creating synergy · zainah binti mustafa, aged 62, female, a malaysian, was appointed on the board...

DAMANSARA REALTY BERHAD (4030-D)

Lot 10.3, Level 10Wisma Chase Perdana

off Jalan SemantanDamansara Heights50490 Kuala Lumpur

T : 03-2081 2688F : 03-2081 2690

E : [email protected]

DA

MA

NSA

RA REA

LTY BERHAD

(4030-D) A

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UAL REPO

RT 2016

CREATING

SYNERGY

Annual Report 2016

B ANNUAL REPORT 2016 | DAMANSARA REALTY BERHAD

COVER RATIONALE

CREATING SYNERGY

A business transformation encompasses the creation of a new culture whilst improving the core businesses which involves formulation of strategic plans, organizational development and continuous process improvements. The metamorphosis of a cocoon into a butterfl y symbolizes this journey; the transformation that Damansara Realty Berhad is embarking on.

ANNUAL REPORT 2016 | DAMANSARA REALTY BERHAD 1

TABLE OF CONTENTS

COMPANY02 Corporate Information

03 Corporate Structure

06 Board of Directors’ Profi le

11 Key Managements’ Profi le

14 Group Management

15 Subsidiary Management

CORPORATE STATEMENTS18 Chairman’s Statement

20 Executive Vice Chairman’s Message 22 Group Chief Executive Offi cer’s Review of Operations

30 Management Discussion and Analysis

34 Sustainability Report

CORPORATE GOVERNANCE41 Statement of Corporate Governance

56 Audit Committee Report

60 Statement on Risk Management and Internal Control

65 Statement on Directors’ Responsibility

66 Recurrent Related Party Transactions

FINANCIAL STATEMENTS70 Directors’ Report

74 Statement by Directors

74 Statutory Declaration

75 Independent Auditors’ Report

81 Statements of Comprehensive Income

82 Statements of Financial Position

84 Statement of Changes In Equity

86 Statement of Cash Flows

88 Notes to the Financial Statements

151 Supplimentary Information

OTHER INFORMATION152 List of Properties Held by the Group

153 Shareholdings Statistics

156 Notice of Annual General Meeting

160 Statement Accompanying the Notice of Annual General Meeting

FORM OF PROXY

2 ANNUAL REPORT 2016 | DAMANSARA REALTY BERHAD

CORPORATE INFORMATION

GROUP CHIEF EXECUTIVE

OFFICER

ENCIK BRIAN ISKANDAR

BIN ZULKARIM

(Appointed on 01.09.2016)

TUAN HAJI MOHD FAZLIN SHAH

BIN MOHD SALLEH

(Resigned on 26.08.2016)

BOARD OF AUDIT COMMITTEE

PUAN ZAINAH BINTI MUSTAFA

(Chairman)

TUAN HAJI ABDULLAH

BIN MD YUSOF

ENCIK SHAHRIZAM BIN A

SHUKOR


BOARD OF NOMINATION AND

REMUNERATION COMMITTEE

YBHG DATO’ MOHD AISOM

BIN OMAR

CHAIRMAN(Appointed on 30.05.2016)


TUAN HAJI ABDULLAH

BIN MD YUSOF

BOARD OF RISK MANAGEMENT

COMMITTEE

YBHG DATO’ MOHD AISOM

BIN OMAR

(Chairman) (Appointed on 05.12.2016)



TUAN HAJI ABDULLAH BIN MD

YUSOF


ENCIK SHAHRIZAM BIN A SHUKOR


COMPANY SECRETARY

WAN RAZMAH BINTI WAN ABD

RAHMAN

(MAICSA 7021383) (Appointed on 15.03.2017)

AHMAD FAISAL BIN ABDUL KARIM (MAICSA 7045851)(Resigned on 31.03.2017)

REGISTERED OFFICE

Lot 10.3, Level 10 Wisma Chase Perdana Off Jalan Semantan Damansara Heights50490 Kuala Lumpur

T : 03-20812688 F : 03-20812690 E : [email protected]

SHARE REGISTRAR

TRICOR INVESTOR

SERVICES SDN BHD

Unit 32-01, Level 32, Tower A Vertical Business SuiteAvenue 3, Bangsar SouthNo. 8 Jalan Kerinchi59200 Kuala Lumpur

T : 03-27839299F : 03-27839222E : [email protected]

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad

AUDITORS

Messrs. Jamal, Amin & Partners(AF 1067)

PRINCIPAL BANKER

CIMB Bank Berhad

WEBSITE ADDRESS

www.dbhd.com.my

BOARD OF DIRECTORS

YB DATO’ AHMAD ZAHRI BIN JAMIL

Independent Non-Executive Chairman

YB DATO’ DAING A MALEK BIN DAING A RAHAMAN

Executive Vice Chairman


Senior Independent Non-Executive Director

YBHG DATO’ MOHD AISOM BIN OMAR

Independent Non-Executive Director

YB DATUK MD OTHMAN BIN HJ YUSOF


TUAN HAJI ABDULLAH BIN MD YUSOF


ENCIK WAN AZMAN BIN ISMAIL

Non-Independent Non-Executive Director

ENCIK SHAHRIZAM BIN A SHUKOR



CORPORATE STRUCTURE

100%Damansara Forest Products (Malaysia) Sdn Bhd

100%Damansara Galaxy Sdn Bhd

100%Damansara Realty (Johor) Sdn Bhd

100%Damansara Realty (Terengganu) Sdn Bhd

100%Damansara Realty Construction Sdn Bhd

100%Damansara Realty Land Sdn. Bhd.

100%Damansara Realty Management (Timber Operations) Sdn Bhd

100%Damansara Realty Management Services Sdn Bhd

100%Damansara Realty Properties Sdn Bhd

100%Damansara Urban Sdn. Bhd.

100%DAC Land Sdn. Bhd.

100%DRP Construction Sdn Bhd

100%Harta Facilities Management Sdn Bhd

100%JOLS Construction Sdn Bhd

100%Kesang Construction & Engineering Sdn Bhd

100%Kesang Equipment Hire Sdn Bhd

100%Kesang Industries Sdn Bhd

100%Kesang Leasing Sdn Bhd

100%Kesang Properties Sdn Bhd

100%Kesang Trading Sdn Bhd

100%Metro Equipment Systems (M) Sdn Bhd

100%Metro Parking (M) Sdn Bhd

100%Metro Parking (Sabah) Sdn Bhd

100%Smart Parking Management Systems Sdn Bhd

100%Tebing Aur Sdn Bhd

100%TMR ACMV Services Sdn Bhd

100%TMR Koll Sdn Bhd

WHOLLY OWNED SUBSIDIARIES

51%DHealthcare Centre Sdn Bhd

80%Damansara Realty (Pahang) Sdn Bhd

75%HC Duraclean Sdn Bhd

70%Healthcare Technical Services Sdn Bhd

95%Kesang Kastory Enterprise Sdn Bhd

70%Kesang Quarry Sdn Bhd

90%M.N. Koll (M) Sdn Bhd

55%Pedas Quarry Sdn Bhd

95.5%TMR Urusharta (M) Sdn Bhd

70%TMR LC Services Sdn. Bhd(fka Damansara Millenium Sdn Bhd)

SUBSIDIARIES

100%Metro Parking (B) Sdn Bhd

55%Metro Parking (HK) Limited

70%Metro Parking (S) Pte Ltd

100%Metro Parking Services (I) Pvt. Ltd.

75%Metro Parking Management (Philippines) Inc

100%Healthcare International Ltd

OVERSEAS COMPANIES

30%DAC Properties Sdn Bhd

45%Healthcare Technical Services (PNG) Limited

ASSOCIATED COMPANIES

(4030-D)


EnsuringContinuity

Damansara Realty Berhad sets its transformation journey by rapidly evolving itself through rigorous and continuous improvement initiatives that aim to foster synergisticcohesion within the Group


BOARD OF DIRECTORS

YB DATO’ AHMAD ZAHRIBIN JAMILIndependent Non-Executive Chairman

Dato’ Ahmad Zahri bin Jamil, aged 68, male, a Malaysian, is the Independent Non-Executive Chairman of Damansara Realty Berhad (“Damansara Realty” or the “Group”). He was appointed to the Board of Damansara Realty on 22 August 2014. Dato’ Ahmad Zahri served as a Director of Yayasan Pelajaran Johor from 2004 to 2013 and was a Director of Johor Corporation (“JCorp”) from 2009 to 2013. He was the Chairman of the Executive Committee, Housing, Local Government and Public Amenities of State of Johor from 2008 to 2013. He holds a Bachelor of Arts of History from University Malaya. He was the Private Secretary to the Menteri Besar of Johor from 1982 to 1986 and subsequently became the Political Secretary at the Prime Minister’s Department from 1986 to 1987. He was also the State Assemblyman of Sri Medan, Parit Sulong, Batu Pahat, Johor from 1999 to 2013.

He holds 20,000 units of ordinary shares in the Damansara Realty. Other than as disclosed, he does not have any family relationship with any director and / or major shareholder of Damansara Realty.

He has not been convicted for any offences for the past 5 years and he had attended 4 out of 6 Board Meetings held during the fi nancial year ended 31 December 2016 (“FY2016”).


YB DATO’ DAING A MALEKBIN DAING A RAHAMANExecutive Vice-Chairman• Chairman of Tender Board Committee

Dato’ Daing A Malek bin Daing A Rahaman, aged 61, male, a Malaysian, was appointed as Executive Vice Chairman on 26 May 2014. He is also the Chairman of the Tender Board Committee of Damansara Realty.

Dato’ Daing A Malek possesses more than 30 years of business experience, namely, in real estate, property development, construction and material supplies. He is the Non-Executive Chairman of Astaka Padu Sdn Bhd, a Bumiputra company, which is currently developing the tallest residential tower in Johor Bahru. He is also the Chairman and Shareholder of SIPP Energy Sdn Bhd which was awarded a contract by the Federal Government to construct, own, operate and maintain the 1,440MW electricity generating power plant in Pasir Gudang, Johor. He is a director in many other private companies, which businesses include logistics, reclamation works, port services and management, advisory and consultancy for development and management of BLT (build, lease and transfer) and government-related projects. He is also a Member of the Johor Council Royal Court.

He holds a Bachelor of Surveying (Property Management) from Universiti Teknologi Malaysia. Prior to venturing into business, he was a Valuation Offi cer under the Ministry of Finance and attached to Jabatan Penilaian Harta Batu Pahat. He was also a Lecturer at the Survey Faculty at the University Teknologi Malaysia.

He holds indirect interest of 51% equity shareholding in the Group through Seaview Holdings Sdn Bhd. Other than as disclosed, he does not have any family relationship with any director and / or major shareholder of the Group.

He has not been convicted for any offences for the past 5 years and he had attended all Board Meetings of the Group in the FY2016.

BOARD OF DIRECTORS

BOARD OF DIRECTORS

PUAN ZAINAH BINTI MUSTAFASenior Independent Non-Executive Director• Chairman of Board Audit Committee• Member of Board Nomination and Remuneration

Committee• Member of Board Risk Management Committee

Zainah binti Mustafa, aged 62, female, a Malaysian, was appointed on the Board of Damansara Realty on 17 April 2003. She is a Senior Independent Non-Executive Director of Damansara Realty. She is the Chairman of Board Audit Committee, member of Board Nomination and Remuneration Committee and a member of Board Risk Management Committee.

She graduated from Institut Teknologi MARA (presently known as Universiti Teknologi MARA) and obtained her Association of Chartered Certifi ed Accountants (ACCA) United Kingdom in 1976. She is now a Fellow of Association of Certifi ed Chartered Accountant (FCCA).

She started her career as an Assistant Senior Auditor in Perbadanan Nasional Berhad in 1977. She joined JCorp in October 1978 and rose through the ranks to Group Chief Financial Offi cer before retiring on 31 October 2002.

She also sits on the board of other listed companies, namely, KPJ Healthcare Berhad, Damansara REIT Managers Sdn Bhd (Al-`Aqar KPJ REIT) and Al-’Aqar Capital Sdn Bhd.

Other than as disclosed, she does not have any family relationship with any director and/or major shareholder of the Group, nor any confl ict of interest with the Group.

She has not been convicted for any offences for the past 5 years and she had attended all Board Meetings of the Company during the FY2016.

YBHG DATO’ MOHD AISOMBIN OMARIndependent Non-Executive Director• Chairman of Board Risk Management Committee• Chairman of Board Nomination and Remuneration

Committee

Dato’ Mohd Aisom bin Omar, aged 60, male, a Malaysian, was appointed as an Independent Non-Executive Director of Damansara Realty on 15 December 2015. He is the Chairman of Board Risk Management Committee.

Dato’ Mohd Aisom graduated with a Bachelor’s Degree in Law (LLB Hons) from University of Malaya in 1982. He was a Legal Assistant at Messrs Tahir & Salleh in Johor Bahru for a one year stint in 1983. In 1984, he ventured into the corporate world to join Sri Tenaga Perunding Sdn Bhd as the General Manager, Corporate and Legal Affairs. He later joined Astaka Group of Companies as the Group General Manager, Legal Affairs.

In pursuit of his passion in legal practice, he joined Messrs Zamani Ibrahim, Tarmizan & Co. as a Partner in June 2004. In 2005, he set up his own legal practice through Messrs Omar Ismail & Co, which was later known as Messrs Omar Ismail, Hazman & Co.

Dato’ Mohd Aisom is also passionate in the political arena. He was the Committee Member of Biro Perlembagaan Pemuda UMNO Malaysia in 1984. He was also an UMNO Youth Head of Taman Perbadanan Islam branch, Johor Bahru. He was the Committee Member of UMNO Bahagian Beruas and a representative of the UMNO General Assembly in 2008. He is now the UMNO Branch Chief, Sungai Tuntong, Bahagian Beruas.

Other than as disclosed, he does not have any family relationship with any director and / or major shareholder of the Group, nor any confl ict of interest with the Group.

He has not been convicted for any offences for the past 5 years and he had attended all Board Meetings held during the FY2016.


BOARD OF DIRECTORS

YB DATUK MD OTHMANBIN HAJI YUSOFIndependent Non-Executive Director

Datuk Md Othman bin Haji Yusof, aged 59, male, a Malaysian, was appointed as an Independent Non-Executive Director of Damansara Realty on 15 December 2015.

Datuk Md Othman is a businessman with over 31 years of experience in various industries. He is currently the Executive Director of Country Garden Pacifi cview Sdn Bhd since 2013.

In 2008, he was elected as the Assemblyman for Kukup, Tanjung Piai. During his term of service, he had contributed enormously to improve the well-being of the people within his constituency.


He has not been convicted for any offences for the past 5 years and he had attended 5 out of 6 board meetings held during the FY2016.

TUAN HAJI ABDULLAHBIN MD YUSOFIndependent Non-Executive Director

• Member of Board Audit Committee• Member of Board Nomination and Remuneration

Committee• Member of Board Risk Management Committee• Member of Tender Board Committee

Abdullah bin Md. Yusof, aged 50, male, a Malaysian, was appointed as an Independent Non-Executive Director on 6 June 2014. He is a member of the Board Audit Committee, Board Nomination & Remuneration Committee, Board Risk Management Committee and Tender Board Committee of Damansara Realty.

He holds a Bachelor of Arts (Hons) in History from University Malaya in 1989 and holds a Certificate of Company Secretarial from Institut Usahawan Bumiputera.

He is the Chairman of Polytax and Accounting Services, which provide Company Secretarial and Business Consultancy since 2004. He was a member of Majlis Bandaraya, Johor Bahru from 2007 until 2014. He is a member of the Jawatankuasa Majlis Usahawan and Koperasi Negeri Johor since 2005. He has also served the community as Ketua Penerangan Majlis / Vice President Gabungan NGO Melayu Negeri Johor (GABUNG) since 2011, YDP Persatuan Penjaja, Peniaga dan Pengusaha Industri Kecil Melayu, Johor Bahru since 2002, Penceramah dan Penyelia Biro Tatanegara Johor from 1990-2000. He was also the EXCO Pemuda UMNO Malaysia and Ketua Pemuda UMNO Bahagian Pulai from 2004-2008.

Other than as disclosed, he does not have any family relationship with any director and / or major shareholder of the Group, nor any confl ict of interest with the Group. He has not been convicted for any offences for the past 5 years and he had attended 5 out of 6 Board Meetings of the Group in the FY2016.



ENCIK WAN AZMAN BIN ISMAILNon-Independent Non-Executive Director

• Member of Tender Board Committee

Wan Azman bin Ismail, aged 53, male, a Malaysian, was appointed as a Non-Independent Non-Executive Director of Damansara Realty on 6 June 2014. He is also a member of Tender Board Committee of Damansara Realty.

He graduated with a BA (Hons) in Accounting and Financial Analysis, University of Newcastle upon Tyne, United Kingdom in 1988. He started his career under the Corporate Finance Division of Perwira Affi n Merchant Bank Berhad from September 1990 to March 1996. He later joined the Corporate Finance Division of BSN Merchant Bank Berhad on March 1999 to July 1999.

He joined JCorp Group in September 1999 to December 2000 and later joined Damansara Realty in January 2001. He was appointed as the Managing Director of Damansara Realty on 1 Feb 2011 and later redesignated as Director. Later, in June 2014, he joined JCorp as Vice President and resigned on 15 February 2017. On 15 February 2017, he was appointed Non-Executive Director of Damansara REIT Managers Sdn Bhd.


He has not been convicted for any offences for the past 5 years and he had attended all board meetings held during the FY2016.

ENCIK SHAHRIZAM BIN A SHUKORIndependent Non-Executive Director

• Member of Board Audit Committee• Member of Board Risk Management Committee

Shahrizam bin A. Shukor, aged 45, male, a Malaysian, was appointed as an Independent Non-Executive Director of Damansara Realty on 15 December 2015. He is a member of Board Audit Committee and Board Risk Management Committee.

Currently he is the Chief Financial Offi cer of Tresnergy Sdn Bhd, an oil and gas company.

He is a Chartered Accountant with the Malaysia Institute of Accountants and an Associate member of CPA Australia with 15 years of working experience in auditing, corporate and fi nancial management.

He holds a Bachelor of Accountancy (Honours) from University Putra Malaysia. He started his career at Coopers& Lybrand in 1996 and then joined Azman, Wong Salleh& Co. until 2002 in the areas of auditing and fi nancial advisory. He then set up his own fi nancial advisory fi rm through Westland Consulting Sdn Bhd and still operates until now.


He has not been convicted for any offences for the past 5 years and he had attended all board meetings held during the FY2016.

BOARD OF DIRECTORS



Brian Iskandar Zulkarim, 43, male, a Malaysian, was appointed as the Group Chief Executive Officer of Damansara Realty on 1 September 2016.

His experience and expertise covers the areas of Corporate Planning & Transformation, Asset & Facilities Management, Overseas Investments & International Business, Airport Planning & Operations, Corporate Restructuring Consultancy and Project Management.

Previously he was the General Manager - Transformation Management of Malaysia Airports Holdings Berhad (“MAHB”).

Prior to that, from September 2011 to September 2015, Brian was the CEO of MAHB’s facilities management subsidiary, Urusan Teknologi Wawasan Sdn. Bhd. (“UTW’). During his tenure as CEO, UTW transformed from a loss EBITDA position to becoming one of the most profi table Facilities Management company in Malaysia and ranked top 3 in the country’s industry market share – with CAGR of 217% (2011 to 2015).

From 2009 to 2011, he held the post of General Manager (Overseas Ventures) for MAHB. He was responsible for monitoring the management of MAHB’s international airport investments in India, Maldives and Turkey; in addition to spearheading and participating in airport acquisition bids around the world.

He had also served as the CEO of a multimodal international logistics company prior to joining MAHB in 2009. Before that, he held the post of Regional Director (Asia) for an international company specializing in Homeland Security equipment and drug detection & identifi cation systems.

He started his professional career in 1997 as a Maintenance and Consultant Engineer in the USA. He has a Master in Business Administration and a Bachelor of Science Degree in Mechanical Engineering.

Other than as disclosed, he does not have any family relationship with any director and / or major shareholder of the Group, nor any confl ict of interest with the Group. He has not been convicted for any offences for the past 5 years.

KEY MANAGEMENT

BRIAN ISKANDAR ZULKARIMGroup Chief Executive Offi cer

• Member of Tender Board Committee


KEY MANAGEMENT

ZAIN AZRAI ZAINUDDINGroup Chief Financial Offi cer

Zain Azrai Zainuddin, 44, male, a Malaysian, was appointed as the Group Chief Financial Offi cer (“Group CFO”) of Damansara Realty on 1 September 2016. He has 22 years of experience in auditing, consultancy and fi nance.

He holds a Bachelor of Business (Accounting) from Monash University, Melbourne, Australia. He started his career with Deloitte Kassim Chan in Malaysia from 1995 to 2007. From 2000 until 2002, he was attached at Deloitte & Touche in New Jersey, USA.

He was also attached as a consultant in Transaction Services Department of Pricewaterhouse Coopers Advisory Services Sdn Bhd from 2007 to 2011. From 2011 to 2012, he was the Assistant Vice President in Investment Banking Division with the Asian Finance Bank Berhad.

He was appointed as the Vice President of UDA Holdings Berhad (“UDA”) in Finance Department and later promoted to Senior Vice President heading UDA’s Group Finance in 2015 before joining Damansara Realty.

He is a member of CPA Australian and Malaysian Institute of Accountants (MIA).


WAN RAZMAH WAN ABD RAHMANCompany Secretary

Wan Razmah Wan Abd Rahman, 48, female, a Malaysian, was appointed as the Company Secretary of Damansara Realty on 15 March 2017.

She is a Chartered Secretary of the Institute of Chartered Secretaries and Administrators (ICSA) UK and a member of the Malaysian Institute and Chartered Secretaries and Administrators (MAICSA) since 1996.

Her career in a public listed company began in 1996 when she joined Amcorp Properties Berhad as an Assistant Company Secretary and thereafter joined Idaman Unggul Berhad as the Company Secretary and Head of Human Resources.

In 2014, she joined MAHB as Senior Manager, Company Secretarial Division. In 2016, she was appointed as the Corporate Affairs Manager at Tune Group Sdn Bhd.

Other than as disclosed, she does not have any family relationship with any director and / or major shareholder of the Group, nor any confl ict of interest with the Group. She has not been convicted for any offences for the past 5 years.

KEY MANAGEMENT

LOH ZHI SINGGeneral Manager, Property & Land Development

Loh Zhi Sing, 43, male, a Malaysian, was appointed as General Manager of Property & Land Development Division for Damansara Realty since 7 November 2016.

He has been in Property Development and Construction industry for the past 20 years. He holds a Bachelor’s Degree in Civil Engineering from Universiti Teknologi Malaysia (UTM).


ELIZA CHE MALIKGeneral Manager, Corporate Services

Eliza Che Malik, 43, female, a Malaysian, was appointed as General Manager of Corporate Services for Damansara Realty since 15 December 2016.

She has experience in Corporate Services for more than 20 years especially on Rewards, Performance, Talents, Succession & Development.

She holds a Bachelor’s Degree in Computer & Management Science from the University of Warwick, United Kingdom.

Having served in various Government Linked Companies and industries including Telekom Malaysia, RHB Bank and Time dotCom at Senior Managerial role, Eliza is well rounded and is experienced in the area of transformation for large companies.

Other than as disclosed, she does not have any family relationship with any director and / or major shareholder of the Group, nor any confl ict of interest with the Group. She has not been convicted for any offences for the past 5 years.



GROUPMANAGEMENT

1. SYED ZULKIFLI BIN SYED ISMAIL

Head of Corporate Planning and Transformation

2. SUHANA BINTI MOKHTAR

Head of Legal

3. EIKMAR RIZAL BIN MOHD RIPIN

Head of Corporate Communication

4. SAFIAH BINTI ADNAN

Head of Human Resource

5. ERLINA BINTI AHAMAD

Head of Procurement

6. OSNAINI BINTI OSMAN

Head of Accounting and Finance

7. ZALINA BINTI MAAT

Head of Treasury

8. DAENG FATIN ZULAIKA BINTI DAING A MALEK

Head of Risk Management

9. AZULLAIHA BINTI ABDULLAH

Head of Internal Audit

1

7

4 5 6

2

8

3

9


SUBSIDIARYMANAGEMENT

1

43

2

1. ABDUL JALIL BIN PANDI

Managing Director of Metro Parking (Malaysia) Sdn Bhd

2. SHAMSUL BIN MOHD SALLEH

Managing Director of TMR Urusharta (M) Sdn Bhd

3. HAJI AZHARI BIN ABDUL HAMID

Managing Director of HC Duraclean Sdn Bhd

4. HAJI YAHAYA BIN HASSAN

Managing Director of Healthcare Technical Services Sdn Bhd


CraftingCreativityDamansara Realty Berhad is determined to inculcate creativity and innovation through nurturing a dynamicwork culture within the Group


CHAIRMAN’SSTATEMENT

YB DATO’ AHMAD ZAHRI BIN JAMILIndependent Non-Executive Chairman



The year under review saw the Group executed several strategic actions in order to accelerate corporate recovery and enhance shareholder value, such as efforts to increase the Group’s project base, leverage synergies, enhance operational effi ciencies and bolster corporate governance.

In a very eventful year, the management team conducted a rigorous corporate review led by the new Group CEO Encik Brian Iskandar bin Zulkarim and had put in place a Strategic Restructuring Plan (“SRP”) exercise to drive its transformation. I am confident that we have begun a new chapter in transforming Damansara Realty to a stronger corporation able to unlock its combined strengths and capabilities to enhance shareholder value.

The Group’s fi nancial performance in FY2016 must be viewed in the context of the seeds we have sown. In a challenging year amidst economic and geopolitical uncertainty, the revenue across our subsidiaries declined to RM183.6 million in FY2016 from RM207.1 million in FY2015. Gross profit declined to RM19.3 million from RM47.3 million over the comparative periods as a result of higher operating expenses and costs of sales in FY2016. In spite of these, the Board is hopeful that the transformation plan which focuses on growing and sustaining medium to long term revenue streams, will bear fruit.

On 2 June 2016, the Group announced that it will issue redeemable convertible notes to raise up to RM150 million to seize and execute property development opportunities in Malaysia. The Group intends to use the proceeds to develop projects in Putrajaya, Kuantan and Johor Bahru. I believe this will be a major catalyst for growth that will strengthen our balance sheet and boost trading liquidity.

There had been many new appointments across the Group at various levels. As part of the Board’s commitment to refresh itself, both Dato’ Sohaimi bin Shahadan and the late Dato’ Ar. Wan Mohammad Khair-il Anuar bin Wan Ahmad had stepped down from the Board as Independent and Non-Executive Directors. I thank them for their contributions. The appointment of Encik Brian Iskandar bin Zulkarim as the Group CEO on 1 September 2016 will allow the Group to tap his corporate transformation expertise as it embarks on a new chapter. On 1 September 2016, Encik Zain Azrai bin Zainnuddin was appointed as the Group CFO.

The Group has established an Executive Committee (“EXCO”) on 22 November 2016 which comprises the Group CEO, Group CFO, Group GMs and subsidiary MDs to collectively implement the Group’s restructuring plan.

The Board is mindful that much more remains to be done to realise Damansara Realty’s full potential. While the Board recognizes the challenges that lie ahead, the Board retains its utmost faith in the ability of the management team and the strategic initiatives to be executed. The Board believes that recent signifi cant project wins, together with expected higher revenue contribution over both medium and long terms will position the Group to seize new opportunities and embark on a new phase of growth.

I wish to express my deepest gratitude to all stakeholders for their continuous support. I believe the Group has emerged from a diffi cult year, and is cautiously optimistic as it lays the groundwork to accelerate our corporate recovery. Recognition should also be given to fellow Board members for their guidance, support and advice.

Finally, on behalf of the Board, I would like to extend my heartfelt appreciation to the management team and employees for their dedication and commitment to bring the Group forward.

Thank you.

YB Dato’ Ahmad Zahri Bin Jamil

Chairman

DEAR SHAREHOLDERS,

On behalf of the Board of Directors (the “Board”), I am pleased to present the Annual Report and the Audited Financial Statements of Damansara Realty for the FY2016.

CHAIRMAN’S STATEMENT


YB DATO’ DAING A MALEKBIN DAING A RAHAMANExecutive Vice Chairman

EXECUTIVE VICE CHAIRMAN’S MESSAGE

The FY2016 has been a busy one with significant developments especially for our property development division.

One of the most signifi cant highlights is the proposed joint-venture with Hong Kong-listed Country Garden Holdings Company Limited (“Country Garden”), one of China’s largest property developers.

This major milestone will play a signifi cant role in the Group’s efforts to accelerate its property development business in various parts of Malaysia. Although sentiments about the property market remain cautious, we are optimistic that investors will be able to discern the quality and differentiating attributes of the Group’s projects.



For the past few years in Johor Bahru, there has been a mismatch of supply and demand as most homes built in the urban areas are catered for the high-end market. We are going to amend this by providing affordable homes to Malaysians.

On 14 October 2016, the Group announced the formation of a joint-venture with Country Garden, to develop a 53-acre freehold land parcel in Johor Bahru into a mega integrated township known as Central Park. The Group will hold 30%-stake in DAC Properties Sdn Bhd with the remaining 70% held by Hong Kong-listed Country Garden.

Development is expected to commence in the fi rst half of the fi nancial year ending 2017 (“FY2017”) and will span over eight years. The integrated township development, located in the Tebrau district and 5 kilometres to the north-west of Johor Bahru city centre, will comprise of commercial shop lots and amenities, and affordable residential units targeted at young genuine buyers.

In Johor, huge development projects and infrastructure works have been announced, such as the Johor-Bahru-Singapore Rapid Transfer System link and the Kuala Lumpur-Singapore High Speed Rail. These will contribute to a major enhancement of infrastructure in this region and raise the profile as a preferred location for residents, businesses and industries.

Our partnership with Country Garden represents a signifi cant opportunity for the Group to execute a large-scale project alongside one of China’s most reputable developers. It is a testament to the strong confi dence in our ability to implement and complete a development of such scale.

I believe Central Park will play a crucial role to accelerate the Group’s corporate growth. The execution of the various agreements between JCorp, Country Garden and Damansara Realty will also strengthen our balance sheet. I foresee the partnership to generate a steady and signifi cant income over the next few years.

Subsequent to FY2016, Central Park held its grand opening in March 2017 that attracted many homebuyers and potential investors.

The Group is also developing a 500-acre land parcel in Kuantan known as Bandar Damansara Kuantan, which has been rebranded to Damansara Hills Kuantan.

The luxurious development, which will be completed by the fi nancial ending 31 December 2018 (“FY2018”), boasts 49 spacious and private terraced houses. It is uniquely situated next to an expansive park and is just 19 kilometres from Kuantan city centre.

As announced in September 2016, the Group, via a joint venture, won a RM124 million contract to provide facilities management and catering service to Petronas’ Refinery and Petrochemical Integrated Development (“Rapid”) project in Pengerang, Johor. This underscores the strength of our facilities management services division and we are proud to play a part in the largest integrated refi nery and petrochemical hub in the region.

A NEW ERA

Damansara Realty is simultaneously scaling up the size and scope of its property development projects while building up its capabilities in integrated facilities management. Under the leadership of Encik Brian Iskandar bin Zulkarim, our new Group CEO, major actions have been executed over the past few months which will yield positive results in the near future. Through the disciplined execution of our strategies, we will strive to return to profi tability.

APPRECIATION

I would like to extend my utmost gratitude to our business partners, fi nancial associates, Federal and State Government Agencies and Regulatory Authorities for your cooperation and continuous support over the past year.

Thank you to all our shareholders and investors for their trust. Last but not least, I would like to thank the Board members, management and employees for their commitment and all their hard work.

Together, we will continue to achieve excellence in the coming years. I look forward to another exciting year ahead with all of you.

YB Dato’ Daing A Malek bin Daing A Rahaman

Executive Vice Chairman

EXECUTIVE VICE CHAIRMAN’S MESSAGE


GROUP CHIEFEXECUTIVE OFFICER’SREVIEW OF OPERATIONS

The year in review has seen the Group executed a series of strategic initiatives to facilitate corporate recovery and enhance shareholder value. Despite the uncertain economic backdrop and geopolitical challenges, we have demonstrated resilience and secured major contract wins as we embark on a strategic restructuring plan.

BRIAN ISKANDAR BIN ZULKARIMGroup Chief Executive Offi cer



GROUP CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS

STRATEGIC RESTRUCTURING PLAN

Since my appointment as the Group CEO in September 2016, the management team under my leadership has put in tremendous efforts to identify issues and challenges, perform business analysis as well as introduce the Strategic Restructuring Plan (“SRP”).

Changing the Group’s direction successfully requires detailed analysis of all our businesses followed by dedication and persistence to ensure proper execution. Strategic changes in business direction with prudent fi nancial management to prioritise immediate initiatives were made. This was done through a transformation plan comprising ‘diagnostic’, ‘prescription’ and ‘health-plan’ phases which was presented to and approved by the Board in November 2016. Such transformation plans typically take 100 days, but our team worked quickly to formulate it in only 60.

To return to profi tability, signifi cant changes have to be made. In the coming months, the focus will be to build a strong foundation for growth. As Damansara Realty operates in various competitive industries, there is a need for us to constantly evolve. On that note, we introduced the SRP and it is envisioned to be the catalyst to propel the Group forward. With utmost discipline, we set internal goals for the team that can be measured in various periods-ranging from immediate quick wins to longer term initiatives and action plans.

As part of the strategy, we have begun to centralise various management and operational functions – including procurement, fi nance and human resources – with a view to improve Group-wide cost management and standardize business processes. Recognising the need of a strong corporate headquarter, we have established new divisions such as Corporate Planning & Transformation, Risk Management and Corporate Communication. These divisions will allow us to better monitor processes holistically as we raise the profi le of the Damansara Realty brand, leveraging on synergies between business units.

The SRP identifi es 8 key transformation drivers which include:

1. Upholding Governance 5. Enhancing Business Acumen

2. Raising Leadership Competency 6. Rebuilding Reputation

3. Setting Effective Performance Measures 7. Revamping Organization Structure

4. Creation of a Strategic Business Plan 8. Ensuring Effective Cash Flow Management (including granular level action plans)


PROPERTY DEVELOPMENT

The current challenges faced by Malaysia’s property market are well known. These include high construction costs, Government cooling measures, as well as weak consumer sentiments. Despite these, the Group’s property division has made signifi cant headway.

On 14 October 2016, the Group announced that it would form a joint-venture with Country Garden, to develop a 53-acre freehold land parcel in Johor Bahru into an integrated township known as Central Park and has by been approved by the Shareholders at the Extraordinary General Meeting held on the 11 April 2017.

The joint-venture, DAC Properties Sdn Bhd, is 30% held by the Group’s wholly-owned subsidiary and 70% held by Hong Kong-listed Country Garden. This partnership with one of China’s largest developers will elevate the profi le of Damansara Realty and enable us to showcase our abilities on a bigger scale.

The Central Park site is part of a larger 63-acre land parcel (“TDA Land”) that the Group will acquire for RM141.53 million, following a development rights agreement signed in 2002 and 2003 with JCorp, DAC Properties will pay RM130.3 million to JCorp for the 53-acre site. Separately, the Group will acquire from JCorp the remaining 10 acres of TDA Land, which comprises completed shop offi ces and undeveloped land, for RM11.23 million.

The Group is developing 49 residential units on a project known as Damansara Hills 1 – which sits on a portion of a 500-acre land parcel in Kuantan. We launched our showrooms in April 2017 and expect revenue contribution from this project to kick in commencing FY2017.

Damansara Aliff Square, located in Tampoi, comprises a total of 39 multi-storey shop lots. We have sold 22 units to date and expect to recognise sales from the remaining units in FY2017.


INTEGRATED FACILITIES MANAGEMENT (“IFM”)

Under the IFM business, we now offer planning, development, maintenance, operation, car park solutions and management of assets, through our subsidiaries, TMR Urusharta (M) Sdn Bhd (“TMR”), HC Duraclean Sdn Bhd (“HCD”) and Metro Parking (M) Sdn Bhd (“Metro Parking”).

This strategic shift is intended to create sharper focus and better positions for Damansara Realty to capture the increasing number of clients who prefer to deal with a single service provider. In addition, we will be able to leverage synergies and increase opportunities across our businesses.

TMR and HCD have grown in the past few years to evolve into professional service providers that manage over 10 million square feet of property and assets for the Government as well as private and government-linked companies throughout Malaysia. To ensure global standards are upheld, various subsidiaries have received certifi cations such as ISO9001, ISO14001 and OHSAS18001.

Metro Parking continues to position itself as a premier car park operator across Asia Pacific with over 200 car parks comprising of 60,000 parking bays under the management in Malaysia, Singapore and Philippines. Going forward, Metro Parking will progressively roll out increased automation for its car parks, even as it moves towards managing its own car park assets. Metro Parking also intends to enter into collaborations with public transport providers to further expand its market share.


We are proud to state that our clients include household names such as Petronas, JCorp, Malaysia Airports Holdings Berhad, Permodalan Nasional Berhad and Telekom Malaysia Berhad.

Underscoring our proven track record and strength of our facilities management offerings, the Group’s joint venture with L.C. Catering Sdn Bhd, was awarded a RM124.0 million contract to provide facilities management and catering services to Rapid. As announced on 26 September 2016, the contract covers general cleaning, pest control, landscaping, mechanical & electrical and civil & structural services for the temporary executive village and management office from 1 November 2016. Most importantly, this joint venture opens up the opportunity for us to be involved in the food and beverage industry. The 38-month contract will contribute to Group’s revenue until FY2019.

As announced on 22 April 2016, the Group also won a RM6.9 million contract from the Ministry of Health Malaysia to provide cleaning services for Health Departments in the Federal Territory Kuala Lumpur and Putrajaya for three years commencing 1 May 2016.

We are confident that the combined expertise across our businesses will help the Group establish itself as the preferred asset and facilities management solutions provider in the region.

HEALTHCARE CONSULTANCY

Healthcare Technical Services Sdn Bhd (“HTS”) operates in a niche healthcare consultancy segment that includes hospital planning & design, technical advisory for mechanical & electrical services, hospital equipment and logistics, amongst others. Since its establishment in 1995, HTS has grown rapidly to become a global leader in the industry. It has established a proven track record of having consulted and built over 30 hospitals including in countries such as Poland, Saudi Arabia, Bangladesh, Indonesia, Laos and Papua New Guinea.

FINANCIAL REVIEW

Our scorecard for FY2016 must be seen against the various initiatives which we have executed.

For FY2016, the Group’s revenue decreased to RM183.6 million from RM207.1 million a year ago due to lower contributions across all segments. The parking segment, which is the Group’s main revenue driver has contributed 62.6% of the total sales, saw revenue decreasing 3.6% to RM115.0 million in FY2016. The property services segment

contributed RM64.7 million in revenue, accounting for 35.3% of total revenue. Revenue from the property development segment decreased to RM3.8 million accounting for 2.1% of total revenue, due largely to lower contributions from its Aliff Square 1 development – 3 units were sold in FY2016, while 18 units were sold in FY2015, as the project was completed in FY2016.

The Group reported a net loss attributable to shareholders of RM26.8 million in FY2016 from RM4.4 million in FY2015. The loss in FY2016 included the following:

Item RM million

Non-recurring interest expenses in relation to the unwinding of an amount due to a trade payable

9.2

Recognition of construction cost due to the commencement of the Perumahan Penjawat Awam 1 Malaysia Project (“PPA1M”)

8.9

Write-back payables (11.8)

One-off provision for doubtful debts and receivables

2.7

Write-off for property, plant and equipment 2.2

Total 11.2

Excluding the items stated in the above table, the Group would have reported a net loss attributable to shareholders of RM 0.9 million in FY2016.

SENIOR LEADERSHIP APPOINTMENTS

As part of the Group’s SRP plan and to strengthen the management bench, we have made the following senior appointments:

- Loh Zhi Sing as General Manager of Property & Land Development Division;

- Eliza binti Che Malik as General Manager of Corporate Services;

- Shamsul bin Mohd Salleh who was re-designated as Managing Director of TMR;

- Azua binti Kamaruddin as Executive Director of TMR;

- Syed Zulkifl i bin Syed Ismail as Head of Corporate Planning and Transformation;

- Eikmar Rizal bin Ripin as Head of Corporate Communications;

- Suhana binti Mokhtar as Head of Legal;

- Daeng Fatin Zulaika binti Daing A Malek as Head of Risk Management;

- Safi ah binti Adnan as Head of Human Resource; and

- Erlina binti Ahamad as Head of Procurement.




OUTLOOK

Damansara Realty’s core business synergy



With major internal restructuring and business developments seeded in FY2016, the Group now has a stronger foundation for growth. Further, the contributions from various projects and the launch of major corporate action plans, allows the Group to remain optimistic about the business outlook in FY2017.

Damansara Realty will continue to explore business opportunities, improve internal effi ciencies with a view to achieve profi tability and enhance shareholder value in the near future.

APPRECIATION

I would like to take this opportunity to extend my sincere appreciation to the Chairman, Executive Vice Chairman, and all Directors for their invaluable counsel. To all our stakeholders, business associates, regulatory authorities, State and Federal Government bodies, thank you for your continuous support.

As our people are important to us, I would like to take this chance to express my gratitude to all the employees for their contribution for the growth of the Group. We look forward to better years ahead as we progress on our path to recovery.

Brian Iskandar bin Zulkarim

Group Chief Executive Offi cer


GROUP CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS CHAIRMANCascading CredibilityLike the metamorphosis into a butterfl y, the coreof Damansara Realty Berhad’s transformation isto enhance its reputation and establish credibility; this effect will fl ow through thebottom-line impacting the Group positively


MANAGEMENT DISCUSSIONAND ANALYSIS

INTRODUCTION

Damansara Realty began its operations in the 60’s as a renowned property developer and asset management company. Since then, it has evolved to a diversifi ed group of companies with the addition of various facilities and asset management subsidiaries in 2012. The Group’s key subsidiaries can be categorized into 3 major business segments; Property and Land Development, Integrated Facilities Management (“IFM”) as well as Project Management & Consultancy Services.

Under the Property and Land Development segment, the Group’s key subsidiaries are Damansara Realty Johor Sdn Bhd (“DRJ”) and Damansara Realty Pahang Sdn Bhd (“DRP”); while for IFM, the key subsidiaries are TMR which focuses on engineering related facilities management; Metro Parking which focuses on parking management and consultancy services, as well as HCD which focuses on cleaning and hygiene services. In addition, the Group also consists of project management and consultancy services (construction & infrasturcture development) spearheaded by HTS.

2016 FINANCIAL PERFORMANCE

The Group had undergone a series of challenges in FY2016 which includes global economic uncertainty, currency depreciation, increase in direct and indirect costs due to more stringent statutory requirements (i.e. minimum wages, GST, etc) and tougher competition within our operating industries. By and large, the above combined challenges had somewhat impacted our FY2016 fi nancial performance.

The Group had recorded a net Loss After Tax (“LAT”) of RM27.7 mil for the period of twelve months ended 31st December 2016 as compared to a net LAT of RM2.8 mil in the previous year. The increase in LAT was mainly due to exceptional items amounting to RM16.2 million that occurred in FY2016 and will not recur in FY2017 and includes discounted cashfl ow, property, plant and equipment written off and provision for doubtful debt.

In addition to the above, the Group recorded a lower revenue of RM183.6 million in FY2016 as compared to RM207.1 million a year ago which is primarily attributable to lower contributions from its existing businesses. The Group also booked a higher Total Cost of RM222.7 million in FY2016 as compared to RM212.7 million in FY2015, mainly due to the increase in expenses and direct costs, inclusive of RM8.9 million construction costs for PPA1M in FY2016.

OVERVIEW OF PROPERTY & LAND DEVELOPMENT SEGMENT

Damansara Realty’s Property Division is currently focusing on 2 key projects; the Damansara Hills (“DH1”) and Damansara Aliff Square (“AS1” & “AS2”). DH1 is a medium to high-end housing development project with a total of 49 units of Terrace and Semi-Detached houses built in prime area in Kuantan, Pahang. The development is just minutes away from East Coast Highway, Bandar Indera Mahkota and Teluk Cempedak, one of the key attractions in Kuantan. DH1 aims to provide a safe and exciting living experience with 24-hour security surveillance to ensure the safety of its residents. In addition, DH1 also keeps residents close to nature, providing them a healthy and active living environment.

Show Units of Central Park, Johor Bahru


MANAGEMENT DISCUSSION AND ANALYSIS

The AS1 and AS2 projects are part of the development of a 53-acre freehold land parcel in Johor Bahru which is strategically located in the bustling Tampoi commercial zone and a short distance from Johor Bahru City Centre, Pasir Gudang Port and PTP Port, in the heart of Iskandar Malaysia. The Aliff Square project consists of units ranging from 4,814 square feet up to 9,881 square feet with excellent accessibility and unique eye-catching design surrounded by restaurants, banks, and various education institutions. There are currently 16 units of 3 and 4 storey shops or offi ces which are expected to be completed by 3rd Quarter 2017.

The Property Division contributed a total of RM3.8 million to the Group’s revenue in FY2016 as compared to RM16.4 million in FY2015 due to lower number of units sold (3 units in FY2016 vs 18 units in FY2015). The Property Division recorded a net loss of RM17.2 million mainly due to RM9.2 million fi nancing cost and RM8.9 million PPA1M development cost respectively.

FUTURE PROSPECTS OF PROPERTY DEVELOPMENT

The Group is expecting better sales in FY2017 due to the recovery of Malaysia’s economy which is expected to improve consumer’s buying power and sentiment towards the property market in the country.

The increase in sales would also be supported by continuous rapid development in areas surrounding the Group’s projects i.e. Central Park in Johor Bahru which would increase the value of its properties over-time where the Group is targeting predominantly local buyers. The Group has also formulated future plans to continue the development of Damansara Hills 2, a second phase development on its land in Kuantan.

Among the potential challenges identifi ed for this segment is the Group’s capability to secure fi nancing for large scale development projects due to stricter requirements set by local fi nancial institutions.

Show Units of Central Park, Johor Bahru



Despite its strong confidence in market recovery in the coming years, the Group shall continue to enhance its marketing strategies including social media marketing to create traction for its projects and improving the sales of properties.

OVERVIEW OF IFM SEGMENT

The Group’s IFM segment mainly evolved around its key facilities management subsidiaries namely TMR, HCD and MPM where each gave specifi c prominence on individual company’s expertise such as engineering related services, hygiene and cleaning services and parking management services. These services which will be molded into IFM service offering, shall provide the Group with better opportunities to capture the increasing demands from clients who prefer to deal with a single service provider.

Despite the above, the Group had only managed to emphasize on synergistic relationship late 2016 which did not have much impact to the Group’s FY2016 performance. Nonetheless, it still managed to secure high value contracts from well-known organization which include Petronas, JCorp, Malaysia Airports Holdings Berhad, Permodalan Nasional Berhad and Telekom Malaysia Berhad throughout the year. In general, the IFM segment contributed a total of RM179.8 million to the Group’s revenue in FY2016 as compared to RM190.7 million in FY2015 due to expiry of several signifi cant service contracts hence attributable to the negative Gross Profi t in FY2016.

FUTURE PROSPECT OF IFM SEGMENT

In FY2017, the Group’s IFM segment shall focus more on leveraging each other’s expertise where the Group will continue to explore business opportunities in their existing contracts especially those in Rapid.

Amongst others, the Group will re-package its service offerings to include F&B, catering, comprehensive maintenance and operations, housekeeping and cleaning services, security services, medical facility services, transportation and logistics services and other related consultancy services for its clients. This shall be in-tandem with the Group’s Vision statement which is to be the ‘Preferred Assets and Facility Management Solutions Provider’.

The Group shall also enhance its focus on product and services mix including the development of centralized monitoring and billing system which aims to improve the Group’s effi ciency in managing the car park business. In addition, Damansara Realty is currently developing a smart application to allow users to pre-book car park bays via smartphones at the parking facilities.

OVERVIEW OF PROJECT MANAGEMENT & CONSULTANCY

SERVICES SEGMENT

The Group’s Project Management & Consultancy services are spearheaded by HTS which has expertise in planning and development of hospitals & healthcare specialist centers throughout the country. In addition, the Group also provides Project Management & Consultancy services in the overall construction process inclusive of coordination & facilitation between the clients, contractors and consultants.

The Group is also equipped with the right capabilities in energy management, medical technology as well as technical and construction advisory services where it provides a mixture of complete services to clients.

Key projects that are currently in the Group’s pipeline include KPJ Damansara Specialist, KPJ Ampang Puteri, MSU Medical Centre, Seremban Specialist Hospital, Johor Specialist Hospital, UITM Hospital and Gerehu Hospital in Papua New Guinea.

FUTURE PROSPECT OF PROJECT MANAGEMENT &

CONSULTANCY SERVICES SEGMENT

In the near future, Damansara Realty envisions to enhance its project management and consultancy services where it will explore opportunities in general construction sectors where emphasis shall be given to the Group’s Property Development in various locations including projects in Damansara Hills and Damansara Aliff Square.

The Group shall also focus on diversifying income streams from other consultancy activities such as Energy Management, Medical Technology (MEQ) as well as Technical & Construction advisory.

Damansara Realty is also keen in exploring new business opportunities in Healthcare industry such as providing comprehensive consultancy services for the clients via Build-Equip-Transfer (BET) model for future hospital development.

GROUP’S STRATEGIC RESTRUCTURING PLAN (“SRP”)

In Q3 FY2016, the Group had embarked on the SRP to steer its businesses back to profi tability. SRP’s fundamental focus now is to strengthen the foundation of its businesses by leveraging on synergies between its subsidiaries in efforts to enrich service offerings to the client.

The Group’s SRP initiatives are part of a deliberate and clear strategic plan in realizing its Vision which is to become the Preferred Asset and Facilities Management Solutions Provider.



The SRP is segregated into 2 phases with specifi c targets. Phase-1 of the SRP is targeted to strengthen the very foundation of Damansara Realty’s businesses or in short, to solidify its business DNA. Phase-2 of the SRP shall have more focus on the Group’s future business plans and targets.

In the effort to transform by the Group, it is crucial to understand the business where the new management team conducted a plethora of analysis which includes analyzing current market positions of each subsidiary, its strengths and weaknesses, the organization structure, assessing leadership competencies as well as comprehension of current business challenges. Subsequently, the Group has identified key challenges faced by the Group which includes identifying symptoms and detail analysis of the root-causes which were then categorized into several groups to allow effective hypothesis generation for solutions. Further, the Group has identifi ed possible initiatives, person in charge (champion), deadline and expected impact from each initiative. Lastly, the Group monitors and reports the progress of these initiatives on regular basis to the Executive Committee (“EXCO”) and Damansara Realty’s Board.

The Group has identifi ed 8 key transformation drivers which includes:

1. Upholding governance

2. Raising leadership competencies

3. Setting effective performance measures

4. Creation of a Strategic Business Plan encompassing granular level action plans

5. Enhancing business acumen

6. Rebuilding reputation

7. Revamping organization structure

8. Ensuring effective cash fl ow management

In totality, the Group has implemented over 50 initiatives to address the above key transformation drivers which was further refined to granular level action plans and presented to the management for continuous monitoring and improvements. Amongst the high impact initiatives implemented is the formation of EXCO, being the highest decision making Committee after Damansara Realty’s Board. EXCO is chaired by the Group CEO on a monthly basis with members being subsidiaries’ Managing Directors and Group General Managers. EXCO is formed to deliberate on matters related to the business inclusive of the Group’s year-to-date fi nancial performance, elevating synergies between subsidiaries and most importantly, to effectively track SRP’s initiatives progress.

The Group had also implemented the Group Approval Limits of Authority (“GALOA”) in its efforts to enhance corporate governance and establish effi cient processes in the Group. In addition, the Group’s overall enhancement of effectiveness via centralization of key support services such as Procurement, Legal, Human Resources and Finance services. Centralization aims to prevent unnecessary duplication of support-function at subsidiaries hence promoting cost-savings and standardization of processes company-wide. Other initiatives currently in place also include implementation of effective performance measurement, creation of investor relations plan, creation of key divisions such as Corporate Planning and Corporate Communication, enhancing cash fl ow management and creation of a sustainable business plan throughout the Group.

The expected impact from implementation of SRP would be:

a) To enhance synergy between subsidiaries within IFM businesses where the Group can capitalize on each subsidiaries strength and expansion of services to existing clientele.

b) To improve governance especially on adherence to internal processes, GALOA as well as compliance to Bursa and regulatory requirements for public listed company.

c) To enhance internal efficiency via implementation of centralized shared services for Finance, HR and Procurement (support services at HQ). Once processes are centralized, subsidiaries can focus on operational effi ciency and productivity.

d) To ensure business profi tability via effective tracking and monitoring of Key Performance Indicators, project progress, group fi nancial performance through EXCO.

In summary, the SRP provides clearer path for the Group towards business recovery. Internal weaknesses that threatened the Group’s resilience and strength have been identifi ed and various initiatives to turn the business around have been put in place. Damansara Realty believes the SRP will provide a fi rm foundation to bring the Group back to profi tability and at the same time prepares the Group to navigate through the ever growing challenging industries the Group is currently operating in.


This sustainability report refl ects Damansara Realty’s commitment to the economy, environment and social responsibility for all stakeholders. As Damansara Realty heads towards a new direction, it understands that the incorporation of environmental protection, social obligation and good governance are essential. The Group CEO leads the sustainability plan in 2017 through the members of the EXCO, who will act as the Sustainability Council. The sustainability initiatives will be presented during the board meeting for reviews.

Certifi cations:

HEALTH AND SAFETY

Each subsidiary’s health and safety practices are in line with the industry standards. The subsidiaries will continue their initiatives to inculcate awareness amongst all employees to accept responsibilities in occupational safety and health matters.

Trainings and workshops are conducted regularly to ensure that working environments are in compliance with the rules and regulations. In FY2016, 63 employees had been successfully trained under the National Institute for Occupational Safety and Health (NIOSH).

At the construction and maintenance sites, daily safety meetings are conducted to highlight Personal Protective Equipment (PPE), guidelines, good hygiene and housekeeping. It is important to note that construction and facility areas are prone to mosquito breeding grounds and as a precautionary measure, possible breeding areas are thoroughly inspected and fogging is carried out monthly.

TMR has aligned its workplace health and safety standards in accordance with OHSAS18001. This certifi cation serves as a guideline for TMR to monitor and achieve good working conditions at all sites as well as to identify health and safety risks.

EMPLOYEES

Damansara Realty is committed to its employees’ satisfaction in both professional and personal levels. It fashions its career development initiatives to retain and attract bright and talented employees through various career advancement programmes.

SUSTAINABILITY REPORT

Damansara Realty believes that an effective workforce is essential to the success of an organization. Effective human resource strategies have been put forth to promote wide communication, transparency and harmony amongst all employees. Ongoing reviews are carried out by the Group’s Corporate Services to align its HR policies based on the industry’s best practices.

All new employees undergo induction training to make it possible for them to seamlessly adapt into the new working environment. In addition to specific on-job training, a session on the overview of Damansara Realty’s businesses, products and services is also provided for better understanding of the operations.

The Property Divison regularly carries out training sessions to enable the marketing team to clearly explain to customers the content of the contracts, agreements and compliance in the sale and purchase of a property. To satisfy the requirements of the Government Sales Tax (“GST”) legislation, the accountants underwent GST-related trainings to equip themselves with the knowledge of tax implementation for products and services.

In addition, an employer-employee engagement session is also conducted through a town hall session where both employees and the Group CEO are able interact and convey the Damansara Realty’s commitment to employees. Further, engagement during the Group’s Hari Raya Aidilfi tri Open House as well as Management and Staff Family Day are examples of initiatives conducted to foster greater sense of camaraderie amongst the employees.


QUALITY

Customer satisfaction is one of the most important aspects of Damansara Realty’s policy. Therefore, it is essential that Damansara Realty continuously upgrades the quality of its product and services. In validating the ability to consistently give quality services, both TMR and Metro Parking have been certifi ed with ISO9001.

In measuring customer satisfaction holistically, all TMR sites are required to conduct monthly customer satisfaction surveys. Surveys are analyzed and the results are presented during the monthly management meeting for review and further action.

Satisfaction surveys that have been conducted by TMR for Telekom Malaysia on Civil, Mechanical and Electrical Maintenance and Housekeeping contracts showed improvement in 2016. This was due to pragmatic improvement measures implemented after the review in 2015 was presented to the management.

TMR CUSTOMER SATISFACTION SURVEY TELEKOM MALAYSIA CONTRACT

Service

Contract

2015 Average 2016 Average

CME 89 91

Housekeeping 92 93

The building contractors appointed by the Property Division are chosen from the members of Contractors Industry Development Board (CIDB). In addition to this, contractors are vetted before accreditation into the supply chain. Suppliers’ qualifi cations are strictly inspected against a checklist including historical records of work quality, timely delivery and regulatory compliance.

HTS fi nds that meeting client’s expectation and changes in regulation are very challenging as customers are getting more knowledgeable and informed, as such, higher quality standards are expected. It is proven that being a step ahead is prudent to guarantee customer satisfaction.

HTS’ Sustainable Site Planning and Management Supports Construction Companies monitors its QLASSIC Score which is a method to measure and evaluate the workmanship quality of building construction work based on industry standards.

ENVIRONMENT

Damansara Realty adheres to all environmental laws and regulations and considers its compliance as a responsibility to operate in a safe environment.

In order to map out a framework to manage environmental impact, TMR has obtained an ISO14001 certifi cate.This certifi cation is one of the facilities management’s tools to improve, monitor and assure stakeholders that the working environment is protected while the company conducts its business. In furtherance, all contractors are informed to strictly provide proactive measures to dispose waste in compliance with environmental laws and regulation.

TMR has employed an energy manager to strategically evaluate the company’s energy and water consumption as well as introduced rainwater harvesting for landscaping and cleaning. In addition, TMR is using battery operated machines as opposed to fuel.

HTS provides green building services to hospitals and commercial buildings. Its sustainability management consultancy assists hospitals to plan the development of sustainable buildings by promoting eco-friendly material sourcing, introduction of renewable energy by thermal transfer and natural lighting. In addition, HTS also creates designs and systems to maximise water effi ciency such as rainwater harvesting, water recovery and use of water saving fi tting and fi xtures. Further, HTS tasked 4 energy certifi ed managers to develop, coordinate and implement environmental strategies.

COMMUNITY

The Group contributes to the community though charity contributions and work opportunities. In 2016, TMR started its Management Training Programme in strategic partnership with Skills Johor to provide employment opportunities and to enhance employability of graduates. Graduates are trained for 6 months at various work sites, with the opportunity to be absorbed in the Group’s workforce. Currently, there are 26 trainees under this initiative.

The Group prioritizes sourcing workforce from the surrounding areas where the business or site is located. For example, at Rapid, the majority of the workforce is from Johor Bahru, particularly Pengerang. In addition, to celebrate the spirit of Ramadan, TMR had hosted an Iftar for underprivileged children in Bandar Damansara Hills, Kuantan.

The Group adopted a corporate governance statement “Strategies Promoting Sustainability” to address corporate responsibility. Damansara Realty will continuously carve a sustainable path to successfully achieve its vision to be the “Preferred Asset and Facilities Management Solution Provider”.

SUSTAINABILITY REPORT


METRO PARKING (MALAYSIA) SDN BHD

Metro Parking started its business in 1991 with the setting up of Metro Parking in Malaysia where its core business includes car park management and consultancy. Since it was established, Metro Parking has aggressively expanded its business operations in Singapore, Brunei, Philippines, Hong Kong and India.

Metro Parking’s mission is to be the largest car park operator with initial emphasis on Asia’s market and to establish operations in other continents.

As one of the nation’s premier car park management companies, Metro Parking strives to provide the best services to its clients. With extensive experience gained over than 2 decades in the car park industry,

Metro Parking has diversified its operations to other segments of the parking industry including;

• Car park total solutions and consultancy

• Car park design and planning

• Supply of car park and safety equipment

• Build operate and transfer of car park

• Added value service to car park

Metro Parking’s clients consist of but are not limited to; Institut Jantung Negara, MRT Corporation, Permodalan Nasional Berhad, Malaysia Airport Holdings Berhad, Terengganu Development Corporation and Giant Hypermarket.


TMR URUSHARTA (M) SDN BHD

TMR was incorporated in 1997 and its services adhere to a series of TMR Global Standards issued by Bureau Veritas to ensure that TMR’s Global Standards uphold high level technologies, products and systems, being TMR’s commitment to excellence.

TMR offers facilities management services with a main focus on facilities and asset management services, including;

• Project Management

• Utility Management

• Warranty Management

• Technical Due Diligence

• Energy Effi ciency Management

• Total Infrastructure Facilities Management

• Asset Management System

• Green & Clean Expertise

TMR’s partners, amongst others, are; Petronas, Malaysia Airports Holdings Berhad, Telekom Malaysia Berhad, Maybank, KPJ, Johor Corporation, Lembaga Tabung Haji, Tenaga Nasional Berhad and Majlis Amanah Rakyat.

• Mechanical & Electrical

• Civil & Structural

• Landscaping

• Cleaning Services

• Security Services

• Green Technology Management

• Food & Beverages Services

• Building & Asset Audit


HC DURACLEAN SDN BHD

HCD is a professional care and cleaning company offering a diverse range of cleaning services to commercial, residential and healthcare premises.

As the Master Franchisee for Duraclean International Incorporation (USA), HCD is fully equipped with state of the art equipment and machinery with effective cleaning solutions in ensuring the highest performance standard among its clients.

Since its operations in 1997, HCD has grown from only servicing its parent company’s facilities in its infant years to cleaning services for aircrafts and airports. HCD’s growth is attributed to the strong belief in uniformity and quality of service achieved through its comprehensive staff training programs.

HCD’s partners, amongst others, include KPJ Hospitals, KPJ EyeCare Specialist, Kementerian Kesihatan Malaysia, IJN, UEM (Edgenta), Siegwerk (M) Sdn Bhd, Bank Simpanan Nasional and Muzium DiRaja Johor.


HEALTHCARE TECHNICALSERVICES SDN BHD

HTS was founded in 1995 as a consulting service provider in the healthcare sector. Since its inception, HTS has grown rapidly to become the leader in healthcare consultancy in Malaysia and internationally.

HTS is a multi-disciplinary consulting company with more than 20 years of experience in providing consultancy on hospital planning & design, hospital equipment & logistics, project management, integrated facilities management, medical technology, sustainability through energy management & green building design, technical advisory in mechanical & electrical services and accreditation advisory services to healthcare providers.

HTS’ scope of services ranges from feasibility studies to the completion and operations of hospital buildings. It has also carried out condition and hospital accreditation surveys for many areas of healthcare facilities in Malaysia and overseas, including Poland, Saudi Arabia, Bangladesh, Indonesia, Laos, and Papua New Guinea. Moving forward, HTS is ready to embark in becoming the project management consultant for residential and commercial developments as well as construction projects.

HTS’ expertise is supported by a group of highly skilled employees with various technical backgrounds and its clients includew; the Ministry of Health Malaysia, KPJ Hospitals, Boustead Holdings Berhad, Nadayu Properties and the Curve Shopping Complex.

The Board of Damansara Realty recognizes the importance of adopting good corporate governance in its efforts to safeguard and enhance shareholders’ investment and value and also to protect the interests of other stakeholders. The Board presents this statement to provide an insight into the corporate governance practices of Damansara Realty under the leadership of the Board.

As such, the Board supports the 8 principles and 26 recommendations stated in the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) as set out below in promoting best corporate governance through structures, systems, processes in self-promoting good practices and development of a corporate governance culture and environment, will continue the existing corporate governance practices and shall strive to adopt the substance behind the corporate governance prescriptions and not merely in form, but also in managing its business affairs.

In line with this commitment, the Board has taken and is continuously reviewing, where appropriate, the necessary steps to comply with the requirements on the standard of corporate responsibility, integrity and accountability and provide greater disclosure and transparency by complying with the principles of the MCCG 2012. The corporate governance adopted by the Group during the FY2016 is as follows:

PRINCIPLE 1 – ESTABLISH CLEAR ROLES AND

RESPONSIBILITIES

1.1 Clear Function Reserved for Board and Delegation

to Management

The Board is made up of 8 members, comprising:

• One (1) Independent Non-Executive Chairman;

•. One (1) Executive Vice Chairman (“EVC”);

• Five (5) Independent Non-Executive Directors; and

• One (1) Non-Independent Non-Executive Director.

In accordance with Paragraph 15.02 of the Main Market Listing Requirements (“MMLR”) of Bursa Securities (“Bursa Securities”) that requires at least 2 directors or one-third of the Board to comprise Independent Directors, the presence of 6 Independent Non-Executive Directors lead to the Board being satisfi ed that the size and composition of the Independent Non-Executive Directors has fulfilled this requirement adequately. In the opinion of the Board, the composition and size of the Board is suffi cient and well balanced for Damansara Realty to carry out its duties effectively, whilst providing greater assurance that no individual or small group of individuals can dominate the Board’s decision.

The Group CEO and the Group CFO are separated from the Board and were appointed to be accountable for the day-to-day management of financial and operational matters of the Group within the prescribed limits of authority.

There is a clear distinction of responsibilities between the Chairman and the Group CEO to ensure a balance of power and authority. The Board is led by the Chairman, YB Dato’ Ahmad Zahri bin Jamil, while the post of Group CEO is held by En. Brian Iskandar bin Zulkarim who attained the post on 1 September 2016.

The Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board. The Group CEO holds the principal responsibilities of reporting, clarifying, communicating and recommending key strategic and operational matters and proposals to the Board for approval as well as implementation of policies and strategies.

In determining the limitation of authorities within the Group, the Board has approved the Group Approval Limit of Authority (“GALOA”) aims to give clear indication on the management authority (i.e. EVC, Group CEO, Group CFO, Managing Director (“MD”) of Subsidiaries, General Manager) to approve matters related to company’s day to day operation requirement (i.e. purchases of stocks, payments, appointment of contractors and etc)

The GALOA shall cover all operational item that requires management’s approval which include but not limited to:

• Procurement: Purchase limits, direct awards, variation orders, extension of time, Tender exercise, etc;

• Human Resource: Recruitment, promotion, demotion, salary adjustment, disciplinary action, employment contract, termination, organization structure & employees benefi ts;

• Legal: Appointment of external lawyers; execution of agreements (Memorandum of Understanding (MOU), Joint Venture Agreement (JVA), Non-Disclosure Agreements (NDA); Material litigation; Settlement outsite of court for a specifi c amount at threshold);

• Corporate Communication: Press release, sharing of information with Bursa, sharing info with external parties etc; and

• Finance: Signatory, reporting to Bursa, Reports to the Board of Directors, etc.

STATEMENT OFCORPORATE GOVERNANCE


1.2 Clear Roles and Responsibility in Discharging

Fiduciary / Leadership

All members of the Board contribute signifi cantly in the areas of formulation of strategic direction and policies, performance monitoring and allocation of resources and enhancement of controls and governance.

As prescribed by the MCCG 2012, the Board assumes 6 principal stewardship responsibilities:

• Reviewing, monitoring and where appropriate, approving fundamental fi nancial and business strategies and major corporate actions;

• Overseeing the conduct of the Group’s business to evaluate whether the business is properly managed;

• Establishing the Group’s Enterprise-Wide Risk Management (EWRM) framework;

• Formulating a succession plan for the Managing Director and Senior Executives;

• Establishing an investor relations programme; and

• Ensuring processes are in place for maintaining the integrity of the Company, integrity of the financial Statements, compliance with law and ethics, relationships with customers and suppliers and relationship with stakeholders.

The 6 principal stewardship responsibilities assumed by the Board are also available at the Board Charter in the corporate website (www.dbhd. com.my).

During the Board meeting held on 22 November 2016, the Board has approved the Strategic Restructuring Plan (“SRP”) and currently implemented by Damansara Realty. The conceptual plan of SRP consist of 3 phases as follows:

• Diagnostic Phase – to identify basic issues/ challenges faced by the Company (Phase 1);

• Prescription Phase – to implement quick wins and immediate corrections (Phase 2); and

• Health Plan Phase – Long term business development and strategy (Phase 3).

The following initiatives of SRP have been done in the Diagnostic phase:-

i. GALOA;

ii. Centralized Procurement services;

iii. Establishment of EXCO;

iv. Reshuffl ed leaders from various key positions;

v. Usage of earnings before interest, tax, depreciation and amortization (EBITDA) as performance measure;

vi. Business acumen – enhance project evaluation;

vii. New Vision & Mission;

viii. External talents with competency; and

ix. Disciplinary inquiry – action on non-compliance.

Executive Committee (EXCO)

The Board also has established EXCO on 22 November 2016 that comprises of the following members:-

Chairman: Group CEO

• Secretary: Company Secretary

• Secretariat: Corporate Planning & Transformation

• Members:

– Group CFO

– MD TMR Urusharta

– MD HC Duraclean

– MD Healthcare & Technical Services

– MD Metro Parking

– GM Property & Land Development Division

– GM Corporate Services Division

The roles and responsibilities of EXCO including:-

Primary

• Ensure suffi cient deliberation on matters regarding performance of the Group & its Subsidiaries;

• Deliberate & decide on matters regarding projects participation including assessment on project viability & profi tability, operational strategy, risk analysis & mitigation as well as its impact to Group reputations / image etc;

• Review & approve any change of management policy/ policies & its implementation;

• Ensure effective implementation of SRP;

• Ensure effective progress update on Group SRP plans; and

• Allow effective monitoring and tracking of the SRP’s deliverables.

Secondary

• To update the Board of Directors on the progress of the SRP

The EXCO meeting will be held quarterly with the following matters will be discussed:-

I. Business Review for EXCO;

STATEMENT OF CORPORATE GOVERNANCE


II. Policy related matters;

III. New projects;

IV. Special update request from EXCO; and

V. Update SRP.

At the same time, the Board also ensures the sustenance of a dynamic and robust corporate climate focused on strong ethical values. This emphasizes active participation and dialogue on a structured basis involving key personnel at all levels, as well as ensuring accessibility to information and transparency on all executive actions. The corporate climate is also continuously nourished by value-centered programmes for team-building and active subscription to core values.

The Board has delegated certain specif ic responsibilities to four (4) Committees which operate within clearly defi ned terms of references, with the main objective to assist the Board in discharging its duties and responsibilities. Under the previous board governance structure, the Board Committees included the Board Audit Committee (“BAC”), Board Nomination and Remuneration Committee (“BNRC”), Tender Board Committee (“TC”) and Board Risk Management Committee (“BRMC”). During FY2016, the Board undertook a review of the compositions and functions of the Board Committees aimed at ensuring an optimum level of governance model for further enhancing the Board’s operations.

The Terms of Reference (“TOR”) of the relevant Board Committees are available on www.dbhd.com.my.

The Board shall place great importance in ensuring the high standards of transparency and accountability in its communication to shareholders, as well as to potential investors, analysts and the public.

The Board recognizes the need of effective communication with shareholders and the investment community and adheres strictly to the disclosure requirements of Bursa Securities. Dissemination of information includes the distribution of annual reports and relevant circulars to shareholders, issuance of press releases, announcing the quarterly fi nancial results and performance of the Group to Bursa Securities and the public as well as holding press conferences

The Chairman and the Board encourage shareholders to attend and participate in the AGM held annually as well as in the EGM. The shareholders are given the opportunity to seek clarification by making use of the Question and Answer session during the AGM / EGM on any matters pertaining to the business and fi nancial performance of Damansara Realty. The rights to demand for a poll during the meetings are conveyed to shareholders by the Board.

The details of the investor relations and shareholder communication can be referred to the Board Charter. It is also available in the corporate website at www. dbhd.com.my.

The new management has now put succession planning in place by ensuring that all candidates appointed to senior management positions are of suffi cient, calibre and that there are programmes to provide for the orderly succession of senior management.

1.3 Formalised Ethical Standards through Code of

Ethics

The Board has developed a Code of Conduct for the Directors and employees of the Group by setting out standards of conduct expected from Directors and employees, to create a good corporate behavior across the Group. The Code of Conduct of the Directors which included in the Board Charter, includes the related whistle-blower procedures which outline the procedures to raise any actual or potential corporate fraud or breach of conduct involving employee, Management or Director in the Group. The Board also recognizes the importance of adherence to the Code by all employees in the Group and will take measures to put in place a process to ensure its compliance.

The Group, in its effort to enhance corporate governance, has put into place its Whistle Blowing Policy, providing an avenue for employees and stakeholders to report genuine concerns on malpractices, unethical behavior and misconduct without fear of reprisal. All concerns raised shall be investigated and reports of investigations of genuine concerns shall be provided to the Audit Committee. The Whistle Blowing Policy is available in the corporate website www.dbhd.com.my.

1.4 Strategies Promoting Sustainability

The Board promotes good corporate governance in the application of sustainability practices. The Group practices a system of rewards based on the philosophy of pay for performance. Employees are rewarded for productivity improvements and contribution towards the achievement of the Group’s immediate and long-term objectives. The rewards encompass not only compensation and benefits but also performance recognition and professional development and career progression.

A summary of the Group’s sustainability activities including its corporate social responsibility activities are set out in the Sustainability Report of this Annual Report.



1.5 Access to Information and Advice

The Board has full and unrestricted access to all information on the Group’s business and affairs including inter alia, fi nancial results, annual budgets, business reviews against business plans and progress reports on the Group’s developments and business strategies. Therefore, it will enable them to discharge their duties effectively.

Prior to each Board Meeting, every director is given an agenda and a set of board papers for each agenda item to be deliberated. The board papers will be distributed to the board members at least seven (7) days before the meeting. At the Board Meetings, the Management will present the board papers and provide comprehensive explanation of pertinent issues. Information provided to the Board goes beyond quantitative performance data to include other qualitative performances. Board Meetings are held regularly. The Board and its Committees have access to all information within the Group pertaining to the Group’s business and affairs.

The Board is provided in advance with the agenda for every Board Meeting, together with management reports and supporting documents for the Board’s perusal. The Board is briefed in a timely manner on all matters requiring their deliberation and approval.

All directors are entitled to call for additional clarification and information to assist them in matters that require their decision. In arriving at any decision on recommendation by the Management, deliberation and discussion by the Board is a prerequisite. All proceedings of the Board Meetings are minuted and signed by the Non-Executive Chairman of the Meeting in accordance with the provision of Section 156 of the Companies Act, 1965. Apart from the quarterly and year end fi nancial statements, a report of the Group’s performance and progress is presented to the Board every quarter for the directors to be kept informed of the Group’s state of affairs.

The Board is also notified of any disclosures or announcements made to Bursa Securities. For each fi nancial year, the Board will review and approve the Group’s plan and budget for the forthcoming year. Whilst the Management reviews the budget results regularly, reports of the results and variances against the budget are presented to the Board for review every quarter. In furtherance of their duties

as Directors, whenever independent professional advice is required, external independent experts may be engaged at the Group’s expense.

1.6 Qualifi ed and Competent Company Secretary

The Board has unrestricted access to the advice and services of the Company Secretary and where necessary, in the furtherance of their duties, obtain independent professional advice with the Company paying the related costs. The Company Secretary must obtained a professional qualification from professional bodies or qualifi ed under section 139 (A) of the Companies Act 1965.

The Company Secretary play an advisory role to ensure all Board Members’ decisions and actions are complied with the relevant rules and regulations. The Company Secretary must ensures that all Board and Committee members’ deliberations and decisions are complied with the Damansara Realty’s Articles and Association and other statutory regulations.

The Company Secretary also keeps abreast of the evolving capital market environment, regulatory changes and developments in Corporate Governance through continuous training. The Company Secretary has attended several trainings provided by Companies Commissioner of Malaysia (CCM) and Malaysian Association of Chartered Secretaries and Administrators (MAICSA) to improve his knowledge in ensuring all the board members are updated on the developments of Corporate Governance in Malaysia and the new Companies Act 2016.

1.7 Board Charter

The Board has always conducted itself in an ethical manner while executing its duties and functions with the establishment of its own Board Charter. The Board Charter of Damansara Realty sets out key values, principles and ethos of Damansara Realty in ensuring the Board’s effi ciency in discharging its duties.

The Company Directors’ Code of Ethics in tandem with the recommendation by the CCM had also been established. The Board Charter and Directors’ Code of Ethics shall be reviewed annually or as and when necessary. Both are available on the corporate website at www. dbhd.com.my.



PRINCIPLE 2 – STRENGTHENED COMPOSITION

2.1 Establishment of a Nomination and Remuneration

Committee

Recommendation 2.2 of the Malaysian Code on Corporate Governance 2012 recommends that the board should establish a policy formalising its approach to boardroom diversity. The Board through its nominating committee had taken steps to ensure that women candidates are sought as part of its gender diversity target. Therefore, the Board has ensured at least one (1) female director in its composition.

The Group recognises and embraces the benefi ts of having a diverse Board, and sees increasing diversity at Board level as an essential element in maintaining a competitive advantage.

The Group also has made good use of differences in thought, perspective, knowledge, skills, regional and industry experience, cultural and geographical background, age, ethnicity and gender which will ensure that Damansara Realty retains its competitive advantage. These differences have been considered in determining the optimum composition of the Board and when possible, be balanced appropriately.

All Board appointments are made on merit, in the context of the skills and experience the Board as a whole requires to be effective.

The Board consists of qualified individuals with diverse set of skills, experience and knowledge necessary to govern the Group. The composition and size of the Board is such that it facilitates the decision making of the Group. The Articles of Association of Damansara Realty provides for a minimum of 2 Directors and maximum of 15 Directors. The composition and size of the Board are reviewed from time to time to ensure its effectiveness.

The Group seeks to maintain a Board comprised of talented and dedicated directors with a diverse mix of expertise, experience, skills and backgrounds. The skills and backgrounds collectively represented on the Board should reflect the diverse nature of the business environment in which the Group operates. For purposes of Board composition, diversity includes, but is not limited to, business experience, geography, age, ethnicity and gender.

In reviewing Board composition, Board Nomination and Remuneration Committee (“BNRC”) has considered the benefi ts of all aspects of diversity in

order to maintain an appropriate range and balance of skills, experience and background on the Board. In identifying suitable candidates for appointment to the Board, BNRC also has considered candidates on merit against objective criteria and with due regard for the benefi ts of diversity on the Board.

In accordance with Paragraph 15.02 of the Main Market Listing Requirements of Bursa Securities, that requires at least two directors or one-third of the Board to comprise Independent Directors, the presence of six (6) Independent Non-Executive Directors out of eight (8) lead to the Board being satisfied that the size and composition of the Independent Non-Executive Directors has fulfi lled this requirement adequately. The number of members is suffi cient and well balanced for Damansara Realty to carry out its duties effectively, whilst providing greater assurance that no individual or small group of individuals can dominate the Board’s decision.

On 21 March 2011, the Board resolved to establish its own BNRC. The Board is of the view that the composition of the BNRC meets the objectives and principles of good corporate governance. The members of the BNRC comprise exclusively of non-executives directors, all of whom are independent. The BNRC develops, maintains and reviews the criteria to be used in the recruitment process and annual assessment of directors.

The BNRC consists of the following members:

(i) Y.B Dato’ Mohd Aisom bin Omar – Chairman

(ii) Puan Zainah binti Mustafa – Member

(iii) Tuan Haji Abdullah bin Md Yusof – Member

The appointment of a BNRC member terminates when the member ceases to be a director of the Company. The BNRC shall have no executive power. In the event of equality of votes, the Chairman of the BNRC shall have a casting vote. In the absence of the Chairman of the BNRC, the members present shall elect one of them to chair the meeting. The BNRC shall meet at least once a year and any additional meetings shall be scheduled as considered necessary by the Chairman of the BNRC. The BNRC may establish procedures from time to time to govern its meeting, keeping of minutes and its administration.



The TOR of the BNRC is set out in the corporate website (www.dbhd.com.my).

During the fi nancial year, the BNRC had met once, attended by all members purposely to assess the Board members’ effectiveness.

The BNRC shall have access to such information and advice, both from within the Group and externally, as it deems necessary or appropriate in accordance with the procedures determined by the Group. The BNRC may request other directors, members of management, counsels and consultants as applicable to participate in the BNRC Meetings, as necessary, to carry out the BNRC’s responsibilities. Non-BNRC directors and members of the Management in attendance may be required by the Chairman to leave the meeting of the BNRC when so requested.

The Secretary of the BNRC shall be the Company Secretary.

BNRC meeting agenda shall be the responsibility of the Chairman of the BNRC with input from the BNRC members. The Chairman may also request Management to participate in this process. The agenda of each meeting including supporting information shall be circulated at least seven (7) days before each meeting to the BNRC members and all those who are required to attend the meeting.

The BNRC shall cause the minutes to be duly entered in the books provided for the purpose of all resolutions and proceedings of all meetings of the BNRC. Such minutes shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting, and if so signed, shall be the conclusive evidence without any further proof of the facts thereon stated.

The BNRC, through its Chairman, shall report to the Board at the next Board of Directors’ meeting after each BNRC meeting. When presenting any recommendation to the Board, the BNRC shall provide such background and supporting information as may be necessary for the Board to make an informed decision.

The BNRC shall provide such information to the Board as necessary to assist the Board in making a disclosure in the Annual Report of the Group in accordance with the Best Practices of the Code Part 2 AAIX.

The Chairman of the BNRC shall be available to answer questions about the BNRC’s work at the Annual General Meeting of Damansara Realty.

Scope Activities of BNRC

The duties of the BNRC shall include the following:

A. Nomination

(i) To determine the criteria for Board membership, including qualities, experience, skills, education and other factors that will best qualify a nominee to serve on the Board;

(ii) To review annually and recommend to the Board with regard to the structure, size, balance and composition of the Board and Committees including the required mix of skills and experience, core competencies which Non-Executive Directors should bring to the Board and other qualities to function effectively and effi ciently;

(iii) To consider, evaluate and propose to the Board any new board appointments, whether of executive or non-executive position. In making a recommendation to the Board on the candidate for directorship, the BNRC shall have regard to:

• Size, composition, mix of skills, experience, competencies and other qualities of the existing Board, level of commitment, resources and time that the recommended candidate can contribute to the existing Board; and

• Best Practices of the Code Part 2 AAIII which stipulate that Non-Executive Directors should be persons of calibre, credibility and have the necessary skill and experience to bring an independent judgment to bear on issues considered by the Board and that Independent Non-Executive Directors should make up at least one-third of the membership of the Board.

(iv) To propose to the Board the responsibilities of Non-Executive Directors, including membership and Chairpersonship of Board Committees.

(v) To evaluate and recommend the appointment of Senior Executive positions, including that of the Managing Director or Chief Executive Offi cer and their duties and the continuation (or not) of their service.



(vi) To establish and implement processes for assessing the effectiveness of the Board as a whole, the Committees of the Board and for assessing the contribution of each director.

(vii) To evaluate on an annual basis:

a. The effectiveness of each director’s ability to contribute to the effectiveness of the Board and the relevant Board Committees and to provide the necessary feedback to the directors in respect of their performance;

b. The effectiveness of the Committees of the Board; and

c. The effectiveness of the Board as a whole.

(viii) To recommend to the Board:

a. Whether directors who are retiring by rotation should be put forward for re-election; and

b. Termination of membership of individual director in accordance with policy, for cause or other appropriate reasons.

(ix) To establish appropriate plans for succession at Board level, and if appropriate, at Senior Management level.

(x) To provide for adequate training and orientation of new directors with respect to the business, structure and management of the Group as well as the expectations of the Board with regard to their contribution to the Board and Company.

(xi) To consider other matters as referred to the BNRC by the Board.

B. Remuneration

(i) To establish and recommend the remuneration structure and policy for directors and key executives, if applicable and to review for changes to the policy as necessary.

(ii) To ensure that a strong link is maintained between the level of remuneration and individual performance against agreed targets, the performance-related elements of remuneration setting forming a signifi cant proportion of the total remuneration package of Managing Directors.

(iii) To review and recommend the entire individual remuneration packages for the Managing Director and, as appropriate, other Senior Executives, including: the terms of employment or contract of Employment / service; any benefi t, pension or incentive scheme entitlement; any other bonuses, fees and expenses; and any compensation payable on the termination of the service contract.

(iv) To review with the Managing Director/Group Chief Executive Officer, his/her goals and objectives and to assess his/her performance against these objectives as well as contribution to the corporate strategy.

(v) To review the performance standards for key executives to be used in implementing the Group’s compensation programs where appropriate.

(vi) To consider and approve compensation commitments / severance payments for Executive Directors and key executives, where appropriate, in the event of early termination of the employment/service contract.

(vii) To consider other matters as referred to the BNRC by the Board.

TENDER BOARD COMMITTEE

The Group has also established a Tender Board Committee (“TC”) at Board level comprising Independent Non-Executive Directors, Non-Independent Non-Executive Directors and the Group Chief Executive Offi cer. The functions of the said TC are to evaluate, deliberate and approve the recommendations made by the Management prior to awarding of major contracts and tenders to potential contractors.

The members of the TC are as follows:

Chairman

Y.B Dato’ Daing A Malek bin Daing A Rahaman

Members

Encik Brian Iskandar bin Zulkarim (Appointed on 1 September 2016)

Tuan Haji Abdullah bin Md. Yusof

Encik Wan Azman bin Ismail

Y.B Dato’ Ar. Wan Mohammad Khair-il Anuar bin Wan Ahmad (Resigned on 28.04.2016)



BOARD RISK MANAGEMENT COMMITTEE

The Group has also established a Board Risk Management Committee (“BRMC”) on 23 November 2016 during the Board meeting. The function of BRMC is to identify, assess, monitor and report significant risks faced by the Group. BRMC comprised of Independent Non-Executive members as follows:-

Chairman

Y.B Dato’ Mohd Aisom bin Omar

Members

Puan Zainah binti Mustafa

En Shahrizam bin A. Shukor

Tuan Haji Abdullah bin Md Yusof

Duties, Responsibilities and Functions of the BRMC

The duties, responsibilities and functions are as follows:-

i. Review and recommend appropriate risk management strategies, policies and risk tolerances in with Damansara Realty business objectives for the Board’s approval;

ii. Ensure the implementation of the Enterprise Risk Management Department (“ERMD”) and review the adequacy and integrity of the same in identifying, assessing and managing risk and in establishing Damansara Realty’s risk appetite;

iii. Discuss with management on action taken to improve the ERM framework based on the risk identifi ed in the Risk Management reports;

iv. Review the adequacy of the scope, functions, competency and resources of the ERMD and ensure that it has the necessary authority to carry out its work;

v. Consider and evaluate other matters as judged appropriate by the Committee or as authorized by the Board; and

vi. All recommendations and findings of the Committee shall be submitted to the Board for approval and notation.

2.2 Recruitment Process and Annual Assessment

The Board has been aware of the needs for diversity in its composition which provides the Board the benefi ts of different opinions to bear on issues and right decisions that are aligned to stakeholders’

needs. The Board considers diversity from various areas, including gender, age, ethnicity, academic and professional experience and skills. Every year, the composition of the Board will be reviewed by the BNRC in order to ensure the effectiveness of the Board to meet the targets of the Group.

During the fi nancial year, the BNRC, during the meeting had carried out all assessments and evaluations which were properly documented. The assessments and evaluations were carried out as follows:-

a) Directors’ Self - Evaluation:-

Each Director will be assessed based on the following level of assessment:-

i. Developmental: Performance and quality of contribution sometimes meet standard requirements. Training should overcome any gaps.

ii. Competent: Performance and quality contribution are of a standard expected of a director.

iii. Outstanding: Performance and quality of contribution consistently exceeds the standards expected of a director.

List of Competencies to be assessed:-

i. Integrity & Ethics

ii. Governance

iii. Strategic Perspective

iv. Business Acumen

v. Judgement and Decision Making

vi. Teamwork

vii. Communication

viii. Leadership

b) Independent Directors’ Self-Assessment

c) Board Committee’s Assessment

The results of the assessments are compiled into a report for deliberation and recommendation at the BNRC meeting. The BNRC will table the matter to the Board for further deliberation. The deliberations of the BNRC and the Board are duly minuted in the respective meetings.

The Board is satisfi ed that the combination of different professionals and skills of each Director provide much diversity of perspectives and comprehension to lead and guide the Group in a competitive business environment.



The Board also recognizes the importance of gender diversity policy and target, as set out in the MCCG 2012 and currently there is 1 female Senior Independent Non-Executive Director, Puan Zainah binti Mustafa. There are also few female Directors in the board of directors of Damansara Realty’s subsidiaries. The presence of Independent Directors is essential as to provide unbiased and independent views, advice and judgment to safeguard the interest of stakeholders. It is also implemented at Metro Parking, HTS and TMR.

2.3 Remuneration policies and procedures

Through the BNRC, the Board has established formal and transparent remuneration policies and procedures to attract and retain directors in which BNRC are responsible for making recommendations on the framework, policies and procedures in reviewing and determining the specifi c remuneration package of the Directors of Damansara Realty. Damansara Realty’s remuneration scheme for the Group CEO commensurate with performance, seniority, experience and scope of responsibilities and is benchmarked to market/industry standards. For Non-Executive Directors, the level of remuneration refl ects the level of responsibilities undertaken by them.

The Group’s remuneration scheme for the Group CEO commensurate with performance, seniority, experience and scope of responsibilities and is benchmarked to market/industry standards. For Non-Executive Directors, the level of remuneration refl ects the level of responsibilities undertaken by them. Directors’ fees are subject to approval by the shareholders. Details of the remuneration paid/payable to each Director for the FY2016 are as below:

Name of Directors

Basic Salary and

EPF (RM)Directors’ Fee (RM) Allowance

Benefi ts in-kind

(RM) Total (RM)

YB Dato’ Ahmad Zahri bin Jamil– Independent Non-Executive Chairman

– 120,000 65,000 – 185,000

YB Dato’ Daing A Malek bin Daing A. Rahaman– Executive Vice Chairman

1,284,000 300,000 6,000 – 1,590,000

Puan Zainah binti Mustafa– Senior Independent Non-Executive

– 60,000 13,000 – 73,000

Tuan Haji Abdullah bin Md Yusof– Independent Non-Executive

– 60,000 13,000 – 73,000

Encik Wan Azman bin Ismail– Non-Independent Non-Executive

– 60,000 7,000 – 67,000

YB Datuk Md Othman bin Hj Yusof– Independent Non-Executive

– 60,000 5,000 – 65,000

YBhg Dato’ Mohd Aisom bin Omar– Independent Non-Executive

– 60,000 7,000 – 67,000

Encik Shahrizam bin A. Shukor– Independent Non-Executive

– 60,000 11,000 – 71,000

Dato’ Sohaimi bin Shahadan– Independent Non- Executive (Resigned on 28.04.2016)

– 20,000 2,000 – 22,000

YB Dato’ Ar. Wan Mohammad Khair-il Anuar bin Wan Ahmad– Independent Non-Executive (Resigned on 28.04.2016)

– 20,000 3,000 – 23,000

Encik Mohammad Asri bin Hassan Sabri– Independent Non-Executive (Resigned on 28.04.2016)

– 20,000 1,000 – 21,000

Encik Zulhafi s bin Badoldin– Executive Director (Appointed on 01.06.2016 and Resigned on 29.06.2016)

78,400 5,000 – – 83,400

TOTAL 1,362,400 845,000 133,000 - 2,340,400



PRINCIPLE 3 – REINFORCED INDEPENDENCE

3.1 Assessment of Independence Annually

The Board, through its BNRC, undertakes an evaluation in order to assess how well the Board, its Committees, the Directors including Independent Directors and the Chairman are performing. The evaluation covers the Board’s composition, skills mix, experience, communication, roles and responsibilities, effectiveness as well as conduct.

The process also includes a peer review in which Directors assess their fellow Directors’ performance against set criteria, including the skills they bring to the Group and the contributions they make.

3.2 Tenure of Independent Directors

The Board recognizes the importance of the Independent Non-Executive Directors to ensure that issues of strategies, performance and resources proposed by the Management are professionally evaluated by taking into consideration the interest of the stakeholders in which the Group conduct its business. It is also include ensuring the interest of Minority Shareholder is fairly considered through Board representation.

The MCCG 2012 recommends for the tenure of an Independent Director of the Company not to exceed a cumulative term of 9 years. However, the Board does not have a policy on the tenure for Independent Directors as the Board is of the view that a term of more than 9 years may not necessary impair independence and judgement of an Independent Director and therefore the Board does not impose a fi xed term limit for Independent Directors.

However, the Board will seek shareholders’ approval to retain Independent Directors who have served on the Board for more than 9 years by providing strong justifications and its recommendations to shareholders.

3.3 Shareholders’ Approval for the retention of

Independent Directors

The Board shall seek the shareholders’ approval for the retention of the independent status of an existing Director who had served in that capacity for more than 9 years.

Puan Zainah binti Mustafa was appointed as a Board Member on 17 April 2003 and had served the Board as Independent Non-Executive Director beyond than 9 year tenure limit. Hence, the Board has, after conducting an assessment, has recommended her tenure as an Independent Director be retained subject to the shareholders’

approval at the forthcoming Annual General Meeting (AGM) with the following justifi cations:-

(a) She has fulfi lled the criteria under the defi nition of Independent Director as stated in the Main Market Listing Requirements of Bursa Securities, and thus, she would be able to function as a check and balance, bring an element of objectivity to the Board;

(b) She has possessed vast experience in the fi nance industry that would enable her to provide the Board with a diverse set of experience, expertise and independent judgement;

(c) She has been with the Group for more than nine (9) years and has the knowledge of the Group’s business operations and the property development market;

(d) She has devoted suffi cient time and attention to her professional obligations for informed and balanced decision making; and

(e) She has exercised due care during her tenure as an Independent Non-Executive Director of the Group and carried out her professional duties in the best interest of the Group and shareholders.

3.4 Separation of Chairman and CEO

There is a clear distinction of responsibilities between the Chairman and the Group CEO to ensure a balance of power and authority. The Chairman was responsible for conducting meetings of the Board and shareholders and ensuring all Board members were properly briefed during Board discussions and shareholders were informed of the subject matters requiring their approval. The Group CEO has responsibility to ensure that the strategic planning of the Group be effectively implemented as well as responsible for the whole performance of the Group.

The Chairman of Damansara Realty is the Independent Non-Executive Chairman, YB Dato’ Ahmad Zahri bin Jamil, while the post of Group CEO is held by En. Brian Iskandar bin Zulkarim who attained the post on 1 September 2016.

PRINCIPLE 4 – FOSTER COMMITMENT

4.1 Commitment of Board Members and Protocols for Accepting New Directorships

The Directors will notify the Chairman of the Board before accepting any new directorship in a public listed company and to indicate the time expected to be spent on the new appointment. The Directors are at liberty to accept other board appointments so long as such appointments are not in confl ict with the business of the Group and do not adversely affect the Directors’ performance as a member of the Board.



The Directors are the view that their acceptance of directorships in private limited companies does not affect their commitment and performance as a director of company.

The Board shall conduct at least 4 scheduled meetings annually, with additional meetings to be convened as and when necessary. All Directors will be provided with the performance and progress reports on a timely basis prior to the scheduled Board meetings. A full agenda of the meeting and all Board papers, including complicated issues or specifi c matters, would be distributed in advance to ensure Directors are well informed and have the opportunity to seek additional, and are able to obtain further clarifi cation from the Company Secretary, should such a need arise. Where necessary, the services of other senior management or external consultants will be arranged to brief the Directors or clear to their doubts or concerns. The Board and Board Committee’s’ meeting schedule will be provided to all Directors at the beginning of the fi nancial year.

For the FY2016, there were 6 meetings held on the following dates and venue:

Date of Meeting Description Venue Attendance

25.02.2016 140th Board of Directors’ Meeting Board Room, Wisma Chase PerdanaOff Jalan Semantan Damansara Heights50490 Kuala Lumpur

9/11

29.03.2016 Special Board of Directors’ Meeting Board Room, Wisma Chase PerdanaOff Jalan Semantan Damansara Heights50490 Kuala Lumpur

11/11

30.05.2016 141st Board of Directors’ Meeting Board Room, Wisma Chase PerdanaOff Jalan Semantan Damansara Heights50490 Kuala Lumpur

7/8

26.08.2016 142nd Board of Directors’ Meeting Board Room, Wisma Chase PerdanaOff Jalan Semantan Damansara Heights50490 Kuala Lumpur

7/8

14.10.2016 Special Board of Directors’ Meeting VIP Conference Room, Forest City, Gallery Persada Utama, Jalan Forest City 1, Pulau Satu, 81550 Gelang Patah, Johor

8/8

23.11.2016 143rd Board of Directors’ Meeting Board Room, Wisma Chase PerdanaOff Jalan Semantan Damansara Heights50490 Kuala Lumpur

6/8

The Board Members remain committed and dedicated in fulfi lling their duties and responsibilities and this is refl ected via their attendance at each Board Meeting for FY2016 as listed below:

Director Non-Executive Independent Attendance

YB Dato’ Ahmad Zahri bin Jamil– Independent Non-Executive Chairman

Yes Yes 4/6

YB Dato’ Daing A Malek bin Daing A Rahaman– Executive Vice Chairman

No No 6/6

Puan Zainah binti Mustafa– Senior Independent Non-Executive

Yes Yes 6/6

Tuan Haji Abdullah bin Md Yusof– Independent Non-Executive

Yes Yes 5/6

Encik Wan Azman bin Ismail– Non-Independent Non-Executive

Yes No 6/6

YB Datuk Md Othman bin Hj Yusof– Independent Non-Executive

Yes Yes 5/6

YBhg Dato’ Mohd Aisom bin Omar– Independent Non-Executive

Yes Yes 6/6



Director Non-Executive Independent Attendance

Encik Shahrizam bin A. Shukor– Independent Non-Executive

Yes Yes 6/6

YB Dato’ Ar. Wan Mohammad Khair-il Anuar bin Wan Ahmad-Independent Non-Executive(Resigned on 28.04.2016)

Yes Yes 1/6

Dato’ Sohaimi bin Shahadan- Independent Non- Executive(Resigned on 28.04.2016)

Yes Yes 2/6

Encik Mohammad Asri bin Hassan Sabri-Independent Non-Executive(Resigned on 28.04.2016)

Yes Yes 1/6

Any nominations for new Directors to the Board are reviewed by the BNRC and presented to the Board for approval. The Company Secretary will ensure that all appointments are properly made and that statutory requirements are met.

4.2 Continuing Education Programmes

The Board is aware of the importance for its members to participate and undergo continuous training to be notifi ed and enlighten on any changes on the relevant regulatory requirements and the impact of the said regulatory requirement to the Group.

In compliance with the MMLR of Bursa Securities, all members of the Board have completed the Mandatory

Accreditation Programme (MAP) conducted by Bursatra Training Sdn Bhd or relevant courses recognized by Bursa Securities.

The Board encourages its Directors to attend talks, seminars, workshops and conferences to update and enhance their skills and knowledge to enable them to carry out their roles effectively as Directors in discharging their responsibilities towards good corporate governance, operational and regulatory standards. The Board took note of the amendments to the Listing Requirements, which stated that the Board of Directors of listed companies will assume the onus of determining or overseeing the training needs of their directors.

During the fi nancial year, the Directors attended the following courses:

No.Director Courses

1. YB Dato’ Ahmad Zahri bin Jamil • Business Sustainability – 26 August 2016• Latest Amendments to the Bursa Malaysia Listing

Requirements – 26 August 2016

2. YB Dato’ Daing A Malek bin Daing A Rahaman • Business Sustainability – 26 August 2016• Latest Amendments to the Bursa Malaysia Listing


3. Puan Zainah binti Mustafa • Business Sustainability – 26 August 2016• Latest Amendments to the Bursa Malaysia Listing

Requirements – 26 August 2016• Fraud Risk Management: Whose Responsibility Is

It?- 8 September 2016

4. Tuan Haji Abdullah bin Md Yusof • Business Sustainability – 26 August 2016• Latest Amendments to the Bursa Malaysia Listing




No.Director Courses

5. Encik Wan Azman bin Ismail • Malaysian 2020 Vision Asean Microfinance Conference- 20 January 2016

• JCorp Knowledge and Empowerment Programme For Leadership & Top Management - Session 2 – 25 April 2016

• Business Sustainability– 26 August 2016• Latest Amendments to the Bursa Malaysia Listing

Requirements– 26 August 2016• Achieving Business Continuity through Innovation

and Corporate Responsibility- 4 October 2016

6. YB Datuk Md Othman bin Hj Yusof • Mandatory Accreditation Program for Directors of Public Listed Companies (MAP) by Bursatra Sdn Bhd – 2 and 3 March 2016

7. YBhg Dato’ Mohd Aisom bin Omar • Business Sustainability – 26 August 2016• Latest Amendments to the Bursa Malaysia Listing


8. Encik Shahrizam bin A. Shukor • Business Sustainability – 26 August 2016• Latest Amendments to the Bursa Malaysia Listing


9. Encik Mohammad Asri bin Hassan Sabri(Resigned on 28.04.2016)

• Mandatory Accreditation Program for Directors of Public Listed Companies (MAP) by Bursatra Sdn Bhd – 6 and 7 March 2016

PRINCIPLE 5 - UPHOLD INTEGRITY IN FINANCIAL REPORTING

5.1 Compliance with Applicable Financial Reporting Standards

Pursuant to Paragraph 15.26(a) of the MMLR of Bursa Securities, all the Company Directors are collectively responsible in ensuring that the fi nancial statements and the quarterly results are drawn up in accordance with the approved accounting standards adopted by the Malaysian Financial Reporting Standard (MFRS), the provisions of the Companies Act, 1965, and the MMLR of Bursa Securities.

It is the responsibility of the Directors to ensure that the fi nancial reporting of the Group presents a true and fair view of the state of affairs of Damansara Realty and its subsidiary companies as of the end of the fi nancial period and of the results and cash fl ows of the Group for FY2016.

The Directors have applied the appropriate and relevant accounting policies on a consistent basis and made judgments and estimates that are reasonable and fair in preparing the fi nancial statements of Damansara Realty and of the subsidiaries. The fi nancial statements are also prepared on a going concern basis and the Directors have assured that proper accounting records are kept so as to enable the preparation of the fi nancial statements with reasonable accuracy.

In overseeing the fi nancial reporting, the BAC reviewed the fi nancial statements and the quarterly results as presented by the Group CFO in accordance with the approved accounting standards adopted by the Malaysian Financial Reporting Standard (MFRS). During the fourth quarter of 2016 meeting, discussion was conducted on detailed analysis of impairment of assets in compliance with the MFRS 136 Impairment of Assets with the present of external auditors and internal auditors. The external auditors, Messrs. Jamal Amin & Partners (“JAP”) also conducted limited review for every quarterly results.

The further details of the compliance with applicable fi nancial reporting standards can be referred in the Audit Committee Report section.



Every quarter, each Director declared their interest in companies (as director or shareholder) pursuant to section 135 of the Companies Act, 1965 which were tabled during the quarterly Board of Director’s meeting. The Board monitors and review any potential Related Party or Confl ict of Interest transactions. During the year, there were no Related Party and/or Confl ict of Interest transactions except for Y.B Dato’ Mohd Aisom bin Omar, pursuant to section 131 of the Companies Act 1965, whom has declared his interest as a partner of a Legal firm to be appointed as a panel lawyer for one of Damansara Realty’s subsidiaries and he has abstained from deliberating and participating in the decision made by the Board.

5.2 Assessment of Suitability and Independence of

the External Auditor

The external auditors play an important role in ensuring the reliability of the Group’s financial statements and providing the assurance of accuracy to shareholders. The Board, via the BAC, maintains a formal and transparent professional relationship with the external auditors, JAP, in seeking professional advice and ensuring compliance with the applicable accounting standards and statutory requirements.

The external auditors were invited and had attended all the BAC meetings and general meetings of the Damansara Realty during the fi nancial year.

The BAC ensures that the policies and procedures to assess the suitability and independence of external auditors are complied. The Committee meets with the external auditors without the presence of the Senior Management at least once a year to assess the suitability and independence of the external auditors. During the year, one meeting was conducted without the presence of the Management. Representatives from the external auditors were also invited to attend every Annual General Meeting (“AGM”).

During the meeting held on 24 February 2017, the BAC has agreed and adopted the external auditors’ assessment and the BAC had on 7 March 2017, assessed the external auditor on their quality of service, sufficiency of resources, communication and interaction, and independence, objectivity and professional skepticism.

The BAC was satisfi ed with the suitability of JAP, as a fi rm as well as in terms of the professional staff assigned to the audit, based on the quality of services and suffi ciency of resources they provided to the Group. The BAC also took note of the openness in communication and interaction with the lead audit engagement partner and engagement team, which demonstrated their independence, objectivity and professionalism.

Further details of the assessment of suitability and independence of the external auditor can be referred in the Audit Committee Report section.

PRINCIPLE 6 – RECOGNIZE AND MANAGE RISKS

6.1 Sound Framework to Manage Risks

The BRMC was set-up to assist the Board to oversee the risk management framework. The BRMC reviews the risk management framework and processes, and receives periodic reporting on risk management matters and management’s actions to mitigate and manage significant risks to ensure that the Group’s business objectives are met.

6.2 Internal Audit Function

The Group has an Internal Audit Department which reported directly to the BRMC members. The details of the recognition and risk management and the Internal Audit Functions are set out in the Statement on Risk Management and Internal Control and Audit Committee Report of this Annual Report, respectively.

The Internal Audit function is independent from the operations of the Group and provides reasonable assurance that the Group’s system of internal control and risk management is satisfactory and operating effectively. The internal auditors adopt a risk based approach towards the planning and conduct of their audits, and this is consistent with the Group’s framework in designing, implementing and monitoring its internal control system.

PRINCIPLE 7 – ENSURE TIMELY AND HIGH QUALITY

DISCLOSURE

7.1 Corporate Disclosure Policy

The Group has in place procedures for compliance with the MMLR of Bursa Securities and ensures that all material information must be announced immediately to Bursa Securities.

The Corporate Disclosure Policy and Procedures can be accessed by Stakeholders through the corporate website www.dbhd.com.my.

7.2 Leverage on Information Technology for Effective

Dissemination of Information

The Group maintains a website which enable public to access information on the latest updates on the corporate information, corporate events, annual report, corporate announcements, financial information as well as the Board Charter of Damansara Realty. Thus,



it will create greater awareness of the Group activities, performance and other relevant information among the stakeholders and general public.

PRINCIPLE 8 – STRENGTHEN RELATIONSHIPS BETWEEN

THE COMPANY AND SHAREHOLDERS

8.1 Encourage Shareholder Participation at General

Meetings

The AGM is the principal forum for dialogue with shareholders. Notice of the AGM and Annual Reports are sent out at least 21 days before the date of the meeting. In the case of an Extraordinary General Meeting (“EGM”), the Notice is sent out at least 14 days before the date of the meeting (or 21 days where any special resolutions are proposed).

The Chairman and the Board encourage shareholders to attend and participate in the AGM held annually as well as in the EGM. The shareholders are given the opportunity to seek clarifi cation by making use of the Question and Answer session during the AGM / EGM on any matters pertaining to the business and fi nancial performance of Damansara Realty.

8.2 Encourage Poll Voting

The rights to demand for a poll during AGM was conveyed to the shareholders at the commencement of the AGM by the Chairman in line with Recommendation 8.2 of the MCCG 2012. The Board also encourages poll voting for substantive resolutions specifi cally, the Recurrent Related Party Transactions.

8.3 Effective Communication and Proactive Engagement

The Board also recognizes the importance of effective communication with shareholders and the investment community and adheres strictly to the disclosure requirements of Bursa Securities.

Disseminat ion of information includes the distribution of annual reports and relevant circulars to shareholders, issuance of press releases, announcing the quarterly financial results and performance of the Group to Bursa Securities and the public as holding press conferences.

COMPLIANCE STATEMENT

This Statement is made in accordance with a resolution of the Board dated 15 March 2017.

MATERIAL CONTRACTS INVOLVING DIRECTORS AND

SUBSTANTIAL SHAREHOLDERS

Except as otherwise disclosed in the report, there were no material contracts involving Directors and substantial shareholders entered by Damansara Realty for the FY2016.

UTILISATION OF PROCEEDS

There were no proceeds raised by Damansara Realty from any corporate proposals during the FY2016.

AUDIT AND NON-AUDIT FEES

The Audit and Non-audit fees of External Auditors during the FY2016, as follows:-

FEES (RM)

AUDIT 135,797

NON- AUDIT 63,965

TOTAL 199,762

RELATED PARTY TRANSACTIONS AND RECURRENT

RELATED PARTY TRANSACTIONS (“RPT AND RRPT”)

All RPT including RRPT entered into by the Group were made in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with other persons or charged on the basis of equitable rates agreed between the parties. All RPT are reviewed by the BAC and reported to the Board.

At the forthcoming AGM to be held on 24 May 2017, Damansara Realty intends to seek its shareholders’ approval to renew the existing mandate for recurrent related party transactions of a revenue or trading nature. The details of the shareholders’ mandate to be sought will be furnished in the Circular to Shareholders dated 28 April 2017 attached to this Annual Report.

COMPLIANCE WITH THE MCCG 2012

The Board is of the opinion that the Group had complied with the spirit and objectives of the MCCG 2012. Although, there are deviations from several recommendations as contained in the MCCG 2012, the Board believes that there are justifi able rationale for the deviations and that the overall corporate governance of Damansara Realty is not compromised. Nevertheless, Damansara Realty will continue to strengthen its governance practices to safeguard the best interest of its shareholders and other stakeholders.

This Corporate Governance Statement is made in accordance with the resolution of the Board dated 15 March 2017.



COMPOSITION OF MEMBERS

The composition of the BAC are as follows:

1. Puan Zainah binti Mustafa (Chairman - Senior Independent Non-Executive Director)

2. Tuan Haji Abdullah bin Md. Yusof (Independent Non-Executive Director)

3. Encik Shahrizam bin A. Shukor (Independent Non-Executive Director)

This meets the requirements of paragraph 15.09(1)(a) and (b) of Bursa Securities’s MMLR.

The BAC Chairman, Puan Zainah binti Mustafa, is a fellow member of Association of Certifi ed Chartered Accountant. Accordingly, Damansara Realty complies with paragraph 15.09(1)(c)(ii) and 15.10 of MMLR.

MEETINGS

The BAC met 6 times during the year under review. The Directors holding executive positions, Damansara Realty's Internal Auditors, representatives of the Damansara Realty’s External Auditors and members of the Management were invited to the meetings (ACM).

The attendance of each Committee Member during the fi nancial year was as follows:

Members

24/02/16

(79th

ACM)

29/03/16

(Special

ACM)

30/05/16

(80th

ACM)

25/08/16

(81st

ACM)

14/10/16

(Special

Audit)

22/11/16

(82nd

ACM)

Puan Zainah binti Mustafa Yes Yes Yes Yes Yes Yes

Tuan Haji Abdullah bin Md. Yusof Yes Yes Yes Yes Yes Yes

YB Dato’ Ar. Wan MohammadKhair-il Anuar bin Wan Ahmad(Resigned on 28.04.2016)

Yes Yes - - - -

Encik Shahrizam bin A. Shukor(Appointed on 28.04.2016)

- - Yes Yes Yes Yes

TERMS OF REFERENCE

Objectives

The objectives of the BAC are as follows:

1. To assist the Board in discharging its responsibilities relating to the Group and Damansara Realty’s management of principal risks, internal controls, corporate governance, fi nancial reporting and compliance of statutory and legal requirements.

2. To provide, by way of regular meetings, a line of communication between the Board, Senior Management and External Auditors.

3. To provide emphasis on the internal audit functions by increasing the objectivity and independence of the Internal Auditors and provide a forum for discussion that is independent of the Management.

4. To review the quality of the audits conducted by the Internal and External Auditors of Damansara Realty.

AUDIT COMMITTEE REPORT


Authorities

The BAC is authorized by the Board:

1. To investigate any matter within its terms of reference. 2. To have full, free and unrestricted access to any

information, records, properties and personnel of the Company and any other companies within the Group.

3. To have direct communication channels with the External Auditors and person(s) carrying out the internal audit functions or activities.

4. To obtain independent professional or other advice.

5. To convene meetings with the External Auditors, without the presence of the Management (executive members) at least once a year.

Duties and Responsibilities

Duties and responsibilities of the BAC are as follows:

1. To review with the Management and recommend acceptance or otherwise of major accounting policies, principles and practices especially on management accounting, fi nancial reporting, risk management and business practices.

2. To review the Group’s quarterly and year-end fi nancial statements before submission to the Board.

3. To consider the appointment of the External Auditors, the terms of reference of their appointment, the audit fee and any proposal of their resignation as auditors.

4. To review with the External Auditors, the nature and scope of their audit plans and their audit reports.

5. To review the External Auditor’s Management Letter and discuss any matter that the External Auditors may wish to raise in the absence of Management, where necessary.

6. To review the Internal Audit Charter and the yearly audit plan and budget to ensure that the internal audit functions are adequately resourced to undertake its functions and have appropriate standing in the Group.

7. To review the internal audit functions and the result of the internal audit programs or investigations undertaken and whether or not Management has taken appropriate actions on the recommendations made by the Internal Auditors.

8. To review any related party transactions and conflict of interest situation that may arise within Damansara Realty or Group including any transactions, procedures or courses of conduct that raise questions of Management’s integrity.

9. To review inspection and examination reports issued by any regulatory authority and to ensure prompt and appropriate actions are taken in respect of any fi ndings.

10. To receive reports and deliberate on the implementation of the risk-control process and the progress of risk management activities undertaken by the Group.

11. To perform any other functions as authorized by the Board.

Summary of Activities

The BAC’s activities during 2016 comprised the following:

A) Financial Reporting

1. BAC reviewed the financial statements and the Quarterly Results as presented by the Group CFO in accordance with the approved accounting standards adopted by the Malaysian Financial Reporting Standard (MFRS). During the fourth quarter of 2016 meeting, discussion was conducted on detailed analysis of impairment of assets in compliance with the MFRS 136 Impairment of Assets with the present of external auditors and internal auditors.

2. The Group CFO had given assurance to the BAC, on quarterly meetings that:

i. Appropriate accounting policies had been consistently adopted and applied;

ii. The going concern basis applied in the Annual Financial Statements and Consolidated Financial Statements was appropriate;

iii. Prudent judgements and reasonable estimates had been made in accordance with the requirements set out in the MFRSs;

iv. Adequate processes and controls were in place for effective and efficient financial reporting and disclosures under the MFRSs, and

v. The Annual Financial Statements and Quarterly Consolidated Financial Statements did not contain material misstatements and gave a true and fair view of the financial position of the Group and the respective companies within the Group for fi nancial year 2016.



vi. Quarterly Results were reviewed by external auditors, Jamal Amin & Partners (“JAP”) prior to announcement to Bursa Securities.

3. Significant issues reviewed by BAC during the fi nancial year were as follows:

i. Compliance with MFRS

ii. Compliance with statutory requirements including Appendix 9B of the MMLR

iii. Budget and expenditures

iv. Unexpected expenses

v. Financial performance

vi. Audit fi ndings reports

vii. Risk management reports

4. BAC was satisfi ed of the issues reviewed. B) Internal Audit Functions

1. The Internal Auditors ultimately report to the BAC and administratively to the Group CEO. They have carried out their internal audit functions for the Group independently with impartiality, profi ciency and due professional care.

2. The core function of internal audit is to perform an independent appraisal of the Group’s activities as a service to the Management. The internal audit functions play an important role in helping Management to establish and maintain the best possible internal control environment within the Group. The sound internal control environment would ensure the Group’s compliance with legal and regulatory requirements, safeguarding of assets, adequacy of records, prevention or early detection of frauds, material errors and irregularities as well as effi ciency of operations.

3. The Internal Auditors had ensured that:

i. The internal audit plans and programs were appropriately developed to commensurate with the Group’s activities and appropriate focus and resources were allocated;

ii. The internal audit plans and programs were continuously reviewed and where necessary were adjusted accordingly to reflect any signifi cant changes in the Group’s business environment, structure, activities, risk exposures or systems; and

iii. The activities of internal audit are consistent with the long term goals of the Group and are in line with its internal controls, policies and procedures

4. BAC met Internal Auditors quarterly and the following topics were discussed:

i. Internal audit reports

ii. Follow up audit reports

iii. Risk management reports

iv. Unresolved audit fi ndings

5. Internal Auditors conducted a risk based approach during the development of the annual audit plan. The coverage of auditable areas takes into consideration the functions of governance, review of controls and compliance, operational risks, audit history, and request by the top management or BAC that is aligned to the organization’s strategic objectives.

6. The scope of internal audit covers the audits of all of the Group’s operational units, including its subsidiary companies based on the approved 2016’s audit plan. Among the key areas covered during the fi nancial year were:

i. Revenue Recognition

ii. Billings

iii. Debtors and Creditors Ageing

iv. Bank Reconciliation

v. Credit Facility

vi. Inventory Management

vii. Operations and Maintenance

viii. Planning

ix. Project Management

x. Safety and Security

xi. Procurement

xii. Asset Management

xiii. Financial Management

xiv. Human Resource Management

xv. Contracts

xvi. Legal and government regulations

xvii. SOPs



7. Internal Auditors presented audit reports that contain purpose, scope and results of the audit, including findings, conclusions and recommendations, management response and corrective actions in areas with significant risks and internal control defi ciencies to the BAC on a monthly basis. During the year, 70 audit activities (including 39 special audits or investigations and 23 follow-ups) were undertaken throughout the Group and 66 audit reports issued.

8. Internal audit findings in 2016 continued to reflect a moderate internal control system. Internal audit reports provide a formal means of communicating audit results and recommended actions to the Management and BAC. Audit reports provide the basis for the BAC to highlight signifi cant weaknesses and the Management’s proposed remedial measures to the Board. The Internal Auditors’ recommendations are for reducing risks, strengthening internal controls and correcting errors. BAC was satisfi ed with Internal Auditors review and instructed the Management to take all necessary actions to resolve the issues raised by Internal Auditors.

9. As at 31 December 2016, IAD had a total of 5 auditors, comprising staff from various backgrounds. The total costs incurred during the fi nancial year for the internal audit functions for the Group level was approximately RM341,035 as compared to RM422,868 in 2015.

C) External Audit

1. In November 2016, BAC had a private meeting with the External Auditors without the presence of the Group CEO, Management and Internal Auditors. The BAC questioned about Management’s cooperation with the External Auditors, their sharing of information and the profi ciency and adequacy of resources in fi nancial reporting functions with applicable MFRSs. The BAC Chairman also requested the External Auditors to inform BAC at any time should they be aware of incidents or matters in the course of their audits or reviews that needed BAC’s attention.

2. Policy established and adopted by the Board for BAC to assess suitability and independence of External Auditors. During fi rst quarter 2017 meeting, BAC performed an annual assessment on lead audit engagement partner and engagement team which covered their performance and quality of audit, communications with the BAC and Bursa Malaysia, and JAP’s independence, objectivity and professionalism.

3. Assessment questionnaires were used as a tool to obtain input from Damansara Realty personnel who had considerable contact with the external audit team throughout the year. A fi ve-point scale was used to evaluated JAP’S performance which encompassed on their ability to provide advice, suggestions or clarifications pertaining to the presentation of financial statements, ability to provide realistic analysis of issues using technical knowledge and independent judgment, and maintain active engagement, via both verbal and written communication during the audit process, as well as their responsiveness to issues.

4. The BAC satisfi ed with the suitability of JAP, based on the quality of services and suffi ciency of resources they provided to the Group. The BAC also acknowledged of the communication and interaction with the lead audit engagement partner and engagement team, which revealed their independence, objectivity and professionalism.

5. Result of the performance assessment of JAP for 2016 supports the BAC’s recommendation to the Board for approval of the appointment of JAP as External Auditors for the fi nancial year ending 31 December 2017.

6. The Board at its meeting approved the BAC’s recommendation to appoint JAP, subject to the shareholders’ approval being sought at the forthcoming 55th AGM on the appointment of JAP as external auditors of the Company for the fi nancial year ending 31 December 2017.

7. On 31 December 2016, the Group CFO reported that non-audit fees incurred in 2016 amounted to RM63,965, constituting approximately 32% of the total remuneration of RM199,762 to the External Auditors for the fi nancial year 2016. Group CFO also sought the BAC’s approval for the proposed audit and non-audit services to be provided by the External Auditors for 2016.

8. JAP had provided a written assurance on 15 March 2017 to the BAC that, in accordance with the terms of all relevant professional and regulatory requirements, they had been independent throughout the audit engagement for 2016.



MCCG 2012 requires the Board to identify the Group’s critical business risks and implement a system to manage these risks as well as to review the adequacy and the integrity of the Group’s internal control system to safeguard shareholder’s investment and the Group’s assets. Paragraph 15.26(b) of the MMLR of Bursa Securities requires Directors of listed companies to include a statement in the annual report on the state of the Group’s internal controls for the fi nancial year under review with the guidance provided to directors as set out in the “Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers” issued by the Taskforce on Internal Control with the support and endorsement of Bursa Securities.

RESPONSIBILITY & ACCOUNTABILITY BOARD

BOARD

The Board acknowledges its responsibility in instituting a system of internal controls that covers all aspects of the business including strategic, commercial, operational and fi nancial areas.

It recognizes that reviewing the Group’s system of internal control is a concerted and continuing process, designed to manage rather than eliminate the risk of failure to achieve business objectives. Accordingly, the system effected by Damansara Realty’s Board and Management, can only provide reasonable but not absolute assurance with regard to the achievement of the Group’s objectives.

The Board has received assurance from the Group CEO and Group CFO that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects.

The Board confi rms that there is an ongoing process of identifying, evaluating and managing all signifi cant risks faced by the Group throughout the year and up to the date of approval of the Annual Report and Financial Statement. The Group includes material joint ventures and associated companies.

Previously the Group formed an Risk Management Committee, which consisted of the Management, and it’s risk coordinators and was held every quarter in the year 2016. In order to further enhance the effectiveness of risk management, BRMC was established on the 23rd of November 2016 and will hold it’s fi rst meeting in Q1 2017 to further provide oversight on risk management matters relating to the activities within the Group and ensure that

there are prudent risk management over the Group’s businesses and operations.

The following Board Committees have been set up to promote transparency, governance and accountability:

• Board Audit Committee

• Board Risk Management Committee

• Tender Board Committee

• Board Nomination & Remuneration Committee

MANAGEMENT

The Management is responsible in ensuring risk management is adequately carried out, as part of their responsibility in evaluating and making key strategic and operational decision. The Management provides oversight for risk management and internal control implementation across the Group and reviewing, monitoring and taking action as required. Furthermore, the Management ensures that corporate level risks are being reviewed and actions are appropriately followed up by respective Divisions.

Management has set up the following committees to monitor, direct and provide on-going assessment to ensure that the Group’s businesses follow its business plans and established policies:

• Group Management Procurement Committee

• Group Executive Committee

RISK MANAGEMENT FRAMEWORK

The Board has established a risk management framework for the Group by adopting the Risk Management Process. This framework designed by Damansara Realty’s Directors, Management and other personnel, is a process to identify, evaluate, monitor and manage principal risks that will provide reasonable assurance regarding the achievement of the following objectives:

• Effectiveness and effi ciency of operations;

• Reliability of fi nancial reporting;

• Compliance with applicable laws and regulations; and

• Safeguarding of the Group’s assets.

STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL


The Enterprise Risk Management Department continuously reviews the adequacy and effectiveness of the risk management processes that are in place within the Group.

In order to properly manage risks, the Board recognizes the fact that an appropriate and sound system of internal control should be in place. The Board has adopted the Committee of Sponsoring Organisations of the Treadway Commission’s (COSO) Internal Control – Integrated Framework which comprises the following five (5) fundamental components that include Control Environment, Risk Assessment, Control Activity, Information and Communication and Monitoring.

RISK MANAGEMENT PROCESS

The Group’s Risk Management Process describes the fi ve-step process of risk assessment and risk treatment in the context of external and internal environments. This process is applied throughout the Group, whereby risks preventing the achievement of objectives are identifi ed, assessed, mitigated and reviewed and communicated to the Board, Management and relevant stakeholders.

As a result, the Group’s strategic risk profi le was developed refl ecting the key risk preventing the Group from achieving its strategic objectives. In addition, risk profiles for all divisions, departments and subsidiaries in the Group were generated as an outcome of the risk management process. These risk profi les refl ect the risk appetite of the respective divisions, departments and subsidiaries as the risk applied is based on the likelihood and impact parameters that have been approved by the respective heads.

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1. Control Environment

The Board and the management set the tone of the organization and infl uence the control consciousness within all levels of employees. The Group is committed in ensuring that an adequate control environment is maintained. Among the measures taken are as follows:

a. The Group has formulated a Risk Management Framework to guide personnel in identifying, assessing, managing and reporting the risks;

b. The Group had also established and distributed to all levels of personnel the Internal Policy and Procedures on Property Development, Property Services, Project Management, Tendering as well as Construction Management. The said policies and procedures, amongst others, defi ne the authority, responsibility and accountability of the relevant personnel within the Group business functions. Changes in strategic plans, objectives and goals are immediately disseminated and communicated to the employees;

c. In line with the existence of Human Resource Policies and Procedures in place, the Group had also adopted and practiced the Ethical Code of Conduct which further provides guidance to all employees in their day- to-day conduct of business transactions. Added to that, all employees are requested to make a formal disclosure as to whether they are engaged in activities that may have any conflict with Damansara Realty’s interests.

2. Risk Assessment & Evaluation

The Board is aware that every organization faces a variety of risks from external and internal sources that must be assessed. A pre-condition to risk assessment is the establishment of objectives, linked at different levels and internally consistent. Risk assessment is the identifi cation and analysis of relevant risks affecting the achievement of the objectives, forming a basis for determining how the risks should be managed. In order to ensure that the Board is satisfi ed that the key business risks have been identifi ed and are being addressed, a structured Risk-Control process has been established. Risk issues are updated and reviewed by the Management, Enterprise Risk Management Department and Internal Auditors. All risk-control reports from the respective risk owners / operating units are compiled and assessed quarterly. Results are presented to the BRMC for notifi cation and endorsement from time to time.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL


Risk assessment is performed in determining the severity (impact) and probability (likelihood) of occurrence of the risks. The risk assessment considers the range of potential severity and how likely these would occur. A product of the risk severity and probability will provide the risk rating and is evaluated using a risk matrix and this is used as the basis to prioritize the risks.

The comparison of estimated risks levels against established criteria, and deciding if the risk is within tolerable limits was used to evaluate the risks. If the levels of risk are within acceptable limits, or if the costs of addressing the risk outweigh the potential loss from the risk, then that risk may be accepted as a Control Exception and further risk treatment may not be required. The management has made conscious decision to accept that risk and not expend further effort in trying to control it.

3. Control Activities

Control activities help to ensure that necessary actions are taken to address risks that may hinder the achievement of the organization’s objectives. Control activities occur throughout the organization, at all levels and in all functions. Internal controls are enforced through policy manuals, jobs description and functions, operating procedures, delegation, authorization, etc. Appropriate control activities have been designed and put in place on all aspects of business operating functions. Among the key control activities currently undertaken by the Group are:

• Regular review of comprehensive information/reports provided by the Management to the Board covering financial and operational performance and key business indicators;

• Regular Management meetings to obtain feedback on the progress of activities undertaken by the operating/business units in order to rectify any shortcomings or problems affecting the implementation plan;

• Visits to operating/business units by members of the Board and senior management;

• Regular internal audit visits to sites to review and appraise the systems of internal controls in place to ensure that these controls are effective and working as intended;

• Regular reconciliations, for example banks’ reconciliations, to ensure that all transactions are accounted for;

• Efforts to safeguard Damansara Realty’s assets through adequate insurance coverage over the Group’s major assets against fi re peril;

• Segregation of duties and physical security of assets e.g. limit access to assets, systems and records; establish clear control of assets and custodial responsibility; and

• Risk-Control reports together with action plans are prepared by the risk owners and submitted to the Risk Management Coordinator for monitoring purposes. The Risk Management Coordinator shall ensure that all action plans are implemented.

4. Information and Communication Process

The Group has a well-defined and clear line of communication within the Group’s organizational structure. The structure ensures that the Board receives timely, relevant and reliable reports on business activities, progress and related information for decision-making. Periodic reports are compiled containing operational, fi nancial, compliance-related information and information on external events and activities for business decision-making and external reporting.

The Group has effective communication channels, through reports, briefings, meetings, discussions, internal memorandum and website, to communicate and disseminate relevant and important information on a timely basis.

5. Continuous Monitoring Process on the Adequacy

and Integrity of the System of Internal Control

The Board recognizes the fact that internal control systems need to be continuously monitored, a process that assesses the quality of the system’s performance over time. This is accomplished through ongoing monitoring activities, separate evaluations or a combination of both. Ongoing monitoring occurs in the course of operations through regular internal audit reviews on internal control system as well as management and supervisory activities over the business functions.

The Management provides regular and comprehensive information/reports to the Board covering fi nancial performance and key business indicators. The Internal Auditors have been in existence and are independent of the activities they audit.



The Internal Auditors report functionally to the BAC and administratively to the Group CEO. They perform regular reviews of business processes to assess the effectiveness of the internal controls, conduct audit visits to key business units of the Group on a planned basis and issue audit reports on their findings and recommendations for the review of the BAC.

The BAC conducts a review on the results of the internal audit programme or investigation undertaken and determines whether the Management has taken the appropriate actions on the recommendations made by the Internal Auditors.

SIGNIFICANT RISKS

1. Cash Flow Management Risk

In order to increase the effectiveness of cash flow management, the Management has instilled centralization of fi nance to the Group level. The usage of a common fi nancial system, ERP was used since 2016 across not all departments and divisions. The usage of the system made it possible for the Group to effectively monitor its debtor and creditors and the centralization of fi nance have dedicated a special unit to oversee this and are effective in Q1 2017.

The Board has acknowledged the effectiveness in centralization of fi nance using systems and ensures that the cash fl ow management risk is well managed by the Group.

2. Business Interruption Risk

Appropriate systems with adequate capacity, security arrangements facilities and resources are in place to mitigate risks that could cause an interruption to the Group’s critical business function. The EXCO was established in 2016 as part of the Group’s SRP in which it effectively look at business decision and the synergy of all its subsidiaries. EXCO members, comprised of head of each subsidiaries, department and division, Group CEO and Group CFO conduct EXCO meeting monthly. Better internal control and synergy was achieved since the formation of EXCO. The Group’s Management have identifi ed the potential future of the Group’s business using the strategic business analysis tools (i.e. Ansoff Matrix, TOMS, etc.) whether the subsidiaries within the group should focus on market penetration, product or service mix, market development or diversifi cation in order to ensure an effective business continuity plan is emplaced.

The Board have acknowledge the business continuity plan by the EXCO members and ensure that the business interruption risk is well managed by the Group.

3. Increasing Competition Risk

In face of competition, the Group has identifi ed the competition it faced in similar business and have further used strategic business analysis tools to diversify its business only if it meets the Group’s business objectives. Better focuses on the each business and effective project planning have been emplaced. Better market penetration by its businesses by focusing on its strengths, which synergizes all its subsidiaries in achieving an Integrated Facilities and Assets management. This created leverage for the Group’s businesses against its competitors.

The Board have acknowledge the effectiveness of the EXCO meeting in making sure that the increasing competition risk is well managed by the Group.

INTERNAL AUDIT FUNCTION

The Group has an Internal Audit Department (“IAD”), which reports directly to the BAC. Its role is to provide the Board with the assurance it requires regarding the adequacy and integrity of internal control across the Group.

IAD reviews the internal control processes in the key activities of the Group’s businesses by adopting a risk-based internal audit approach and reports directly to the BAC. Reports on internal audit findings together with recommendations for Management actions are presented to the BAC where it then reports to the Board by the BAC on a quarterly basis or as appropriate.

For each fi nancial year, IAD prepares annual Internal Audit Plan and presents it to the BAC for their approval. The scope of work in the Audit Plan encompasses review of fi nancial and operational activities within the Group.

The IAD has completed the planned audits for the year and will closely monitor the implementation progress of its audit recommendations in order to ensure that all major risks and control concerns have been duly addressed by the Management. All internal audit reports together with the recommended action plans and their implementation status have been presented to the Management and BAC.



STATE OF INTERNAL CONTROL DURING THE PERIOD

UNDER REVIEW

The Board is satisfi ed with the adequacy, effectiveness and integrity of the systems of risk management and internal control and is committed through improving when necessary to further enhance the Group’s system of risk management and internal control. The system of risk management and internal control of the Group is regularly reviewed by the BAC and in the 2017 onwards; BRMC is to enhance the oversight of risks management.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

As required by Paragraph 15.23 of the MMLR of Bursa Securities, the External Auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was performed in accordance with Recommended Practice Guide (“RPG”) 5 (Revised) issued by the Malaysian Institute of Accountants. RPG 5 (Revised) does not require External Auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.

This statement is made in accordance with the resolution of the Board dated 15 March 2017.



The Directors consider that, in preparing the fi nancial statements of the Damansara Realty for the FY2016, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent of judgements and estimates. The Directors also consider that all applicable approved accounting standards in Malaysia have been followed and confi rm that the fi nancial statement have been prepared on a going process basis.

The Directors are responsible for ensuring that the Group keep accounting records which disclose with reasonable accuracy at any time the fi nancial statements comply with the provisions of the Companies Act, 1965. The Directors are also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

This Statement is made in accordance with the resolution of the Board dated 15th March 2017.

STATEMENT ONDIRECTORS’ RESPONSIBILITY


RECURRENT RELATEDPARTY TRANSACTIONS

Transacting Parties

"Relationship oftransacting party”

"Nature of Transaction”

Aggregate Value of transaction Financial Year 2016 (RM’000)

JCorp Group -the Group

JCorp is a substantial shareholder of DBhd, by virtue of Section 6A of the Act

Rental of office space to the Group and other related operational expenses.

192



Miscellaneous services rendered by Jcorp Group to the Group (includes secretarial services, share registrar services, staff training, project management services, consultancy services internal audit services and others).

1,542

JCorp Group -DRJ


Sale of houses, shops, shop offices and other types of development on land registered in the name of JCorp Group for which DBhd has acquired from JCorp Group the rights to develop the said land. The entire proceeds of the sale accrue to the Group.

891

Jcorp Group -DRJ & the Group


Miscellaneous services offered by the Group to JCorp Group such as supplier, contractor or project manager of construction projects and sales, marketing agent and other related services.

1,881



Hotel and accomodation charges

0

KPJ Group -HTS

KPJ is an associated of Jcorp. Jcorp is a substantial shareholder of DBhd by virtue of section 6A of the Act

Consultancy services for hospital planning, commissioning, construction and operation provided by HTS. 3,059

KPJ Group -HTS


Facility management services for hospital provided by HTS.

1,327

JCorp Group -Metro Parking

J C o r p i s a m a j o r shareholder of DBhd by virtue of Section 6A of the Act

Rental of spaces for parking operations to Metro Parking

2,306

KPJ Group -Metro Parking


Rental of spaces for parking operations to Metro Parking

1,719


Transacting Parties

"Relationship oftransacting party”

"Nature of Transaction”

Aggregate Value of transaction Financial Year 2016 (RM’000)

JCorp Group -TMR


Facility management services for commercial buildings provided by TMR

531

KPJ Group -HCD


Cleaning services offered by HCD and other related expenses (i.e. rental of cleaning equipment, sales of toiletries, rental of toilet equipment and others) 15,342

JCorp Group -HCD & TMR


Cleaning services offered by HCD and TMR, other related expenses (i.e. rental of cleaning equipment, sales of toiletries, rental of toilet equipment, landscaping and other related activities)

2,930

# Damansara Realty Berhad (“DBhd”)

RECURRENT RELATED PARTY TRANSACTIONS


This Page Has Been Intentionally Left Blank

FINANCIAL STATEMENTS

70 Directors’ Report

74 Statement by Directors

74 Statutory Declaration

75 Independent Auditors’ Report

81 Statements of Comprehensive Income

82 Statements of Financial Position

84 Statement of Changes In Equity

86 Statement of Cash Flows

88 Notes to the Financial Statements

151 Supplementary Information

DIRECTORS’ REPORT

The directors have pleasure in submitting their report together with the audited fi nancial statements of the Group and of the Company for the fi nancial year ended 31 December 2016.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding, construction and project management.

The principal activities of the subsidiaries are described in Note 17 to the fi nancial statements.

There has been no signifi cant change in the nature of the principal activities during the fi nancial year.

RESULTS

Group Company RM’000 RM’000

(Loss)/Profi t net of tax (27,734) 75

(Loss)/Profi t attributable to:Owners of the parent (26,827) 75Non-controlling interests (907) –

(27,734) 75

There was no material transfer to or from reserves or provisions during the fi nancial year other than as disclosed in the fi nancial statements.

In the opinion of the directors, the results of the operations of the Group and of the Company during the fi nancial year were not substantially affected by any item, transaction or event of a material and unusual nature other than the readoption of Financial Reporting Standards (“FRS”) as further disclosed in Note 2.2 to the fi nancial statements.


DIRECTORS

The names of the directors of the Company in offi ce since the date of the last report and at the date of this report are:

Dato’ Ahmad Zahri bin Jamil (Chairman)Dato’ Daing A Malek bin Daing A RahamanZainah binti MustafaAbdullah bin Md YusofWan Azman bin IsmailDatuk Md Othman bin Hj YusofDato’ Mohd Aisom bin OmarShahrizam bin A. ShukorDato’ Sohaimi bin Shahadan (Resigned on 28.04.2016)Mohammad Asri bin Hassan Sabri (Resigned on 28.04.2016)Dato’ Ar. Wan Mohammad Khair-il Anuar bin Wan Ahmad (Resigned on 28.04.2016)Zulhafi s Bin Badoldin (Appointed on 01.06.2016, Resigned on 29.06.2016)

DIRECTORS’ BENEFITS

Neither at the end of the fi nancial 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 benefi ts by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous fi nancial year, no director has received or become entitled to receive a benefi t (other than benefi ts included in the aggregate amount of emoluments received or due and receivable by the directors or the fi xed salary of a full-time employee of the Company as shown in Note 11 to the fi nancial statements) by reason of a contract made by the Company or a related corporation with any director or with a fi rm of which the director is a member, or with a company in which the director has a substantial fi nancial interest, except as disclosed in Note 29 to the fi nancial statements.

DIRECTORS’ REPORT (cont’d.)


DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors in offi ce at the end of the fi nancial year in shares and options over shares in the Company and its related corporations during the fi nancial year were as follows:

Number of ordinary shares of RM0.50 eachName of director 01.01.2016 Acquired Sold 31.12.2016

Direct interest in the Company:

Dato’ Ahmad Zahri bin Jamil 20,000 – – 20,000

Indirect interest in the Company:

Dato’ Daing A Malek bin Daing A Rahaman * 157,816,580 – – 157,816,580

* Held through Seaview Holdings Sdn. Bhd.

None of the other directors in offi ce at the end of the fi nancial year had any interest in shares in the Company or its related corporations during the fi nancial year.

OTHER STATUTORY INFORMATION

(a) Before the statements of comprehensive income and statements of fi nancial 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 allowance for doubtful debts and satisfi ed themselves that all known bad debts had been written off and that adequate allowance 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 allowance for doubtful debts in the fi nancial statements of the Group and of the Company inadequate to any substantial extent; and

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



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 fi nancial statements of the Group and of the Company which would render any amount stated in the fi nancial statements misleading.

(e) 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 fi nancial 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 fi nancial 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 fi nancial year which will or may affect the ability of the Group or of the Company to meet their obligations 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 fi nancial 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 fi nancial year in which this report is made.

Signed on behalf of the Board in accordance with a resolution of the directors dated 15 March 2017.

Dato’ Ahmad Zahri bin Jamil Dato’ Daing A Malek bin Daing A Rahaman



We, Dato’ Ahmad Zahri bin Jamil and Dato’ Daing A Malek bin Daing A Rahaman, being two of the directors of Damansara Realty Berhad, do hereby state that, in the opinion of the directors, the accompanying fi nancial statements set out on pages 81 to 150 are drawn up in accordance with Financial Reporting Standards (“FRSs”) and Companies Act, 1965 in Malaysia so as to give a true and fair view of the fi nancial position of the Group and of the Company as at 31 December 2016 and of their fi nancial performance and cash fl ows for the year then ended.

The information set out in Note 36 to the fi nancial statements on page 151 have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profi ts or Losses in the Context of Disclosure pursuant to the 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 March 2017.

Dato’ Ahmad Zahri bin Jamil Dato’ Daing A Malek bin Daing A Rahaman

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

I, Zain Azrai Bin Zainuddin, being the offi cer primarily responsible for the fi nancial management of Damansara Realty Berhad, do solemnly and sincerely declare that the accompanying fi nancial statements set out on pages 81 to 150 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 declaredby the abovenamed, Zain Azrai Bin Zainuddinat Kuala Lumpur in the Federal Territory on 15 March 2017 Zain Azrai Bin Zainuddin

Before me,

STATEMENT BY DIRECTORSPursuant to Section 169(15) of the Companies Act, 1965


REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

OPINION

We have audited the fi nancial statements of Damansara Realty Berhad, which comprise the statements of fi nancial position as at 31 December 2016 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash fl ows of the Group and of the Company for the year then ended, and notes to the fi nancial statements, including a summary of signifi cant accounting policies, as set out on pages 81 to 151.

In our opinion, the accompanying fi nancial statements give a true and fair view of the fi nancial position of the Group and of the Company as at 31 December 2016, and of their fi nancial performance and their cash fl ows for the year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

BASIS FOR OPINION

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our opinion.

INDEPENDENCE AND OTHER ETHICAL RESPONSIBILITIES

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfi lled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

MATERIAL UNCERTAINTY RELATED TO GOING CONCERN

We draw attention to Note 2.1 in the fi nancial statements, which indicates that the Group incurred a net loss of RM27 million during the year ended 31 December 2016 and, as of that date, the Group’s current liabilities exceeded its current assets by RM155 million. As stated in Note 2.1, these events or conditions, along with other matters as set forth in Note 2.1, indicate that a material uncertainty exists that may cast signifi cant doubt on the Group’s ability to continue as a going concern. Our opinion is not modifi ed in respect of this matter.

INDEPENDENT AUDITORS’ REPORTTo the members of Damansara Realty Berhad (Incorporated in Malaysia)


KEY AUDIT MATTER

Key audit matters are those matters that, in our professional judgement, were of most signifi cance in our audit of the fi nancial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the fi nancial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a seperate opinion on these matters.

KEY AUDIT MATTERS OUR RESPONSE

1. Impairment of Assets

a. Property, Plant and Equipment (Note 14 to the Financial Statements)

The carrying amount of property, plant and equipment as at 31.12.16 was RM25.082 million. From that amount, the carrying amount of property, plant and equipment for Metro Parking Group represented almost 79% of the total carrying amount of property, plant and equipment which was RM19.784 million. The Group assessed the performance of its parking operation under Metro Parking Group in 2016. There are some parking machines that are no longer in the operable conditions due to some car parks which have been closed as a result of expiry of the concession agreements between the landlords and the Metro Parking Group. The landlords also requested for new equipment for every new car park open which caused the existing the parking machines to be obsolete.

The Group concluded that the above factors represented an indication that certain assets may be impaired and performed impairment tests as required by appropriate FRS.

Our audit procedures included, among others;

• Assessed internal control designed for identifi cation of impairment indicators;

• Evaluated the appropriateness of the Group’s judgements regarding identifi cation of assets or cash generating units which may be impared;

• Assessed the Group’s assumptions and estimates used to determine the recoverable amount of property, plant and equipment and any impairment losses recognized, using our judgement.

• Evaluated the adequacy of disclosure in respect of impairment.

b. Trade and Other Receivables (Note 22 to the Financial Statements)

The Group has a material credit exposure in its portfolio of trade and other receivables. Given the nature of these assets, the assessment of impairment involves signifi cant estimation uncertainty, subjective assumptions and the application of signifi cant judgement.

The management conducted their impairment test to assess the recoverability and consider whether there are indicators of impairment of the trade and other receivables. Based on managements’ assessment, there are indicators for impairment and management has written off RM1.207 million of Bad Debts (Note 9 to the Financial Statements).


• Reviewed the Group’s trade and other receivables schedule of debtors written off prepared by management.

• Evaluated the reasonableness of the methods and assumptions used by management to estimate the debtors written off and if management’s methods and assumptions are reasonable.

• Performed test on the accuracy and completeness of the data used by management.

INDEPENDENT AUDITORS’ REPORTTo the members of Damansara Realty Berhad (Incorporated in Malaysia) (cont’d.)


KEY AUDIT MATTER (cont’d.)


c. Investment Properties (Note 16 to the Financial Statements)

The carrying value of investment properties amounted to RM3.054 million. Significant judgement is required by the directors in determining the fair value of investment properties and for the purposes of our audit; we identified the valuation of investment properties as representing key audit matter due to signifi cant risk area material misstatement as a whole, combined with the significant auditor judgement while determining the fair value.


• Evaluated the reasonableness of the methods and assumptions used by management to estimate the fair values and if management’s methods and assumptions are reasonable.

• Performed independent test on the fair value of the investment properties by referring to available information.

d. Goodwill on Consolidation (Note 20 to the Financial Statements)

Goodwill on consolidation arises as a result of acquisitions of subsidiaries by the TMR Group and Healthcare Technical Services Sdn. Bhd. Under FRS, the Group is required to annually test goodwill for impairment. This assessment require the exercise of signifi cant judgement about future market conditions, including growth rates and discount rates, particularly those effecting the business of TMR Group and Healthcare Technical Services Sdn. Bhd.


• Critically evaluating the determination of the cash-generating units;

• Evaluating whether the model used to calculate the fair value less costs to sell and value in use of the individual cash-generating units complies with the requirements of MFRS 136: Impairment of Assets;

• Validating the assumptions applied and inputs in the respective models by comparing it to historical information and approved budgets.

2. Trade and Other Payables (Note 26 to the Financial

Statements)

In current year, Group undertook an exercise of writing back long outstanding balances amounted to RM11.949 million. The management performed write back on the balances which have been outstanding for more than 7 years. As a result of the write back, the Group recognized RM11.764 million in Other Income (Note 7 to the Financial Statements).


• Reviewed the Group’s trade and other payables schedule of payables write back prepared by management.

• Evaluated the reasonableness of the methods and assumptions used by management to estimate the payables write back and if management’s methods and assumptions are reasonable.

• Performed test on the accuracy and completeness of the data used by management.



KEY AUDIT MATTER (cont’d.)


3. Valuation of Inventories (Note 21 to the Financial

Statements)

Included in the inventories of RM3.999 million are 2 unsold shop lots in Taman Damansara Aliff, in the Group’s Johor Bahru development project amounting to RM2.362 million. This project was completed in August 2016 and the Group has recognized the unsold shop lots as inventories and at cost. Previously, no recognition for the unsold shop lots due to the ongoing development of the project.


• Performed test on the accuracy and completeness of the calculation of inventories recognized.

• Assessed the measurement of the inventories whether stated at the lower of cost and net realizable value.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS’ REPORT THEREON

The directors of the Company are responsible for the other information. The other information comprises the Director’s Report but does not include the fi nancial statements of the Company and our auditors’ report thereon.

Our opinion on the fi nancial statement of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the fi nancial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the fi nancial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of these other information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of fi nancial statements of the Group and of the Company that 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 fi nancial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the fi nancial statements of the Group and of the Company, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.



AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the fi nancial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standard on auditing in Malaysia and International Standard on Auditing will always detect a material misstatement when it exist. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to infl uence the economic decisions of users taken on the basis of these fi nancial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the fi nancial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is suffi cient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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 Group’s and of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signifi cant doubt on the Group’s or the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the fi nancial statements of the Group and of the Company or, if such disclosure are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the fi nancial statements of the Group and of the Company, including the disclosures, and whether the fi nancial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain suffi cient appropriate audit evidence regarding the fi nancial information of the entities or business activities within the Group to express an opinion on the fi nancial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible fo our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and signifi cant audit fi ndings, including any signifi cant defi ciencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most signifi cance in the audit of the fi nancial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumtances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefi ts of such communication.



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 of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 17 to the fi nancial statements, being accounts that have been included in the consolidated accounts.

(c) We are satisfi ed that the accounts of the subsidiaries that have been consolidated with the Company’s fi nancial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the fi nancial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) Our audit reports on the accounts of the subsidiaries did not contain any qualifi cation or any adverse comment required to be made under Section 174(3) of the Act.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 36 on page 151 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the fi nancial statements. 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 Profi ts 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.

OTHER MATTERS

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.

JAMAL, AMIN & PARTNERS AHMAD HILMY BIN JOHARI

(No: AF 1067) (No: 2977/03/18(J))Chartered Accountants Chartered Accountant

Kuala Lumpur, MalaysiaDated: 15th March 2017



Group Company

Note 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Revenue 4 183,596 207,058 7,142 –Cost of sales 4 (164,283) (159,795) – –

Gross profi t 19,313 47,263 7,142 –

Other items of income: Interest income 5 319 985 76 268 Dividend income from subsidiaries 6 – – 1,400 776 Other income 7 14,481 7,006 8,716 1,862Other items of expense: Depreciation (2,482) (2,603) (574) (589) Finance costs 8 (9,955) (9,698) (292) (313) Employee benefi ts expense 10 (20,614) (21,551) (7,549) (8,336) Other expenses (25,379) (19,099) (6,932) (3,343)

(Loss)/Profi t before tax 9 (24,317) 2,303 1,987 (9,675)Income tax expense 12 (3,417) (5,138) (1,912) –

(Loss)/Profi t for the year (27,734) (2,835) 75 (9,675)

Other comprehensive (loss)/income, net of tax

Foreign currency translation differences for foreign operations 347 572 – –

Total comprehensive loss for the year (27,387) (2,263) 75 (9,675)

Loss attributable to:

Owners of the parent (26,827) (4,316) 75 (9,675)Non-controlling interests (907) 1,481 – –

(27,734) (2,835) 75 (9,675)

Total comprehensive loss attributable to:

Owners of the parent (26,480) (3,744) 75 (9,675)Non-controlling interests (907) 1,481 – –

(27,387) (2,263) 75 (9,675)

Group

2016 2015

Basic loss per share attributable to owners of the parent (sen per share)

For the year (Note 13) (8.67) (1.40)

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

STATEMENTS OFCOMPREHENSIVE INCOME

For the fi nancial year ended 31st December 2016


Group Company

Note 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Assets

Non-current assets

Property, plant and equipment 14 23,216 26,369 933 2,887 Land held for property development 15 227,342 216,164 – – Investment properties 16 3,054 3,512 3,054 3,512 Investment in subsidiaries 17 – – 27,333 27,333 Deferred tax assets 18 779 502 – – Other investments 19 51 101 51 101 Goodwill on consolidation 20 1,410 1,409 – –

255,852 248,057 31,371 33,833

Current assets

Property development costs 15 - 4,604 – – Inventories 21 4,000 1,655 – – Trade and other receivables 22 51,815 47,356 63,286 60,283 Other current assets 23 5,385 3,638 206 45 Cash and bank balances 24 25,672 41,003 354 6,593

86,872 98,256 63,846 66,921

Total assets 342,724 346,313 95,217 100,754


STATEMENTS OF FINANCIAL POSITIONAs at 31st December 2016


Group Company

Note 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Equity and liabilities

Current liabilities

Loans and borrowings 25 14,230 15,302 7,480 8,302 Trade and other payables 26 227,298 202,955 44,972 49,745

241,528 218,257 52,452 58,047

Net current (liabilities)/assets (154,656) (120,001) 11,394 8,874

Non-current liabilities

Loans and borrowings 25 5,013 4,113 78 95 Deferred tax liabilities 18 480 459 – –

5,493 4,572 78 95

Total liabilities 247,021 222,829 52,530 58,142

Net assets 95,703 123,484 42,687 42,612

Equity attributable to owners of the parent

Share capital 27 154,685 154,685 154,685 154,685 Share premium 27 156 156 156 156 Merger defi cit 28 (18,568) (18,568) – – Accumulated losses (47,011) (20,531) (112,154) (112,229)Exchange reserve (1,378) (1,031) – – Capital reserve 28 85 85 – –

87,969 114,796 42,687 42,612 Non-controlling interests 7,734 8,688 – –

Total equity 95,703 123,484 42,687 42,612

Total equity and liabilities 342,724 346,313 95,217 100,754


STATEMENTS OF FINANCIAL POSITIONAs at 31st December 2016 (cont’d.)


|------------------------Attributable to owners of the parent-------------------------| |---------------Non-distributable----------------| Accumu- Non- Share Share Capital Merger Exchange lated controlling Equity capital premium reserve reserve reserve losses Total interests Total (Note 27) (Note 27) (Note 28) (Note 28) RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2016

At 1 January 2016 154,685 156 85 (18,568) (1,031) (20,531) 114,796 8,688 123,484

Total comprehensive (loss)/income – – – – (347) (26,480) (26,827) (907) (27,734) Dividends to non-controlling interests – – – – – – – (47) (47)

At 31 December 2016 154,685 156 85 (18,568) (1,378) (47,011) 87,969 7,734 95,703

2015

At 1 January 2015,

as previously stated 154,685 156 85 (18,568) (459) (16,787) 119,112 7,482 126,594

Total comprehensive income/(loss) – – – – (572) (3,744) (4,316) 1,481 (2,835) Dividends to non-controlling interests – – – – – – – (275) (275) Capital reserve – – – – – – – – –

At 31 December 2015 154,685 156 85 (18,568) (1,031) (20,531) 114,796 8,688 123,484


STATEMENTS OFCHANGES IN EQUITY – GROUPFor the fi nancial year ended 31st December 2016


Non-distributable

Share Share Accumulated Equity

capital premium losses Total

RM’000 RM’000 RM’000 RM’000

2016

At 1 January 2016 154,685 156 (112,229) 42,612 Profi t for the year – – 75 75

At 31 December 2016 154,685 156 (112,154) 42,687

2015

At 1 January 2015 154,685 156 (102,554) 52,287 Loss for the year – – (9,675) (9,675)

At 31 December 2015 154,685 156 (112,229) 42,612


STATEMENTS OFCHANGES IN EQUITY – COMPANY

For the fi nancial year ended 31st December 2016 (cont’d.)


Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Cash Flow from Operating Activities

Profi t/(Loss) before tax (24,317) 2,303 1,987 (9,675)Adjustments for: Interest Income (369) (268) (76) (268) Interest Expense 562 3,815 5,258 5 Depreciation of Plant and Equipment 7,381 2,603 573 589 Write-Off Property, Plant and Equipment – – – – (Gain)/Loss on disposal of plant and equipment (16) (186) – (186)Translation Difference (10,078) – – –

Operating profi t/(loss) before working capital changes (26,864) 8,267 7,742 (9,535)

Changes in working capital:- Property Development Cost (6,574) (4,941) – – Decrease in inventories (2,345) – – – (Increase)/Decrease in Trade and Other Receivables (1,425) (488) (4,003) (8,499) (Decrease)/Increase Trade and Other Payables 26,721 (1,380) (6,685) 4,887 Increase Amount due to Subsidiary Companies 50 – 50 14,115 Decrease Amounts due to Related Companies – – – (5,041)

Cash Generated From/(Used In) Operations (10,437) 1,458 (2,896) (4,073)

Taxes Paid (6,097) (466) – (1) Taxes Refunded – 125 – 23 Interest Paid (562) (3,815) (5,258) (5) Interest Received 396 268 (76) 268

Net Cash (Used In)/Generated From Operating Activities (16,700) (2,430) (8,078) (3,788)

Cash Flow from Investing Activities

Addition of Land Held of Development Properties – – – – Purchase of Investment Property – – – – Sales Proceed from Disposal of PPE – 4,703 1,528 80 Sales Proceed from Disposal of Investment Property 400 1,540 384 1,540 Purchase of Property, Plant and Equipment 1,286 (7,934) (73) (588) Fixed Deposit Maturity More Than 3 Months – 2,406 – –

Net Cash Generated From/(Used In) Investing Activities 1,686 715 1,839 1,032


STATEMENTS OF CASH FLOWSFor the year ended 31st December 2016


Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Cash Flow from Financing Activities

Drawdown of Loan – 200 – 200 Repayment of Loan (3,537) (1,296) – – Drawdown of Lease – 125 – 125 Repayment of Lease 3,504 (853) – – Drawdown of Hire Purchase – 214 – – Repayment of Hire Purchase – (16) – (16) Dividend Paid – (275) – –

Net Cash (Used In)/Generated From Financing Activities (33) (1,901) – 309

Net Increase/(Decrease) of Cash and

Cash Equivalents (15,047) (3,616) (6,239) (2,447)

Cash and Cash Equivalents at Beginning of Year 36,221 39,837 6,593 9,040

Cash and Cash Equivalents at End of Year (Note 24) 21,174 36,221 354 6,593


STATEMENTS OF CASH FLOWSFor the year ended 31st December 2016 (cont’d.)


1. CORPORATE INFORMATION

The fi nancial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards (“FRS”) and the Companies Act, 1965 in Malaysia.

Damansara Realty Berhad (“the Company”), a public limited liability company incorporated and domiciled in Malaysia is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered offi ce and principal place of business is located at Lot 10.3 Wisma Chase Perdana, Off Jalan Semantan, Damansara Heights, 50490, Kuala Lumpur.

The immediate and ultimate holding company is Seaview Holdings Sdn. Bhd. which is incorporated in Malaysia.

The principal activities of the Company are investment holding, construction and project management. The principal activities of the subsidiaries are described in Note 17.

There has been no signifi cant changes in the nature of the principal activities during the fi nancial year.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The fi nancial statements of the Group and the Company have been prepared in accordance with Financial Reporting Standards (“FRS”) and the requirements of the Companies Act, 1965 in Malaysia.

The fi nancial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

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

As at 31 December 2016, the Group current liabilities has exceeded its current assets by RM155 million. Mainly arising from due and payable of Development Rights Agreement payable to Johor City Development Sdn Bhd on the 31 December 2016. The Group have entered into a agreement to address the Group’s net current liabilities position.

NOTES TO THE FINANCIAL STATEMENTSFor the fi nancial year ended 31st December 2016


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)

2.2 Standards issued but not yet effective

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

Effective for annual

periods beginning

Description on or after

• Amendments to FRS 12 (Annual Improvements to FRS Standards 2014 – 2016 Cycle) 1 January 2017 Amendments to BC• FRS 15: Revenue from Contracts with Customers 1 January 2017• Disclosure Initiative (Amendments to FRS 107) Amendments to BC Amendments to IE 1 January 2017• FRS 112 : Recognition of Deferred Tax Assets for Unrealised Loses (Amendments to FRS 112) Amendments to BC Amendments to IE 1 January 2017• FRS 9: Financial Instruments 1 January 2018

The directors expect that the adoption of the above standards and interpretations will have no material impact on the fi nancial statements in the period of initial application.

The amendments are to be applied prospectively to the sale or contribution of assets occurring in annual periods beginning on or after 1 January 2016. Earlier application is permitted.

FRS 9: Financial Instruments

In November 2014, MASB issued the fi nal version of FRS 9 Financial Instruments which refl ects all phases of the fi nancial 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 Group is currently assessing the fi nancial impact of adopting FRS 9.

Malaysian Financial Reporting Standards (“MFRS Framework”)

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, signifi cant investor and venturer (herein called ‘Transitioning Entities’).

Transitioning Entities within the scope of MFRS 141, and those within the scope of IC 15 will be mandatorily required to adopt the MFRS Framework for annual periods beginning on or after 1 January 2018.

NOTES TO THE FINANCIAL STATEMENTSFor the fi nancial year ended 31st December 2016 (cont’d.)



2.3 Basis of consolidation

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

The Group controls an investee if and only if 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.

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 suffi cient 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 defi cit 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 refl ect 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 profi t or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassifi ed to profi t 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 the investment.




2.4 Business combinations

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

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Business combinations involving entities under common control are accounted for by applying the merger accounting method. The assets and liabilities of the combining entities are refl ected at their carrying amounts reported in the consolidated fi nancial statements of the controlling holding company. Any differences between the consideration paid and the share capital of the acquired entity is refl ected within the equity merger (defi cit)/reserve. The statement of comprehensive income refl ects the results of the combining entities for the full year, irrespective of when the combination takes place. Comparative are presented as if the entities had always been combined since the date the entities had come under common control.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

2.5 Foreign currency

(a) Functional and presentation currency

The individual fi nancial 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 fi nancial 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 costs 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 profi t or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassifi ed from equity to profi t or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profi t and 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.




2.5 Foreign currency (cont’d.)

(c) Foreign operations

The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profi t and loss.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.

2.6 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 benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, plant and equipment and furniture and fixtures are measured at cost less accumulated depreciation and accumulated impairment losses. When signifi cant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specifi c 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 satisfi ed. All other repair and maintenance costs are recognised in profi t or loss as incurred.

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings 10 to 50 yearsPlant and machinery 5 to 10 yearsSite infrastructure and renovations 10 to 14 yearsOffi ce equipment, furniture and fi ttings 4 to 20 yearsMotor vehicles 5 yearsMedical equipment 10 yearsRenovation 5 to 10 yearsPlant and parking equipment 5 to 7 yearsMachinery and tools 5 to 10 years

Capital work in progress included in plant and equipment are not depreciated as these assets are not yet available for use.

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 fi nancial year end, and adjusted prospectively, if appropriate.

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




2.7 Investment properties

Investment properties are initially recorded at cost, including transaction costs. Subsequent to recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment losses.

Depreciation is computed on a straight-line basis over the estimated useful lives of the investment properties at 50 years. The carrying values of investment properties 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 fi nancial year end, and adjusted prospectively, if appropriate.

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 benefi t is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profi t 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 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 2.6 up to the date of change in use.

2.8 Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units that are expected to benefi t from the synergies of the combination.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profi t or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained. Goodwill and fair value adjustments arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the company and are recorded in RM at the rates prevailing at the date of acquisition.




2.9 Impairment of non-fi nancial 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 identifi able cash fl ows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash fl ows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c 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 fi rst 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 profi t 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 profi t 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.

2.10 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 fi nancial 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 profi t or loss.




2.11 Investments in associates and joint ventures

An associate is an entity in which the Group has signifi cant infl uence. Signifi cant infl uence is the power to participate in the fi nancial and operating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

On acquisition of an investment in associate or joint venture, any excess of the cost of investment over the Group’s share of the net fair value of the identifi able 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 identifi able 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 or joint venture’s profi t or loss for the period in which the investment is acquired.

An associate or a joint venture is equity accounted for from the date on which the investee becomes an associate or a joint venture.

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

Profi ts and losses resulting from upstream and downstream transactions between the Group and its associate or joint venture are recognised in the Group’s fi nancial statements only to the extent of unrelated investors’ interests in the associate or joint venture. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The fi nancial statements of the associates and joint ventures are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

2.12 Financial assets

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

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




2.12 Financial assets (cont’d.)

The Group and the Company determine the classifi cation of their fi nancial assets at initial recognition, and the categories include loans and receivables and available-for-sale fi nancial assets.

(a) Loans and receivables

Financial assets with fi xed or determinable payments that are not quoted in an active market are classifi ed 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 profi t or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

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

(b) Available-for-sale fi nancial assets

Available-for-sale fi nancial assets are fi nancial assets that are designated as available for sale or are not classifi ed in any of the three preceding categories.

After initial recognition, available-for-sale fi nancial assets are measured at fair value. Any gains or losses from changes in fair value of the fi nancial 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 profi t or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassifi ed from equity to profi t or loss as a reclassifi cation adjustment when the fi nancial asset is derecognised. Interest income calculated using the effective interest method is recognised in profi t or loss. Dividends on an available-for-sale equity instrument are recognised in profi t 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 fi nancial assets are classifi ed as non-current assets unless they are expected to be realised within 12 months after the reporting date.

A fi nancial asset is derecognised when the contractual right to receive cash fl ows from the asset has expired. On derecognition of a fi nancial 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 profi t or loss.

Regular way purchases or sales are purchases or sales of fi nancial 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 fi nancial 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.




2.13 Impairment of fi nancial assets

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

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

To determine whether there is objective evidence that an impairment loss on fi nancial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments. For certain categories of fi nancial 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 fl ows discounted at the fi nancial asset’s original effective interest rate. The impairment loss is recognised in profi t or loss.

The carrying amount of the fi nancial asset is reduced by the impairment loss directly for all fi nancial 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 profi t or loss.

(b) Unquoted equity securities carried at cost

If there is objective evidence (such as signifi cant adverse changes in the business environment where the issuer operates, probability of insolvency or signifi cant fi nancial diffi culties of the issuer) that an impairment loss on fi nancial 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 fl ows discounted at the current market rate of return for a similar fi nancial asset. Such impairment losses are not reversed in subsequent periods.

(c) Available-for-sale fi nancial assets

Signifi cant or prolonged decline in fair value below cost, signifi cant fi nancial diffi culties 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 classifi ed as available-for-sale fi nancial assets are impaired.

If an available-for-sale fi nancial 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 profi t or loss, is transferred from equity to profi t or loss.

Impairment losses on available-for-sale equity investments are not reversed in profi t 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 profi t 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 profi t 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 insignifi cant 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 profi ts (less recognised losses) exceeds progress billings, the balance is classifi ed as amount due from customers on contracts. When progress billings exceed costs incurred plus, recognised profi ts (less recognised losses), the balance is classifi ed as amount due to customers on contracts.

2.16 Land held for property development and property development cost

(i) Land held for property development

Land held for property development consists of land where no active development activity has been carried out or where development activity is not expected to be completed within the normal operating cycle. Such land is classifi ed within non-current asset and is stated at cost less any accumulated impairment losses.

Land held for property development is reclassifi ed to property development costs at the point when development activity has commenced and where it can be demonstrated that the development activity will be completed within the normal operating cycle.




2.16 Land held for property development and property development cost (cont’d.)

(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 fi nancial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in profi t 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 bears to the estimated total property development costs.

Where the fi nancial 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 profi t or loss over billings to purchasers is classifi ed as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in profi t or loss is classifi ed as progress billings within trade payables.

2.17 Inventories

Inventories are stated at the lower of cost and net realisable value. The cost of raw materials comprises costs of purchase. The cost of unsold completed inventory properties comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs.

Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.

2.18 Non-current assets held for sale

Non-current assets are classifi ed as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.

Immediately before classifi cation as held for sale, the measurement of the non-current assets is brought up-to-date in accordance with applicable FRSs. Then, on initial classifi cation as held for sale, non-current assets (other than investment properties, deferred tax assets, employee benefi ts assets, fi nancial assets and inventories) are measured in accordance with FRS 5 that is at the lower of carrying amount and fair value less costs to sell. Any differences are included in the profi t or loss.




2.19 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 outfl ow 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 refl ect the current best estimate. If it is no longer probable that an outfl ow 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 refl ects, where appropriate, the risks specifi c to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a fi nance cost.

2.20 Financial liabilities

Financial liabilities are classifi ed according to the substance of the contractual arrangements entered into and the defi nitions of a fi nancial liability.

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

(a) Other fi nancial liabilities

The Group’s and the Company’s other fi nancial 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 classifi ed 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 fi nancial liabilities, gains and losses are recognised in profi t or loss when the liabilities are derecognised, and through the amortisation process.

A fi nancial liability is derecognised when the obligation under the liability is extinguished. When an existing fi nancial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modifi ed, such an exchange or modifi cation 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 profi t or loss.




2.21 Financial guarantee contracts

A fi nancial guarantee contract is a contract that requires the issuer to make specifi ed payments to reimburse the holder for a loss it incurs because a specifi ed 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, fi nancial guarantee contracts are recognised as income in profi t or loss over the period of the guarantee. If the debtor fails to make payment relating to fi nancial 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.

2.22 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 profi t 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.

2.23 Employee benefi ts

(a) Short term benefi ts

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(b) Defi ned contribution plans

The Group participates in the national pension schemes as defi ned by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defi ned contribution pension scheme. Contributions to defi ned contribution pension schemes are recognised as an expense in the period in which the related service is performed.

Such contributions are recognised as an expense in the profi t or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).

Some of the Group’s foreign subsidiaries also make contributions to their respective countries’ statutory pension schemes.




2.24 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 fi nance 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 profi t 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 profi t or loss on a straight-line basis over the lease term. The aggregate benefi t 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 classifi ed 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 2.25(b)(i).

2.25 Revenue and other income

Revenue and other income are recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and the amount can be reliably measured regardless of when the payment is being made. Revenue and other income are measured at the fair value of consideration received or receivable. The following specifi c recognition criteria must also be met before revenue and other income are recognised:

(a) Revenue

(i) Sale of land held for development

Revenue relating to sale of land held for development is recognised upon the transfer of signifi cant risks and rewards of ownership to the buyer.

(ii) Sale of properties

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

(iii) Construction contracts

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

(iv) Project management services

Project management services are recognised for services rendered based on the stage of completion during pre and post contract for each project.




2.25 Revenue and other income (cont’d.)

(a) Revenue (cont’d.)

(v) Parking services rendered

Revenue from parking services are upon the delivery of the service to the customers.

(vi) Cleaning services

Services are recognised upon completion of monthly services based on price stated in the predetermined agreement between company and the customer.

(b) Other income

(i) 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.

(ii) Interest income

Interest income is recognised using the effective interest method.

2.26 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 profi t or loss except to the extent that the tax relates to items recognised outside profi t 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 fi nancial 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 profi t nor taxable profi t or loss; and

– in respect of taxable temporary differences associated with investments in subsidiaries and associates, 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.




2.26 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 profi t 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 profi t nor taxable profi t or loss; and

– in respect of deductible temporary differences associated with investments in subsidiaries and associates, 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 profi t 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 suffi cient taxable profi t 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 profi t 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 profi t or loss is recognised outside profi t 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.

2.27 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 35, including the factors used to identify the reportable segments and the measurement basis of segment information.




2.28 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 classifi ed as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.29 Contingencies

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

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

2.30 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(i) In the principal market for the asset or liability, or

(ii) In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-fi nancial asset takes into account a market participant’s ability to generate economic benefi ts by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in circumstances and for which suffi cient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the fi nancial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is signifi cant to the fair value measurement as a whole:

(i) Level 1 – Quoted (unadjusted) market prices in active markets for identical assets of liabilities.

(ii) Level 2 – Valuation techniques for the lowest level input that is signifi cant to the fair value measurement is directly or indirectly observable.

(ii) Level 3 – Valuation techniques for which the lowest level input that is signifi cant to the fair value measurement is unobservable.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the assets or liabilities and the level of the fair value hierarchy as explained above.



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s fi nancial 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 Judgements made in applying accounting policies

There are no critical judgements made by management in the process of applying the Group’s accounting policies that may have signifi cant effect on the amounts recognised in the fi nancial statements.

3.2 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 signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below.

(a) Impairment of receivables

The Group and the Company assess at each reporting date whether there is any objective evidence that a fi nancial asset is impaired. To determine whether there is objective evidence of impairment, the Group and the Company consider factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash fl ows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s and Company’s receivables at the reporting date is disclosed in Note 23.

(b) Impairment of goodwill

Goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation of the value in use of the cash-generating units to which goodwill is allocated.

When value in use calculations are undertaken, management must estimate the expected future cash fl ows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash fl ows. Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are given in Note 20.



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (CONT’D.)

3.2 Key sources of estimation uncertainty (cont’d.)

(c) Measurement of amount due to Johor City Development Sdn. Bhd.

(“JCDSB”)

Amount due to JCDSB is part of the total consideration of RM180 million for JCorp and JCDSB agreeing to appoint Damansara Realty Johor Sdn. Bhd. (“DRJ”), a subsidiary of the Company, as the developer for Taman Damansara Aliff (“TDA”). On 1 July 2011, JCDSB has granted an extension of time of DRJ’s appointment as the developer of TDA for 5 years until 30 September 2016. Accordingly, the term of repayment of amount due to JCDSB was modifi ed to be repayable within 5 years until 30 September 2016. It is repayable on when and as is where is basis subject that DRJ shall undertake to set aside a proportion of proceeds arising from the land sale or development of properties in TDA, for the purpose of settlement of the said amount. The Group has discounted the repayment amount at the interest rate of 8.25% (2015: 8.25%). During the year, the Group has remeasured the amount due to JCDSB based on the one-off repayment in 2016. Accordingly, the present value of the amount due to JCDSB as at year end is RM120,900,000 (2015: RM111,685,000).

(d) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profi t will be available against which the losses can be utilised. Signifi cant 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 profi ts together with future tax planning strategies.

Assumptions about generation of future taxable profi ts depend on management’s estimates of future cash fl ows. These depends on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements 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 fi nancial position and the amount of unrecognised tax losses and unrecognised temporary differences.

The carrying value of deferred tax assets of the Group at 31 December 2016 was RM779,000 (2015: RM501,641) and the unrecognised tax losses and capital allowances at 31 December 2016 was RM8,333,000 (2015: RM49,615,000).



4. REVENUE

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Sale of properties 3,856 16,394 – – Project management services 18,128 41,942 – – Parking services 115,035 119,296 – – Cleaning services 42,315 29,426 – – Management fees received from subsidiaries – – 7,142 – Others 4,262 – – –

183,596 207,058 7,142 –

Cost of sales

Included in cost of sales are the following:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Cost of services performed 10,328 6,270 – – Car park rental 54,437 57,759 – – Profi t sharing with landlord 13,377 13,496 – – Depreciation (Note 14) 4,825 3,880 – – Employee benefi ts expense (Note 10) 39,611 35,048 – – Property service overhead – 16,508 – – Cleaning services overhead 20,473 19,791 – – Property development 10,460 6,202 – – Royalties – 175 – – Others 10,772 666 – –

5. INTEREST INCOME

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Interest income from loans and receivables 319 985 76 268



6. DIVIDEND INCOME

Company

2016 2015

RM’000 RM’000

Dividend income from subsidiaries 1,400 776

7. OTHER INCOME

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Net gain on sale of investment properties 16 160 16 160 Rental income from: – investment properties 361 219 361 219 Discount from contractors 270 7 63 5 Creditors write back 11,764 – 7,968 – Late payment 535 – – – Reversal of allowance for impairment of – trade and other receivables (Note 22) 248 50 – 29 Income from minerals – 3,080 – – Tender income – 452 – – Others 1,287 3,038 308 1,449

14,481 7,006 8,716 1,862

8. FINANCE COSTS

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Interest expense on:– Term loans – 17 – –– Finance leases 35 51 5 5– Overdrafts 394 890 – –– Advance from a subsidiary – – – 108– Advance from holding company 175 200 287 200– Bank charges 122 – – –– Bank guarantee 15 28 – –– Unwinding of amount due to JCDSB 9,214 8,512 – –

Total fi nance costs 9,955 9,698 292 313



9. (LOSS)/PROFIT BEFORE TAX

The following items have been included in arriving at loss before tax:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Auditors’ remuneration: – Statutory audit – Audit fees 458 326 65 60 – Other services 61 – 22 –Other auditors’ remuneration: – Statutory audit – 96 – 208Employee benefi ts expense (Note 10) 60,225 56,599 7,549 8,336Non-executive directors’ remuneration (Note 11) 750 566 750 566Depreciation of property, plant and equipment (Note 14) 2,408 2,498 500 484Rental expense:– offi ce, warehouse and house rental 1,334 1,364 597 596– computer and equipment 118 134 83 96Depreciation of investment properties (Note 16) 74 105 74 105Direct operating expenses arising from investment properties 185 232 185 –

Impairment loss on fi nancial assets:– trade receivables (Note 22(a)) – 538 – –Legal fees 551 562 125 –Write-off of property, plant and equipment 2,182 – – –Debtors written off 1,207 – 219 –Provision for doubtful debts 1,541 – – –Realised foreign exchange loss 12 – 2 –Unrealised foreign exchange gain (347) (572) – –



10. EMPLOYEE BENEFITS EXPENSE

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Wages, salaries and bonus 54,475 48,975 6,649 6,368Social security contributions 1,370 222 31 31Contributions to defi ned contribution plan 1,801 4,505 613 762Training 374 61 76 21Other benefi ts 2,205 2,836 180 1,154

Employee benefi ts expense (Note 9) 60,225 56,599 7,549 8,336Less: Employees’ benefi ts expenses included in cost of sales (Note 4) (39,611) (35,048) – –

20,614 21,551 7,549 8,336

Included in employee benefi ts expense of the Group and the Company are executive directors’ remuneration amounting to RM1,591,000 (2015: RM2,427,000) and RM1,591,000 (2015: RM2,427,000) respectively.

11. DIRECTORS’ REMUNERATION

The details of remuneration receivable by directors of the Company during the year are as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Executive: Salaries, bonus and other emoluments 1,201 1,852 1,201 1,852 Fees 306 353 306 353 Defi ned contribution plan 84 222 84 222

Total executive directors’ remuneration (excluding benefi ts-in-kind) (Note 10) 1,591 2,427 1,591 2,427 Estimated money value of benefi ts-in-kind – 10 – 10

Total executive directors’ remuneration (including benefi ts-in-kind) 1,591 2,437 1,591 2,437

Non-Executive: Fees (Note 9) 750 566 750 566 Estimated money value of benefi ts-in-kind – – – –

Total non-executive directors’ remuneration (including benefi ts-in-kind) 750 566 750 566

Total directors’ remuneration 2,341 3,003 2,341 3,003



11. DIRECTORS’ REMUNERATION (CONT’D.)

The number of directors of the Company whose total remuneration during the fi nancial year fell within the following bands is analysed below:

Number

of directors

2016 2015

Executive directors:RM600,001 – RM650,000 – –RM650,001 – RM700,000 – –RM700,001 – RM750,000 – –RM750,001 – RM800,000 – 1RM1,000,001 – RM2,000,000 1 1

Non-Executive directors:Below RM50,000 3 4RM50,000 – RM100,000 7 5RM100,001 – RM200,000 1 1RM400,001 – RM500,000 – –

12. INCOME TAX EXPENSE

Major components of income tax expense

The major components of income tax expense for the years ended 31 December 2016 and 2015 are:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Statement of comprehensive income:

Current income tax: – Malaysian income tax 3,417 5,074 1,713 – – Under provision in respect of previous years – 64 199 –

3,417 5,138 1,912 –

Deferred income tax (Note 18): – Reversal and origination of temporary differences – – – – – Under provision in respect of previous years – – – –

– – – –

Income tax expense recognised in profi t or loss 3,417 5,138 1,912 –



12. INCOME TAX EXPENSE (CONT’D.)

Reconciliation between tax expense and accounting profi t

A reconciliation of income tax expense applicable to loss before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Company is as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Profi t / (Loss) before tax (24,317) 2,303 1,987 (9,675)

Tax at Malaysian statutory tax rate of 24% (2015: 25%) (5,838) 780 477 (2,419)Adjustments: Non-deductible expenses 1,995 1,193 491 300 Income not subject to taxation – – – (678) Income subject to taxation – – – 678 Utilisation of business loss in respect of previous years 7,260 3,101 944 2,119 Under provision of income tax in respect of previous years – 64 – –

Income tax expense recognised in profi t or loss 3,417 5,138 1,912 –

Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) of the estimated assessable profi t for the year.

Tax savings during the fi nancial year arising from:

Group 2016 2015

RM’000 RM’000

Utilisation of previously unrecognised tax losses 10 10



13. (LOSS)/EARNINGS PER SHARE

Basic (loss)/earnings per share amounts are calculated by dividing (loss)/profi t for the year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the fi nancial year.

The Company does not have dilutive potential ordinary shares for years ended 31 December 2016 and 2015.

The following refl ects the (loss)/profi t and share data used in the computation of basic (loss)/earnings per share for the years ended 31 December:

Group 2016 2015

RM’000 RM’000

(Loss)/profi t net of tax attributable to owners of the parent used in the computation of basic earnings per share (26,827) (4,316)

No. of No. of

shares shares

‘000 ‘000

Weighted average number of ordinary shares for basic (loss)/earnings per share computation 309,371 309,371



14. PROPERTY, PLANT AND EQUIPMENT

Site

infra- Computer

Freehold structure Furniture and Capital

land and and Plant and and offi ce Motor work-in

buildings renovations machinery fi ttings equipment vehicles progress Total

2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

Cost

At 1 January 2016 788 4,407 57,371 2,653 9,596 4,392 6,650 85,857 Additions 1,709 22 5,785 85 772 304 1,038 9,715 Write-offs (428) – (199) – – – (1,555) (2,182) Disposals – – (432) (60) (1) (207) (507) (1,207) Transfer to / (from) – – (7) – – (64) (3,096) (3,167) Translation differences – – (900) 375 34 (102) 311 (282) Asset held for sales – – – – – – (629) (629)

At 31 December 2016 2,069 4,429 61,618 3,053 10,401 4,323 2,212 88,105

Accumulated depreciation

At 1 January 2016 Accumulated Depreciation 544 3,121 43,260 1,516 7,938 3,109 – 59,488 Accumulated impairment loss – – – – – – – – Depreciation charge for the year 9 562 5,812 146 539 239 – 7,307 Impairment loss – – 158 – – – – 158 Write-offs (428) – (199) – – – – (627) Disposals – – (558) (4) (1) – – (563) Transfer to assets held for sale – – – – – – – – Translation differences – – (1,175) 408 27 (134) – (874)At 31 December 2016 Accumulated Depreciation 125 3,683 47,140 2,066 8,503 3,214 – 64,731 Accumulated impairment loss – – 158 – – – – 158

Net carrying amount 1,944 746 14,320 987 1,898 1,109 2,212 23,216



14. PROPERTY, PLANT AND EQUIPMENT (CONT’D.)

Site

infra- Computer

Freehold structure Furniture and Capital

land and and Plant and and offi ce Motor work-in

buildings renovations machinery fi ttings equipment vehicles progress Total

2015 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

Cost

At 1 January 2015 788 4,344 50,834 2,736 8,286 3,748 6,100 76,836 Additions – 63 3,814 186 860 555 2,456 7,934 Write-offs – – – – – – – – Disposals – – (1,635) (383) – (133) (81) (2,232) Transfer – – 1,844 – – – (1,844) – Translation differences – – 2,514 114 450 222 19 3,319

At 31 December 2015 788 4,407 57,371 2,653 9,596 4,392 6,650 85,857


At 1 January 2015 537 2,555 37,293 1,615 6,690 2,510 – 51,200 Depreciation charge for the year 7 566 4,300 158 856 492 – 6,379 Write-offs – – – – – – – – Disposals – – (82) (359) – (11) – (452) Translation differences – – 1,749 102 392 118 – 2,361

At 31 December 2015 544 3,121 43,260 1,516 7,938 3,109 – 59,488

Net carrying amount 244 1,286 14,111 1,137 1,658 1,283 6,650 26,369




Offi ce

Equipment Furniture Capital

and and Motor work-in

Computers Fittings Renovations Vehicles progress Total

2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Company

Cost

At 1 January 2016 117 372 1,287 144 1,528 3,448 Additions 39 12 22 – – 73 Disposals – – – – (1,528) (1,528)

At 31 December 2016 156 384 1,309 144 – 1,993


At 1 January 2016 11 23 498 29 – 561 Depreciation charge for the year 15 19 436 29 – 499

At 31 December 2016 26 42 934 58 – 1,060

Net carrying amount 130 342 375 86 – 933

2015

Company

Cost

At 1 January 2015 71 367 1,230 – 1,273 2,941 Additions 46 5 57 144 336 588 Disposals – – – – (81) (81)

At 31 December 2015 117 372 1,287 144 1,528 3,448


At 1 January 2015 2 5 70 – – 77 Depreciation charge for the year 9 18 428 29 – 484

At 31 December 2015 11 23 498 29 – 561

Net carrying amount 106 349 789 115 1,528 2,887




Assets held under fi nance lease

During the fi nancial year, the Group acquired property, plant and equipment with an aggregate cost of RM4,323,000 (2015: RM4,321,000) by means of fi nance leases.

The net carrying amount of property, plant and equipment of the Group held under fi nance lease at the reporting date was RM1,109,000 (2015: RM1,278,000).

Leased assets are pledged as security for the related fi nance lease liabilities (Note 25).

15. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS

(a) Land held for property development

Freehold Development

land Rights Costs Total

RM’000 RM’000 RM’000 RM’000

Group

At 1 January 2016 39,152 105,406 71,606 216,164Additions – – 20,137 20,137Recognised in profi t and loss – – (8,959) (8,959)

At 31 December 2016 39,152 105,406 82,784 227,342

At 1 January 2015 39,152 105,406 60,188 204,746 Adoption of FRS – – 11,144 11,144

At 1 January 2015 39,152 105,406 60,462 205,020 Additions – – 11,144 11,144

At 31 December 2015 39,152 105,406 71,606 216,164

The development rights are pursuant to the consideration to be paid to Johor City Development Sdn. Bhd. (“JCDSB”) for the appointment of DRJSB as the developer of Taman Damansara Aliff Land (“TDA Land”). The development rights confers all the benefi cial interest over the TDA Land to DRJSB where DRJSB shall undertake to develop or sell TDA Land.



15. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (CONT’D.)

(b) Property development costs

Freehold Development

land Rights Costs Total

RM’000 RM’000 RM’000 RM’000

Group

At 31 December 2016

Cumulative property development costs

At 1 January 2016 – 1,712 14,578 16,290Cost incurred during the year _ _ 610 610

At 31 December 2016 – 1,712 15,188 16,900

Cumulative costs recognised in profi t or loss

At 1 January 2016 – (1,228) (10,458) (11,686)Recognised during the year – (300) (1,201) (1,501)Transfer to inventory _ _ (2,362) (2,362)Transfer to property plant & equipment _ _ (1,351) (1,351)

At 31 December 2016 – (1,528) (15,372) (16,900)

Property development costs at

31 December 2016 – 184 (184) _

Group

At 31 December 2015

Cumulative property development costs

At 1 January 2015 – 1,712 14,578 16,290

At 31 December 2015 – 1,712 14,578 16,290

Cumulative costs recognised in profi t or loss

At 1 January 2015 – (576) (4,907) (5,483)Recognised during the year – (652) (5,551) (6,203)

At 31 December 2015 – (1,228) (10,458) (11,686)

Property development costs at

31 December 2015 – 484 4,120 4,604



16. INVESTMENT PROPERTIES

Group/Company

2016 2015

RM’000 RM’000

Cost

At 1 January 3,994 5,424Disposal during the year (409) (1,430)

At 31 December 3,585 3,994


At 1 January 482 453Depreciation charge for the year (Note 9) 74 105Disposal during the year (25) (76)

At 31 December 531 482

Net carrying amount 3,054 3,512

Fair value 5,000 5,440

Fair value of investment properties has been determined based on valuations performed by accredited independent valuers. The valuation is based on the comparison method of valuation.

Title to investment properties of the Company is presently registered in the name of the developer.

Fair value hierarchy disclosure for investment properties have been provided in Note 31(c).

17. INVESTMENT IN SUBSIDIARIES

Company

2016 2015

RM’000 RM’000

Unquoted shares, at cost In Malaysia 67,896 67,896Impairment losses (40,563) (40,563)

27,333 27,333



17. INVESTMENT IN SUBSIDIARIES (CONT’D.)

Proportion (%) of

ownership interest

Name Principal activities 2016 2015

i) Held by the Company and Incorporated in Malaysia:

Damansara Realty Management Services Sdn. Bhd.

Management services to holding and related companies and general insurance business

100 100

Damansara Realty (Pahang) Sdn. Bhd. (“DRPSB”)

Property holding and development 80 80

Metro Parking (M) Sdn. Bhd. Parking operation and the provision of related consultancy services

100 100

Kesang Properties Sdn. Bhd. Property development (inactive) and investment holding

100 100

Tebing Aur Sdn. Bhd. Contract management and construction

100 100

Healthcare Technical Services Sdn. Bhd.

Project management and engineering maintenance services

70 70

HC Duraclean Sdn. Bhd. Franchising of professional care and cleaning services and sales of machinery and equipment, chemicals, tools, parts, accessories and uniform

75 75

TMR Urusharta (M) Sdn. Bhd. Business of the real estate services, involved in general services, facility management, project consultant and project management

75 75

Damansara Galaxy Sdn. Bhd.

Management services (inactive) 100 100

Kesang Leasing Sdn. Bhd. Lease, hire purchase and loan fi nancing (inactive)

100 100

Kesang Industries Sdn. Bhd. Investment holding (inactive) 100 100




Proportion (%) of

ownership interest


i) Held by the Company and Incorporated in Malaysia: (cont’d.)

Damansara Forest Products (Malaysia) Sdn. Bhd.

Quarrying (inactive) 100 100

JOLS Construction Sdn. Bhd. Construction, refurbishment, inspection and sanitisation service (inactive)

100 100

Damansara Realty Management (Timber Operations) Sdn Bhd

Timber operation and its related activities (inactive)

100 100

Damansara Realty Properties Sdn. Bhd Property development and construction works (inactive)

100 100

Kesang Kastory Enterprise Sdn. Bhd. Importation and distribution of food stuffs (inactive)

95 95

Kesang Trading Sdn. Bhd. Property development and trading of offi ce equipment (inactive)

100 100

Damansara Realty Constructions Sdn. Bhd.

Manufacturing, wholeselling and trading of pharmaceutical products (inactive)

100 100

Damansara Realty Land Sdn. Bhd. Sand extraction and trading (inactive) 100 100

DHealthcare Centre Sdn. Bhd. Healthcare service provider (inactive) 51 51

Damansara Urban Sdn. Bhd. To carry on the business of general merchants, traders, suppliers, factors, brokers, commission and general agents etc (general traders) (inactive)

100 100

ii) Held through subsidiaries and incorporated in Malaysia

Damansara Realty (Johor) Sdn. Bhd.

Property development 100 100

Damansara Realty (Terengganu) Sdn. Bhd.

Property development 100 100




Proportion (%) of

ownership interest


ii) Held through subsidiaries and incorporated in Malaysia (cont’d.)

TMR LC Catering Sdn. Bhd. (Formerly known as Damansara Millenium Sdn. Bhd.)

Property development and advertising (inactive)

70 100

Metro Equipment Systems (M) Sdn. Bhd.

Trading of parking and other related services

100 100

Metro Parking (Sabah) Sdn. Bhd. Parking operator and other transport related services

100 100

Smart Parking Management Systems Sdn. Bhd.

Trading of parking and other related equipment

100 100

M.N. Koll (M) Sdn. Bhd. Building management and maintenance services

90 90

TMR ACMV Services Sdn. Bhd. Trading and services of airconditioning services

100 100

TMR Koll Sdn. Bhd. Engineering consultancy services 100 100

Harta Facilities Management Sdn. Bhd.

Project management 100 100

DRP Construction Sdn. Bhd. Property development, construction and investment (inactive)

100 100

Kesang Construction & Engineering Sdn. Bhd.

The business of general contracting (inactive)

100 100

Kesang Equipment Hire Sdn. Bhd. Buying, selling and renting of machinery (inactive)

100 100

Kesang Quarry Sdn. Bhd. Quarrying (inactive) 70 70

Pedas Quarry Sdn. Bhd. Quarrying (inactive) 55 55

DAC Properties Sdn. Bhd. Development of building projects 56 –

DAC Land Sdn. Bhd. Investment properties and property development.

100 –




Country of

Incorporation

Proportion (%) of

ownership interest


iii) Held by the Company and incorporated in overseas:

** Damansara Forest Products Ltd. Papua New Guinea

Timber operations (liquidation) – 100

** Damansara Batai Ltd. Papua New Guinea

Inactive (Removed) – 85

** Damansara Pai (PNG) Ltd. Papua New Guinea


** Damansara-Siau (PNG) Ltd. Papua New Guinea


iv) Held through subsidiaries and incorporated in overseas:

** Metro Parking (S) Pte. Ltd. Singapore Parking operator and consultancy services

70 70

** Metro Parking (B) Sdn. Bhd. Brunei Parking operator and other transport related services

75 75

** Metro Parking Management (Philippines) Inc.

Philippines Parking operator and other transport related services

75 75

** Metro Parking (HK) Limited Hong Kong Parking operator, consultancy services and transport related services

55 55

** Metro Parking Services (India) Private Limited

India Parking operator, consultancy services and transport related services

100 100

** Audited by a fi rm other than Jamal, Amin & Partners



18. DEFERRED TAX

Deferred income tax as at 31 December relates to the following:

As at 1 Recognised As at 31 Recognised As at 31

January in profi t December in profi t December

2015 or loss 2015 or loss 2016

RM’000 RM’000 RM’000 RM’000 RM’000

(Note 12) (Note 12)

Group

Deferred tax liabilities:

Property, plant and equipment 420 39 459 21 480

Deferred tax assets:

Unutilised tax losses (23) – (23) 23 – Others (346) (133) (479) (300) (779)

(369) (133) (502) (277) (779)

51 (94) (43) (256) (299)

Group

2016 2015

RM’000 RM’000

Presented after appropriate offsetting as follows:

Deferred tax liabilities 480 459Deferred tax assets (779) (502)

(299) (43)



18. DEFERRED TAX (CONT’D.)

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

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Unused tax losses 84,356 49,574 20,053 20,053 Unabsorbed capital allowances 446 41 254 254

84,802 49,615 20,307 20,307

Unrecognised tax losses

At the reporting date, the Group has unused tax losses and unabsorbed capital allowances that are available for offset against future taxable profi ts of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of recoverability. The availability of unused tax losses and unabsorbed capital allowances for offsetting against future taxable profi ts of the respective subsidiaries are subject to no substantial changes in shareholdings of those subsidiaries under the Income Tax Act, 1967 and guidelines issued by the tax authority.

19. OTHER INVESTMENTS

Group/Company

2016 2015

RM’000 RM’000

Non-current

Available-for-sale fi nancial assets:– equity instruments (quoted in Malaysia) 51 51

– equity instruments (unquoted), at cost – 897 Less: accumulated impairment losses – (847)

– 50

51 101

Market value of quoted investments 129 81



20. GOODWILL ON CONSOLIDATION

2016 2015

RM’000 RM’000

Group

Cost

At 1 January and 31 December 3,049 3,049Addition 1 –

At 31 December 3,050 3,049

Accumulated impairment

At 1 January and 31 December 1,640 1,640

Net carrying amount 1,410 1,409

Impairment testing of goodwill

Goodwill arising from business combinations has been allocated to two individual cash-generating units (“CGU”) for impairment testing as follows:

– Healthcare services segment – Property services segment

The carrying amounts of goodwill allocated to each CGU are as follows:

2016 2015

RM’000 RM’000

Goodwill

Healthcare services segment 523 523Property services segment 887 886

Total 1,410 1,409



20. GOODWILL ON CONSOLIDATION (CONT’D.)

The recoverable amounts of the CGUs have been determined based on value in use calculations using cash fl ow projections from fi nancial budgets approved by management covering a fi ve-year period. The pre-tax discount rate applied to the cash fl ow projections and the forecasted growth rates used to extrapolate cash fl ows beyond the fi ve-year period are as follows:

Growth rates Pre-tax discount rates 2016 2015 2016 2015

Healthcare services segment 5.0% 5.0% 9.2% 9.2%Property services segment 11.0% 11.0% 9.0% 9.0%

The calculations of value in use for the CGUs are most sensitive to the following assumptions:

Budgeted gross margins – Gross margins are based on average values achieved in the three years preceding the start of the budget period. These are increased over the budget period for anticipated effi ciency improvements.

Growth rates – The forecasted growth rates are based on published industry research and do not exceed the long-term average growth rate for the industries relevant to the CGUs.

Pre-tax discount rates – Discount rates refl ect the current market assessment of the risks specifi c to each CGU. This is the benchmark used by management to assess operating performance and to evaluate future investment proposals.

Market share assumptions – These assumptions are important because, as well as using industry data for growth rates (as noted above), management assesses how the CGU’s position, relative to its competitors, might change over the budget period.

21. INVENTORIES

Group 2016 2015

RM’000 RM’000

Cost

Cleaning machinery and equipment 62 47Chemicals 92 102Developed properties held for sale 2,362 –Uniforms 22 15Materials and consumables 244 119Parking materials 1,218 1,372

4,000 1,655

During the year, the amount of inventories recognised as an expense in cost of sales of the Group was RM10,328,000 (2015: RM6,270,000).



22. TRADE AND OTHER RECEIVABLES

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Current

Trade receivables

Third parties 20,971 56,243 – 8,217

20,971 56,243 – 8,217Less: Allowance for impairment – Third parties (4,322) (27,010) – (8,217)

Trade receivables, net 16,649 29,233 – –

Other receivables

Income tax recoverable 283 1,733 283 282Amounts due from subsidiaries – – 175,332 171,971Deposits 870 5,296 221 346Others 34,767 18,256 479 2,698

35,920 25,285 176,315 175,297

Less: Allowance for impairment – Amounts due from subsidiaries – – (113,002) (113,002) – Others (754) (7,162) (27) (2,012)

(754) (7,162) (113,029) (115,014)

Other receivables, net 35,166 18,123 63,286 60,283

Total trade and other receivables 51,815 47,356 63,286 60,283Less: Income tax recoverable (283) (1,733) (283) (282)Add: Cash and bank balances (Note 24) 41,003 41,003 6,593 6,593

Total loans and receivables 92,535 86,626 69,596 66,594



22. TRADE AND OTHER RECEIVABLES (CONT’D.)

(a) Trade receivables

Trade receivables are non-interest bearing and generally ranges from 14 to 90 days (2015: 14 to 90 days) 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 and Company’s trade receivables are as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Neither past due nor impaired 3,814 6,301 – –

1 to 30 days past due not impaired 3,476 6,447 – –31 to 60 days past due not impaired 1,902 2,296 – –61 to 90 days past due not impaired 1,100 2,815 – –91 to 120 days past due not impaired 1,796 6,382 – –More than 121 days past due not impaired 4,561 4,992 – –

12,835 22,932 – –Impaired 4,322 27,010 – 8,217

20,971 56,243 – 8,217

Receivables that are neither past due nor impaired

18% (2015: 11.2%) of trade receivables of the Group or RM3,814,000 (2015: RM6,301,000) that is neither past due nor impaired.

None of the Group’s and Company’s trade receivables that are neither past due nor impaired has been renegotiated during the fi nancial year.

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM12,836,000 (2015: RM22,932,000) respectively that are past due at the reporting date but not impaired.

Although these receivables have exceeded the credit terms granted to them, the directors are reasonably confi dent that all debts can be recovered within the next 12 months.




(a) Trade receivables (cont’d.)

Receivables that are impaired

The Group’s and Company’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:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Individually impaired

Trade receivables – nominal amounts 4,322 27,010 – 8,217Less: Allowance for impairment (4,322) (27,010) – (8,217)

– – – –

Movement in allowance accounts:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

At 1 January 27,010 26,476 8,217 8,217Charge for the year (Note 9) – 538 – –Reversal of impairment (22,688) (4) – –

At 31 December 4,322 27,010 8,217 8,217

Included in trade receivables that are impaired are amounts being disputed and under legal claim as follows:

Group

2016 2015

RM’000 RM’000

Due from companies within the Safuan Group – 12,884Other trade receivable – 11,766

– 24,650

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in signifi cant fi nancial diffi culties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.




(b) Other receivables

Amounts due from subsidiaries are unsecured, non-interest bearing and are repayable on demand.

Amounts due from former related companies represent amounts due from subsidiaries of JCorp. These amounts are unsecured, non-interest bearing and are repayable on demand. JCorp is the former immediate and ultimate holding corporation of the Company.

Other receivables that are impaired

At the reporting date, debts due from subsidiaries that are in net liabilities position amounted to RM173,272,000 (2015: RM156,891,000) of which provision for impairment of RM114,075,000 (2015: RM131,002,000) had been made.

Amounts due from former related companies are owing by companies within the Safuan Group, which are in dispute and under legal action. Full allowance had been made against these receivables in prior years.

Movement in allowance accounts: Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

At 1 January 7,166 7,216 115,014 122,648Charge for the year (Note 9) – – – –Reversal of allowance (Note 7) (248) (50) – (29)Written off of allowance (6,164) – (1,985) (7,605)

At 31 December 754 7,166 113,029 115,014



23. OTHER CURRENT ASSETS

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Prepayments 7,012 3,642 206 950Amount due from customers for contract 9,444 2,502 10,248 1,601

16,456 6,144 10,454 2,551

Less: Allowance for impairment – Prepayments (823) (905) – (905) – Amounts due from customers on contract (10,248) (1,601) (10,248) (1,601)

(11,071) (2,506) (10,248) (2,506)

Total other current assets 5,385 3,638 206 45

Gross amount due from customers for contract

Construction contract costs incurred to date 46,521 25,993 31,577 7,508Attributable profi ts 7,710 222 6,640 –

54,231 26,215 38,217 7,508Less: Progress billings (44,787) (23,713) (27,969) (5,907)

9,444 2,502 10,248 1,601

Presented as:Gross amount due from customers for contract work 9,444 2,502 10,248 1,601



24. CASH AND CASH EQUIVALENTS

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Cash at banks and on hand 15,822 31,545 354 6,593Short term deposits with licensed banks 9,850 9,458 – –

25,672 41,003 354 6,593Less: Bank overdrafts (Note 25) 140 (956) – –Less: Deposits with maturity more than 3 months (4,638) (3,826) – –

Cash and cash equivalents 21,174 36,221 354 6,593

Included in deposits with licensed banks of the Group are deposits amounting to RM4,638,000 (2015: RM3,826,000) which are pledged as security for bank facilities and bank guarantees.

Short-term deposits are made for varying periods of between one day and one year depending on the immediate cash requirements of the Group and the Company, and earn interests at the respective short-term deposit fi xed rates. The weighted average effective interest rates at the reporting date for the Group and the Company are as below:

Group Company

2016 2015 2016 2015

% % % %

Licensed banks 2.38 2.66 2.94 3.47



25. LOANS AND BORROWINGS

Group Company

2016 2015 2016 2015

Maturity RM’000 RM’000 RM’000 RM’000

Current

Secured:Syndicated term loan at BLR+2.0% p.a. 2017 4,136 1,047 – –Obligations under fi nance leases (Note 30(b)) 2017 962 3,206 13 14Bank overdrafts (Note 24) On demand (140) 956 – –

4,958 5,209 13 14

Unsecured:Advances from a non-controlling shareholder of a subsidiary On demand 1,805 1,805 – –Advance from ultimate holding company On demand 7,467 8,288 7,467 8,288

9,272 10,093 7,467 8,288

14,230 15,302 7,480 8,302

Non-current

Secured:Syndicated term loan at BLR+2.0% p.a. 2018 – 2021 776 383 – –Obligations under fi nance leases (Note 30(b)) 2018 – 2024 4,237 3,730 78 95

5,013 4,113 78 95

Total loans and borrowings 19,243 19,415 7,558 8,397



25. LOANS AND BORROWINGS (CONT’D.)

The remaining maturities of the loans and borrowings are as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

On demand or within one year 14,230 15,302 7,480 8,302More than 1 year and less than 2 years 4,037 2,160 18 17More than 2 years and less than 5 years 723 1,924 38 365 years or more 253 29 22 42

19,243 19,415 7,558 8,397

Advances from a non-controlling shareholder of a subsidiary

The advances from a non-controlling shareholder of a subsidiary, Uniphoenix Corporation Bhd. (in liquidation) are unsecured, non-interest bearing and are repayable on demand.

Advance from ultimate holding company

The advance from the ultimate holding company is unsecured, bears interest of 2.5% per annum and is repayable on demand.

Obligations under fi nance leases

These obligations are secured by a charge over the leased assets (Note 14). The weighted average discount rate implicit in the lease is 5.5% (2015: 5.5%) per annum.



26. TRADE AND OTHER PAYABLES

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Current

Trade payables

Amount due to related companies 125,899 111,685 – –Third parties 29,845 27,231 3,903 5,381

155,744 138,916 3,903 5,381

Other payables

Amounts due to subsidiaries – – 31,858 29,239 Deposits received 8,815 43 – 20 Accruals 17,144 12,346 837 63 Others 45,595 51,650 8,374 15,042

71,554 64,039 41,069 44,364

Total trade and other payables 227,298 202,955 44,972 49,745

Non-current

Trade payables

Amount due to JCDSB – – – –

– – – –

Total trade and other payables 227,298 202,955 44,972 49,745 Add: Loans and borrowings (Note 25) 19,243 19,415 7,558 8,397

Total fi nancial liabilities carried at amortised cost 246,541 222,370 52,530 58,142

(a) Trade payables

These amounts are non-interest bearing. Trade payables are normally settled on 30 to 90 days (2015: 30 to 90 days) terms. Non-current trade payables are repayable after 12 months on installment basis.

Amount due to JCDSB is part of the total consideration of RM180 million for JCorp and JCDSB agreeing to appoint Damansara Realty Johor Sdn. Bhd. (“DRJ”), a subsidiary of the Company, as the developer for Taman Damansara Aliff (“TDA”). On 1 July 2011, JCDSB agreed to grant an extension of time of DRJ’s appointment as the developer of TDA for another 5 years until 30 September 2016. Accordingly, the term of repayment of amount due to JCDSB was modifi ed to be repayable within 5 years until 31 December 2016. It is repayable on when and as is where is basis subject that DRJ shall undertake to set aside a proportion of proceeds arising from the land sale or development of properties in TDA, for the purpose of settlement of the said amount.



26. TRADE AND OTHER PAYABLES (CONT’D.)

(a) Trade payables (cont’d.)

On 13 October 2016, Damansara Realty Johor Sdn Bhd (“DRJ”) had entered into the following:

i) a subscription and shareholders’ agreement with Country Garden Management (“CGM”) to record certain commitments of the parties with regards to the subscription of shares in DAC Properties Sdn Bhd (“DAC Properties”) and to regulate their rights as shareholders of DAC Properties and the conduct of the business and affairs of DAC Properties, which has been identifi ed as the joint venture vehicle between DRJ and CGM to undertake the development of a 53.08 acre parcel of land within the TDA Land; and

ii) a share sale agreement with CGM for the disposal of 26,500 ordinary shares of RM0.10 each in DAC Properties held by DRJ to CGM, resulting in DRJ and CGM holding 30.0% and 70.0% of the equity interest in DAC Properties, respectively for a disposal consideration of RM18.8 million upon the terms and subject to the conditions contained therein, which form part of the Proposed Joint Venture.

Subsequently, on 14 October 2016 DRJ had entered into a settlement agreement with DBhd, JCD, JCorp, and JLand to settle an aggregate sum of RM141.526 million for the TDA Land. The Aggregate Settlement Sum shall be settled through (i) the consideration arising from the purchase of the JV Land by DAC Properties; and (ii) the consideration arising from the purchase of the remaining portion of approximately 10.07 acres of the TDA Land by DRJ and its wholly-owned subsidiary, namely DAC Land Sdn Bhd (“DAC Land”), which will be effected via the following two (2) sale and purchase agreements:-

i) a sale and purchase agreement entered into between JCD, JCorp and DAC Properties, for the acquisition of the JV Land for a sale and purchase consideration of RM130.30 million; and

ii) a sale and purchase agreement between JCorp, JLand, DRJ and DAC Land, for the acquisition of the Remaining Land for a purchase consideration of RM11.23 million.

(b) Other payables

Includes in other payables are amount due to former holding and related company of Johor Corporation Berhad amounting to RM164,021 and RM3,517,853 (2015: RM164,021 and RM3,517,853) respectively.

These amounts are non-interest bearing. Other payables are normally settled on an average term of three months (2015: average term of three months).

(c) Amounts due to subsidiaries

These amounts are unsecured, repayable on demand and non-interest bearing except for an amount of RM1,630,755 (2015: RM1,630,755) which bears interest at the effective average rate of 6.6% (2015: 6.6%) per annum.



27. SHARE CAPITAL AND SHARE PREMIUM

Number of ordinary l–----------------------------- Amount –-----------------------------l

shares of RM0.50 each Total

Share capital Share capital share capital

(Issued and (Issued and Share and share

fully paid) fully paid) premium premium

‘000 RM’000 RM’000 RM’000

Group and Company

Issued and fully paid

At beginning and end of 2015 and 2016 309,371 154,685 156 154,841

Number of ordinary shares

of RM0.50 each l–----------------- Amount –--------------l

2016 2015 2016 2015

‘000 ‘000 RM’000 RM’000

Authorised share capital

At beginning and end of 2015 and 2016 2,000,000 2,000,000 1,000,000 1,000,000

28. MERGER DEFICIT AND CAPITAL RESERVE

(a) Merger defi cit

Group

2016 2015

RM’000 RM’000

At 1 January/31 December (18,568) (18,568)

This represents the difference between the consideration paid and the share capital of the acquired companies.

(b) Capital reserve

This represents reserve arising from bonus issue by a subsidiary.



29. RELATED PARTY TRANSACTIONS

(a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the fi nancial statements, the following signifi cant transactions between the Group and related parties took place at terms agreed between the parties during the fi nancial year:

Related companies within Seaview Holdings Sdn Bhd:

Group/Company

2016 2015

RM’000 RM’000

Advance received from ultimate holding company 7,467 8,288Interest on advances 287 200

(b) Compensation of key management personnel

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Salaries and other emoluments 5,762 6,405 84 2,997Defi ned contribution plan 697 775 149 352

6,459 7,180 233 3,349

30. COMMITMENTS

(a) Operating lease commitments – as lessee

The Group has entered into commercial leases on offi ce buildings. These leases have an average tenure of three years with no renewal option or contingent rent provision included in the contract. There are no restrictions placed upon the Group by entering into these leases.

Future minimum rentals payable under non-cancellable operating leases at the reporting date are as follows:

Group

2016 2015

RM’000 RM’000

Not later than 1 year 54,276 72,031Later than 1 year but not later than 5 years 115,075 56,290Later than 5 years 54 236

169,405 128,557



30. COMMITMENTS (CONT’D.)

(b) Finance lease commitments

The Group has fi nance leases for certain motor vehicles and plant and machinery (Note 14). These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term.

Future minimum lease payments under fi nance leases together with the present value of the net minimum lease payments are as follows:

Group

2016 2015

RM’000 RM’000

Minimum lease payments:

Not later than 1 year 1,103 3,683Later than 1 year but not later than 2 years 3,521 1,853Later than 2 years but not later than 5 years 810 1,999Later than 5 years 237 –

Total minimum lease payments 5,671 7,535Less: Amounts representing fi nance charges (472) (599)

Present value of minimum lease payments 5,199 6,936

Present value of payments:

Not later than 1 year 962 3,206Later than 1 year but not later than 2 years 3,281 1,840Later than 2 years but not later than 5 years 741 1,861Later than 5 years 215 29

Present value of minimum lease payments 5,199 6,936Less: Amount due within 12 months (Note 25) (962) (3,206)

Amount due after 12 months (Note 25) 4,237 3,730



31. FAIR VALUE OF FINANCIAL INSTRUMENTS

A. Fair value of fi nancial instruments by classes that are not carried at fair value and whose carrying

amounts are not reasonable approximation of fair value

Group

Carrying Fair

amount value

RM’000 RM’000

At 31 December 2016

Financial liabilities:

Non-current

Loans and borrowings (non-current) (Note 25) – Term loan 776 –

At 31 December 2015


Non-current

Loans and borrowings (non-current) (Note 25) – Term loan 383 –

B. 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 fi nancial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Note

Other investments (current) 19Trade and other receivables (current) 22Loans and borrowings (current) 25Trade and other payables (current) 26

The carrying amounts of these fi nancial assets and liabilities are reasonable approximation of fair values due to their short-term nature.

The carrying amounts of the current portion of loans and borrowings are reasonable approximations of fair values due to the insignifi cant impact of discounting.

The fair values of non-current loans and borrowings are estimated by discounting expected future cash fl ows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.



31. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONT’D.)

C. Fair value measurement

The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities.

Quantitative disclosures fair value measurement hierarchy for asset as at 31 December 2016

Carrying

Date of amount Fair value

Fair value disclosures valuation RM’000 RM’000

Investment properties (Note 16) 31 December 2014 3,054 5,000

Fair value disclosure of investment properties are categorised in Level 2 within the fair value hierarchy where the valuation involved signifi cant directly or indirectly observable inputs.

32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company are exposed to fi nancial risks arising from their operations and the use of fi nancial instruments. The key fi nancial risks include credit risk, liquidity risk and interest rate risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks. The audit committee provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous fi nancial year, the Group’s policy that no derivatives shall be undertaken.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned fi nancial risks and the objectives, policies and processes for the management of these risks.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding fi nancial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other fi nancial assets (including cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verifi cation procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not signifi cant.

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of fi nancial assets recognised in the statement of fi nancial position.

Information regarding credit enhancements for trade and other receivables is disclosed in Note 22.



32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D.)

(a) Credit risk (cont’d.)

Credit risk concentration profi le

The Group determines concentrations of credit risk by monitoring the business segment of its trade receivables on an ongoing basis. The credit risk concentration profi le of the Group’s trade receivables at the reporting date are as follows:

Group

2016 2015

RM’000 % of total RM’000 % of total

By business segments:

Parking 1,690 100 1,690 100

1,690 100 1,690 100

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 22. Deposits with banks and other fi nancial institutions that are neither past due nor impaired are placed with or entered into with reputable fi nancial institutions.

Financial assets that are either past due or impaired

Information regarding fi nancial assets that are either past due or impaired is disclosed in Note 22.




(b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter diffi culty in meeting fi nancial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of fi nancial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and fl exibility through the use of stand-by credit facilities.

Analysis of fi nancial instruments by remaining contractual maturities

The table below summarises the maturity profi le of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

On demand

or within One to Over fi ve

one year fi ve years years Total

RM’000 RM’000 RM’000 RM’000

Group

At 31 December 2016


Trade and other payables 227,298 – – 227,298Loans and borrowings 14,230 4,760 253 19,243

Total undiscounted fi nancial liabilities 241,528 4,760 253 246,541

At 31 December 2015


Trade and other payables 202,955 – – 202,955Loans and borrowings 15,302 4,084 29 19,415

Total undiscounted fi nancial liabilities 218,257 4,084 29 222,370

Company

At 31 December 2016


Trade and other payables 44,972 – – 44,972Loans and borrowings 7,480 56 22 7,558

Total undiscounted fi nancial liabilities 52,452 56 22 52,530

At 31 December 2015


Trade and other payables 49,745 – – 49,745Loans and borrowings 8,302 53 42 8,397

Total undiscounted fi nancial liabilities 58,047 53 42 58,142




(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash fl ows of the Group’s and the Company’s fi nancial instruments will fl uctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings. At the reporting date, the Group and Company do not have fl oating rate borrowings.

(d) Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash fl ows of a fi nancial instrument will fl uctuate because of changes in foreign exchange rates.

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the Group entities, primarily RM, Singapore Dollar, Hong Kong Dollar and Indonesian Rupiah. The management believes that the foreign exchange risk is minimal.

It is not the Group’s policy to hedge its transactional foreign currency risk exposure.

33. 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. No changes were made in the objectives, policies or processes during the years ended 31 December 2016 and 31 December 2015.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s policy is to keep the gearing ratio below 70%. The Group includes within net debt, loans and borrowings, trade and other payables, less cash and bank balances. Capital includes equity attributable to the owners of the parent.



33. CAPITAL MANAGEMENT (CONT’D.)

Group Company

2016 2015 2016 2015

Note RM’000 RM’000 RM’000 RM’000

Loans and borrowings 25 19,243 19,415 7,558 8,397 Trade and other payables 26 227,298 202,955 44,972 49,745 Cash and bank balances 24 (25,672) (41,003) (354) (6,593)

Net debt 220,869 181,367 52,176 51,549 Equity attributable to the owners of the parent, representing total capital 87,969 114,796 42,687 42,612

Capital and net debt 308,838 296,163 94,863 94,161

Gearing ratio 72% 61% 55% 55%

34. SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services, and has four reportable operating segments as follows:

I. Property development – the development of residential and commercial properties.

II. Construction contracts – construction of sewage treatment plant, residential and commercial properties.

III. Property services – provision of property services comprising of general services, facility management, project management and consultant, construction management, energy management services, hospital planning, maintenance services and manpower services.

IV. Parking services – parking operation, trading of parking equipments and the provision of related consultancy services.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profi t or loss which, in certain respects as explained in the table below, is measured differently from operating profi t or loss in the consolidated fi nancial statements. Group fi nancing (including fi nance costs) and income taxes are managed on a group basis and are not allocated to operating segments.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.



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6,60

3) (

239,

218)

246

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22,8

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anci

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148

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34. SEGMENT INFORMATION (CONT’D.)

A Inter-segment revenues are eliminated on consolidation.

B Other material non-cash expenses consist of the following items as presented in the respective notes to the fi nancial statements:

2016 2015

Note RM’000 RM’000

Impairment loss on fi nancial assets:– trade receivables 22 – 538– other receivables 22 – –Write-off of property, plant and equipment 14 – –

– 538

C Additions to non-current assets consist of:

2016 2015

RM’000 RM’000

Investment properties – –Property, plant and equipment 9,715 7,934

9,715 7,934



35. MATERIAL LITIGATIONS

(a) Bungsar Hill Holdings Sdn Bhd (“BHH”) v Damansara Realty Berhad (“DBhd”)

On 4 February 2016, The Federal Court registrar has fi xed the matter for hearing on 12 May 2016. The Federal Court had on 12 May 2016 granted BHH’s leave to appeal on one single question on law only. The suit has been fi xed for case management on 18 November 2016.

During the case management on 18 November 2016, the parties’ solicitors had informed the Federal Court that the Grounds of Judgment from the Court of Appeal had not been obtained despite of the several requests made. The Federal Court also informed that the Appeal cannot be heard until the Grounds of Judgment had been obtained from the Court of Appeal. The next case management is fi xed on 28 March 2017 pending the receipt of the Court of Appeal’s Grounds of Judgments.

(b) DBhd & Tebing Aur Sdn Bhd (“TASB”) v Ibsul Holdings Sdn Bhd

DBhd and TASB had fi led a summons action against lbsul Holdings Sdn Bhd (“IHSB”) claiming a sum of RM3.6 million being the balance progress claim submitted to IHSB under the subcontract for Jelutong project which was terminated in April 2006. On 18 July 2012, the Court had dismissed DBhd’s application for summary judgement with costs resulting the matter to proceed to trial.

On 3 June 2016, The Court dismissed the DBhd’s & TASB’s claim on the account that the claim is premature, and also dismissed the IHSB’s counter claim with no order as to costs.

On 17 October 2016, DBhd have instructed our solicitors to conduct watching brief for the arbitration proceedings between IHSB and the concession company pertaining to the dispute arose due to the said project.

However, the management has made a commercial decision not to proceed with the arbitration as watching brief, taking into account of the legal risk and implication and legal cost of the said arbitration.

(c) Om Cahaya Mineral Asia Berhad v Damansara Realty (Pahang) Sdn Bhd

On 5 February 2016, Om Cahaya Mineral Asia Berhad (“Om Cahaya”) has fi led a claim for unlawful termination of contract in relation to their alleged appointment to carry out mining works at Damansara Realty (Pahang) Sdn Bhd’s (“DRP”) land in Kuantan, Pahang.

DRP had on 14 April 2016 fi led an application to strike out the suit to the court. The matter has come up for hearing of the striking out application on 27 May 2016 whereby the Kuala Lumpur High Court has allowed DRP’s application to strike out Om Cahaya’s summons and statement of claim with costs of RM5,000.00 and allocator fee of RM200.00. Om Cahaya appealed against the striking out and a case management is fi xed on 8 November 2016, pending the extraction of the sealed Order.

During the case management on 8 November 2016, the Court has instructed the parties to fi le their written submission and bundle of authorities, executive summary and common chronology of facts by the next case management date which is fi xed on 20 February 2017. The Court of Appeal has also fi xed the hearing date on 6 March 2017.



36. 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 31st December 2016 and 2015 into realised and unrealised profi ts/(losses) is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profi ts or Losses in the Context of Disclosure Pursuant to Listing Requirements of Bursa Malaysia Securities Berhad, as issued by the Malaysian Institute of Accountants.

Group Company

RM’000 RM’000

At 31 December 2016

Total accumulated losses of the Company and its subsidiaries – Realised 138,225 (112,154)– Unrealised (646) –

137,579 (112,154)Less: Consolidation adjustments (184,590) –

Accumulated losses as per fi nancial statements (47,011) (112,154)

At 31 December 2015

Total accumulated losses of the Company and its subsidiaries – Realised 163,592 (112,229)– Unrealised (615) –

162,977 (112,229)Less: Consolidation adjustments (183,508) –

Accumulated losses as per fi nancial statements (20,531) (112,229)



LIST OF PROPERTIES HELD BY THE GROUP As at 31 December 2016

Title / Particulars of Location Tenure Area Description

Age of Building

Net Book Value

RM’000 Date of Valuation

Lot Nos. 17423, 17424, 17427, 17431, 17434, 17439, Mukim Sungai Karang, Kuantan, Pahang.

Lot Nos. 5995, 5997 & 5998, Mukim Beserah, Kuantan, Pahang

Freehold 504.29 Acres

9 parcels of agricultural land with development potential

n/a 39,152 31 December 2014

Lot Nos. 2389 to 2402, Mukim of Beserah, Kuantan, Pahang

Freehold 0.56 Acres

14 parcels of vacant subdivided commercial terraced shop/offi ce plot

Lot Nos. 4139 to 4160 and 4162 to 4188, Mukim of Beserah, Kuantan, Pahang

Freehold 2.63 Acres

49 parcels of subdivided residential terrace / semi-detached plot

Lot Nos. 2189 and 2190, Mukim of Beserah, Kuantan, Pahang

Freehold 0.27 Acres

2 parcels of vacant subdivided residential semi-detached plot

Lot No. 2388, Mukim of Beserah, Kuantan, Pahang

Freehold 1.013 Acres

A parcel of commercial land designated for petrol station use

Levels 14 & 15, Menara Safuan, No. 80, Jalan Ampang, Kuala Lumpur.

Freehold 10,244 sq. ft

Offi ce Building19 years 3,054 31 December 2014

No.7,Jalan Hujung Permatang Satu 26/25A, Section 26, 40000 Shah Alam, Selangor Darul Ehsan

Freehold 1,600 sq.ft.

Double storey shophouse

n/a 242 n/a

No. 47, Block J andNo. 38, Block HJalan Aliff 4Taman Damansara Aliff81200 Johor BahruJohor

Freehold 4,814sq.ft.

2 units of shop offi ces

1 1,709 n/a

The above properties are valued at cost. These properties will be revalued at recoverable amount if there is any signifi cant impairment.


The total no. of issued shares : 309,371,260 Ordinary Shares with voting right of one vote per ordinary share.

ANALYSIS BY SIZE OF HOLDINGS as at 5 April 2017

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

1 - 99 1,231 3.572 46,828 0.015

100 – 1,000 21,772 63.184 12,177,283 3.936

1,001 – 10,000 10,384 30.135 29,521,289 9.542

10,001 – 100, 000 961 2.788 27,758,271 8.972

100,001 – 15,468,562 (*) 108 0.313 51,966,677 16.797

15,468,563 AND ABOVE (**) 2 0.005 187,900,912 60.736

TOTAL: 34,458 100.000 309,371,260 100.000

Remark

* Less than 5% of issued shares ** 5% and above of issued shares

LIST OF TOP 30 HOLDERS as at 5 April 2017

(Without aggregating securities from different securities accounts beloging to the same registered holder)

NO. NAME HOLDINGS %

1. Seaview Holdings Sdn Bhd 157,816,580 51.012

2. Sindora Berhad 30,084,332 9.724

3. Kulim (Malaysia) Berhad 13,879,926 4.486

4. UOB Kay Hian Nominees (Asing) Sdn BhdExempt An for UOB Kay Hian Pte Ltd (A/C Clients)

4,917,400 1.589

5. Datuk Tay Hock Tiam 2,450,000 0.791

6. Datin Leung Kit Man 1,479,068 0.478

7. Maybank Nominees (Tempatan) Sdn BhdPledged Securities Account for Chow Ah Kau

1,171,200 0.378

8. Kenanga Nominees (Asing) Sdn BhdExempt An for Philip Securities Pte Ltd (Client Account)

1,051,600 0.339

9. Kenanga Nominees (Tempatan) Sdn BhdPledged Securities Account for Khaled bin Mohamad Aroff

1,050,000 0.339

10. Harun Bin Kassim 1,040,900 0.336

11. Kenanga Nominees (Tempatan) Sdn BhdPledged Securities Account for Muhamad Hapiz bin Othman

949,200 0.306

12. Wong Ten Yong 919,900 0.297

13. Rashid bin Sihes 747,800 0.241

14. Tan Beng Nee 663,000 0.214

15. Sam Fong @ Chan Sam Fong 594,500 0.192

SHAREHOLDINGS STATISTICSAs at 5 April 2017


NO. NAME HOLDINGS %

16. Ng Say Piyu 510,000 0.164

17. Maybank Securities Nominees (Tempatan) Sdn BhdPledged Securities Account for Azhar bin Mohd Mokhtar (Margin)

500,000 0.161

18. Datuk Tay Hock Tiam 498,025 0.160

19. Ong Seng Chye 490,500 0.158

20. Rashid bin Sihes 448,900 0.145

21. Inter-Pacifi c Equity Nominees (Tempatan) Sdn BhdPledged Securities Account for Soh Jin Gee

440,000 0.142

22. Teh Chin Huat 420,000 0.135

23. Selina Ng Li Yin 416,000 0.134

24. Tay Lay Thoh 399,500 0.129

25. Tee See Kim 392,000 0.126

26. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account for Siti Esa binti Ab Rahim

382,200 0.123

27. Kenanga Nominees (Tempatan) Sdn BhdPledged Securities Account for Azizui @ Azizul bin Katan

375,000 0.121

28. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account for Ihsan bin Osman

374,100 0.120

29. Soon Ah Seng 372,800 0.120

30. Ho Jia Luen 370,000 0.119

Total No. of Holders : 30Total Holdings : 225,204,431Total Percentage (%) : 72.794

SHAREHOLDINGS STATISTICSAs at 5 April 2017 (cont’d.)


SHAREHOLDINGS STATISTICSAs at 5 April 2017 (cont’d.)

Name <------------ Direct ------------> <---------- Indirect ---------->

No. of

shares held

%

held

No. of

shares held

%

Held

Seaview Holdings Berhad 157,816,580 51 - -

Dato’ Daing A Malek bin Daing A Rahaman 157,816,580# 51

Sindora Berhad 30,084,332 9.7 - -

Kulim (Malaysia) Berhad 13,879,926 4.5 30,084,332* 9.7

JCorp - - 43,964,258** 14.2

Notes

* Deemed interested by virtue of its shareholdings in Sindora Berhad pursuant to Section 7 of the Companies Act, 2016 (“the Act”).

** Deemed interested by virtue of its shareholdings in Kulim (Malaysia) Berhad pursuant to Section 7 of the Act. # Dato’ Daing A Malek bin Daing A Rahaman deemed interested by virtue of its shareholdings in Seaview Holdings

Sdn Bhd pursuant to Section 7 of the Act.

ANALYSIS OF SHAREHOLDERS

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

Malaysian - Bumiputra - Others

Foreigner

17,14416,987

327

49.7549.30

0.95

236,767,55162,259,689

10,344,020

76.5320.12

3.34

TOTAL 34,458 100.00 309,371,260 100.00

DIRECTORS’ SHAREHOLDINGS

NO. NAME HOLDINGS %

1. YB Dato’ Ahmad Zahri bin Jamil 20,000 0.01

2. YB Dato’ Daing A Malek bin Daing A Rahaman - -

3. Puan Zainah binti Mustafa - -

4. Tuan Haji Abdullah bin Md Yusof - -

5. YB Datuk Md Othman bin Hj. Yusof - -

6. Encik Wan Azman bin Ismail - -

7. YBhg Dato’ Mohd Aisom bin Omar - -

8. Encik Shahrizam bin A Shukor - -

Summary

Total No. of Holder : 1Total Holdings : 20,000Total Percentage (%) : 0.01

SUBSTANTIAL SHAREHOLDERS as at 5 April 2017


NOTICE OF 55TH ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the 55th Annual General Meeting (“AGM”) of Damansara Realty Berhad (“Damansara Realty” or “the Company”) will be held at the Johor Conference Hall II (Level II), Forest City Phoenix Hotel, Jalan Forest City 1, Pulau Satu, 81550 Gelang Patah, Johor Bahru, Johor, Malaysia on Wednesday, 24 May 2017 at 11.00 a.m. for the following purposes:-

1. To receive the Audited Financial Statements for the fi nancial year ended 31 December 2016 together with and the Reports of the Directors and Auditors thereon.

2. To consider and if thought fi t, to pass the following Ordinary Resolutions in accordance with Article 81 of the Company’s Articles of Association and/or the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”):

(a) “THAT YB Dato’ Ahmad Zahri bin Jamil, the Director retiring by rotation in accordance with Article 81 of the Company’s Articles of Association of the, be and is hereby re-elected as a Director of the Company.”

(b) “THAT YB Dato’ Daing A Malek bin Daing A Rahaman, the Director retiring by rotation in accordance with Article 81 of the Company’s Articles of Association, be and is hereby re-elected as a Director of the Company.”

(c) “THAT Puan Zainah binti Mustafa, the Director retiring by rotation in accordance with Article 81 of the Company’s Articles of Association and having served as a Senior Independent Director for more than nine (9) years, be and is hereby re-elected and retained as a Senior Independent Director of the Company.”

3. To approve the payment of Directors’ fees of RM845,000 in respect of the fi nancial year ended 31 December 2016.

4. To approve the payment of Directors’ remuneration (excluding Directors’ fees) to the Directors up to an amount of RM800,000 from 1 January 2017 until the next AGM of the Company.

5. To re-appoint Messrs Jamal Amin & Partners as auditors of the Company for the fi nancial year ending 31 December 2017 and to authorize the Board of Directors to determine their remuneration

AS SPECIAL BUSINESS

To consider and, if thought fi t, pass the following resolutions: 6. ORDINARY RESOLUTION

AUTHORITY TO ALLOT SHARES IN GENERAL PURSUANT TO SECTION 75 OF THE COMPANIES

ACT, 2016 (“the Act”)

“THAT pursuant to Section 75 of the Companies Act, 2016 and subject to the approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue shares in the capital of the Company from time to time and upon such terms and conditions and for such proposes as the Directors, may at their absolute discretion deem fi t, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be and are hereby also empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the listing and quotation of the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next AGM of the Company.”

Note 1

Resolution 1

Resolution 2

Resolution 3(Explanatory Note 2)

Resolution 4


Resolution 6



NOTICE OF 55TH ANNUAL GENERAL MEETING (cont’d.)

7. ORDINARY RESOLUTION

PROPOSED RENEWAL OF SHAREHOLDERS’ FOR RECURRENT RELATED PARTY TRANSACTION

OF A REVENUE OR TRADING NATURE (“Proposed Shareholders’ Mandate”)

“THAT, subject always to the Act and Main Market Listing Requirements, of Bursa Malaysia Securities Berhad approval be and is hereby given to the Company and/or its subsidiary companies to renew the existing mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature from the shareholders of the Company for the Company and/or its subsidiary companies to enter into all arrangements and/or transactions involving the interest of Directors, substantial shareholders or persons connected with Directors and/or substantial shareholders of the Company and/or its subsidiary companies (Related Parties) as outlined in Section 2.2 of the Circular to Shareholders dated 28 April 2017 (‘the Circular to Shareholders’), which are necessary for the day-to-day operations of the Company and/or its subsidiary companies, and are within the ordinary course of business of the Company and/or its subsidiary companies (“Proposed Shareholders’ Mandate”), subject further to the following:

i) the transaction are in the ordinary course of business for the day-to-day operations and normal commercial terms which are not more favorable to the related parties than those generally available to the public and not to the detriment of the minority shareholders; and

ii) disclosure will be made in the Annual Report of the aggregate value of transactions conducted pursuant to the Proposed Shareholders’ Mandate during the fi nancial year including amongst others, the following information:-

a) the type of the recurrent related party transactions made: and

b) the names of the Related Parties involved in each type of the Recurrent Related Party Transaction entered into and their relationship with the Company; and

AND THAT such approval shall continue to be in force until:-

i) the conclusion of the next Annual General Meeting (AGM) of the Company following the General Meeting at which the Proposed Shareholders’ Mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;

ii) the expiration of the period within which the next AGM after this date is required to be held pursuant to Section 340 (2) of the Act (but shall not extend to such extensions as may be allowed pursuant to Section 340 (4) of the Act); or

iii) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting; whichever is earlier.

AND FURTHER THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or give effect to the Proposed Shareholders’ Mandate.’

8. To transact any other business of the Company of which due notice shall have been given in accordance with the Companies Act, 2016.

By Order of the BoardDAMANSARA REALTY BERHAD

WAN RAZMAH BINTI WAN ABD RAHMAN(MAICSA 7021383)Secretary

Venue : KUALA LUMPUR Dated : 28 APRIL 2017



EXPLANATORY NOTES

1. AUDITED FINANCIAL STATEMENTS FOR FINANCIAL YEAR ENDED 31 DECEMBER 2016

The Audited Financial Statements laid at this meeting pursuant to Section 340(1)(a) of the Companies Act, 2016 are meant for discussion only. It does not require shareholders’ approval, and therefore, will not be put for voting.

2. ORDINARY RESOLUTION 2(C) – CONTINUATION IN OFFICE AS AN INDEPENDENT NON-EXECUTIVE DIRECTOR

Proposed continuation in offi ce as an Independent Non-Executive Director

The Ordinary Resolution 2(C) if passed, will enable Puan Zainah binti Mustafa to continue to act as a Senior Independent Non-Executive Director, notwithstanding that she has served the Board as a Senior Independent Non-Executive Director for a term of more than nine (9) years, in line with Recommendation 3.2 and 3.3 of the MCCG 2012.

The Nomination Committee has assessed the independence of Puan Zainah binti Mustafa, who served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years and recommended her to continue to act as a Senior Independent Non-Executive Director of the Company as she has shown that she:-

a) Fulfilled the criteria under the definition of Independent Director as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, and thus, she would be able to function as a check and balance, bring an element of objectivity to the Board;

b) Possessed vast experience in the fi nance industry that would enable her to provide the Board with a diverse set of experience, expertise and independent judgement;

c) Had been with the Company for more than nine (9) years and has knowledge of the Company’s business operations and the property development market;

d) Had devoted suffi cient time and attention to her professional obligations for informed and balanced decision making; and

e) Had exercised due care during her tenure as an Independent Non-Executive Director of the Company and carried out her professional duties in the best interest of the Company and shareholders.

3. ORDINARY RESOLUTION 5 – TO APPROVE THE REMUNERATION FOR DIRECTORS

Directors’ remuneration (excluding Directors’ fees) comprises the allowance and other emoluments payable to the Chairman and members of the Board is as set out below.

Board Chairman Executive Vice

Chairman

NEDs

Monthly Fixed Allowance RM5,000 - -

Other Benefi ts Claimable Benefi ts:- Travelling, accommodation and

other claimable benefi ts

Club membership, medical coverage, travel

& communication and other claimable benefi ts

Claimable Benefi ts:- Travelling, accommodation

and other claimable benefi ts

Meeting Allowance

(per meeting):-

Board Meeting RM1,000 RM1,000 RM1,000

Board Audit Committee Meeting

- - RM1,000

Board Nominat ion and Remuneration Meeting

- - RM1,000

Board Risk Management Committee

- - RM1,000

Tender Board Committee - RM1,000 RM1,000



4. ORDINARY RESOLUTION 7 – AUTHORITY TO ALLOT SHARES PURSUANT TO SECTIONS 75 OF THE

COMPANIES ACT, 2016

The proposed Resolution 7 is the renewal of the mandate obtained from the members at the last AGM (“the previous mandate”). As at the date of this Notice, the Company did not allot any shares pursuant to the mandate granted to the Directors at the 55th AGM held on 24 May 2017 as there were no requirements for such fund raising activities. The proposed Resolution 7, if passed, would provide fl exibility to the Directors to undertake fund raising activities, including but not limited to further placement of shares for the purpose of funding the Company’s future investment project(s), working capital and/or acquisition(s), by the issuance of shares in the Company to such persons at any time as the Directors may deem fi t provided that the aggregate number of shares issued pursuant to the mandate does not exceed 10% of the total number of issued shares of the Company for the time being, without having to convene a general meeting. This authority, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of the next AGM of the Company or at the expiry of the period within which the next AGM is required to be held after the approval was given, whichever is earlier

5. ORDINARY RESOLUTION 8 - PROPOSED RENEWAL OF SHAREHOLDERS’ FOR RECURRENT RELATED

PARTY TRANSACTION OF A REVENUE OR TRADING NATURE (“Proposed Shareholders’ Mandate”)

The Ordinary Resolutions proposed, if passed, is to authorise the Company and/or its subsidiary companies to enter into any recurrent transactions of a revenue or trading nature with Related Parties which are necessary for the day-to-day operations of the Group, subject to the transactions being in the ordinary course of business, on arms’ length basis and are based on normal commercial terms that are not more favorable to the related parties than those generally made available to the public.

Please refer to the Circular to Shareholders dated 28 April 2017 for further information.

NOTES:

1. In respect of deposited securities, only members whose names appear on the Record of Depositors on 18th May 2017 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his/her behalf.

2. A member entitled to attend and vote at this meeting is entitled to appoint a proxy/(proxies or attorney) or authorised representative to attend and vote in its stead. A proxy may but need not be a member of the Company and need not be an advocate, an approved company auditor or a person approved by the Registrar of Companies.

3. Where a member is an authorised nominee as defi ned under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorised nominee specifi es the proportion of its shareholding to be represented by each proxy.

4. Where a member of the Company is an Exempt Authorised Nominee (“EAN”) as defi ned under the Secruties Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple benefi cial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which EAN may appoint in respect of each omnibus account it holds.

5. Where a member or the authorised nominee appoints two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specifi ed in the instrument appointing the proxies. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, shall be deposited at the Company’s Share Registrar, Tricor Investor & Issuing House Services Sdn Bhd, Unit 32-01, Level 32, Tower A,Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, not less than 48 hours before the time for holding the Meeting or adjourned Meeting at which the person or persons named in such instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid. The Annual Report and Proxy Form are available for access and download at the Company’s website at www.dbhd.com.my

6. In the case of the corporate member, the instrument appointing a proxy shall be (a) under its Common Seal or (b) under the hand of a duly authorised its offi cer or attorney and in the case of (b) be supported by a certifi ed true copy of the power of attorney.

7. If this Proxy Form is signed under the hands of an offi cer duly authorised, it should be accompanied by a statement reading “signed as authorised offi cer under Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the attorney duly appointed under a power of attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed in the Proxy Form.



STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING

Resolution pursuant to Directors who are retiring in accordance with the Company’s Articles of Association:-

(i) YB Dato’ Ahmad Zahri bin Jamil (Article 81) Resolution 1

(ii) YB Dato Daing A Malek bin Daing A Rahaman (Article 81) Resolution 2

(iii) Puan Zainah binti Mustafa (Article 81) Resolution 3

The details of the Directors standing for re-election are on pages __________to __________


FORM OF PROXY

I/We ____________________________________________________________________________________________________________ (Full Name as per NRIC /Passport No./Certifi cate of Incorporation in block letters)NRIC No. (new) /ID No. /Company No. ________________________________ NRIC No. (old) ________________________________

of ______________________________________________________________________________________________________________ (Full Address)being a member(s) of DAMANSARA REALTY BERHAD (4030-D) (the Company) hereby appoint _________________________________________________________________________________________________________________ (Full Name as per NRIC /Passport No.)With NRIC No. (new)/Passport No. _________________________________ NRIC No. (old) _________________________________

of _______________________________________________________________________________________________________________ (Full Address)of failing him/her _______________________________________________________________________________________________________________ (Full Name as per NRIC /Passport No. in block letters) with NRIC No. (New)/ Passport No. _______________________________________ NRIC No. (old) _______________________________________

of ______________________________________________________________________________________________________________ (Full Address)

or failing him/her the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the 55th Annual General Meeting (“AGM”) of the Company to be held at the Johor Conference Hall II (Level II) Forest City Phoenix Hotel, Jalan Forest City 1, Pulau Satu 81550 Gelang Patah, Johor Bahru, Johor, Malaysia on Wednesday, 24 May 2017, at 11.00 a.m. or at any adjournment thereof.

With reference to the agenda set forth in the Notice of Meeting, please indicate with an “X” in the space provided below how you wish your votes to be cast on the ordinary resolution specifi ed. If no specifi c direction as to the voting is given, the Proxy will vote or abstain at his/her discretion.

NO. RESOLUTIONS FOR AGAINST

Ordinary Resolution

1. To re-elect of YB Dato’ Ahmad Zahri bin Jamil.

2. To re-elect of YB Dato Daing A Malek bin Daing A Rahaman.

3. Re-appointment and retain of Puan Zainah binti Mustafa as a Senior Independent Director.

4. To approve the payment of Directors’ fees of RM845,000 in respect of the fi nancial year ended 31 December 2016.

5. To approve the payment of Directors’ remuneration (excluding Directors’ fees) to the Directors up to an amount of RM800,000 from 1 January 2017 until the next AGM of the Company.

6. To re-appoint Messrs Jamal Amin & Partners as auditors.

7. Authority To Allot Shares Pursuant To Sections 75 Of The Companies Act, 2016.

8. Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.

……………………………………………………… Signature of Shareholder(s) or Common Seal NOTES:1. In respect of deposited securities, only members whose names appear on the Record of Depositors on 18 May 2017 (General Meeting Record of Depositors) shall

be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his/her behalf.2. A member entitled to attend and vote at this meeting is entitled to appoint a proxy/(proxies or attorney) or authorised representative to attend and vote in its stead. 3. A proxy may but need not be a member of the Company and need not be an advocate, an approved company auditor or a person approved by the Registrar of Companies.4. Where a member is an authorised nominee as defi ned under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more

than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. The appointment of two (2) proxies in respect of any particulars securities account shall be invalid unless the authorised nominee specifi es the proportion of its shareholding to be represented by each proxy.

5. Where a member of the Company is an Exempt Authorised Nominee (“EAN”) as defi ned under the Secruties Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple benefi cial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which EAN may appoint in respect of each omnibus account it holds.

6. Where a member or the authorised nominee appoints two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specifi ed in the instrument appointing the proxies.

7. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, shall be deposited at the Company’s Share Registrar, Tricor Investor & Issuing House Services Sdn Bhd, Unit 32-01, Level 32, Tower A,Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, not less than 48 hours before the time for holding the Meeting or adjourned Meeting at which the person or persons named in such instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid. The Annual Report and Proxy Form are available for access and download at the Company’s website at www.dbhd.com.my

8. In the case of the corporate member, the instrument appointing a proxy shall be (a) under its Common Seal or (b) under the hand of a duly authorised its offi cer or attorney and in the case of (b) be supported by a certifi ed true copy of the power of attorney.

9. If this Proxy Form is signed under the hands of an offi cer duly authorised, it should be accompanied by a statement reading “signed as authorised offi cer under Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the attorney duly appointed under a power of attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed in the Proxy Form.

CDS account no. of authorised nominee

For appointment of two (2) proxies, percentage of shareholdings to be represented by the respective proxies must be indicted below.

NO OF SHARES PERCENTAGE

Proxy 1 %

Proxy 2 %

Date: 100%

The RegistrarDAMANSARA REALTY BERHAD (4030-D)

C/O TRICOR INVESTOR & ISSUING HOUSE SERVICES SDN. BHD.Unit 32-01, Level 32, Tower A

Vertical Business SuiteAvenue 3, Bangsar South

No. 8 Jalan Kerinchi59200 Kuala Lumpur

STAMP

creating synergy · zainah binti mustafa, aged 62, female, a malaysian, was appointed on the board...

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