 166487 HS (D) 351599

32 PTD 166488 HS (D) 351600

33 PTD 166489 HS (D) 351601

34 PTD 166491 HS (D) 351602

35 PTD 173048 HS (D) 353200

36 PTD 181976 HS(D) 375498

37 PTD 181977 HS(D) 375499

38 PTD 181985 HS(D) 375504

39 PTD 181986 HS(D) 375505

40 PTD 196260 HS(D) 442852

41 PTD 196262 HS(D) 442854

42 PTD 163089 HS (D) 320480 JV with Paradise Realty


January 2097)

43 PTD 163090 HS (D) 320481

44 PTD 163091 HS (D) 320482

45 PTD 163092 HS (D) 320483

46 PTD 163093 HS (D) 320484

47 PTD 163094 HS (D) 320485

48 PTD 163095 HS (D) 320486

49 PTD 163096 HS (D) 320487

50 PTD 163097 HS (D) 320488

51 PTD 163098 HS (D) 320489

52 PTD 163099 HS (D) 320490

53 PTD 163100 HS (D) 320491

54 PTD 163101 HS (D) 320492

Annual Report 2014


NoLocation (Lot No)

Location (Title No)


Value (RM)


55 PTD 163102 HS (D) 320493 JV with Paradise Realty


January 2097)

56 PTD 163103 HS (D) 320494

57 PTD 163104 HS (D) 320495

58 PTD 163105 HS (D) 320496

59 PTD 163106 HS (D) 320497

60 PTD 163107 HS (D) 320498

61 PTD 163108 HS (D) 320499

62 PTD 163109 HS (D) 320500

63 PTD 163110 HS (D) 320501

64 PTD 163111 HS (D) 320502

65 PTD 163112 HS (D) 320503

66 PTD 163113 HS (D) 320504

67 PTD 163114 HS (D) 320505

68 PTD 163115 HS (D) 320506

69 PTD 163116 HS (D) 320507

70 PTD 163117 HS (D) 320508

71 PTD 163118 HS (D) 320509

72 PTD 163119 HS (D) 320510

73 PTD 163120 HS (D) 320511

74 PTD 163121 HS (D) 320512

75 PTD 163122 HS (D) 320513

76 PTD 163123 HS (D) 320514

77 PTD 163124 HS (D) 320515

78 PTD 163125 HS (D) 320516

79 PTD 163126 HS (D) 320517

80 PTD 163127 HS (D) 320518

81 PTD 163128 HS (D) 320519

82 PTD 163129 HS (D) 320520

83 PTD 163130 HS(D) 320521

84 PTD 163131 HS(D) 320522


Annual Report 2014

BOTANIKA VILLAartist impression of upcoming development

NoLocation (Lot No)

Location (Title No)


Value (RM)


85 PTD 196261 HS(D) 442853 Leasehold (Expiring 21

January 2097)

0.37 ha Residential and


1,682,335 31 March 2013

86 Unit 222, Bandar Putra, Phase 114, Bangi, Selangor

Freehold 6,006 sq. ft. Bungalow Lot 360,000 31 December 2014

87 Unit No. 3, Type No. 3G, 15th Floor, Building A, PD Marina International Resort, Port Dickson, Negeri Sembilan


December 2101)

1,122 sq. ft. Condominium 40,000 31 December 2014

Annual Report 2014


Authorised Share Capital : RM500,000,000.00Issued & Fully Paid Up Capital : RM334,863,571.50Class of Shares : Ordinary Shares of RM0.50 EachVoting Right : One (1) vote per ordinary share

A. DISTRIBUTION OF SHAREHOLDINGS

HoldingsNo. of

HoldersTotal

Holdings %

Less than 99 56 1,108 0.00

100 to 1,000 3,572 3,473,877 0.52

1,001 to 10,000 7,106 32,019,355 4.78

10,001 to 100,000 1,736 53,502,106 7.99

100,001 to less than 10% of issued shares 314 211,289,361 31.55

10% and above of issued shares 3 369,441,336 55.16

Total 12,787 669,727,143 100.00

B. LIST OF 30 LARGEST SHAREHOLDERS

No. NameNo of

shares held %

1. ISKANDAR WATERFRONT HOLDINGS SDN BHD 229,476,000 34.264

2. AMSEC NOMINEES (TEMPATAN) SDN BHDPledged Securities Account - Ambank (M) Berhad For Iskandar Waterfront Holdings Sdn.Bhd.(A/C 2)

86,370,069 12.896

3. KUMPULAN PRASARANA RAKYAT JOHOR SDN BHD 53,595,267 8.002

4. CITIGROUP NOMINEES (ASING) SDN BHDEXEMPT AN FOR CITIBANK NEW YORK (NORGES BANK 1)

17,803,761 2.658

5. DB (MALAYSIA) NOMINEE (ASING) SDN BHDSSBT FUND PLD2 FOR POLUNIN EMERGING MARKETS SMALL CAP FUND, LLC

7,471,400 1.115

6. MAYBANK NOMINEES (TEMPATAN) SDN BHDETIQA TAKAFUL BERHAD (FAMILY PRF EQ)

6,942,600 1.036

7. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR GO YOONG FEI (6000326)

4,741,200 0.707

8. UOB KAY HIAN NOMINEES (ASING) SDN BHDEXEMPT AN FOR UOB KAY HIAN PTE LTD (A/C CLIENTS)

4,104,900 0.612

9. CITIGROUP NOMINEES (ASING) SDN BHDCBNY FOR EMERGING MARKET CORE EQUITY PORTFOLIO DFA INVESTMENT DIMENSIONS GROUP INC

3,729,400 0.556

10. LOH YU SAN 3,582,000 0.534

11. MAYBANK NOMINEES (TEMPATAN) SDN BHDETIQA INSURANCE BERHAD (LIFE PAR FUND)

3,347,000 0.499

Annual Report 2014


B. LIST OF 30 LARGEST SHAREHOLDERS cont’d

No. Name

No of shares

held %

12. CITIGROUP NOMINEES (ASING) SDN BHDCBNY FOR DFA EMERGING MARKETS SMALL CAP SERIES

3,000,600 0.448

13. MAYBANK NOMINEES (TEMPATAN) SDN BHDETIQA INSURANCE BERHAD (SHAREHLDR’S FD)

2,831,800 0.422

14. TAN WEN SHIOW 2,004,900 0.299

15. SHARP VENTURES SDN BHD 2,000,000 0.298

16. KOH HONG SENG 1,993,000 0.297

17. RHB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR GARY LEE SEATON

1,955,000 0.291

18. TAN LAI LENG 1,929,900 0.288

19. MAYBANK NOMINEES (TEMPATAN) SDN BHDETIQA INSURANCE BERHAD (LIFE NON-PAR FD)

1,923,000 0.287

20. MOHD HANAFFIAH BIN TALIB 1,784,500 0.266

21. H’NG BAK TEE 1,780,000 0.265

22. KWA POH LING 1,756,900 0.262

23. SEE HOY CHAN PROPERTIES SENDIRIAN BERHAD 1,735,000 0.259

24. CIMSEC NOMINEES (ASING) SDN BHDEXEMPT AN FOR CIMB SECURITIES (SINGAPORE) PTE LTD (RETAIL CLIENTS)

1,729,000 0.258

25. TUNG FOONG NGOH 1,672,500 0.249

26. YONG SIEW LIN 1,640,000 0.244

27. KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR YAP KOK WOON

1,622,000 0.242

28. MAYBANK NOMINEES (TEMPATAN) SDN BHDETIQA TAKAFUL BERHAD (SHAREHOLDERS FD)

1,596,000 0.238

29. GOH ENG KEONG 1,495,800 0.223

30. SUN AI CHOO 1,477,300 0.220

TOTAL 457,090,797 68.250

Annual Report 2014


C. LIST OF SUBSTANTIAL SHAREHOLDERS

Direct Interest Deemed Interest

NameNo. of

shares %No. of

shares %

ISKANDAR WATERFRONT HOLDINGS SDN BHD 229,476,000 34.264 - -

AMSEC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT - AMBANK

(M) BERHAD FOR ISKANDAR WATERFRONT HOLDINGS SDN.BHD.(A/C 2) 86,370,069 12.896 - -

KUMPULAN PRASARANA RAKYAT JOHOR SDN. BHD. 53,595,267 8.002 315,846,069 (a) 47.159

CREDENCE RESOURCES SDN BHD - - 315,846,069 (a) 47.159

TAN SRI DATO’ LIM KANG HOO - - 315,846,069 (b) 47.159

TOTAL 369,441,336 55.162 315,846,069 47.159

(a) Deemed interested in the shares held by IWHSB by virtue of its interest in IWHSB pursuant to Section 6A of the Act.

(b) Deemed interested in the shares held by IWHSB by virtue of his interest in IWHSB through CRSB pursuant to Section 6A of the Act.

D. LIST OF DIRECTORS’ SHAREHOLDINGS IN THE COMPANY

Direct Interest Deemed Interest

Name of DirectorsNo. of

shares %No. of

shares %

Tan Sri Dato’ Lim Kang Hoo - - 315,846,069 (a) 47.160

Lim Keng Guan - - 776,000 (b) 0.12

Chow Yoon Sam 10,000 0.001 - -

Wong Khai Shiuan 10,000 0.001 - -

(a) Deemed interested in the shares held by Iskandar Waterfront Holdings Sdn. Bhd. (“IWH”) by virtue of his interest in IWH.

(b) Deemed interested in the shares held by Lim Seong Hai Holdings Sdn Bhd (LSHH) by virtue of his interest in LSHH.

FORM OF PROXY

ISKANDAR WATERFRONT CITY BERHAD(formerly known as Tebrau Teguh Berhad) (Co. No. 8256-A)(Incorporated in Malaysia)

I/We (I.C. No. )

of

(or attorney of the said )

a Member/Members of ISKANDAR WATERFRONT CITY BERHAD (formerly known as Tebrau Teguh Berhad) (Co. No. 8256-A) hereby appoint:-

Full Name (in Block) NRIC/Passport No. Proportion of ShareholdingsNo. of Shares %

Address

and / or (delete as appropriate)

Full Name (in Block) NRIC/Passport No. Proportion of ShareholdingsNo. of Shares %

Address

or failing him, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the 46th Annual General Meeting of the Company to be held at Danga Bay Convention Centre, Lot PTB21350, Batu 3½, Jalan Skudai, 80200 Johor Bahru, Johor on on Tuesday, 16 June 2015 at 11.00 a.m. and at any adjournment thereof, and to vote as indicated below:-

NO. RESOLUTION FOR AGAINSTOrdinary Business1. Re-appointment of Director – Mr Khoo Boon Ho2. Re-appointment of Director – Mr Cho Joy Leong @ Cho Yok Lon 3. Re-election of Director (Article 78) – Tan Sri Dato’ Lim Kang Hoo4. Re-election of Director (Article 78) – Mr. Bernard Hilary Lawrence5. Re-election of Director (Article 78) – En. Mohd Salleh bin Othman6. Re-election of Director (Article 84) – En. Izaddeen Bin Daud7. Re-appointment of Ernst & Young as Auditors Special Business8. Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965.9. Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party

Transactions of Revenue or Trading Nature10. Continuing in Office as Independent Director, Mr. Khoo Boon Ho

(Please indicate with an “x” in the spaces provided how you wish your votes to be cast. If you do not do so, the Proxy will vote or abstain from voting at his discretion).

Signed this day of 2015 Signature of Member(s)/Common Seal

Notes:1. A member entitled to attend and vote at the meeting is entitled to appoint not more than two proxies to attend and vote in his

stead. A proxy need not be a member of the Company.

2. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy.

3. Where a member is an authorized nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

4. Where a member of the Company is an exempt authorized nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds.

5. Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of an officer or attorney duly authorized.

6. The Proxy Form must be deposited with the Company Secretary at the Registered Office, Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor Darul Takzim not less than 48 hours before the time set for the Meeting.

7. For the purpose of determining a member who shall be entitled to attend the 46th Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 54(2) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991 to issue a general meeting Record of Depositor as at 9 June 2015. Only a depositor whose name appears therein shall be entitled to attend the said meeting or appoint a proxy to attend and/or vote on his stead.

CDS ACCOUNT NO. NO. OF SHARES HELD

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AffixStamp

THE COMPANY SECRETARYISKANDAR WATERFRONT CITY BERHAD(formerly known as Tebrau Teguh Berhad) (Co. No. 8256-A)

Suite 1301, 13th FloorCity Plaza, Jalan Tebrau80300 Johor BahruJohor Darul Takzim

annual report 2014 iskandar waterfront city berhad (8256-a)notice is hereby given that the 46th...

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