TAKING THE NEXT STEP ANNUAL REPORT 2017 ANNUAL REPORT 2017 WCE HOLDINGS BERHAD (534368-A) (Formerly...

TAKING THE

NEXT STEPANNUAL REPORT 2017

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WCE HOLDINGS BERHAD (534368-A)(Formerly known as Kumpulan Europlus Berhad)

CORPORATE OFFICE37-2, No. 8, Jalan Anggerik Vanilla BE31/BEKota Kemuning, Seksyen 3140460 Shah Alam

Tel: +603 5525 8800Fax: +603 5525 8666

REGISTERED ADDRESSUnit 30-01, Level 30, Tower AVertical Business SuiteAvenue 3, Bangsar SouthNo.8, Jalan Kerinchi59200 Kuala Lumpur

Tel: +603-2783 9191Fax: +603-2783 9111

www.wcehb.com.my

CORPORATE PROFILE

CONTENTS

Incorporated in December 2000 and listed on 17 November 2003, WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) is focused on the execution of the nation’s RM5,940.0 million West Coast Expressway Project (the Project) by its 80%-owned subsidiary, West Coast Expressway Sdn Bhd, an ISO9001:2008 company. This build-operate-transfer privatisation project involves the development of a 233km highway from Banting in Selangor to Taiping in Perak. The construction of this highway has commenced and it is expected to be completed in 2019.

In the property sector, the Group has also enjoyed success in the launches of its 1,879-acre Bandar Rimbayu mixed development project located next to Kota Kemuning, Shah Alam.

Moving forward, the Group is confident that its ventures in infrastructure and properties will position itself positively on a sustainable growth path.

2 Corporate Structure

3 Corporate Information

4 Profile of Board of Directors

8 Profile ofChief Executive Officer

9 Profile ofKey Management Team

12 Financial Highlights

13 Management Discussionand Analysis

16 Statement on Corporate Governance

29 Corporate Social Responsibility

32 Additional Compliance Information

35 Statement on Risk Management and Internal Control

38 Audit Committee Report

41 Financial Statements

133 List of Properties

135 Statement on Directors’ andChief Executive Officer’s Interest

136 Analysis of Shareholdings

139 Notice of Annual General Meeting

Proxy Form

WE CONTINUE TO MAKE INROADS

WORKING AS ONE

ELEVATING OUR PERFORMANCE

WCE HOLDINGS BERHAD (formerly known as Kumpulan Europlus Berhad)

1

CORPORATE STRUCTUREAs at 30 June 2017

80%West Coast Expressway Sdn Bhd 339890-P

100%KEB Builders Sdn Bhd 248662-U

50%Ambang Usaha Sdn Bhd 341282-A

30%IJMC – KEBJoint Venture

30%Radiant Pillar Sdn Bhd 501699-W

10%

63%Tiasa Ria Sdn Bhd 527198-X

7%

100%Bandar Rimbayu Sdn Bhd 568093-K

100%KEB Plantations Holdings Sdn Bhd451276-V

100%KEB Management Sdn Bhd521369-K

100%Ambang Vista Sdn Bhd 287253-V

100%KEURO Trading Sdn Bhd 141294-M

100%KEURO Leasing Sdn Bhd 92129-H

100%Ratus Prestij Sdn Bhd 351342-D

100%Angsana Mestika Sdn Bhd 647303-A

100%Maximix Sdn Bhd 359439-D

100%Perkasa Jati Holdings Sdn Bhd 521368-W

n Subsidiariesn Associatesn Jointly Controlled Entity

2 WCE HOLDINGS

BERHAD (formerly known as Kumpulan Europlus

Berhad)

CORPORATE INFORMATION

BOARD OF DIRECTORS

COMPANy SECRETARyRaw Koon Beng (MIA 8521)

AUDIT COMMITTEEDatuk Oh Chong Peng Chairman

Dato’ Abdul Hamid bin MustaphaMember

U Chin Wei Member

Tang King Hua Member

NOMINATION COMMITTEEDato’ Abdul Hamid bin MustaphaChairman

Datuk Oh Chong Peng Member

U Chin Wei Member

Tang King Hua Member

REMUNERATION COMMITTEEDato’ Abdul Hamid bin MustaphaChairman

Datuk Oh Chong Peng Member

U Chin Wei Member

Lee Chun Fai Member

PRINCIPAL BANKERSRHB Investment Bank BerhadRHB Bank BerhadMalayan Banking Berhad

CORPORATE OFFICE37-2, No. 8, Jalan Anggerik Vanilla BE31/BE Kota Kemuning, Seksyen 31 40460 Shah Alam

Tel : +603 5525 8800Fax : +603 5525 8666Website : www.wcehb.com.my

REGISTERED OFFICEUnit 30-01, Level 30, Tower A Vertical Business Suite Avenue 3, Bangsar South 8 Jalan Kerinchi 59200 Kuala Lumpur

Tel : +603 2783 9191Fax : +603 2783 9111

SHARE REGISTRARMetra Management Sdn Bhd 30.02, 30th Floor, Menara Multi-Purpose Capital Square 8 Jalan Munshi Abdullah 50100 Kuala Lumpur

Tel : +603 2698 3232Fax : +603 2698 0313

AUDITORSBaker Tilly Monteiro Heng (AF0117)Chartered Accountants Baker Tilly MH Tower Level 10, Tower1, Avenue 5 Bangsar South City 59200 Kuala Lumpur

Tel : +603 2297 1000Fax : +603 2282 9980

STOCK ExCHANGE LISTINGMain Market of Bursa Malaysia Securities Berhad Stock Code : 3565Stock Name : WCEHB

Dato’ Abdul Hamid bin Mustapha (Chairman/Independent Non-Executive Director)

Datuk Oh Chong Peng(Senior Independent Non-Executive Director)

U Chin Wei (Independent Non-Executive Director)

Datuk Ir. Hamzah bin Hasan(Independent Non-Executive Director)

Tan Sri Pang Tee Chew(Non-Independent Non-Executive Director)

Vuitton Pang Hee Cheah(Alternate director to Tan Sri Pang Tee Chew)

Lee Chun Fai(Non-Independent Non-Executive Director)

Tang King Hua(Non-Independent Non-Executive Director)


3

PROFILE OF BOARD OF DIRECTORS

DATUK OH CHONG PENG

Datuk Oh Chong Peng, a Malaysian, male, aged 73, a Senior Independent Non-Executive Director, joined the Board of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“WCEHB”) on 28 September 2007. Datuk Oh is the Chairman of the Audit Committee and a member of Nomination Committee and Remuneration Committee.

Datuk Oh undertook his accountancy training in London and qualified as a Chartered Accountant in 1969. He is a Fellow of the Institute of Chartered Accountants, England and Wales. Datuk Oh joined Coopers & Lybrand in London in 1969 and in Malaysia in 1971. He was a partner of Coopers and Lybrand Malaysia from 1974 until his retirement in 1997.

Datuk Oh is currently the Chairman of Alliance Financial Group Berhad, a public listed company. He is also a Non-Executive Director of several public listed companies, such as British American Tobacco (Malaysia) Berhad, Dialog Group Berhad and Malayan Flour Mills Berhad. He is also a director in unlisted Saujana Resort (M) Berhad.

He is a Government appointed member of the Labuan Financial Services Authority (LFSA).

His past appointments include being a Government appointed Member of the Kuala Lumpur Stock Exchange (1990-1996), a Council member (1981-2002) and a past President (1994-1996) of the Malaysian Institute of Certified Public Accountants (MICPA).

Datuk Oh has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

Datuk Oh has attended all five (5) Board of Directors’ meetings held during the financial year ended 31 March 2017.

DATO’ ABDUL HAMID BIN MUSTAPHA

Dato’ Abdul Hamid bin Mustapha, a Malaysian, male, aged 71, Chairman/Independent Non-Executive Director, joined the Board of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“WCEHB”) on 27 October 2005 and was appointed as Chairman on 29 September 2009.

Dato’ Abdul Hamid is a member of the Audit Committee and also the Chairman of Nomination Committee and Remuneration Committee of WCEHB. Dato’ Abdul Hamid also sits on the Board of a public listed company Edaran Berhad, Online E-Club Malaysia Berhad and several other private companies.

Dato’ Abdul Hamid graduated with Bachelor of Arts from University of Malaya. He has served the Royal Malaysia Police Force in various capacities since 1971 until his retirement as the Commissioner of Police, Director of Public Order and Internal Security in 2002. He was appointed as a member of the Police Force Commission in Malaysia from May 2003 to May 2005.

Dato’ Abdul Hamid has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

Dato’ Abdul Hamid will achieve his tenure of twelve (12) years as an Independent Non-Executive Director on 26 October 2017. As such, in accordance with WCEHB’s Board Charter, he will be re-designated as Non-Independent Non-Executive Director. However, the Board wishes to seek shareholders’ approval at the forthcoming 16th Annual General Meeting of the Company that he be retained and to continue to act as an Independent Non-Executive Director/Chairman of WCEHB.

Dato’ Abdul Hamid has attended all five (5) Board of Directors’ meetings held during the financial year ended 31 March 2017.

from left• Dato’ Abdul Hamid bin Mustapha• Datuk Oh Chong Peng

4 WCE HOLDINGS


Berhad)

DATUK IR. HAMZAH BIN HASAN

Datuk Ir. Hamzah bin Hasan, a Malaysian, male, aged 66, Independent Non-Executive Director, joined the Board of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“WCEHB”) on 2 January 2015. He was also appointed as the Chairman and Director of West Coast Expressway Sdn Bhd, a subsidiary of WCEHB on 15 April 2015. Presently, he is also an Independent Non-Executive Director of IJM Corporation Berhad, a public listed company.

Datuk Hamzah holds a Bachelor of Science (Honours) degree in Civil Engineering from Glasgow University, United Kingdom in 1975 and obtained his Master of Science (Construction Management) from Loughborough University, United Kingdom in 1987. He is a Professional Engineer of the Board of Engineers Malaysia, Fellow of Chartered Institute of Building, Fellow of Royal Institute of Chartered Surveyors, Fellow of Institution of Engineers Malaysia, Fellow of Institute of Value Engineering Malaysia, ASEAN Federation of Engineering Organisations and Honorary Fellow of the Project Management Institute Malaysia.

He started his career as a Civil Engineer in the Public Works Department (“JKR”) in 1975. Since then he has served JKR for 23 years until 1998. With his vast experience in both the public and private sectors, he was appointed as Chief Executive Officer of the Construction Industry Development Board (“CIDB”), Malaysia in 2003 and then served as the Chairman of CIDB from 2011 to February 2014 and the Chairman of Malaysian Highway Authority from 17 February 2014 to 31 December 2014.

His directorship in other public company includes School of Professional and Continuing Education, University of Technology Malaysia.

He has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no conviction for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

He has attended all five (5) Board of Directors’ meetings held during the financial year ended 31 March 2017.

U CHIN WEI

U Chin Wei, a Malaysian, male, aged 66, Independent Non-Executive Director, joined the Board of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“WCEHB”) on 1 July 2003. He was formerly a Non-Independent Non-Executive Director of WCEHB prior to his re-designation as an Independent Non-Executive Director on 28 March 2008. He is a member of the Audit Committee, Nomination Committee and Remuneration Committee. He is also currently a Director of public listed companies, TA Enterprise Berhad and TA Global Berhad.

Mr U is a Fellow of Institute of Chartered Accountants in England and Wales and a member of the Malaysian Institute of Accountants and carries with him a wealth of experience from international companies and local conglomerates. Before returning to Malaysia, he worked in the London office of Coopers & Lybrand Chartered Accountants (now known as PriceWaterhouseCoopers). The initial years of his career were with Inchcape and YTL Group. He was with the MUI Group from 1980 to 1989 where he served as General Manager. He was appointed as an Executive Director of Pegi Malaysia Berhad for a year and he was subsequently appointed as an Executive Director of TA Enterprise Berhad, a position he held until October 1998. He was reappointed as an Independent Non-Executive Director from July 1999.

On 5 October 2009 he was appointed as an Independent Non-Executive Director of TA Global Berhad.

He has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no conviction for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

He has attended all five (5) Board of Directors’ meetings held during the financial year ended 31 March 2017.

from left• U Chin Wei• Datuk Ir. Hamzah bin Hasan


5

VUITTON PANG HEE CHEAH(Alternate Director to Tan Sri Pang Tee Chew)

Vuitton Pang Hee Cheah, a Malaysian, male, aged 36, joined the Board of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“WCEHB”) on 28 August 2014 as an alternate director to Tan Sri Pang Tee Chew. He graduated with a double degree in Information Systems and Commerce from the University of Melbourne in 2004. Mr Vuitton Pang is currently the Group General Manager of Finance for Mamee-Double Decker (M) Sdn Bhd (“Mamee”).

He started his career as a Management Associate for OSK Investment Bank Berhad (“OSK”). While at OSK, he was exposed to different aspects of banking namely Asset Management, Corporate Finance and Venture Capital to name a few. After 3 years with OSK, Mr Vuitton Pang joined Mamee in April 2009 and assumed the role of Business Development Manager. He was responsible for managing the Group’s investor relations and corporate exercise which saw the Group’s market capitalisation more than doubling in value. He also played an instrumental role in the privatisation of Mamee in 2012.

Mr Vuitton Pang is the son of Tan Sri Pang Tee Chew. Datuk Wira Pang Tee Nam, a substantial shareholder of the Company, is the uncle of Mr Vuitton Pang. There is no conflict of interest with the Company. He has no conviction for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

TAN SRI PANG TEE CHEW

Tan Sri Pang Tee Chew, a Malaysian, male, aged 64, Non-Independent Non-Executive Director, joined the Board of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“WCEHB”) on 17 February 2014.

Tan Sri Pang is the Group Chief Executive Officer of Mamee Double Decker (M) Sdn Bhd (“Mamee”). He has been with Mamee since its inception in 1971 and is currently in charge of the corporate affairs of Mamee. He also sits on the Board of several private limited companies.

He was previously trained in Japan on food processing in the area of canning and packaging and has attended the Advanced Management Program at Harvard University, United States of America. With close to 40 years of experience in the food industries, he has acquired a wide knowledge of both the local and overseas food markets.

He was conferred the award of Panglima Jasa Negara by DYMM YDP Agong on 7 June 2014.

Tan Sri Pang is the father of Mr Vuitton Pang Hee Cheah. Datuk Wira Pang Tee Nam, a substantial shareholder of the Company is the brother of Tan Sri Pang. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

He has attended three (3) out of five (5) Board of Directors’ meetings held during the financial year ended 31 March 2017.

PROFILE OF BOARD OF DIRECTORS (cont’d)

from left• Tan Sri Pang Tee Chew • Vuitton Pang Hee Cheah

6 WCE HOLDINGS


Berhad)

LEE CHUN FAI

Mr Lee Chun Fai, a Malaysian, male, aged 46, Non-Independent Non-Executive Director, joined the Board of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“WCEHB”) on 17 February 2014. Mr Lee is also a member of the Remuneration Committee.

Mr Lee graduated with a Bachelor of Accountancy (Honours) Degree from University Utara Malaysia in 1995 and a Master of Business Administration from Northwestern University (Kellogg) and The Hong Kong University of Science & Technology (2012).

He started his career with a public accounting firm. In October 1995, he joined Road Builder (M) Holdings Bhd (“RBH Group”) and was the Head of Corporate Services Division of RBH Group prior to the acquisition of RBH Group by IJM Corporation Berhad (“IJM”), a public listed company in 2007. Currently, he is the Deputy Chief Executive Officer and Deputy Managing Director of IJM and also Head of Corporate Strategy & Investment of IJM Group. Previously, he has served as the Deputy Chief Financial Officer.

His directorships in other public companies include Scomi Group Bhd and Scomi Energy Services Bhd. His directorships in public companies include IJM Land Berhad, Road Builder (M) Holdings Bhd and Sebana Golf & Marina Resort Berhad.

Mr Lee has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

Mr Lee has attended all five (5) Board of Directors’ meetings held during the financial year ended 31 March 2017.

TANG KING HUA

Mr Tang King Hua, a Malaysian, male, aged 59, Non-Independent Non-Executive Director, joined the Board of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“WCEHB”) on 17 February 2014. Mr Tang is also a member of the Audit Committee and Nomination Committee.

Mr Tang graduated with a Bachelor’s degree in Industrial Engineering from Canada Technical University of Nova Scotia in 1982. He is an Industrial Engineer by profession and held various managerial positions in related industries before joining Eastrade Electronics (M) Sdn Bhd (“EESB”) in 1986 as Operations Manager. Subsequently, he was appointed as Managing Director of EESB and was actively involved in the operations of EESB.

In 1991, he joined Davex Group of Companies, an electronic division of a public listed company, MWE Holdings Berhad as a Managing Director where he was responsible for the overall profitability and viability of Davex Group. On 2 February 2000, Mr Tang was appointed an Executive Director of MWE Holdings Berhad and subsequently as a Managing Director of MWE Holdings Berhad on 28 August 2002. He is also a Director of MWE Golf & Country Club Berhad and several private limited companies.

Mr Tang has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

Mr Tang has attended all five (5) Board of Directors’ meetings held during the financial year ended 31 March 2017.

from left• Lee Chun Fai• Tang King Hua


7

PROFILE OF CHIEF ExECUTIVE OFFICER

DATO’ NEOH SOON HIONG

Dato’ Neoh Soon Hiong, a Malaysian, male, aged 61, was appointed as the Chief Executive Officer of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“WCEHB”) and Managing Director of West Coast Expressway Sdn Bhd, a subsidiary of WCEHB on 17 February 2014.

Dato’ Neoh graduated from the Paris Graduate School of Management, France with a European Masters Degree in Business Administration.

He was with the Public Works Department (“JKR”) for more than 10 years before he joined PLUS Expressways Berhad as an engineer of its Maintenance Management Department in 1990. In 1995, he was transferred to Metramac Corporation Sdn Bhd and served as an engineer until he joined Besraya (M) Sdn Bhd (“BSB”) as a Project Manager in 1997. His subsequent appointments included Head of Operations of BSB (1999-2000), General Manager of BSB and New Pantai Expressway Sdn Bhd (“NPE”) (2001-2004), Executive Director of BSB and NPE (2004-2006), Managing Director of BSB and NPE (2006-2011) and Chief Executive Officer of Lebuhraya Kajang-Seremban Sdn Bhd (2007-2011). BSB and NPE are wholly-owned subsidiaries of Road Builder (M) Holdings Berhad, which in turn is a wholly-owned subsidiary of IJM Corporation Berhad (“IJM”). He was appointed as the Chief Executive Officer of West Coast Expressway Sdn Bhd after he retired as the Head of IJM Toll Division in 2011. He has more than 20 years’ experience in highway concession and operations.

His interest in the securities of WCEHB is stated on page 135 of this Annual Report (Statement on Directors’ and Chief Executive Officer’s Interests).

Dato’ Neoh has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

8 WCE HOLDINGS


Berhad)

PROFILE OF KEy MANAGEMENT TEAM

LyNDON ALFRED FELIxChief Financial Officer

Mr. Lyndon, Malaysian, male, aged 43, was appointed as the Chief Financial Officer of WCEHB on 17 February 2014 and joined the Board of West Coast Expressway Sdn Bhd (WCE), an 80%-owned subsidiary of WCEHB on 2 April 2014. He graduated as a Bachelor of Arts (Hons) in Accounting & Finance from Middlesex University, United Kingdom in 1996 and completed the Association of Chartered Certified

Accountants professional examinations and appointed as member in 2001. He started his career with PricewaterhouseCoopers where he was attached to the audit/assurance division from 1997 to 2002. He then joined IJM Corporation Berhad (IJM) and was the Head of Internal Audit before he joined WCEHB. During his eleven (11) years in the IJM Group, he gained extensive experience in the audit, finance and accounting functions in various businesses such as construction, properties, infrastructure, manufacturing and plantations.

Mr Lyndon has no directorship in any public companies or listed public companies. He has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year

RAW KOON BENGCompany Secretary

Mr. Raw, Malaysian, male, aged 52, was appointed Company Secretary of WCEHB on 11 August 2010. He is a member of the Malaysian Institute of Certified Public Accountant and Malaysian Institute of Accountants since 1993 and 1994

respectively. He has 12 years of working experience in public auditing/accounting firms, six years each in KPMG Peat Marwick and Ernst & Young respectively. Thereafter, 15 years of working experience in public listed companies. Prior to his appointment as Company Secretary in WCEHB, he was employed in IJM as a senior manager in the Accounts and Finance Department.

KAM JIN LEONGSenior Manager – Finance and Accounts

Mr. Kam, Malaysian, male, aged 51, joined WCEHB on 1 August 2014 as Senior Manager - Finance and Accounts. He graduated from Monash University, Melbourne, Australia with a Bachelor of Economics (Hons) degree in 1986 and is a member of the Malaysian Institute of Accountants.

He started his career with a public accounting firm and thereafter gained more than 25 years of work experience with various public listed companies, including Tan Chong Motor Holdings Berhad, APM Automotive Holdings Berhad, Lay Hong Berhad and Ajinomoto (Malaysia) Berhad.

Mr. Kam has no directorship in any public companies or listed public companies.

He has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

Mr Raw has no directorship in any public companies or listed public companies. He has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year


9

MEJ (B) IR. GNANASEKARAN A/L MARIASOOSAyGeneral Manager

Ir. Gnanasekaran, Malaysian, male, aged 56, joined WCE as General Manager on 1 March 2014. He holds a Bachelor’s Degree in Engineering from the University of New South Wales, Sydney, Australia. He started his career in the Malaysian Armed Forces in 1985 and left upon the completion of his

contract in 1995 with the rank of Major. Prior to joining WCE, he has been involved in various construction projects, including the Petronas Gas Processing Plant 5 & 6 in Paka, Terengganu, the Kuala Lumpur Middle Ring Road Package 3 (Seri Gombak Interchange) and the Seremban – Gemas Electrified Double Track Project. He is a member of the Institution of Engineers Malaysia and a Professional Engineer registered with the Board of Engineers Malaysia since 1996.

Ir. Gnanasekaran has no directorship in any public companies or listed public companies. He has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

NG BAK SONGAssistant General Manager, Technical

Mr Ng, Malaysian, male, aged 45, joined WCE on 2 January 2017 as an Assistant General Manager, Technical Department. He holds a Bachelor of Engineering Degree with Honours in Civil Engineering from University Putra Malaysia and is a member of Project Management Professional Institute. He embarked in the construction industry in 1993, with his first project in supervising construction works of the National Sports Complex at Bukit Jalil, Selangor for the 1998 Commonwealth Games. In 2000, he further

enhanced his construction career with a reputable government linked conglomerate for seventeen (17) years, holding various positions for projects in Malaysia and the Middle East, and had positioned him as a hands-on technical professional specialising in highways, bridgeworks and geo-technical treatment for adverse ground conditions. He played pivotal role in the design, construction and completion of several key projects including the Sultan Abdul Halim Muadzam Shah Bridge (formerly known as Second Penang Bridge), the longest bridge in Southeast Asia, the Bayan Lepas Expressway, widening of the first Penang Bridge to a dual

three carriageway and the construction of the Ribbon Wrap Structure of the College of Technology in Doha, Qatar.

Mr Ng has no directorship in any public companies or listed public companies. He has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

CHAN KIM HONGAssistant General Manager – Human Resources and Administration

Ms Chan, Malaysian, female, aged 57, joined WCE on 1 December 2011 as the Senior Manager, Human Resources and Administration in WCE before being promoted to Assistant General Manager in July 2016. She graduated from Taiwan Normal University in 1984 with a Bachelor Degree in Social Education.

She was a Sub-Editor in Shin Min Daily News, an Executive in the Taiwan Representative Office in Malaysia, before she joined Road Builder (M) Holdings Bhd (RBH Group) as Secretary to an executive director in 1994. She was promoted to Property Executive in 1999 and Assistant Administration Manager in 2002. She continued her service with IJM Group after the acquisition of RBH Group by IJM Corporation Berhad in 2007. She was transferred to Besraya (M) Sdn Bhd (BSB), a wholly-owned subsidiary of RBH Group which in turn is a wholly-owned subsidiary of IJM Corporation Berhad as Assistant Manager

to the Human Resources and Administration Department in 2010 and was promoted as Manager to the department in the following year. She left BSB in December 2011.

Ms Chan has no directorship in any public companies or listed public companies. She has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. She has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on her during the financial year.

PROFILE OF KEy MANAGEMENT TEAM (cont’d)

10 WCE HOLDINGS


Berhad)

IR MAZLI BIN AB. RAHMANSenior Manager – Technical

Ir Mazli, Malaysian, male, aged 50, joined WCE on 1 November 2013 as Senior Technical Manager. He holds a Bachelor degree in Civil Engineering from Marquette University, United States of America. He is a member of the Board of Engineers Malaysia and the Institution of Engineers Malaysia.

He worked for various engineering consultants undertaking design works for civil and infrastructure since 1989, after gaining more than 15 years of work experience, he worked as Assistant Resident Engineer for 3 years and thereafter, Resident Engineer until 2013, supervising the construction of the roads, highways and the Mass Rapid Transit.

Ir. Mazli has no directorship in any public companies or listed public companies. He has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.

HWA TEE HAISenior Manager – Management Information System

Mr Hwa, Malaysian, male, aged 43, joined WCE on 1 November 2013 as Senior Manager of the Management Information System (MIS) Department. He graduated from University Putra Malaysia (“UPM”) in 1988 with a Bachelor Degree in Computer Science. He completed his Master Degree in Business Administration from Putra Business School of UPM in year 2014.

He started his career as a System Administrator (1998-2002) in BSB and New Pantai Expressway Sdn Bhd, wholly-owned subsidiaries of RBH Group. Subsequently, he was promoted to Assistant Manager (2003-2005), Manager (2006-2008) and Senior Manager (2009-2013) in the MIS Department of the IJM Malaysia Toll Division responsible for toll operations and management information system for highways in Malaysia. He was seconded to WCE in 2013.

Mr. Hwa has no directorship in any public companies or listed public companies. He has no family relationship with any other directors and/or major shareholders of the Company. There is no conflict of interest with the Company. He has no convictions for offences within the past five (5) years. There were no public sanction or penalty imposed by any regulatory bodies on him during the financial year.


11

FINANCIAL HIGHLIGHTS

2017 RM million

2016 RM million

2015 RM million

2014 RM million

2013 RM million

GROUP

Total assets 2,943 2,358 755 410 375

Shareholders’ fund 686 650 623 127 101

Net current asset/(liabilities) 937 1,143 444 (102) (198)

Revenue 817 529 19 14 18

Profit/(loss) before taxation 43 30 41 (33) (22)

Earnings/(loss) per share (sen) 3.51 2.67 4.69 (5.99) (4.55)

Net asset per share (RM) 0.72 0.69 0.62 0.22 0.19

Return on total assets 1% 1% 5% (8%) (5%)

Return on equity 5% 4% 6% (25%) (19%)

Gearing ratio 2.23 1.60 0.01 0.96 1.23

COMPANy

Total assets 704 721 592 292 298

Shareholders’ fund 600 584 580 120 154

Net current asset/(liabilities) 375 334 416 (136) (25)

Profit/(loss) before taxation 19 3 2 (92) (47)

Return on total assets 2.3% 0.5% 0.2% (31%) (15%)

Return on equity 2.7% 0.6% 0.3% (77%) (31%)

Gearing ratio 0.00 0.00 0.00 0.93 0.45

12 WCE HOLDINGS


Berhad)

PROJECT FINANCING

The Group’s 80%-owned subsidiary West Coast Expressway Sdn Bhd (WCESB) is the concessionaire for the Project, a 233 km highway that runs from Banting in Selangor to Taiping in Perak.

The financing of the Project is structured mainly in three components totalling RM5,940.0 million, as follows:

RM million

(a) Shareholders’ Contribution:- Equity 210.00- Redeemable Unsecured Murabahah Loan Stocks (RUMS) 990.00

(b) Government Support Loan (GSL) 2,240.00

(c) Commercial Loans (secured):- Term Loans 1,500.00- Sukuk Murabahah Bonds (Sukuk Bonds) 1,000.00

Total 5,940.00

During the financial year WCESB raised RM81.0 million from the issuance of RUMS. To date, WCESB has drawn down RM650.0 million and RM407.0 million from the GSL and Term Loans facilities respectively. On August 2015, the Sukuk Bonds were issued en bloc.

The utilisation of the above facilities are required to be made in proportion to the amount financed. Any drawdown in excess of utilisation are placed in licensed Islamic financial institutions in Malaysia, earning profit/interest.

MANAGEMENT DISCUSSION AND ANALySIS

The Group achieved revenue of RM817 million compared to RM529 million in the previous financial year. The increase was largely due to higher construction activities of the West Coast Expressway (the Project) recognised pursuant to IC Interpretation 12 – Service Concession Arrangements.

Pretax profit increased to RM42.5 million from RM30.0 million in the previous financial year due mainly to the higher revenue achieved during the financial year as prescribed by the IC Interpretation 12 – Service Concession Arrangement, lower operating expenses but reduced by lower distribution income from unit trust and fair value gain on other investments and loss on disposal of an associate classified as held for sale.


13

PROJECT DEVELOPMENT

The Project is divided into the following eleven (11) packages:

Package 1 Banting – South Klang Valley Expressway (SKVE) Package 6 Kapar- Assam Jawa

Package 2 SKVE – Shah Alam Expressway (KESAS) Package 7 Assam Jawa – Tanjung Karang

Package 3 KESAS – Federal Highway Route 2 Package 8 Hutan Melintang – Teluk Intan

Package 4 Federal Highway Route 2 – New North Klang Straits Bypass

Package 9 Kampung Lekir – Changkat Cermin

Package 10 Changkat Cermin – Beruas

Package 5 New North Klang Straits Bypass – Kapar Package 11 Beruas – Taiping South

MANAGEMENT DISCUSSION AND ANALySIS (cont’d)

Out of the eleven (11) packages, nine (9) have been awarded and the construction progress is on schedule. The design, technical and land acquisition processes for these nine (9) packages are almost complete and we expect construction progress to accelerate further over the next twelve (12) months.

The tender process for the remaining two packages i.e., Package 7 and Package 11 are in progress and expected to be completed by September 2017.

During the financial year, the Group incurred additional RM900.4 million in Infrastructure Development Expenditure (IDE) and cumulatively up to 31 March 2017, the Group had incurred a total IDE of RM1,591.8 million.

The Group is exposed to certain anticipated or known risks that may have material effect on our operations, performance, financial condition and liquidity. These risks and our strategies to mitigate them are stated in the Statement on Risk Management and Internal Control on page 35 on this Annual Report.

The Project is on schedule and expected to begin sectional tolling towards end of 2018 and is anticipated to complete by fourth quarter of 2019. It will be a stand out expressway due to its mostly flat alignment, innovative rest and service areas and unique landscape.

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Berhad)

PROPERTy DEVELOPMENT – BANDAR RIMBAyU

The property market in Malaysia remained challenging as it continued to be weighed down by weak consumer sentiments due to economic uncertainties, rising cost of living and banks’ stringent lending rules.

The Property development activities are carried out by the Group’s 40%-owned associate, Radiant Pillar Sdn Bhd (RPSB).

Moving forward, new launches in the pipeline include affordable terrace houses, targeting first time home buyers and young working adults. RPSB Group is expected to maintain its performance for the coming financial year on the back of the unbilled sales and satisfactory response from new launches.

DISPOSAL OF MANUFACTURING AND TRADING OF INDUSTRIAL PRODUCTS BUSISNESS

The Group completed the disposal of its entire 82.8% equity interest in Asian Resinated Felt Sdn Bhd to remain focussed on its core businesses in construction and operations of tolled highways.

DIVIDEND POLICy

The Board will have a dividend policy nearer the completion of WCE Project when future operating cash flows can be more clearly determined.

APPRECIATION

There are many parties who have helped the Group along in its journey so far and we would like to extend our heartfelt appreciation and gratitude to our shareholders, lenders, contractors, business associates, management and staff for their continuous support and commitment to the Group. We also wish to extend our sincere gratitude to Kementerian Kerja Raya, Lembaga Lebuhraya Malaysia, Ministry of Finance, Securities Commission, Bursa Malaysia Securities Berhad and all relevant authorities for their support.


15

1. ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

(i) Board Composition

The Board currently has seven (7) members comprising four (4) Independent Non-Executive Directors and three (3) Non-Independent Non-Executive Directors. The Chairman is one of the Independent Non-Executive Director. The Senior Independent Non-Executive Director is Datuk Oh Chong Peng who will attend to any query or concern relating the Group where the Chairman and the Chief Executive Officer are conflicted.

The Non-Executive Directors provide the necessary balance of power and authority to the Board with a mix of industry-specific knowledge and broad business and commercial experience. They ensure that all proposals by management are fully deliberated and examined after taking into account the interest of shareholders and stakeholders. The Independent Non-Executive Directors play crucial roles in providing unbiased and independent views, advice and judgment to the Board to safeguard the interest of minority shareholders.

The role of the Independent Non-Executive Chairman and Chief Executive Officer is distinct and separated to ensure balance of power and authority. The Independent Non-Executive Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board, while the Chief Executive Officer has overall responsibility for the day-to-day management of the business and implementation of the Board’s policies and decisions. The Chief Executive Officer is also responsible to ensure due execution of the strategic goals, effective operation within the Group, and to explain, clarify and inform the Board on matters pertaining to the Group.

The Independent Non-Executive Director/Chairman, Dato’ Abdul Hamid bin Mustapha will achieve his tenure of twelve (12) years on 26 October 2017. In accordance with WCEHB’s Board Charter, he will be re-designated as Non-Independent Non-Executive Director. However, in view of his experience, objectivity, independent judgment and integrity, and at the recommendation of Nomination Committee, the Board opines that his services as an effective Independent Non-Executive Director/Chairman is still required. The Board, therefore, wishes to seek shareholders’ approval at the forthcoming 16th Annual General Meeting of the Company that he be retained and to continue to act as an Independent Non-Executive Director/Chairman of the Company.

(ii) Board Diversity

The Directors have a diverse set of skills, experience and knowledge necessary to govern the Group. The Directors are professionals in the field of engineering, finance, accounting, economics, manufacturing and experienced senior public administrators. Together, they bring a wide range of competencies, capabilities, technical skills and relevant business experience to ensure that the Group continues to be a competitive leader with a strong reputation for technical and professional competence. In evaluating candidates for appointment to the Board, the Nomination Committee and the Board will always evaluate and match the criteria of the candidate based on experience, skill, competency, knowledge, potential contribution and boardroom diversity (including gender, ethnicity and age). The Board is mindful of the Recommendation 2.2 of the Code and female candidates will be considered as part of the recruitment exercise of new directors for the Company.

STATEMENT ON CORPORATE GOVERNANCE

The Board of Directors (“Board”) of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“WCEHB” or “the Company”) recognises the importance of good corporate governance and fully supports the principles and recommendations as set out in the Malaysian Code on Corporate Governance 2012 (“Code”). The Board is therefore, committed towards instilling a high standard of corporate governance throughout the Group as a fundamental part of discharging its responsibility to enhance shareholders’ value and the financial performance of the Group. The Board will continue to apply the recommendations as set out in the Code and evaluate the status of the Group’s practices and procedures from time to time.

This statement describes the manner in which the Group has applied the principles of the Code and the extent of its compliance with the recommendations of the Code pursuant to paragraph 15.25 of Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“Listing Requirements”). The reason for not applying specific principles in the Code is explained in this statement.

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Berhad)

(iii) Board Functions and Delegation to Management

The Board is fully responsible for the Group’s overall strategic plans on business performance, overseeing the proper conduct of business, succession planning, risk management, shareholders’ communication, internal control, management information systems and statutory matters, while the management is accountable for the execution of the expressed policies and attainment of the Group’s expressed corporate objectives. This demarcation complements and reinforces the supervisory role of the Board. Nevertheless, the Board is always guided by the Board Charter which outlines the duties and responsibilities and matters reserved for the Board in discharging their duties.

The duties and responsibilities of the Board as outlined in the Board Charter include amongst others, the following:-

(1) reviewing and adopting the overall strategic plans and programmes for the Group;

(2) overseeing and evaluating the conduct of business of the Group and the Company;

(3) identifying principal risks and ensuring implementation of a proper risk management system to manage such risks;

(4) establishing a succession plan;

(5) developing and implementing a shareholder communication policy for the Company; and

(6) reviewing the adequacy and the integrity of the management information and internal controls system of the Group and the Company.

In all Board meetings, major operating divisions report their respective progress, financial achievement, performance compared to approved budget, business outlook and challenges including proposed resolutions thereon.

The Board consists of qualified individuals with diverse set of skills, experience and knowledge to govern the Group. The Non-Executive Directors are professionals in the field of engineering, finance, accounting, economics, manufacturing and senior public administrators.

The profiles of the Directors are set out on pages 4 to 7 of this Annual Report. Such information is also available on the Company’s website, www.wcehb.com.my.

(iv) Code of Conduct

The Board has made a commitment to create a corporate culture within the Group to operate the business in an ethical manner and to uphold a high standard of professionalism and exemplary corporate conduct. The Code of Ethics and Conduct which sets out the principles and standards of business ethics and conduct of the Group has been adopted and is applicable to all Directors and employees of the Group.

Briefly, the Code of Ethics and Conduct, which is to assist the Directors and Employees in defining ethical standards and conduct at work, as follows:-

(a) Avoidance of Conflict of Interest

Directors and Employees must not use their position or knowledge to gain in the course of duties or employment for private or personal advantage. In addition, they are to avoid any situation in which they have an interest in any entity or matter that may influence their judgment in the discharge of responsibilities.

(b) Safeguard of Confidential Information

Directors and Employees are to exercise caution and due care to safeguard any information of a confidential and sensitive nature relating to the Group which is acquired in the course of duties, and is strictly prohibited to disclose to any person, unless the disclosure is authorised or legally mandated.

(c) Inside Information and Securities Trading

Directors and Employees shall not use price sensitive non-public information, which can affect prices of securities of the Company and/or related listed companies (“Inside Information”), for personal benefit or to trade in securities or to provide information to others to trade in securities of the Company and/or related listed companies until the Inside Information is publicly released. They shall also not trade in securities in any other companies where they have Inside Information which they obtain in the performance of duties.

(d) Protection of Assets and Funds

Directors and Employees must protect assets and funds of the Group to ensure availability for legitimate business purposes and none of these be used for personal gain.


17

(e) Business Record and Control

All books, records and accounts to conform to generally accepted and applicable accounting principles, all applicable laws and regulations, are accurate, reliable and timely.

(f) Compliance to the Law

Directors and Employees are expected to understand and comply with the laws, rules and regulations including the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001, Malaysian Anti-Corruption Commission Act 2009, Personal Data Protection Act 2010 and Competition Act 2010.

(g) Personal Gifting

No personal gifts, favours, entertainment or services, in cash or kind, that influence objective and fair business decisions, will be accepted or provided.

(h) Health and Safety

To provide a safe workplace, Directors and Employees are required to understand and abide by the Group’s policies and procedures.

(i) Sexual Harassment

Policy to provide all Employees with a working environment free from any form of sexual harassment.

(j) Outside Interest

Directors and Employees are not permitted to engage in any outside interest, which will undermine their performance or bring disrepute to the Group.

(k) Fair and Courteous Behaviour

Employees are to treat their fellow Employees fairly and courteously without regard to race, creed, religion, gender, nationality, age or disability, and shall not create any form of discrimination or prejudice in the workplace.

(l) Misconduct

Not involved in or abet in any activity that is deemed by the Group to be an act of misconduct.

The Company recognises that any genuine commitment of detecting and preventing actual or suspected unethical, unlawful, illegal, wrongful or other improper conduct must include a mechanism whereby employees can report his/her concerns freely without fear, reprisal or intimidation. Accordingly, the Company has adopted a Whistle Blowing Policy which has been disseminated to all employees.

Briefly, the policy and procedure is to provide and facilitate a mechanism for any reporting individual (“RI”) to report concerns about any suspected and/or known misconduct, wrongdoings, corruption, fraud and/or abuse in writing, by telephone, fax or e-mail to Datuk Oh Chong Peng, the Audit Committee Chairman or Dato’ Neoh Soon Hiong, the Chief Executive Officer. The policy allows the RI to either identify oneself or if the RI prefers, to remain anonymous. The policy assures and protects the RI against reprisal and/or retaliation from his/her superior and provides immunity from disciplinary actions as long as the RI does not provide false information and is not malicious in nature. All costs in relation to any legal liabilities or proceedings that may be brought against the RI will be borne by the Company.

The Code of Ethics and Conduct and Whistle Blowing Policy was updated on 20 February 2017 and is available on the Company’s website, www.wcehb.com.my.

(v) Business Sustainability Plan

The Company focuses on key areas of environment conservation and social contribution with the aim to promote sustainable development. A detailed report on sustainability activities, demonstrating the Company’s commitment to the global environment, social, governance and sustainability agenda, appears in the Corporate Social Responsibility Statement of this Annual Report.

(vi) Access to Information and Advice

A full agenda of the meeting and all Board papers are distributed on a timely manner prior to Board Meetings to enable the Directors to review and consider the agenda items to be discussed at the meeting and where necessary, to obtain further explanations in order to be fully briefed before the meeting. The Board papers include reports relevant to the issues of the meeting, covering the areas of strategic, financial, operational and regulatory compliance matters.

STATEMENT ON CORPORATE GOVERNANCE (cont’d)

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In discharging their duties, the Directors have access to all information within the Company and to the advice and services of senior management staff and Company Secretary. If necessary, the Directors may seek independent professional advice and information in furtherance of their duties at the Company’s expense, so as to ensure the Directors are able to make independent and informed decisions. Any such request is presented to the Board for approval.

Senior management staff, as well as advisers and professionals appointed on corporate proposals, may be invited to attend Board meetings to provide the Board with their views and explanations and to furnish clarification on issues that may be raised by the Directors.

The Directors are notified of any corporate announcements released to Bursa Securities. Minutes of each Board meeting were circulated to all Directors at least five (5) business days before the Board meeting for their perusal prior to confirmation of the minutes at the commencement of the Board meeting. The Directors could request for clarifications or raise comments before the minutes were tabled for confirmation as a correct record of proceedings of the Board meeting.

(vii) Company Secretary

The Company Secretary plays an important advisory role and is a source of information and advice to the Board and its Committees on issues relating to compliance with laws, rules, regulations, board policies and procedures and compliance with the relevant regulatory requirements affecting the Group and Company. The Board is supported by a suitably qualified and competent Company Secretary who is a member of a professional body.

Every Board member has ready and unrestricted access to the advice and services of the Company Secretary who is capable of carrying out the duties and responsibilities, to which the post entails. The roles and responsibilities of the Company Secretary include the following:-

(1) advise the Board and management on governance issues;

(2) ensure compliance of listing and related statutory obligations;

(3) attend Board, Committees and general meetings, and ensure the proper recording of minutes;

(4) ensure proper upkeep of statutory registers and records;

(5) assist Chairman in the preparation for and conduct of meetings;

(6) assist Chairman in determining the annual Board plan and the administration of other strategic issues; and

(7) assist the induction of new directors, and continuously update the Board on changes to listing rules, other related legislations and regulations.

The Company Secretaries ensures that deliberations at Board and Board Committee meetings are documented and subsequently communicated to the Management for appropriate actions. The Board is updated by the Company Secretaries on the follow-up of its decisions and recommendations by the Management.

(viii) Board Charter

The Board Charter was adopted by the Board on 28 March 2013, updated on 22 May 2017 and is available on the Company’s website at www.wcehb.com.my. The Board undertakes that the Board Charter will be periodically reviewed and updated in accordance with the needs of the Company and new regulations that may have an impact on the discharge of the Board’s responsibilities.

The Board Charter was established to ensure that all Board members are aware of their fiduciary duties and responsibilities, various legislations and regulations affecting their conduct, the need to safeguard the interests of the shareholders, customers and other stakeholders and that a high standard of corporate governance is applied in all their dealings on behalf of the Company. The Board Charter also serves as a source of reference and primary induction literature, providing insights to prospective board members and senior management. The Board Charter clearly sets out the division of responsibility and powers of duties between the Board and management, the different committees established by the Board and between the Chairman and the Chief Executive Officer.


19

2. STRENGTHEN COMPOSITION

(i) Board Committees

The Board has delegated certain functions to the Committees it established to assist in the execution of its responsibilities. The Committees operate under clearly defined terms of reference. The Committees are authorised by the Board to deal with and to deliberate on matters delegated to them within their terms of reference.

The Chairman of the respective Committees report to the Board the outcome of the Committee meetings and such reports are included in the Board papers.

(a) Audit Committee

The Audit Committee comprises three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. The Audit Committee is chaired by Datuk Oh Chong Peng. Other members of the Audit Committee are Dato’ Abdul Hamid bin Mustapha, U Chin Wei and Tang King Hua.

The terms of reference and summary of activities of the Audit Committee during the financial year are set out under the Audit Committee Report on pages 38 to 40 of this Annual Report and is available on the Company’s website, www.wcehb.com.my.

(b) Nomination Committee

The Nomination Committee comprises three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. During the financial year ended 31 March 2017, two (2) meetings were held and attended by all the members. The details of the members are as follows:-

Members Designation

Dato’ Abdul Hamid bin Mustapha (Chairman)

Independent Non-Executive Director

Datuk Oh Chong Peng Independent Non-Executive Director

U Chin Wei Independent Non-Executive Director

Tang King Hua Non-Independent Non-Executive Director

The main terms of reference of the Nomination Committee include, amongst others, the following:-

(1) to recommend to the Board, candidates for all directorships. In making its recommendation, the Nomination Committee should consider the candidates’ skills, knowledge, expertise and experience, professionalism and integrity. In the case of candidates for the position of independent non-executive directors, the Nomination Committee should also evaluate the candidates’ ability to discharge such responsibilities/functions as expected from independent non-executive directors;

(2) to recommend to the Board, directors to fill the seats on Board Committees;

(3) to review the required mix of skills, experience and other qualities, including core competencies which Non-Executive Directors should bring to the Board, on an annual basis; and

(4) to assess the effectiveness of the Board as a whole, the Committees of the Board, the contribution of each individual Director, including Independent Non-Executive Directors and Chief Executive Officer on an annual basis.

The key activities undertaken by the Nomination Committee during the financial year were as follows:-

(1) assessed the effectiveness of the Board as a whole and the contribution of the various Board Committees and each individual Director;

(2) assessed the independence of the Independent Directors;

(3) reviewed the overall composition of the Board in terms of its structure and appropriate size, mix of skills, experience and core competencies of its Directors;

(4) reviewed and assessed the effectiveness of the Chief Executive Officer; and


20 WCE HOLDINGS


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(5) assessed and deliberated on the effectiveness of Dato’ Abdul Hamid bin Mustapha, an Independent Non-Executive Director/Chairman of the Board and the Nomination Committee (wherein the Chairman abstained from the deliberation), in view of him achieving twelve (12) years tenure on 26 October 2017 whereby he will be re-designated as Non-Independent Non-Executive Director/Chairman, in accordance to the Board Charter of the Company. The Committee acknowledged that his experience, objectivity, independent judgment and integrity, will continue to be a pillar of strength to the Board and the Committees headed by him, have recommended to the Board that he be retained and to continue to act as an Independent Non-Executive Director/Chairman of the Company.

(c) Remuneration Committee

The Remuneration Committee comprises three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director.

During the financial year ended 31 March 2017, one (1) meeting was held and was attended by all the members. The details of the members are as follows:-

Members Designation


Independent Non-Executive Director

Datuk Oh Chong Peng Independent Non-Executive Director

U Chin Wei Independent Non-Executive Director

Lee Chun Fai Non-Independent Non-Executive Director

The main terms of reference of the Remuneration Committee include, amongst others, the following:-

(1) to recommend to the Board, the reward framework for Executive Directors/Chief Executive Officer and perform an on-going review of the Executive Directors/Chief Executive Officer remuneration structure;

(2) to recommend to the Board, changes in remuneration, if required, or in the event the present structure and remuneration policy are deemed inappropriate;

(3) the remuneration of the Non-Executive Directors are to be determined by the Board based on the recommendation of the Remuneration Committee; and

(4) to review and approve annual salaries, incentive arrangements, service agreements and other employment conditions for the Executive Directors/Chief Executive Officer after considering the performance of Executive Director/Chief Executive Officer. This is performed by linking the Executive Directors/Chief Executive Officers’ remuneration to corporate and individual performance, such as, performance of the Company, growth of the Company vis-à-vis the growth of the industry, contribution of the Executive Directors/Chief Executive Officer to the Group etc..

The key activities undertaken by the Remuneration Committee during the financial year were as follows:-

(1) Review and recommend incentive plan of the Chief Executive Officer, and

(2) Review and recommend the payment of Directors’ fee and benefits for the financial year ended 31 March 2017.


21

d. Executive Committee

The Executive Committee consists of the Directors and senior management staff of the Group. The Executive Committee shall preferably meet on quarterly basis or whenever deemed necessary to review the performance of the Group’s operating divisions. During the financial year ended 31 March 2017, four (4) meetings were held which were attended by the members of the Committee except for Dato’ Neoh Soon Hiong who had attended three (3) out of the four (4) meetings held. The details of the members are as follows:-

Members Designation

Dato’ Neoh Soon Hiong (Chairman)

Chief Executive Officer

Lyndon Alfred Felix Chief Financial Officer

Tang King Hua Non-Independent Non-Executive Director

The main terms of reference of the Executive Committee include the following:-

(1) to propose strategic business direction and business plan to the Board periodically or whenever deemed necessary;

(2) to evaluate and decide on transactions (including acquisition or disposal of assets or investments) and matters relating to the Group’s core businesses consisting mainly of construction and existing investment (or such investments as may be approved by the Board of Directors), but excluding businesses relating to the construction and/or operations of tolled highway and where the value of each of such transaction does not exceed RM10 million;

(3) to review, on periodically basis, the performance of all business units of the Group and suggest corrective actions, if necessary; and

(4) to undertake such function and decide on all matters as may be approved or delegated by the Board of Directors.

(ii) Board Evaluation

The Nomination Committee assesses the effectiveness of the Board as a whole and the contribution of each individual Director including the Independent Non-Executive Directors and the Chief Executive Officer.

During the financial year, the Nomination Committee conducted an annual assessment of the required mix of skills, experience and other qualities including core competencies which the Non-Executive Directors should bring to the Board and identified areas for improvement. It also conducted an annual assessment of the Directors and the effectiveness of the Board as a whole, Board committees and the contribution of each individual Director, including the Independent Non-Executive Directors and the Chief Executive Officer. All assessments and evaluations carried out by the Nomination Committee in discharging its functions have been properly documented.

Board evaluation comprises Self & Peer Assessment and Independence of Independent Director. The assessment criteria include contributions to interaction, roles and duties, knowledge and integrity, governance and risk management whilst the criteria for assessing the Independence of an Independent Director include the relationship between the Independent Director and the Group, tenure of independence and his involvement in any significant transaction with the Group. The Audit Committee members were evaluated on the basis of Self-Assessment and Peer Assessment by the Nomination Committee.

(iii) Appointment to the Board

The Nomination Committee is responsible for making recommendations to the Board of suitable candidates for appointment as Director, after which the Company Secretary ensures that all appointments are properly made and all legal and regulatory compliance are met.

In making these recommendations, the Nomination Committee evaluate and match the criteria of the candidate based on experience, skill, competency, knowledge, potential contribution and boardroom diversity (including gender, ethnicity and age). The Committee is mindful of the Recommendation 2.2 of the Code and female candidates will be considered as part of the recruitment exercise of new directors for the Company.


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(iv) Re-election and Re-appointment of Directors

In accordance with the Constitution of the Company, all Directors who are newly appointed to the Board, are subject to re-election by shareholders subsequent to their appointment at the immediate Annual General Meeting. The Constitution also provide that one-third (1/3) of the Directors shall retire from office and be eligible for re-election at every Annual General Meeting. All Directors shall submit themselves for re-election at least once every three (3) years.

The re-election of each Director is voted on separately. To assist shareholders in their decision, sufficient information, such as personal profile, meetings’ attendance and the shareholdings of each Director standing for re-election, are furnished in this Annual Report.

The re-appointment of an Independent Director who has served for a cumulative term of more than twelve (12) years, to continue serving in the same capacity, will require the Board of Directors to justify, recommend and seek shareholders’ approval in order for that individual to continue as such, on a yearly basis.

(v) Remuneration Committee

The Remuneration Committee is primarily responsible for recommending the policy and framework of directors’ remuneration including the terms and remuneration of the Chief Executive Officer, to the Board for approval in order to align with the business strategy and long term objectives of the Company. The remuneration of the Chief Executive Officer will be reviewed annually to ensure that the remuneration package of the Chief Executive Officer remains sufficiently attractive to attract and retain the Chief Executive Officer with the relevant experience and expertise to govern the Group effectively. The Chief Executive Officer does not participate in the decision with regards to his remuneration.

The determination of the remuneration of the Non-Executive Directors are a matter for the Board as a whole following the relevant recommendation made by the Remuneration Committee, with the Director concerned abstaining from deliberation and voting on his own remuneration. The remuneration of the Non-Executive Directors comprises of Director’s fee and other emoluments which are determined by the Board. The remuneration of the Non-Executive Directors reflects the contribution and level of responsibilities undertaken by the particular Non-Executive Director. Director’s remuneration will be subject to the approval of shareholders at the Annual General Meeting.

The details of the Directors’ remuneration in the Company for the financial year ended 31 March 2017 were as follows:-

Category Fees(RM’000)

Benefit in kind

(RM’000)Total

(RM’000)

Non-Executive Directors – Company

885 - 885

Non-Executive Directors – Group

- 24 24

Total 885 24 909

The number of Directors whose total remuneration falls within the following bands:-

Number of Non-Executive

Directors

RM50,000 and below -

RM50,001 to RM100,000 2

RM100,001 to RM150,000

3

RM150,001 to RM200,000

2

Total 7


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3. REINFORCE INDEPENDENCE

(i) Annual Assessment of Independent Directors

The Board through the Nomination Committee assessed the Independent Directors on annual basis, with a view to ensure that the Independent Directors bring independent and objective judgment to the Board and this mitigates risks arising from conflict of interest or undue influence from interested parties. Where there is a likely conflict of interest in any matter under deliberation, he is required to disclose his interest and abstain from participating or discussion on the matter.

The concept of independence adopted by the Board is in line with the definition of an Independent Director in Section 1.01 of the Listing Requirements of Bursa Securities and Practice Note 13 (Revised July 2015). The main element for fulfilling the criteria is the appointment of an Independent Director who is not a member of management and free from any relationship which could interfere in the exercise of independent judgment or the ability to act in the best interest of the Company. The Board complies with paragraph 15.02 of the Listing Requirements of Bursa Securities which requires that at least two Directors or one-third of the Board, whichever is higher, are Independent Directors.

The Nomination Committee and Board have upon their annual assessment, concluded that each of the Independent Non-Executive Directors had demonstrated in conduct and behavior that indicate independence and each of them continues to fulfill the definition of independence as set out in the Code and Listing Requirements of Bursa Securities.

(ii) Tenure of an Independent Director

The Board noted that one of the recommendations of the Code states that the tenure of an Independent Director shall not exceed a cumulative terms of nine (9) years. Upon completion of the nine (9) years tenure in office, an Independent Director may continue to serve on the Board subject to the Director’s redesignation as a Non-Independent Director.

However, the Board is of the view that the ability of long serving independent directors to remain independent and to discharge their duties with integrity and competency should not be measured solely by tenure of service. The extended service should not affect their independence, as they are still able to provide independent judgment, experience and objectivity without being subordinated to operational considerations. They are able to ensure that the interest of all shareholders are indeed taken into account by the Board and that relevant issues are subjected to objective and impartial consideration by the Board. The Nomination Committee and the Board have decided that the service of independent Directors will not be extended beyond a cumulative term of twelve (12) years. Accordingly, Dato’ Abdul Hamid bin Mustapha being the longest serving Independent Non-Executive Director since 27 October 2005 and has completed the nine year tenure on 26 October 2014, will continue to be an Independent Director of the Company until 26 October 2017. In view of Dato’ Abdul Hamid’s experience, objectivity, independent judgment and integrity, the Board opines his services as an Independent Non-Executive Director/Chairman is still required. The Board, therefore, wishes to seek shareholders’ approval at the forthcoming 16th Annual General Meeting of the Company that he be retained and to continue to act as an Independent Non-Executive Chairman/Director of the Company.

4. FOSTER COMMITMENT

(i) Time Commitment

The Board conduct at least five (5) regular scheduled meetings annually, with additional meetings convened as and when necessary, to consider all matters relating to the overall control, business performance and strategy of the Company. Additional meetings will be convened as and when necessary.

In fostering the commitment of the Board that the Directors shall devote sufficient time to carry out their responsibilities, the Directors are required to notify the Chairman before accepting any new directorship and to indicate the time expected to be spent on the new appointment. The Chairman shall also notify the Board if he has any new directorship or significant commitments outside the Company. All the Directors hold not more than five (5) directorships in public listed companies.


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The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company. During the financial year ended 31 March 2017, five (5) Board meetings were held and the attendance record of the Directors were satisfactory as evidenced in the table set out below:-

Directors

Number of meetings attended


5 out of 5

Datuk Oh Chong Peng 5 out of 5

U Chin Wei 5 out of 5

Tan Sri Pang Tee Chew 3 out of 5

Lee Chun Fai 5 out of 5

Tang King Hua 5 out of 5

Datuk Ir. Hamzah bin Hasan 5 out of 5

All the Directors have complied with the minimum requirements on the attendance at Board meetings as stipulated in the Listing Requirements of Bursa Securities. In the intervals between Board meetings, for any matters requiring Board’s decisions, the Board’s approvals are obtained through circular resolutions. The resolutions passed by way of such circular resolutions are then noted at the next Board meeting.

(ii) Directors’ Training and Continuing Education Programme

All the Directors have attended the Mandatory Accreditation Programme prescribed by Bursa Securities. The Company is aware of the importance of continuous training for its Directors to enable them to effectively discharge their duties and sustain active participation in the Board deliberations and will continuously evaluate and determine the training needs of its Directors.

The Directors are also aware of their duty to continuously update their knowledge and enhance their skills through appropriate continuing education programmes. They are provided with the opportunity, and are encouraged, to attend training to keep themselves updated on relevant new legislation, financial reporting requirements, best practices and changing commercial and other risks.

All the Directors have attended at least one training session during the financial year ended 31 March 2017. Some of these training programmes, seminars or forum are as follows:-

1. Blue Ocean Strategy Workshop;

2. Bursa Talk “New Environment, Social & Governance (ESG) Index and Methodology Rating”;

3. 19th Annual Asian Investment Conference, Hongkong;

4. Malaysia Carbon Reduction & Environment Sustainability (MYCREST);

5. Capital Market Directors Programme (CMDP);

6. Sustainability Reporting;

7. Corporate Governance Series “Future of Auditor Reporting – The Game Changer for Boardroom”;

8. International Conference on Blue Ocean Strategy;

9. Workshop on Sustainability;

10. Conference Towards Sustainability and Resilience Construction Malaysia;

11. Budget Talk 2017;

12. Corporate Governance Breakfast Series – How to Leverage on AGMs for Better Engagement with Shareholders, and

13. Overview of the Companies Act 2016: Practical Insights & The Challenges and Duties and Responsibilities of Directors.

The Company Secretary has circulated the relevant guidelines on statutory and regulatory requirements to the Board for reference. The external auditors have also briefed the Board members on the changes to the Malaysian Financial Reporting Standards that affect the Group and Company’s financial statements during the year.


25

5. UPHOLD INTEGRITy IN FINANCIAL REPORTING

(i) Financial Statements Compliance

The Board is responsible to ensure that the quarterly announcements of results of the Group presents a fair, balanced and meaningful assessment of the Group’s financial position, performance and prospects. The Board ensures that the Group’s financial statements are drawn up in accordance with the provisions of the Companies Act 2016 (“Act”) and the applicable approved accounting standards in Malaysia. The Board is assisted by the Audit Committee in reviewing and scrutinising the information in terms of the overall accuracy, adequacy and completeness of disclosure and ensuring the Group’s financial statements comply with applicable financial reporting standards.

The Audit Committee meets with the Company’s external auditors to review the scope and adequacy of the audit processes, the annual financial statements and their audit findings. In line with the good corporate governance practices, the Audit Committee also meets with the external auditors at least twice a year to discuss audit plans, audit findings and the financial statements of the Company. These meetings are held without the presence of the Chief Executive Officer and senior management. The Audit Committee also meets with the external auditors whenever it deems necessary.

(ii) Directors’ Responsibility Statement

The Directors are required by the Act, to prepare financial statements for each financial year in accordance with the provisions of the Act and applicable approved accounting standards to give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and of their results and cash flows for the financial year then ended. Where there are new accounting standards or policies that become effective during the year, the impact of these new treatments would be stated in the notes to the financial statements accordingly.

In preparing the financial statements for the financial year ended 31 March 2017, the Directors have:-

(1) adopted appropriate accounting policies which were consistently applied;

(2) made judgments and estimates that are reasonable and prudent;

(3) ensured that all applicable approved accounting standards have been followed; and

(4) prepared financial statements on going concern basis as the Directors have a reasonable expectation, having made enquiries, that the Group and the Company have adequate resources to continue in operational existence in the foreseeable future.

The Directors are responsible for ensuring that the Company keeps accounting records, which discloses with reasonable accuracy the financial position of the Group and the Company and comply with the provisions of the Companies Act 2016. The Directors are also responsible for taking reasonable steps to safeguard the assets of the Group and Company and to prevent and detect material fraud and other irregularities.

(iii) External Auditors

On an annual basis, the Audit Committee will review the suitability and independence of the external auditors. The Audit Committee would also review the provision of non-audit services by the external auditors and noted the following for the financial year ended 31 March 2017:-

Audit Fees

RM’000

Non-Audit

Fees RM’000

Total RM’000

By Company 140 21 161

By Subsidiaries 114 31 145

Total 254 52 306

The Audit Committee has obtained written assurance from the external auditor that they were, and had been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

The Audit Committee is satisfied with the competence and independence of the external auditors and had recommended the re-appointment of the external auditors to the shareholders at the Annual General Meeting. The external auditors are invited to attend the Annual General Meeting of the Company and are available to answer shareholders’ questions on the matters with regard to the audit, its preparation and content of the audit report.


26 WCE HOLDINGS


Berhad)

6. RECOGNISE AND MANAGE RISKS

(i) Risk Management and Internal Control

The Board acknowledges its responsibilities for maintaining a reliable system of internal controls within the Group which covers the financial controls, the operational and compliance controls and risks management. The internal control system is designed to meet the Group’s needs and to manage risks. This is a continuing process which included risk assessments, internal controls reviews and internal audit checks on all companies within the Group. This will ensure that the Group and Company’s assets are safeguarded to preserve shareholders’ investment.

The Audit Committee is entrusted to provide advice and assistance to the Board in fulfilling its statutory and fiduciary responsibilities relating to the Group and Company’s internal and external audit functions, risk management and compliance systems and practices, financial statements, accounting and control systems and matters that may significantly impact the financial condition or affairs of the business.

The Statement on Risk Management and Internal Control, which provides an overview of the state of risk management and internal control and processes within the Group, is set out on page 35 to 37 of this Annual Report.

(ii) Internal Audit Function

The Board has an overall responsibility for maintaining a sound system of internal controls to safeguard shareholders’ investment. As the system of internal controls are designed to mitigate rather than eliminate the likelihood of errors or fraud, the system can only provide reasonable assurance against material misstatement or loss.

The Group and Company’s internal audit service was outsourced to an independent professional service provider. The internal audit service performs regular reviews of business processes, appraisal on the effectiveness of governance, risk management and internal controls processes and reports regularly to the Audit Committee. The internal audit engagement is focused on areas of priority according to their risk assessment and in accordance with the annual audit plans approved by the Audit Committee. The Audit Committee reviews and approves the internal audit plan on an annual basis. Areas of improvement as highlighted by the internal audit service were implemented by management.

7. ENSURE TIMELy AND HIGH QUALITy DISCLOSURE

(i) Corporate Disclosure Policy

The Board is aware of the need to establish corporate disclosure policies and procedures to enable a comprehensive, accurate and timely disclosures relating to the Company, to the regulators, shareholders and stakeholders. The Company has identified persons authorised and responsible to approve and disclose material information to shareholders and stakeholders to ensure compliance with the Listing Requirements of Bursa Securities. The Board has delegated the authority to the Chief Executive Officer to approve all announcements for release to Bursa Malaysia Securities Berhad. The Chief Executive Officer works closely with the Board, senior management and the Company Secretary who are privy to the information to maintain strict confidentiality of the information.

(ii) Information Dissemination

The Company continues to recognise the importance of transparency and accountability to its shareholders. The Board ensures that shareholders are informed of the financial performance and major development in the Group. Such information is communicated to shareholders by timely release of quarterly financial results, circulars, annual reports, announcements and press releases.

Apart from the mandatory announcements through Bursa Securities, the information on the Company is available on the Company’s website at www.wcehb.com.my.


27

8. STRENGTHEN RELATIONSHIP BETWEEN COMPANy AND SHAREHOLDERS

(i) Shareholder Participation at General Meetings

The Company provides information to the shareholders with regards to, amongst others, details of the Annual General Meeting, their entitlements to attend the Annual General Meeting, the right to appoint proxy and also, the qualifications of a proxy.

General meetings are an important venue through which the shareholders can exercise their rights. The Board would ensure suitability of venue and timing of meeting to encourage shareholders’ participation in the meetings.

(ii) Poll Voting

Voting at the 16th Annual General Meeting will be conducted by poll as it more accurately and fairly reflects shareholders’ view by ensuring that every vote is recognised, in accordance with the principal of “one share one vote”.

(iii) Effective Communications with Shareholders

The Board recognises the importance of establishing a direct line of communication with shareholders and investors through timely dissemination of information on the Group and Company’s performance and major developments via appropriate channels of communications. Dissemination of information includes the distribution of Annual Report and relevant circulars, information by way of material announcements, issuance of quarterly financial results of the Group to Bursa Securities and the public as well as through press conferences. In addition, stakeholders who wish to reach the Group or Company can do so through the “Contact Us” page in our website at www.wcehb.com.my. The Group believes that by consistently maintaining a high level of disclosure and extensive communication with its shareholders, the shareholders and investors will be able to make informed investment decision.

The Annual General Meeting is the principal forum for dialogue with shareholders. Besides the usual agenda for the Annual General Meeting, the Board presents the progress and performance of the business as contained in the Annual Report and provides opportunities for shareholders to raise questions pertaining to the business activities of the Group and Company. Members of the Board as well as the external auditors of the Company are present to provide responses to questions from the shareholders during these meetings.

This Statement is made in accordance with a resolution of the Board of Directors dated 29 June 2017.


28 WCE HOLDINGS


Berhad)

EMPLOyEE WELFARE

The Group and Company value its employees as they are key to competitive success in the marketplace which is vital in sustaining its businesses. We endeavour to provide relevant training in order for them to acquire the right skill sets to deliver results.

As a policy, the Group and Company do not discriminate against any race, gender, age or minorities. The employees are also provided adequate medical benefits as well as hospitalisation and personal accident insurance coverage.

ENVIRONMENTAL MANAGEMENT

As part of our continuing efforts towards environmental sustainability, the Group ensures that there are sufficient measures at all construction sites and work places to prevent any adverse impact on the environment.

Our West Coast Expresssway via 80%-owned subsidiary, West Coast Expressway Sdn Bhd will be constructed based on the latest green technology and in compliance to the Environmental Impact Assessment (“EIA”) Approval Conditions resulting in minimal impact to the environment. In addition, it will employ a full electronic system which not only reduces the usage of printed tickets but is proven to be very accurate and reliable thus vastly reducing discrepancies/errors/pilferages.

The Group’s Bandar Rimbayu development through its 40%-owned associate, Radiant Pillar Sdn Bhd, features sustainable environmental initiatives like rain water harvesting and solar panels for its housing units, amongst others. Abundant use of trees for landscape, creeks and canals adds to the scenic charm while cooling the environment. More than 50,000 trees, palms, shrubs, flower garden, aquatic plants, herbs and climbers will be planted around the Arc and sales gallery. The Bandar Rimbayu development which has been certified as a Green Township is poised to become a premier green township in the Klang Valley.

Environment sustainability is an on-going initiative and we will continue to incorporate environmental consideration into our processes.

CORPORATE SOCIAL RESPONSIBILITy (CSR)

The Group is firmly committed to undertake responsible corporate practices and uphold the sustainability elements of the Group and Company, as in the longer term, the sustainable business will deliver value for the shareholders and/or stakeholders which include employees, customers, shareholders and the wider environment and community that we operate in. We have identified our sustainability priorities which comprise of Employee Welfare, Environmental Management, Community and Marketplace.


29

COMMUNITy

We encourage our employees to get involved in volunteering activities and encourage them to use their knowledge, skills and resources to make a positive contribution to the local communities.

On 30 July 2016, the Group, Lembaga Lebuhraya Malaysia and with the support of Hospital Teluk Intan, jointly organised a blood donation campaign at AEON Mall, Seri Manjung, Perak. The campaign successfully collected 86 pints of blood from the public, registered donors and members of the organising corporations.

On 23 November 2016, WCESB adopted three Seladangs under the Taiping Zoo Adoption Scheme to symbolise WCESB’s responsibility for the environment with the focus of balancing nature and development. The Seladang, the mascot for the Perak alignment of the WCE Project represents the beauty of the natural eco-system. This will inspire WCESB in the pursuit of its mission: To build an expressway for the convenience of the nation without compromising the balance of nature and ecology.

On 5 December 2016, WCESB collaborated with the State Government of Perak and Malaysian Construction Industry Development Board (CIDB) to organize a series of apprenticeship programmes aimed at training and equipping youths residing along the WCE alignment with skills that will enable them to benefit through employment in the construction sector.

Programmes conducted during the financial year, are as follows:

(a) Skill Assessment Programme was conducted from 5 December 2016 to 8 December 2016 at Manjung, Perak, involving 20 existing personnel at the construction site. Certificates from CIDB were issued to candidates who have passed the assessment test. On the following day, a refresher training for Traffic Controllers and Flagmen was conducted for another batch of 20 existing construction personnel.

CORPORATE SOCIAL RESPONSIBILITy (CSR) (cont’d)

(b) On 2 January 2017, after a series of interviews, fourty (40) local youths from Perak, age 18 to 35 were selected to enroll for a 3-month Youth Training Programme at Akedemi Binaan Malaysia, the training centre of CIDB, at Sitok, Kedah for trades of Backhoe Loader Operator and Excavator Operator. Qualified candidates, post training will continue with a 3-month apprenticeship programme with the WCE Project. CIDB certificates will be issued to the candidates upon completion of the full 6-months Youth Training Programme. The Youth Training Programme, will thereafter continue with the next cycle targeting different trades.

30 WCE HOLDINGS


Berhad)

On 1 April 2017, the Group, Lembaga Lebuhraya Malaysia and the National Blood Bank jointly organised a blood donation campaign at AEON Mall, Bukit Tinggi, Selangor. The campaign successfully collected 140 pints of blood both from the public, registered donors and members of the organising corporations.

In addition to the above, the Group also participated in ad hoc community activities such as contribution to fire victims, back to school programme for the poor and repair/upgrade of schoosl in remote areas.

MARKETPLACE

The Group ensures that its operations are in line with the best practices guidelines set in the Malaysian Code on Corporate Governance 2012.

As part of promoting investor relations, the Group maintains an online platform via its website which provides information on the Group encompassing formal announcements, quarterly financial results and updates on the Group’s performance and development with the objective of fostering and maintaining good relations and providing timely information to various stakeholders of the Group.


31

1.0 OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

The Company had in issue 214,871,911 number of 2014/2016 Warrants. Each warrant entitles registered holder to subscribe for one new share in the Company at an exercise price of RM1.18 per share. During the financial year up to the date of maturity of the warrants, i.e., 26 August 2016, none of the warrants were exercised and accordingly lapsed.

Company had not issued any share options or convertible securities.

2.0 AMERICAN DEPOSITORy RECEIPT (ADR)/GLOBAL DEPOSITORy RECEIPT (GDR) PROGRAMMES

The Company did not sponsor any ADR or GDR programmes during the financial year.

3.0 IMPOSITION OF SANCTIONS AND/OR PENALTIES

There were no sanctions and/or penalties imposed by any regulatory bodies on the Company or its subsidiaries, Directors or management during the financial year.

4.0 NON-AUDIT FEES

During the financial year, the Company incurred fees for non-audit services of RM51,600 by the Auditors of the Company.

5.0 VARIATION IN RESULTS

There were no material variations between the audited results for the financial year ended 31 March 2017 and the unaudited results for the quarter ended 31 March 2017 of the Group.

6.0 MATERIAL CONTRACTS

There were no material contracts entered by the Company and its subsidiaries involving its Directors’, Chief Executive Officer’s and Major Shareholders’ interests, either still subsisting at the end of the financial year or entered into since the end of the previous financial year end.

ADDITIONAL COMPLIANCE INFORMATIONAs at 31 March 2017

32 WCE HOLDINGS


Berhad)

7.0 STATUS OF UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSALS

(a) Proposed Renounceable Rights Issue

In August 2015, the Company undertook Renounceable Rights Issue of 429,743,823 new ordinary shares of RM1.00 each in the Company at an issue price of RM1.08 per Rights Share, together with 214,871,911 free detachable Warrants, on the basis of three Rights Shares for every four existing shares in the Company held and one free Warrant for every two Rights Shares subscribed for. The Warrants matured on 26 August 2016 and none of the warrants were exercised and accordingly lapsed.

The status of utilisation of proceeds as at 31 March 2017 is set out below:

Proposed utilisation of Proceeds Utilisation Balance RM’mil RM’mil RM’mil

Injection as equity, convertibles and/or subordinated advanced into West Coast Expressway Sdn Bhd (WCESB), an 80%-owned subsidiary 357.0 (320.4) 36.6

Repayment of bank borrowings 92.0 (92.0) -Working capital and contingencies 8.1 (8.1) -Defray Rights Issue expenses 7.0 (4.8) 2.2*

464.1 (425.3) 38.8

(b) Proposed Disposal of 900 million ordinary shares in Talam Transform Berhad (Proposed Disposal)

In January 2016, the Company proposed to disposed of 900 million ordinary shares in Talam Transform Berhad (TTB), representing 21.34% equity interest held in TTB to Tan Sri Dato’ (Dr) Ir. Chan Ah Chye @ Chan Chong Yoon for a total cash consideration of RM80.50 million. The Proposed Disposal is to be undertaken in two tranches, as follows:

(i) First tranche consisting of 500 million TTB shares for a total cash consideration of RM42.50 million (completed on 18 April 2016), and

(ii) Second tranche consisting of 400 million TTB shares for a total cash consideration of RM38.00 million (due for completion on 15 August 2017).

The status of utilisation of proceeds from the first tranche of the Proposed Disposal, as at 31 March 2017 is set out below:

Proposed utilisation of Proceeds Utilisation Balance RM’mil RM’mil RM’milInjection as equity, convertibles and/or subordinated advanced into WCESB,

an 80%-owned subsidiary 32.2 - 32.2Working capital and contingencies 8.0 - 8.0Defray estimated expenses of the proposed disposal 2.3 (0.4) 1.9*

42.5 (0.4) 42.1

* The excess amount will be utilised as working capital.


33

8.0 SHARES BUy-BACK

The Company did not buy back any of its shares during the financial year.

9.0 RECURRENT RELATED PARTy TRANSACTIONS OF A REVENUE OR TRADING NATURE

Details of recurrent related party transactions made during the financial year ended 31 March 2017 pursuant to the shareholders’ mandate obtained by the Company at the Annual General Meeting held on 30 August 2016 are as follows:-

Nature of Transactions Undertaken by WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“WCEHB”) and/or its subsidiaries Transacting Company

Transacted Value (RM’000)

Interested Related Party

A. Transactions by WCEHB

Interest Radiant Pillar Sdn Bhd (60% owned subsidiary of IJM Group)

262 IJM (Note 2)

Interest IJM Construction Sdn Bhd (wholly owned subsidiary of IJM Group)

1,020 IJM (Note 2)

B. Transactions by IJM Corporation Berhad (“IJM”) Group

Project billings for construction work IJMC-KEB Joint Venture (Note 1)

673,433 IJM (Note 2)

Interest IJM Construction Sdn Bhd (wholly owned subsidiary of IJM Group)

77 IJM (Note 2)

Interest Radiant Pillar Sdn Bhd (60% owned subsidiary of IJM Group)

197 IJM (Note 2)

Notes:1. IJMC-KEB Joint Venture is an unincorporated joint venture with the participating interest of WCEHB and IJM Construction Sdn Bhd of 30% and 70%

respectively.2. IJM Corporation Berhad is a Major Shareholder of WCEHB by virtue of its 26.45% direct interest in WCEHB.

ADDITIONAL COMPLIANCE INFORMATION (cont’d)

As at 31 March 2017

34 WCE HOLDINGS


Berhad)

BOARD’S RESPONSIBILITIES

The Board recognises the importance of a sound system of risk management and internal control in order to achieve good corporate governance. The Board acknowledges that the Board is ultimately responsible for the Group’s system of risk management and internal control, which includes the establishment of an appropriate risk management framework, as well as reviewing its adequacy, integrity and effectiveness. The system covers risk management and internal controls relating to financial, operational, achievement of strategic goals and compliance with applicable laws and regulations.

Generally, the Group’s system of risk management and internal control is designed to manage the risks to which the Group is exposed to while pursuing its business objectives. The Group’s system of risk management and internal control is designed to mitigate rather than eliminate the risks. Therefore, the system of risk management and internal control can only provide reasonable but not absolute assurance against material misstatement, loss or fraud.

RISK MANAGEMENT FRAMEWORK

A sound framework of risk management and internal control is fundamental to good corporate governance. The Risk Management System (“RMS”) is used to manage key business risks and to provide assurance to the Board and stakeholders that the risks faced by the Group are adequately and effectively managed and the shareholders’ investment and the Group’s assets are safeguarded. The effectiveness of the Group’s RMS is reviewed and improved, both at the management and the Board levels, as and when necessary.

The Risk Management Committee (“RMC”) is chaired by the Chief Executive Officer and its members comprise senior management of the Group. The RMC ensures the Group has in place an ongoing process in place for the year under review and up to the date of approval of this statement for identifying, evaluating, assessing, monitoring and managing key business risks that may affect the achievement of the Group’s business objectives and also ensure that the Group’s corporate objectives are achieved within acceptable risk appetite. The review covers responses to significant risks identified including non-compliance with applicable laws, rules, regulations and guidelines and provides assurance to the Board that processes put in place continue to operate adequately and effectively. As the business risk profile changes, new area are introduced in the risk management process.

Key business risks are documented in the risk profile that addresses risks to the achievement of strategic, financial and operational objectives. The risk profile lists all identified risks and thereafter assesses the likelihood of occurring and its quantitative and qualitative impact to the Group. It also lists controls and measures used to monitor and mitigate those risks.

Risks that are likely or almost certain to occur and have major or catastrophic impact (“Principal Risks”) are specially assessed to ascertain measures taken to monitor and mitigate the risks are adequate and effective and are reported to the Audit Committee.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

Set out below is the Board of Directors’ (“the Board”) Statement on Risk Management and Internal Control for WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) and its subsidiaries (“the Group”), made in compliance with Paragraph 15.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad and the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers.


35

The main identified Principal Risks during the financial year are as follows:

(a) Uncertainty of highway alignment

Delay in obtaining final alignment consensus from the Authorities.

To mitigate this risk, the Group liaise closely with Kementerian Kerja Raya Malaysia (KKR), Lembaga Lebuhraya Malaysia (LLM) and relevant State Authorities in ensuring compliance with both State and Federal laws and regulations.

(b) Delay in land acquisition and land acquisition cost overrun

The West Coast Expressway Project (Project) stretches 233 km and may face delays in land acquisition.

To mitigate these risks, among others, the Group liaise closely with Jabatan Ketua Pengarah Tanah dan Galian (JKPTG) to identify available replacement lands for malay reserve land that are subject to acquisition for the Project.

The Group regularly monitors the land acqusition expenditure against available budget to ascertain funding adequacy and if required will apply to the Government of Malaysia for re-allocation of project funds to be utilised for land acquisition.

(c) Delay in approval from Government Agencies

The development of the Project inevitably requires the involvement and approval of various Government agencies such as KKR, LLM, Ministry of Finance, Unit Kerjasama Awam Swasta and JKPTG, in addition to State agencies. The approval requirements may delay progress of Project.

To mitigate this risk, management had an on-going measure to minimise the possibility of applications being delayed or rejected by government agencies, amongst others:(i) obtaining prioritised submission, review and approval from government agencies,(ii) liaise with Engineering Consultant, Independent Checking Engineer and LLM to iron-out issues to expedite approval, and(iii) regular meetings being held with various parties to discuss project issues.

(d) Health and Safety Risk Despite construction activities of the Project being contracted to third parties, management is ever conscientious of health and safety of workers and public at Project sites.

To mitigate this risk, amongst others, management have in place the following controls:(i) increased frequency of safety audit to evaluate the effectiveness of contractor’s safety effort,(ii) work procedures are refined from time to time to minimise gap between procedures and practices, and(iii) more safety trainings

INTERNAL AUDIT’S RESPONSIBILITIES

The Group’s internal audit service is outsourced to a professional firm that performs reviews of business processes to assess the effectiveness of internal controls and reports to the Audit Committee. The internal audit provides an assessment as to whether risk, which may hinder the Group from achieving its objectives, are being adequately evaluated, managed and controlled or mitigated. It also evaluates the system of internal control and effectiveness of governance in accordance with the approved annual internal audit plan.

OTHER KEy ELEMENTS OF RISK MANAGEMENT AND INTERNAL CONTROL

1. Operational organisation structure with defined lines of responsibilities and delegation of authority which facilitates a process of reporting and provides for a documented and auditable trail of accountability;

2. Management reports, which are presented by the respective division heads to the Management Committee, provides financial information, including information of significant changes in accounting standards and reporting;

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont’d)

36 WCE HOLDINGS


Berhad)

3. Executive Committee meetings convened to discuss the Group’s operations and performance. The meetings enable the monitoring of results against budget, with significant variance explained and appropriate action taken;

4. Defined limits of authority for various transactions, including purchasing and payments;

5. Standing Instructions and Standard Operating Procedures are reviewed and updated as and when necessary to ensure effective management of the Group’s operations; and

6. Review of quarterly financial results by the Audit Committee and the Board.

ASSOCIATES

The Statement on Risk Management and Internal Control does not deal with the associates as the Group does not have management control over their operations.

JOINT VENTURE

The Statement on Risk Management and Internal Control does not cover the joint venture as the joint venture is jointly controlled by the Group and another joint venture partner. In respect of the joint venture entered by the Group, the Management of the joint venture, which consists of representation from the Group and the other joint-venture partner, are responsible to oversee the administration, operation and performance of the joint venture. Financial and operational reports of this joint venture are provided monthly to the Management of the Group.

BOARD’S COMMITMENT

The Board recognises that the Group operates in a dynamic business environment in which the risk management and internal control system must be responsive in order to be able to support its business objectives. To this end, the Board remains committed towards maintaining a sound system of Risk Management and Internal Control and believe that a balanced achievement of its business objectives and operational efficiency can be attained.

REVIEW OF STATEMENT By ExTERNAL AUDITORS

The external auditors have performed a limited assurance engagement on the Statement on Risk Management and Internal Control for inclusion in the Annual Report of the Company for the financial year ended 31 March 2017 pursuant to the scope set out in the Recommended Practice Guide 5 (Revised): Guidance for Auditors on Engagements to Report on the Statement on Risk management and Internal Control, issued by Malaysia Institute of Accountants and reported that nothing has come to their attention that would cause them to believe that the Statement is not prepared, in all material aspects, in accordance with the disclosures required by paragraph 41 and 42 of the “Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers” nor is the same factually inaccurate.

CONCLUSION

The Board is pleased to report that it has received the assurance from the Chief Executive Officer and the Chief Financial Officer that the Group’s Risk Management and Internal Control system is operating adequately and effectively in all material aspects.

The Board is of the view that the Risk Management and Internal Control system is adequate and effective and there were no material weakness in the system of internal control during the financial year that would have material adverse effect on the results of the Group for the period under review. The Board will continue to take measures to strengthen the internal control environment to safeguard shareholders’ investment and the Group’s asset.

This Statement is approved by the Board on 29 June 2017.


37

COMPOSITION

Members of the Committee Designation

1. Datuk Oh Chong Peng (Chairman) Independent Non-Executive Director

2. Dato’ Abdul Hamid bin Mustapha Independent Non-Executive Director

3. U Chin Wei Independent Non-Executive Director

4. Tang King Hua Non-Independent Non-Executive Director

AUDIT COMMITTEE REPORT

TERMS OF REFERENCE

The following terms of reference of the Audit Committee and is available on the Company’s website, www.wcehb.com.my.

Constitution

The Audit Committee was established by the Board on 17 July 2003.

Membership

The Committee shall be appointed by the Board of Directors from amongst their numbers and shall consist of not less than 3 members, of whom a majority shall be Independent Directors. An Independent Director shall be one who fulfils the requirement as provided for in the Listing Requirements of Bursa Malaysia Securities Berhad.

At least one member of the Audit Committee must be a member of the Malaysian Institute of Accountants, or if he is not a member of the Malaysian Institute of Accountants, he must have:

n at least 3 years’ working experience and passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967, or

n at least 3 years’ working experience and is a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967, or

n a degree/masters/doctorate in Accounting or Finance and at least 3 years’ post qualification experience in Accounting or Finance, or

n at least 7 years’ experience being a Chief Financial Officer of a corporation, or having the function of being primarily responsible for the management of the financial affairs of a corporation.

The members of the Audit Committee shall elect a Chairman from amongst their number, who shall be an Independent Director. If a member of the Audit Committee resigns, dies or for any other reason ceases to be a member with the result that the number of members is reduced to below 3, the Board of Directors shall, within 3 months of that event, appoint such number of new members as may be required to make up the minimum number of 3 members.

No alternate director can be appointed as a member of the Audit Committee.

Authority

The Audit Committee is granted the authority to investigate any activity of the Company and its subsidiaries within its terms of reference. In particular, the Audit Committee has the authority to:

n have resources, which are required to perform its duties,

n have full and unrestricted access to any information, including any information it requires from any employee, and all employees are directed to co-operate with any request made by the Audit Committee,

n be able to obtain independent professional or other advice, and

n have direct communication channels with the external and internal auditors.

Meetings and Reporting Procedures

The Audit Committee will meet at least four times a year. A quorum for a meeting shall be two members, both being Independent Directors. At least twice a year, the Audit Committee shall meet with the External Auditors without any Executive Directors/Chief Executive Officer being present. The External Auditors may request for a meeting, if they consider necessary.

The Directors and employees will attend any particular Audit Committee Meeting only at the Audit Committee’s invitation, specific to the relevant meeting.

The Company Secretary shall be the secretary of the Audit Committee. Minutes of the meeting shall be duly entered in the books provided therefrom. The minutes will be circulated to all members of the Board of Directors and shall be presented at the Board of Directors’ meeting.

38 WCE HOLDINGS


Berhad)

Duties and Functions

The duties and functions of the Audit Committee shall be:

(i) To consider appointment of external auditors, audit fee, and any questions of resignation or dismissal of external auditors before making recommendation to the Board of Directors;

(ii) To discuss with external auditors before the audit commences, audit plan, nature and scope of the audit and to ensure coordination where more than one audit firms are involved;

(iii) To review the quarterly results and year-end financial statements prior to the approval by the Board of Directors, focusing particularly on:

n any changes in accounting policies and practices,

n significant and unusual events,

n the going concern assumption, and

n compliance with accounting standards, stock exchange and legal requirements.

(iv) To review any related party transaction and conflict of interest situation that may arise in the Company including any transaction, procedure or course of conduct that raises questions of management integrity;

(v) To discuss problems and reservations arising from the interim and final audits, and matters the auditors may wish to discuss (in the absence of management where necessary);

(vi) In relation to Internal Audit function/service:

n to review the adequacy of the scope, functions, competency and resources of the internal audit function/service that it has the necessary authority to carry out its work;

n to review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function/service;

n to review any appraisal or assessment of the performance of members of the internal audit function/service;

n to approve any appointment or termination of senior staff members of the internal audit function/service; and

n to take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reason for resigning.

(vii) To keep under review the effectiveness of Internal Control system and in particular review External Auditors’ management letter and management’s response;

(viii) To review the audit reports;

(ix) To review the reports of the Risk Management Committee;

(x) To make periodic report to the Board of Directors summarizing the work performed in fulfilling the Audit Committee’s primary responsibilities; and

(xi) To consider other topics, as defined by the Board of Directors.

ATTENDANCE AT AUDIT COMMITTEE MEETINGS

During the financial year ended 31 March 2017, there were five (5) Audit Committee Meetings held and the number of meetings attended by each Audit Committee member are as follows:

Audit Committee Members Number of Meetings Attended

1. Datuk Oh Chong Peng (Chairman) 5 out of 5

2. Dato’ Abdul Hamid bin Mustapha 5 out of 5

3. U Chin Wei 5 out of 5

4. Tang King Hua 4 out of 5

REVIEW OF THE AUDIT COMMITTEE

An annual assessment and evaluation on the performance and effectiveness of the Audit Committee was undertaken by the Board of Directors for the financial year ended 31 March 2017. The Audit Committee was assessed based on four (4) key areas, namely effectiveness and quality, internal and external audit, risk management and internal control and financial reporting, to determine whether the Audit Committee had carried out its duties in accordance with its terms of reference.

SUMMARy OF AUDIT COMMITTEE ACTIVITIES

During the financial year ended 31 March 2017, the Audit Committee carried out its duties, amongst others, in accordance with its terms of reference, as follows:

(i) Reviewed the quarterly financial results prior to recommending them for consideration and approval by the Board of Directors;

(ii) Reviewed and discussed with the External Auditors the audit planning memorandum before commencement of the year end audit;

(iii) Reviewed and discussed with External Auditors’ findings during the course of their audit and Management’s response, including having two confidential private sessions with the External Auditors;

(iv) Reviewed the Annual Audited Financial Statements and recommend for approval by the Board of Directors;

(v) Reviewed and deliberated the Recurrent Related Party Transactions;

(vi) Reviewed and approved the appointment of outsourced professional firm engaged to assist the Risk Management Committee to perform Enterprise Risk Managements review and Internal Audit Services;

(vii) Reviewed and deliberated the Internal Audit reports; and

(viii) Reviewed Risk Management report by the Risk Management Committee.


39

Financial Reporting

In overseeing the Company’s financial reporting, the AC reviewed the quarterly financial statements and the annual audited financial statements. The quarterly financial statements for the first, second, third and fourth quarters ended 31 March 2017 were prepared in compliance with the Malaysian Financial Reporting Standards (“MRFS”) 134 Interim Financial Reporting, International Accounting Standards 34 Interim Financial Reporting and paragraph 9.22, including Appendix 9B of the Main Market Listing Requirement (“MMLR”), were reviewed at the AC meetings on 22 August 2016, 23 November 2016, 20 February 2017 and 22 May 2017 respectively.

On 29 June 2017, the AC reviewed the annual audited financial statements for financial year ended 31 March 2017.

In all of the deliberations, the Chief Financial Officer had given the following assurances to the AC:

(a) Appropriate accounting policies had been adopted and applied consistently,

(b) The going concern basis applied in the Interim Financial Statements and Annual Financial Statements was appropriate,

(c) Prudent judgement and reasonable estimates had been made in accordance with the requirement set out in the MFRSs,

(d) Adequate processes and controls were in place for effective and efficient financial reporting and disclosures under the MFRSs and MMLR, and

(e) The Interim Financial Statements and Annual Financial Statements did not contain material misstatements and gave a true and fair view of the financial position of the Company and Group.

External Audit (EA)

On 23 November 2016, the AC reviewed the EAs’ Audit Planning Memorandum (APM) for the audit for the financial year ending 31 March 2017 outlining the scope of their audit work including other related services such as Review of Statement on Risk Management and Internal Controls and Review of Supplementary Information on Realised and Unrealised Profits or Losses. The APM also provided an explicit assurance to the AC that the EA have complied with the requirements for independence in accordance with the terms of all relevant professional and regulatory requirements. In addition to the above, the APM also contain information on the status of Malaysian Accounting Standards Board’s Approved Accounting Standards, Capital Market Developments and New Independent Auditor’s Report applicable to the Group and Company.

On 22 May 2017, the AC reviewed the EAs’ Audit Review Memorandum (ARM) for the financial year ended 31 March 2017 detailing the status, findings and outstanding matters of the annual audit. The ARM also provided an explicit assurance to the AC that the EA have complied with the requirements for independence in accordance with the terms of all relevant professional and regulatory requirements.

On 29 June 2017, the AC reviewed the Audited Financial Statements (AFS) for the financial year ended 31 March 2017. At the invitation of the AC, the EA and management briefed the AC salient points of the AFS and the key audit matters (KAMs) stated in the Independent Auditors’ Report to the Members of the Company.

The AC deliberated on the KAMs and are satisfied the audit procedures carried out by the EA is sufficient. In addition, the AC opines that significant judgements and estimates provided by senior management to the Board of Directors and the EA were sound and resonable. Therefore, the AC recommended the AFC to the Board for approval.

For the financial year ended 31 March 2017, the AC had two private meetings with the EA without the presence of chief executive officer, senior management and company secretaries.

INTERNAL AUDIT SERVICE

The Audit Committee is supported by the Internal Audit service provided by an independent professional service provider. The Committee is aware of the fact that the Internal Audit Service is essential to assist in obtaining assurance regarding the effectiveness of the system of Internal Control in the Group.

The primary objective of the Internal Audit service is to review the effectiveness of the system of internal control and this is performed with impartiality, proficiency and with due professional care. The Internal Audit Service enables the Audit Committee to discharge its duties by undertaking independent regular and systematic reviews of the system of internal control, so as to provide reasonable assurance that such system continue to operate satisfactorily and effectively.

The internal audit approach was risk based and in compliance with the IIA Standard. During the financial year, the internal audit service carried out two internal audit assessments on West Coast Expressway Sdn Bhd. The internal audit service assessed key internal controls for processes and key associated risks in the following areas:

(a) Human Resource, focusing on staff competency assessment, manpower planning, recruitment and resignation and payroll management;

(b) Project, focusing on stakeholders management, health and safety management, project management, environmental impact monitoring, assessment on availability of equipment and land acquisition, and

(c) Payment processes.

The internal audit reports were deliberated at AC and remedial actions have been taken by management on the identified risks.

Total cost incurred in respect of internal audit services during the financial year ended 31 March 2017 was RM49,000.

AUDIT COMMITTEE REPORT (cont’d)

40 WCE HOLDINGS


Berhad)

FINANCIAL STATEMENTS42 Directors’ Report

47 Statements of Financial Position

49 Statements of Comprehensive Income

51 Statements of Changes in Equity

53 Statements of Cash Flows

55 Notes to The Financial Statements

126 Supplementary Informationon The Breakdown of Realised and Unrealised Profits or Losses

127 Statement by Directors

128 Statutory Declaration

129 Independent Auditors’ Report

The directors hereby submit their report together with the audited financial statements of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“the Company”) and its subsidiaries (“the Group”) for the financial year ended 31 March 2017.

PRINCIPAL ACTIVITIES

The Company is principally involved in investment holding. The principal activities of its subsidiaries and associates are disclosed in Note 8 and Note 9 to the financial statements.

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

RESULTS

Group Company RM’000 RM’000

Profit for the financial year, net of tax- Continuing operations 38,127 16,354 - Discountinued operation (3,019) -

35,108 16,354

Profit/(loss) attributable to:Owners of the Company 35,156 16,354 Non-controlling interests (48) -

35,108 16,354

DIVIDEND

No dividend was paid or declared by the Company since the end of the previous financial year.

The directors do not recommend the payment of any dividend in respect of the financial year ended 31 March 2017.

RESERVES AND PROVISIONS

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

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were prepared, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances which would render the amount written off for bad debts or the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent.

DIRECTORS’ REPORT

42 WCE HOLDINGS


Berhad)

CURRENT ASSETS

Before the financial statements of the Group and of the Company were prepared, the directors took reasonable steps to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their values as shown in the accounting records of the Group and of the Company had been written down to an amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

VALUATION METHODS

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

CONTINGENT AND OTHER LIABILITIES

At the date of this report, there does not exist:

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; and

(ii) any contingent liabilities in respect of the Group or of the Company which has arisen since the end of the financial year.

In the opinion of the directors, no contingent or other liability of the Group or of the Company has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations as and when they fall due.

CHANGE OF CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

ITEMS OF MATERIAL AND UNUSUAL NATURE

In the opinion of the directors,

(i) the results of the operations of the Group and of the Company for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

ISSUE OF SHARES AND DEBENTURES

During the financial year, no new issue of shares or debentures were made by the Company.

OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up the unissued shares of the Company during the financial year.


43

WARRANTS

On 3 September 2014, the Company allotted and issued 214,871,911 warrants which were constituted under the Deed Poll dated 16 July 2014.

Salient features of the above warrants are as follows:

(i) each of the warrant entitles the holder to the right of exercise of one ordinary share in the Company. The number of warrants is subject to adjustments under certain circumstances in accordance with the provisions of Deed Poll;

(ii) the warrants may be exercised any time over a period of two (2) years including and commencing from the issue date of the warrants. Any warrants not exercised during the Exercise Period will thereafter lapse and become void;

(iii) the new ordinary shares allotted and issued upon exercise of the warrants shall be fully paid and rank pari passu with the existing ordinary shares of the Company. The warrant holders will not have any voting rights in any general meeting of the Company unless the warrants are exercised into new ordinary shares and registered prior to the date of the general meeting of the Company; and

(iv) each warrant entitles its holder the right to subscribe for one ordinary share of RM1 each in the Company at any time up to the expiry date of 26 August 2016 at an exercise price of RM1.18 each payable in cash.

On 26 August 2016, the warrants had expired and lapsed in accordance with the deed poll.

The movement in the warrants during the financial year are as follows:

Number of warrants At At 1.4.2016 Exercised Lapsed 31.3.2017

Warrants 214,871,911 - 214,871,911 -

DIRECTORS

The directors in office during the financial year and during the period from the end of the financial year to the date of the report are:

Dato’ Abdul Hamid bin Mustapha

Datuk Oh Chong Peng

U Chin Wei

Lee Chun Fai

Tang King Hua

Datuk Ir. Hamzah bin Hasan

Tan Sri Pang Tee Chew

Vuitton Pang Hee Cheah (Alternate director to Tan Sri Pang Tee Chew)

DIRECTORS’ REPORT (cont’d)

44 WCE HOLDINGS


Berhad)

DIRECTORS’ INTERESTS

According to the Register of Directors’ shareholdings required to be kept by the Company under Section 59 of the Companies Act 2016 in Malaysia, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:

Number of ordinary shares At At 1.4.2016 Bought Sold 31.3.2017

The Company

Direct interestU Chin Wei 30,000 - - 30,000 Tan Sri Pang Tee Chew 35,000 - - 35,000 Tang King Hua 350,000 - - 350,000

Indirect interestU Chin Wei 11,500 - - 11,500#Tan Sri Pang Tee Chew 93,415,100 - - 93,415,100^

Number of warrants At At 1.4.2016 Bought Sold Lapsed 31.3.2017

The Company

Direct interestTan Sri Pang Tee Chew 7,500 - - 7,500 -

Indirect interestTan Sri Pang Tee Chew 20,148,800 - 10,048,800 10,100,000 -^

# Deemed interested in the shares held by his spouse, Madam Goh Siew Thing by virtue of Section 59(11)(c) of the Companies Act 2016 in Malaysia.^ Deemed interested in the shares held by United Frontiers Holdings Limited by virtue of Section 8(4) of the Companies Act 2016 in Malaysia.

Other than as stated above, none of the other directors in office at the end of the financial year had any interest in shares of the Company and its related corporations during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable, by the directors as disclosed in Directors’ Remuneration and Note 32 to the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest.

Neither during, nor at the end of the financial year, was the Company a party to any arrangements where the object is to enable the directors to acquire benefits by means of the acquisition of shares in, or debentures of the Company or any other body corporate.


45

DIRECTORS’ REMUNERATION

Group Company RM’000 RM’000

Directors’ fees 885 885 Directors’ other emoluments 1,738 - Benefits-in-kind 24 -

SUBSIDIARIES

The details of the Company’s subsidiaries are disclosed in Note 8 to the financial statements.

AUDITORS’ REMUNERATION

The details of the auditors’ remuneration are disclosed in Note 25 to the financial statements.

AUDITORS

The auditors, Messrs. Baker Tilly Monteiro Heng, have expressed their willingness to continue in office.

This report was approved and signed on behalf of the Board of Directors in accordance with a resolution of the directors:

DATO’ ABDUL HAMID BIN MUSTAPHADirector

DATUK OH CHONG PENGDirector

Kuala Lumpur29 June 2017

DIRECTORS’ REPORT (cont’d)

46 WCE HOLDINGS


Berhad)

STATEMENTS OF FINANCIAL POSITIONAs At 31 March 2017

Group Company 2017 2016 2017 2016 Note RM’000 RM’000 RM’000 RM’000

ASSETSNon-current assetsProperty, plant and equipment 5 3,119 10,581 162 190 Goodwill on consolidation 6 5,369 5,369 - - Infrastructure development expenditure 7 1,591,843 691,411 - - Investment in subsidiaries 8 - - 160,746 163,931 Investment in associates 9 96,946 73,219 - - Other investment 10 - - 64,800 -

Total non-current assets 1,697,277 780,580 225,708 164,121

Current assetsInventories 11 - 2,151 - - Trade receivables, other receivables and prepayments 12 113,858 78,166 373,816 360,575 Tax recoverable 145 1,046 - - Other investments 10 78,109 109,017 77,697 108,618 Deposits placed with licensed banks 13 1,004,602 1,296,751 25,770 1,500 Cash and bank balances 49,339 4,709 976 478

1,246,053 1,491,840 478,259 471,171 Former associate classified as non-current asset held for sale 14 - 85,470 - 85,470

Total current assets 1,246,053 1,577,310 478,259 556,641

TOTAL ASSETS 2,943,330 2,357,890 703,967 720,762


47


Equity attributable to the owners of the CompanyShare capital 15 1,045,081 1,002,736 1,045,081 1,002,736 Reserves 16 (359,421) (352,761) (444,825) (418,834)

Equity attributable to the owners of the Company 685,660 649,975 600,256 583,902 Non-controlling interests 39,305 42,964 - -

Total equity 724,965 692,939 600,256 583,902

Non-current liabilitiesDeferred tax liabilities 17 3,749 1,683 300 - Deferred income 18 286,162 120,294 - - Loans and borrowings 19 1,619,853 1,109,131 - -

Total non-current liabilities 1,909,764 1,231,108 300 -

Current liabilitiesTrade and other payables 20 307,176 427,096 68,461 88,561 Amount due to customers for contract works 21 - - 33,560 48,299 Loans and borrowings 19 - 6,625 - - Tax payable 1,425 122 1,390 -

Total current liabilities 308,601 433,843 103,411 136,860

Total liabilities 2,218,365 1,664,951 103,711 136,860

TOTAL EQUITY AND LIABILITIES 2,943,330 2,357,890 703,967 720,762

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

STATEMENTS OF FINANCIAL POSITION (cont’d)

As At 31 March 2017

48 WCE HOLDINGS


Berhad)

Group Company 2017 2016 2017 2016 Note RM’000 RM’000 RM’000 RM’000 (Restated) Continuing operations Revenue 22 817,489 529,335 233,492 122,073 Cost of sales 23 (799,458) (524,222) (217,103) (122,073)

Gross profit 18,031 5,113 16,389 - Other income 9,406 17,353 9,261 16,549 Administrative expenses (4,827) (5,226) (3,996) (3,905)

Operating profit 22,610 17,240 21,654 12,644 Other expenses (2,164) (7,046) (1,164) (7,199)Finance costs 24 (1,642) (3,221) (1,445) (2,033)Share of results of associates, net of tax 23,727 23,026 - -

Profit before taxation 25 42,531 29,999 19,045 3,412 Taxation 26 (4,404) (2,030) (2,691) -

Profit for the financial year from continuing operations 38,127 27,969 16,354 3,412 Discontinued operation Loss for the financial year from discontinued operation, net of tax 27 (3,019) (209) - -

Profit for the financial year 35,108 27,760 16,354 3,412 Other comprehensive income, net of tax Item that may be reclassified subsequently to profit or loss - Reclassification adjustment of foreign exchange reserve 529 - - -

Total comprehensive income for the financial year 35,637 27,760 16,354 3,412

STATEMENTS OF COMPREHENSIVE INCOME For The Financial Year Ended 31 March 2017


49

Group Company 2017 2016 2017 2016 Note RM’000 RM’000 RM’000 RM’000 (Restated)

Profit for the financial year attributable to: Owners of the Company - From continuing operations 38,385 27,067 16,354 3,412 - From discontinued operation (3,229) (173) - -

35,156 26,894 16,354 3,412 Non-controlling interests - From continuing operations (258) 902 - - - From discontinued operation 210 (36) - -

(48) 866 - -

35,108 27,760 16,354 3,412

Total comprehensive income for the financial year attributable to: Owners of the Company - From continuing operations 38,914 27,067 16,354 3,412 - From discontinued operation (3,229) (173) - -

35,685 26,894 16,354 3,412 Non-controlling interests - From continuing operations (258) 902 - - - From discontinued operation 210 (36) - -

(48) 866 - -

35,637 27,760 16,354 3,412

Earnings/(loss) per ordinary share (sen) Basic earnings/(loss) per ordinary share - from continuing operations 28 3.83 2.69 - from discontinued operations 28 (0.32) (0.02)

3.51 2.67

Diluted earnings/(loss) per ordinary share - from continuing operations 28 3.83 2.69 - from discontinued operations 28 (0.32) (0.02)

3.51 2.67

STATEMENTS OF COMPREHENSIVE INCOME (cont’d)

For The Financial Year Ended 31 March 2017


50 WCE HOLDINGS


Berhad)

Attributable to owners of the Company Foreign Exchange Reserve Classified Non- Share Share Warrant as Held Accumulated controlling Total Capital Premium Reserve for Sale Losses Total Interests EquityGroup Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2015 1,002,736 42,345 51,569 (529) (473,040) 623,081 42,098 665,179 Total comprehensive income

for the financial yearProfit for the financial year - - - - 26,894 26,894 866 27,760

Total comprehensive income - - - - 26,894 26,894 866 27,760

At 31 March 2016 1,002,736 42,345 51,569 (529) (446,146) 649,975 42,964 692,939 Total comprehensive income

for the financial yearProfit/(loss) for the financial year - - - - 35,156 35,156 (48) 35,108 Other comprehensive income:- Reclassification adjustment of

foreign exchange reserve - - - 529 - 529 - 529

Total comprehensive income/(loss) - - - 529 35,156 35,685 (48) 35,637

Transactions with owners:Transition to no-par value regime 15 42,345 (42,345) - - - - - - Expiry of warrants 16 - - (51,569) - 51,569 - - - Disposal of subsidiary 8 - - - - - - (2,107) (2,107)Dividend paid on shares by subsidiary - - - - - - (1,504) (1,504)

Total transactions with owners 42,345 (42,345) (51,569) - 51,569 - (3,611) (3,611)

At 31 March 2017 1,045,081 - - - (359,421) 685,660 39,305 724,965

STATEMENTS OF CHANGES IN EQUITYFor The Financial Year Ended 31 March 2017


51

Non-distributable Share Share Warrant Accumulated Total Capital Premium Reserve Losses EquityCompany Note RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2015 1,002,736 42,345 51,569 (516,160) 580,490 Total comprehensive income

for the financial yearProfit for the financial year - - - 3,412 3,412

Total comprehensive income - - - 3,412 3,412

At 31 March 2016 1,002,736 42,345 51,569 (512,748) 583,902 Total comprehensive income

for the financial yearProfit for the financial year - - - 16,354 16,354

Total comprehensive income - - - 16,354 16,354 Transaction with owners:Transition to no-par value regime 42,345 (42,345) - - - Expiry of warrants - - (51,569) 51,569 -

Total transactions with owners 42,345 (42,345) (51,569) 51,569 -

At 31 March 2017 1,045,081 - - (444,825) 600,256

STATEMENTS OF CHANGES IN EQUITY (cont’d)



52 WCE HOLDINGS


Berhad)

STATEMENTS OF CASH FLOWSFor The Financial Year Ended 31 March 2017


CASH FLOWS FROM OPERATING ACTIVITIES:Profit before taxation - Continuing operations 42,531 29,999 19,045 3,412 - Discontinued operation (2,737) (350) - -

39,794 29,649 19,045 3,412 Adjustments for:

Depreciation of property, plant and equipment 313 360 28 28 Distribution income from unit trusts (4,898) (5,374) (4,885) (4,857)Dividend income from a subsidiary - - (6,429) - Fair value gain on other investments - (2,153) - (1,933)Loss/(gain) on disposal of subsidiaries 3,866 - (2,187) - Loss on disposal of an associate 1,457 - 928 - Impairment loss on property, plant and equipment 231 - - - Impairment loss on receivablestrade and other receivables - 6,940 - 6,891 - subsidiaries - - 209 280 Impairment loss on receivables no longer required - -* (6) - Profit arising from IC Interpretation 12

Service Concession Arrangements (18,491) (5,233) - - Gain on disposal of property, plant and equipment (40) - - - Reversal of write down of a former associate classified

as non-current asset held for sale - (6,965) - (6,965)Interest income:- deposits with licensed banks (672) (1,328) (658) (1,256)- murabahah stocks from subsidiary - - (1,250) - Interest expenses 1,642 3,221 1,445 2,033 Share of results of associates (23,727) (23,026) - - Waiver of debt (197) (8) (197) -

Operating (loss)/profit before changes in working capital (722) (3,917) 6,043 (2,367)

Changes In Working Capital:Inventories 346 (18) - - Receivables (3,245) (2,288) 46,073 (125,743)Payables (1,975) 10,095 (17,876) 78,004 Balances with customers for contract works - - (14,739) 48,299

Cash flows (used in)/from operations (5,596) 3,872 19,501 (1,807)Income tax paid (1,381) (1,394) (1,001) - Income tax refunded - 66 - -

Net cash (used in)/from operating activities (6,977) 2,544 18,500 (1,807)


53


CASH FLOWS FROM INVESTING ACTIVITIES:Additions to property, plant and equipment (573) (1,158) - (9)Additions to infrastructure development expenditure 7 (1,001,393) (196,955) - - Interest received 672 216 658 144 Subcription of Murabahah loan stocks of a subsidiary - - (64,800) - Net change in amount owing by subsidiaries - - (22,494) (208,019)Net change in amount owing by associates 152 (43) 2,227 (203)Proceeds from other investments 39,984 296,764 39,984 208,111 Proceeds from disposal of a subsidiary 5,372 - 5,372 - Proceeds from disposal of an associate 42,364 - 42,364 - Proceeds from disposal of property, plant and equipment 40 - - - Upliftment/(Placement) of fixed deposits 941,567 (946,185) - -

Net cash from/(used in) investing activities 28,185 (847,361) 3,311 24

CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of bonds - 1,000,000 - - Drawdown of government support loan 400,000 250,000 - - Drawdown of term loan 284,755 39,161 - - Issuance of murabahah loan stocks 16,200 - - - Dividend paid to minority shareholders of a subsidiary (1,504) - - - Transaction costs of financing facilities (23,553) (99,370) - - Interest paid (77) (1,182) (77) - Net change in amount owing to subsidiaries - - 3,034 (710)

Net cash from/(used in) financing activities 675,821 1,188,609 2,957 (710)

NET CHANGE IN CASH AND CASH EQUIVALENTS 697,029 343,792 24,768 (2,493)CASH AND CASH EQUIVALENTS

AT THE BEGINNING OF THE FINANCIAL YEAR 352,927 9,135 1,978 4,471

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 1,049,956 352,927 26,746 1,978

ANALYSIS OF CASH AND CASH EQUIVALENTS:Deposits placed with licensed banks 1,004,602 1,296,751 25,770 1,500 Cash and bank balances 49,339 4,709 976 478 Bank overdrafts 19 - (2,348) - - Less:Deposits with maturity of more than 3 months (3,985) (946,185) - -

1,049,956 352,927 26,746 1,978

* Represent amount less than RM1,000


STATEMENTS OF CASH FLOWS (cont’d)


54 WCE HOLDINGS


Berhad)

NOTES TO THE FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

WCE Holdings Berhad (formerly knowns as Kumpulan Europlus Berhad) (“the Company”) is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur. The principal place of business of the Company is 37-2, No. 8, Jalan Anggerik Vanilla BE 31/BE, Kota Kemuning, Seksyen 31, 40460 Shah Alam, Selangor Darul Ehsan.

The Company changed its name from Kumpulan Europlus Berhad to WCE Holdings Berhad on 6 September 2016.

The Company is principally involved in investment holding. The principal activities of its subsidiaries and associates are disclosed in Note 8 and Note 9 to the financial statements.

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

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 29 June 2017.

2. BASIS OF PREPARATION

2.1 Statement of Compliance

The financial statements of the Group and of the Company have been prepared in accordance with the Financial Reporting Standards (“FRSs”) and the requirements of the Companies Act 2016 in Malaysia.

2.2 Basis of measurement

The financial statements of the Group and of the Company have been prepared under the historical cost basis, except as disclosed in the significant accounting policies in Note 3 to the financial statements.

2.3 Use of estimates and judgement

The preparation of financial statements in conformity with FRSs requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses during the reported period. It also requires directors to exercise their judgement in the process of applying the Group’s and the Company’s accounting policies. Although these estimates and judgement are based on the directors’ best knowledge of current events and actions, actual results may differ.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4 to the financial statements.

2.4 Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency at the primary economic environment in which they operate (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency, and has been rounded to the nearest thousand, unless otherwise stated.


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2. BASIS OF PREPARATION (cont’d)

2.5 Adoption of amendments/improvements to FRSs

The Group and the Company have adopted the following amendments/improvements to FRSs that are mandatory for the current financial year:

Amendments/Improvements to FRSs

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

FRS 7 Financial Instruments: Disclosures

FRS 10 Consolidated Financial Statements

FRS 11 Joint Arrangements

FRS 12 Disclosure of Interests in Other Entities

FRS 14 Regulatory Deferral Accounts

FRS 101 Presentation of Financial Statements

FRS 116 Property, Plant and Equipment

FRS 119 Employee Benefits

FRS 127 Separate Financial Statements

FRS 128 Investments in Associates and Joint Ventures

FRS 134 Interim Financial Reporting

FRS 138 Intangible Assets

The adoption of the above amendments/improvements to FRSs did not have any significant effect on the financial statements of the Group and of the Company, and did not result in significant changes to the Group’s and the Company’s existing accounting policies.

2.6 New FRS, amendments/improvements to FRSs and new IC Interpretation (“IC Int”) that have been issued, but yet to be effective

The Group and the Company have not adopted the following new FRS, amendments/improvements to FRSs and new IC Int that have been issued, but yet to be effective:

Effective for financial periods beginning on or after

New FRS

FRS 9 Financial Instruments 1 January 2018

Amendments/Improvements to FRSs

FRS 1 First-time Adoption of FRSs 1 January 2018

FRS 2 Share-based Payment 1 January 2018

FRS 4 Insurance Contracts 1 January 2018

FRS 10 Consolidated Financial Statements Deferred

FRS 12 Disclosure of Interests in Other Entities 1 January 2017

FRS 107 Statement of Cash Flows 1 January 2017

FRS 112 Income Taxes 1 January 2017

FRS 128 Investments in Associates and Joint Ventures 1 January 2018/Deferred

FRS 140 Investment Property 1 January 2018

NOTES TO THE FINANCIAL STATEMENTS (cont’d)

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2.6 New FRS, amendments/improvements to FRSs and new IC Interpretation (“IC Int”) that have been issued, but yet to be effective (cont’d)

New IC Int

IC Int 22 Foreign Currency Transactions And Advance Consideration 1 January 2018

A brief discussion on the above significant new FRS, amendments/improvements to FRSs and new IC Int are summarised below. Due to the complexity of these new FRS, amendments/improvements to FRSs and new IC Int, the financial effects of their adoption are currently still being assessed by the Group and the Company.

FRS 9 Financial Instruments

Key requirements of FRS 9:-

• FRS9introducesanapproachforclassificationoffinancialassetswhichisdrivenbycashflowcharacteristicsandthebusinessmodel in which an asset is held. The new model also results in a single impairment model being applied to all financial instruments.

In essence, if a financial asset is a simple debt instrument and the objective of the entity’s business model within which it is held is to collect its contractual cash flows, the financial asset is measured at amortised cost. In contrast, if that asset is held in a business model the objective of which is achieved by both collecting contractual cash flows and selling financial assets, then the financial asset is measured at fair value in the statements of financial position, and amortised cost information is provided through profit or loss. If the business model is neither of these, then fair value information is increasingly important, so it is provided both in the profit or loss and in the statements of financial position.

• FRS9introducesanew,expected-lossimpairmentmodelthatwillrequiremoretimelyrecognitionofexpectedcreditlosses.Specifically, this Standard requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a more timely basis. The model requires an entity to recognise expected credit losses at all times and to update the amount of expected credit losses recognised at each reporting date to reflect changes in the credit risk of financial instruments. This model eliminates the threshold for the recognition of expected credit losses, so that it is no longer necessary for a trigger event to have occurred before credit losses are recognised.

• FRS 9 introduces a substantially-reformedmodel for hedge accounting, with enhanced disclosures about riskmanagementactivity. The new model represents a significant overhaul of hedge accounting that aligns the accounting treatment with risk management activities, enabling entities to better reflect these activities in their financial statements. In addition, as a result of these changes, users of the financial statements will be provided with better information about risk management and the effect of hedge accounting on the financial statements.


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2. BASIS OF PREPARATION (CONT’D)


Amendments to FRS 107 Statement of Cash Flows

Amendments to FRS 107 require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including changes from cash flows and non-cash changes. The disclosure requirement could be satisfied in various ways, and one method is by providing reconciliation between the opening and closing balances in the statement of financial position for liabilities arising from financing activities.

Amendments to FRS 112 Income Taxes

Amendments to FRS 112 clarify that decreases in value of debt instrument measured at fair value for which the tax base remains at its original cost give rise to a deductible temporary difference. The estimate of probable future taxable profits may include recovery of some of an entity’s assets for more than their carrying amounts if sufficient evidence exists that it is probable the entity will achieve this.

The amendments also clarify that deductible temporary differences should be compared with the entity’s future taxable profits excluding tax deductions resulting from the reversal of those deductible temporary differences when an entity evaluates whether it has sufficient future taxable profits. In addition, when an entity assesses whether taxable profits will be available, it should consider tax law restrictions with regards to the utilisation of the deduction.

Amendments to FRS 10 Consolidated Financial Statements and FRS 128 Investments in Associates and Joint Ventures

These amendments address an acknowledged inconsistency between the requirements in FRS 10 and those in FRS 128, in dealing with the sale or contribution of assets between an investor and its associate or joint venture.

The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business, as defined in FRS 3. A partial gain or loss is recognised when a transaction involves assets that do not constitute a business.

MASB Approved Accounting Standards, MFRSs

In conjunction with the planned convergence of FRSs with International Financial Reporting Standards as issued by the International Accounting Standards Board on 1 January 2012, the MASB had on 19 November 2011 issued a new MASB approved accounting standards, MFRSs (“MFRSs Framework”) for application in the annual periods beginning on or after 1 January 2012.

The MFRSs Framework is mandatory for adoption by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities subject to the application of MFRS 141 Agriculture and/or IC Int 15 Agreements for the Construction of Real Estate (“Transitioning Entities”). The Transitioning Entities are given an option to defer the adoption of MFRSs Framework and shall apply the MFRSs framework for annual periods beginning on or after 1 January 2018. Transitioning Entities also include those entities that consolidate or equity account or proportionately consolidate another entity that has chosen to continue to apply the FRSs framework for annual periods beginning on or after 1 January 2012.

Accordingly, the Group and the Company which are Transitioning Entities have chosen to defer the adoption of the MFRSs framework. As such, the Group and the Company will prepare their first MFRSs financial statements using the MFRSs framework for financial year ending 31 March 2019. The main effects arising from the transition to the MFRSs Framework are discussed below.

The effect is based on the Group’s and the Company’s best estimates at the reporting date. The financial effects may change or additional effects may be identified, prior to the completion of the Group’s and the Company’s first MFRSs based financial statements.


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MASB Approved Accounting Standards, MFRSs (cont’d)

Application of MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards (“MFRS 1”)

MFRS 1 requires comparative information to be restated as if the requirements of MFRSs have always been applied, except when MFRS 1 allows certain elective exemptions from such full retrospective application or prohibits retrospective application of some aspects of MFRSs.

The Group and the Company are currently assessing the impact of adoption of MFRS 1, including identification of the differences in existing accounting policies as compared to the new MFRSs and the use of optional exemptions as provided for in MFRS 1. As at the date of authorisation of issue of the financial statements, accounting policy decisions or elections have not been finalised. Thus, the impact of adoption of MFRS 1 cannot be determined and estimated reliably until the process is completed.

MFRS 15 Revenue from Contracts with Customers

The core principle of MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with the core principle by applying the following steps:

(i) identify the contracts with a customer;

(ii) identify the performance obligation in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

(v) recognise revenue when (or as) the entity satisfies a performance obligation.

MFRS 15 also includes new disclosures that would result in an entity providing users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers.

The Group is currently assessing the impact of the adoption of this standard.

MFRS 16 Leases

Currently under MFRS 117 Leases, leases are classified either as finance leases or operating leases. A lessee recognises on its statement of financial position assets and liabilities arising from the finance leases.

MFRS 16 eliminates the distinction between finance and operating leases for lessees. All leases will be brought onto its statement of financial position except for short-term and low value asset leases.

The Group is currently assessing the impact of the adoption of this standard.


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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise stated, the following accounting policies have been applied consistently to all the financial years presented in the financial statements of the Group and of the Company.

3.1 Economic Entities and Basis of Consolidation

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

(i) Subsidiaries and business combination

Subsidiaries are entities (including structured entities) over which the Group is exposed, or has rights, to variable returns from its involvement with the acquirees and has the ability to affect those returns through its power over the acquirees.

The financial statements of subsidiaries are included in the consolidated financial statements from the date the Group obtains control of the acquirees until the date the Group losses control of the acquirees.

The Group applies the acquisition method to account for business combination from the acquisition date.

For a new acquisition, goodwill is initially measured at cost, being the excess of the following:

• thefairvalueoftheconsiderationtransferred,calculatedasthesumoftheacquisition-datefairvalueofassetstransferred(including contingent consideration), the liabilities incurred to former owners of the acquiree and the equity instruments issued by the Group. Any amounts that relate to pre-existing relationships or other arrangements before or during the negotiations for the business combination, that are not part of the exchange for the acquire, will be excluded from the business combination accounting and be accounted for separately; plus

• therecognisedamountofanynon-controllinginterestsintheacquireeeitheratfairvalueorattheproportionateshareofthe acquiree’s identifiable net assets at the acquisition date (the choice of measurement basis is made on an acquisition-by-acquisition basis); plus

• ifthebusinesscombinationisachievedinstages,theacquisition-datefairvalueofthepreviouslyheldequityinterestintheacquiree; less

• thenet fair valueof the identifiable assets acquired and the liabilities (including contingent liabilities) assumed at theacquisition date.

The accounting policy for goodwill is set out in Note 3.6 to the financial statements.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

If the business combination is achieved in stages, the Group remeasures the previously held equity interest in the acquiree to its acquisition-date fair value, and recognises the resulting gain or loss, if any, in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss or transferred directly to retained earnings on the same basis as would be required if the acquirer had disposed directly of the previously held equity interest.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, the Group uses provisional fair value amounts for the items for which the accounting is incomplete. The provisional amounts are adjusted to reflect new information obtained about facts and circumstances that existed as of the acquisition date, including additional assets or liabilities identified in the measurement period. The measurement period for completion of the initial accounting ends as soon as the Group receives the information it was seeking about facts and circumstances or learns that more information is not obtainable, subject to the measurement period not exceeding one year from the acquisition date.


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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

3.1 Economic Entities and Basis of Consolidation (cont’d)

(i) Subsidiaries and business combination (cont’d)

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any gain or loss arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an associate, a joint venture, an available-for-sale financial asset or held for trading financial asset.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The difference between the Group’s share of net assets before and after the change, and the fair value of the consideration received or paid, is recognised directly in equity.

(ii) Non-controlling interests

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company and are presented separately in the consolidated statement of financial position within equity.

Losses attributable to the non-controlling interest are allocated to the non-controlling interests even if the losses exceed the non-controlling interest.

(iii) Associates

Associates are entities over which the Group has significant influence, but not control, to the financial and operating policies.

Investment in associates are accounted for in the consolidated financial statements using the equity method.

Under the equity method, the investment in associates are initially recognised at cost. The cost of investment includes transaction costs. Subsequently, the carrying amount is adjusted to recognise changes in the Group’ share of net assets of the associate.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate.

When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of an available-for-sale financial asset or a held for trading financial asset. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to the profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.


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3.1 Economic Entities and Basis of Consolidation (cont’d)

(iv) Joint arrangements

Joint arrangements arise when the Group and another party or parties are bound by a contractual arrangement, and the contractual arrangement gives the Group and the other party or parties, joint control of the arrangement. Joint control exists when there is contractually agreed sharing of control of an arrangement whereby decisions about the relevant activities require the unanimous consent of the parties sharing control.

Joint arrangements are classified and accounted for as follows:

• A jointarrangement isclassifiedasa“jointoperation”whentheGrouphasrights totheassetsandobligations for theliabilities relating to the arrangement.

• Ajointarrangementisclassifiedas“jointventure”whentheGrouphasrightstothenetassetsofthearrangements.

The Group has assessed the nature of its joint arrangement and determined them to be a joint operation. The Group accounts for its share of the assets (including its share of any assets held jointly), the liabilities (including its share of any liabilities incurred jointly), its revenue from sale of its share of the output arising from the joint operation, its shares of the revenue from the sale of output by the joint operation and its expenses (including its share of any expenses incurred jointly).

The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the FRSs applicable to the particular assets, liabilities, revenues and expenses.

Profits and losses resulting from transactions between the Group and its joint operation are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the joint operation.

(v) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity-accounted associates are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

3.2 Separate Financial Statements

In the Company’s statement of financial position, investment in subsidiaries, joint ventures and associates are measured at cost less any accumulated impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs. The policy for the recognition and measurement of impairment losses shall be applied on the same basis as would be required for impairment of non-financial assets as disclosed in Note 3.19(ii) to the financial statements.


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3.3 Financial Instruments

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

Financial instruments are recognised initially at fair value, except for financial instruments not measured at fair value through profit or loss, they are measured at fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial instruments.

(i) Subsequent measurement

The Group and the Company categorise the financial instruments as follows:

(a) Financial assets

Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss when the financial assets is either held for trading, including derivatives or it is designated into this category upon initial recognition.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value with the gain or loss recognised in profit or loss.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at costs.

Loans and receivables

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

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method less accumulated impairment losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.19(i) to the financial statements. Gains and losses are recognised in profit or loss through the amortisation process.

Held-to-maturity investments

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

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method less accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.19(i) to the financial statements. Gains and losses are recognised in profit or loss through the amortisation process.

Available-for-sale financial assets

Available-for-sale financial assets comprise investment in equity and debt securities that are designated as available for sale or are not classified in any of the three preceding categories.

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


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3.3 Financial Instruments (cont’d)

(i) Subsequent measurement (cont’d)

(b) Financial liabilities

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading, including derivatives or financial liabilities designated into this category upon initial recognition.

Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value with the gain or loss recognised in profit or loss.

Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quoted price in an active market for identical instruments whose fair values otherwise cannot be reliably measured are measured at cost.

The Group has not designated any financial liabilities at fair value through profit or loss.

Other financial liabilities

Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss through the amortisation process.

(ii) Financial Guarantee Contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, 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.

(iii) Derecognition

A financial asset or a part of it is derecognised when, and only when, the contractual rights to receive the cash flows from the financial asset expire or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged, cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

(iv) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is presented in the statements of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.


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3.4 Property, Plant and Equipment

(i) Recognition and measurement

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment loss, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.19(ii) to the financial statements.

Cost of assets includes expenditure that are directly attributable to the acquisition of the asset and any other cost that are directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes cost of materials, direct labour, and any other direct attributable costs but excludes internal profit. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs in Note 3.11 to the financial statements.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as a separate items of property, plant and equipment.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the part will flow to the Group or the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss as incurred.

(iii) Depreciation

Freehold land has an unlimited useful life and therefore is not depreciated.

All other property, plant and equipment are depreciated on straight-line basis by allocating their depreciable amounts over their remaining useful lives at the following rates:

Leasehold land 79 - 95 yearsBuildings 2%Renovation 10 - 20%Plant and machinery 10 - 20%Furniture, fixtures and fittings 10 - 20%Office equipment 10 - 50%Motor vehicles 20%

The residual value, useful lives and depreciation methods are reviewed at the end of each reporting period and adjusted as appropriate.

(iv) Derecognition

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


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3.5 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets.

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases that do not meet this criterion are classified as operating leases.

(i) Lessee accounting

If an entity in the Group is a lessee in a finance lease, it capitalises the leased asset and recognises the related liability. The amount recognised at the inception date is the fair value of the underlying leased asset or, if lower, the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that assets.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are charged as expenses in the periods in which they are incurred.

The capitalised leased asset is classified by nature as property, plant and equipment.

For operating leases, the Group does not capitalise the leased asset or recognise the related liability. Instead lease payments under an operating lease are recognised as an expense on the straight-line basis over the lease term unless another systematic basis is more representative of the time pattern of the user’s benefit.

(ii) Lessor accounting

If an entity in the Group is a lessor in a finance lease, it derecognises the underlying asset and recognises a lease receivable at an amount equal to the net investment in the lease. Finance income is recognised in profit or loss based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the finance lease.

If an entity in the Group is a lessor in operating lease, the underlying asset is not derecognised but is presented in the statement of financial position according to the nature of the asset. Lease income from operating leases is recognised in profit or loss on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished.

3.6 Goodwill on Consolidation

Goodwill arising from business combinations is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. After initially recognition, goodwill is measured at cost less any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.19 to the financial statements.

In respect of equity-accounted associates and joint venture, goodwill is included in the carrying amount of the investment and is not tested for impairment individually. Instead, the entire carrying amount of the investment is tested for impairment as a single asset when there is objective evidence of impairment.


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3.7 Other Intangible Asset

The Group recognises infrastructure development expenditure as an intangible asset. This arises from a service concession arrangement where it has a right to charge users for usage of the concession infrastructure under the intangible asset model, as defined in IC Interpretation 12 Service Concession Arrangements (“IC Int 12”). Intangible asset received as consideration for providing construction work in a service concession arrangement is measured at fair value upon initial recognition. Subsequent to initial recognition, intangible asset is measured at cost less accumulated amortisation and any accumulated impairment loss.

The intangible asset model, as defined in IC Int 12, applies to service concession arrangements where the grantor has not provided a contractual guarantee in respect of the amount receivable for constructing and operating the assets. Under this model, during construction phase, the Group records an intangible asset representing the right to charge users of the public service and recognise profits from the construction of the public service infrastructure. Income and expenses associated with construction contracts are recognised in accordance with FRS 111 Construction Contracts.

Upon completion of construction works and commencement of road tolling operations, the intangible asset is to be amortised. Amortisation is calculated to write off the cost of intangible assets arising from a service concession arrangement on systematic basis over the estimated useful life. Both the period and method of amortisation are reviewed annually.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific assets to which it relates. All other expenditure is recognised in the profit or loss as incurred.

At the end of each of the reporting period, the Group assesses whether there is any indication of impairment. If such indication exists, the carrying amount is assessed and written down immediately to its recoverable amount.

3.8 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method.

The cost of raw materials comprises cost of purchase and incidental costs bringing the inventories to their present locations and conditions. The cost of finished goods consists of raw materials, direct labour and a proportion of manufacturing overheads.

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

3.9 Non-current Assets Held for Sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than continuing use. The criteria for held for sale classification is regarded as met only when:

• theassetisavailableforimmediatesaleinpresentcondition;

• themanagementiscommittedtoaplantoselltheassetandtheassetisactivelymarketedforsaleatapricethatisreasonableinrelation to its current fair value; and

• thesaleisexpectedtobecompletedwithinoneyearfromthedateofclassificationandactionrequiredtocompletetheplanindicates that is unlikely that significant changes to the plan will be made or that the sale will withdrawn.

Immediately before classification as held for sale, the assets, are remeasured in accordance with the Group’s accounting policies. Thereafter, generally the assets are measure at the lower of carrying amount and fair value less cost to sell.

Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Intangible assets and property, plant and equipment once classified as held for sale are not amortised or depreciated. In addition, equity accounting of equity-accounted associates and joint venture ceases once classified as held for sale.

Assets and liabilities classified as held for sale are presented separately as current items in the statements of financial position.


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3.10 Construction Contracts

Construction works are stated at cost plus attributable profit less progress billings. Cost comprises direct labour, material costs, sub-contract sum and an allocated proportion of directly related overheads. Administrative and general expenses are charged to the profit or loss as and when incurred.

When the outcome of a construction contract can be reliably estimated, contract revenue is recognised by using the stage of completion method. The stage of completion is measured by reference to the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Costs incurred in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. They are presented as inventories, prepayments or other assets, depending on their nature.

When the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised only to the extent of contract costs incurred that is probable will be recoverable.

Irrespective of whether the outcome of a construction contracts can be estimated reliably, when it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised in profit or loss immediately. Provision is made for all anticipated losses on construction work. Provision for warranties is made for expected/estimated repair costs for making good certain defects and damages during the warranty periods.

When costs incurred on construction contracts plus recognised profits (less recognised losses) exceed progress billings, the balance is shown as amount due from customers for contract works. When progress billings exceed costs incurred plus recognised profit (less recognised losses), the balance is shown as amount due to customers for contract works.

3.11 Borrowing Costs

Borrowing costs are interests and other costs that the Group and the Company incur in connection with borrowing of funds.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

The Group and the Company begin capitalising borrowing costs when the Group and the Company have incurred the expenditures for the asset, incurred related borrowing costs and undertaken activities that are necessary to prepare the asset for its intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

3.12 Government Grants

Grants from the government are recognised at their fair values where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.

Where the grant relates to an asset, it is recognised as deferred income in the statements of financial position and transferred to profit or loss over the expected useful life of the related asset. Where the grant relates to an expense item, it is recognised in profit or loss, under the heading of “other income”, on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.

The benefit derived from a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates, which will be credited to the statements of comprehensive income over the expected life of the related assets on bases consistent with the depreciation or amortisation of the related assets for which the loan was granted to the Group.


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3.13 Employee Benefits

(i) Short term employee benefits

Short-term employee benefit obligations in respect of wages, salaries, social security contributions, annual bonuses, paid annual leave, sick leave and non-monetary benefits are recognised as an expense in the financial year where the employees have rendered their services to the Group and the Company.

(ii) Defined contribution plans

As required by law, the Group and the Company contribute to the Employees Provident Fund (“EPF”), the national defined contribution plan. Such contributions are recognised as an expense in the profit or loss in the period in which the employees render their services.

3.14 Contingencies

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

Contingent liability is also referred as a present obligation that arises from past events but is not recognised because:

(a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(b) the amount of the obligation cannot be measured with sufficient reliability.

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

3.15 Foreign Currencies

(i) Translation of foreign currency transactions

Foreign currency transactions are translated to the respective functional currencies of the Group entities at the exchange rates prevailing at the dates of the transactions.

At the end of each reporting date, monetary items denominated in foreign currencies are retranslated at the exchange rates prevailing at the reporting date.

Non-monetary items denominated in foreign currencies that are carried at fair value are retranslated at the rates prevailing at the dates the fair values were determined. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated at the historical rates as at the dates of the initial transactions.

Foreign exchange differences arising on settlement or retranslation of monetary items are recognised in profit or loss except for monetary item that is designated as a hedging instrument in either a cash flow hedge or a hedge of the Group’s net investment of a foreign operation. When settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, exchange differences are recognised in profit or loss in the separate financial statements of the parent company or the individual financial statements of the foreign operation. In the consolidated financial statements, the exchange differences are considered to form part of a net investment in a foreign operation and are recognised initially in other comprehensive income until its disposal, at which time, the cumulative amount is reclassified to profit or loss.

The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit or loss, respectively).


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3.15 Foreign Currencies (cont’d)

(ii) Translation of foreign operations

The assets and liabilities of foreign operations denominated in the functional currency different from the presentation currency, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated at exchange rates at the dates of the transactions.

Exchange differences arising on the translation are recognised in other comprehensive income.However, if the foreign operation is a non-wholly owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests.

When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in foreign exchange translation reserves related to that foreign operation is reclassified to profit or loss. For a partial disposal not involving loss of control of a subsidiary that includes a foreign operation, the proportionate share of cumulative amount in foreign exchange translation reserve is reattributed to non-controlling interests. For partial disposals of associates or joint ventures that do not result in the Group losing significant influence or joint control, the proportionate share of the cumulative amount in foreign exchange translation reserve is reclassified to profit or loss.

3.16 Taxes

(a) Income Tax

Income tax expense in profit or loss comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

(i) Current tax

Current tax is the expected taxes payable or receivable on the taxable income or loss for the financial year, using the tax rates that have been enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

(ii) Deferred tax

Deferred tax is recognised using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the statements of financial position. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, unused tax losses and unused tax credits, to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, except where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.


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3.16 Taxes (cont’d)

(a) Income Tax (cont’d)

(ii) Deferred tax (cont’d)

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

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

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority on the same taxable entity, or on different tax entities, but they intends to settle their income tax recoverable and income tax payable on a net basis or their tax assets and liabilities will be realised simultaneously.

(b) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”) except:

• wheretheGSTincurredinapurchaseofassetsorservicesisnotrecoverablefromthetaxationauthority,inwhichcasetheGST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivablesandpayablesthatarestatedwiththeamountofGSTincluded.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statements of financial position.

3.17 Discontinued operation

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:

• representsaseparatemajorlineofbusinessorgeographicalareaofoperations;

• ispartofasingleco-ordinatedplantodisposeofaseparatemajorlineofbusinessorgeographicalareaofoperations;or

• isasubsidiaryacquiredexclusivelywithaviewtoresale.

Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale. When an operation is classified as a discontinued operation, the comparative statements of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative period.


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3.18 Revenue Recognition

The Group recognised revenue when the amount of revenue can be reliably measured, it is probable that future economic benefit will flow to the entity and specific criteria have been met for each of the Group’s activities as described below:

(i) Construction

Revenue from construction is recognised based on the stage of completion method as described in Note 3.10 to the financial statements.

(ii) Sales of goods

Revenue is recognised upon delivery of products and customers’ acceptance, net of sales tax, discounts and returns and when the significant risk and reward of ownership have been passed to the buyer.

(iii) Interest income

Interest income is recognised using the effective interest method.

(iv) Management fee

Management fee is recognised upon completion of services rendered in accordance with the terms of the agreement entered into.

(v) Rental income

Rental income is recognised on accrual basis over the lease period.

(vi) Distribution income from unit trusts

Distribution income from unit trusts is recognised when the right to receive the payment is established.

3.19 Impairment of Assets

(i) Impairment and uncollectibility of financial assets

At each reporting date, all financial assets (except for financial assets categorised as fair value through profit or loss and investment in subsidiaries, associates and joint ventures) are assessed whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the financial asset that can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognised.

Evidence of impairment may include indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.


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3.19 Impairment of Assets (cont’d)

(i) Impairment and uncollectibility of financial assets (cont’d)

Loans and receivables and held-to-maturity investments

The Group and the Company first assess whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If there is no objective evidence for impairment exists for an individually assessed financial asset, whether significant or not, the Group and the Company include the financial asset in a group of financial assets with similar credit risk characteristics and collectively assess them for impairment. Financial assets that are individually assessed for impairment for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

The amount of impairment loss is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the financial asset is reduced through the use of an allowance account and the loss is recognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting an allowance account to the extent that the carrying amount of the financial asset does not exceed what the amortised cost would have been had the impairment not been recognised.

Loans together with the associated allowances are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group and the Company. If a write-off is later recovered, the recovery is credited to the profit or loss.

Available-for-sale financial assets

In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value below its cost is considered to be objective evidence of impairment. The Group and the Company use their judgement to determine what is considered as significant or prolonged decline, evaluating past volatility experiences and current market conditions.

When a decline in the fair value of an available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss that had been recognised in other comprehensive income shall be reclassified from equity to profit or loss as a reclassification adjustment even though the financial asset has not been derecognised. The amount of cumulative loss that is reclassified from equity to profit or loss shall be the difference between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss.

Impairment losses on available-for-sale equity investments are not reversed through profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income.

For available-for-sale debt investments, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to loss event occurring after the recognition of the impairment loss in profit or loss.


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3.19 Impairment of Assets (cont’d)

(ii) Impairment of non-financial assets

The carrying amounts of non-financial assets (except for inventories, amount due from customers for contract work, deferred tax assets and non-current assets held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the Group and the Company make an estimate of the asset’s recoverable amount. For goodwill and intangible assets that have indefinite useful life and are not yet available for use, the recoverable amount is estimated at each reporting date.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of non-financial assets or cash-generating units (“CGUs”). Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a CGU or a group of CGUs that are expected to benefit from the synergies of business combination.

The recoverable amount of an asset of CGU is the higher of its fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. In determining the fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

Where the carrying amount of an asset exceed its recoverable amount, the carrying amount of asset is reduced to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

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

Impairment loss in respect of goodwill is not reversed. In respect of other assets, 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. An impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

3.20 Cash and Cash Equivalents

For the purpose of the statements of cash flows, cash and cash equivalents comprise cash on hand, bank balances and deposits and other short-term, highly liquid investments with a maturity of three months or less, that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are presented net of bank overdrafts.


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3.21 Share Capital

(i) Ordinary shares

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

Prior to Companies Act 2016 which came into operation on 31 January 2017, incremental external costs directly attributable to the issuance of new shares are deducted against the share premium account. Effective 31 January 2017 and subsequent periods, incremental external costs directly attributable to the issuance of new shares are deducted against equity.

Dividends on ordinary shares are recognised in equity in the periods which they are declared.

(ii) Warrants

Warrants are classified as equity. The issue of ordinary shares upon exercise of the warrants are treated as new subscription of ordinary shares for the consideration equivalent to the warrants exercise price.

3.22 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer of the Group that makes strategic decisions.

3.23 Fair Value Measurements

Fair value of an asset or a liability, except for lease transactions, is determined as 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 measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits 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.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.

3.24 Earnings Per Share

The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”). Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.


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4. SIGNIFICANT ACCOUNTING JUDGEMENT, ESTIMATES AND ASSUMPTIONS

Significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have significant effect in determining the amount recognised in the financial year included the following:

(i) 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 flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. 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 disclosed in Note 6 to the financial statements.

(ii) Useful lives of property, plant and equipment

The Group and the Company estimate the useful lives of property, plant and equipment based on period over which the assets are expected to be available for use. The estimated useful lives of property, plant and equipment are reviewed periodically and are updated if expectation differs from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the relevant assets. In addition, the estimation of useful lives of property, plant and equipment are based on experience with similar assets in the industries. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in estimated useful lives of the property, plant and equipment would increase the recorded expenses and decrease the non-current assets. The carrying amount of property, plant and equipment are disclosed in Note 5 to the financial statements.

(iii) Impairment of investment in subsidiaries

The Company assesses the carrying amount of its investment in subsidiaries at each reporting date whether there is an objective evidence that the investment may be impaired. Costs of investments in subsidiaries which have ceased operations were impaired up to net assets of the subsidiaries.

Significant judgement is required in the estimation of the present value of future cash flows generated by the subsidiaries, which involve uncertainties and are significantly affected by assumptions used and judgement made regarding estimates of future cash flows and discount rates. Changes in assumptions could significantly affect the results of the Company’s tests for impairment of investment in subsidiaries. The carrying amounts of investment in subsidiaries are disclosed in Note 8 to the financial statements.

(iv) Impairment of property, plant and equipment

The Group and the Company review the carrying amount of its property, plant and equipment, to determine whether there is an indication that those assets have suffered an impairment loss in accordance with relevant accounting policies. Independent professional valuations to determine the carrying amount of these assets will be procured when the need arises.

As at the end of the financial year under review, there is no events or changes in circumstances to indicate that the carrying amount of an asset may suffer further impairment based on internal management assessment. The carrying amounts of property, plant and equipment are disclosed in Note 5 to the financial statements.

(v) Impairment of infrastructure development expenditure

The Group tests infrastructure development expenditure for impairment annually in accordance with its accounting policy. The Group makes an estimate of the infrastructure development expenditure’s recoverable amount based on the value-in-use calculation using the cash flow projections from financial budgets approved by the Group covering the remaining period of the concession agreement.

Significant judgement is required in the estimation of the present value of future cash flows generated from the infrastructure development expenditure, which involve uncertainties and are significantly affected by assumptions used and judgement made regarding estimates of future cash flows and discount rates. Changes in assumptions could significantly affect the results of the Group’s tests for impairment of infrastructure development expenditure.

The carrying amount of the infrastructure development expenditure is disclosed in Note 7 to the financial statements.


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4. SIGNIFICANT ACCOUNTING JUDGEMENT, ESTIMATES AND ASSUMPTIONS (cont’d)

(vi) Allowance for write down in inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates can result in revisions to the valuation of inventories.

The carrying amount of the inventories are disclosed in Note 11 to the financial statements.

(vii) Impairment of loans and receivables (including amounts owing by subsidiaries, associates and former associate and its subsidiaries)

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

The directors assessed that there is no objective evidence that the amounts owing by former associate and its subsidiaries are impaired and the Group is in negotiation with the former associates on the settlement of the outstanding amounts.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s and the Company’s receivables at the reporting date is disclosed in Note 34(a) to the financial statements.

(viii) Taxation

Significant judgement is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made. The income tax amount of the Group and the Company is disclosed in Note 26 to the financial statements.

(ix) Contingent liabilities

Determination of the treatment of contingent liabilities in the financial statements is based on the Group’s view of the expected outcome of the applicable contingency. The contingent liabilities of the Group is disclosed in Note 30 to the financial statements.

(x) Construction contracts

The Group recognised contract revenue and cost in the profit or loss by using the stage of completion method. The stage of completion is measured by reference to the proportion that contract costs incurred for work performed to date over the estimated total contract costs.

Significant judgements are required in determining the stage of completion, the extent of the contract cost incurred, the estimated total contract revenue and cost, as well as recoverability of the construction projects. In making the judgement, the management’s evaluation is based on past experience. The amount due to customers for contract works is disclosed in Note 21 to the financial statements.

(xi) Construction revenue recognition in relation to Concession Agreement

In accordance with IC Int 12 Service Concession Arrangements, revenue associated with construction works under the Concession Agreement shall be recognised and measured in accordance with FRS 111 Construction Contracts using the percentage of completion method. Revenue generated by construction work rendered by the Group is measured at fair value of the consideration received or receivable.

In order to determine the construction revenue to be recognised, the directors have estimated and recognised a construction margin in the construction of the infrastructure asset. The estimated margin is based on relative comparison with general industry trend although actual margins may differ.

(xii) Classification of joint arrangement

The Company has 30% participating interest in unincorporated IJMC – KEB Joint Venture (“IJMC-KEB JV”). In accordance to the Joint Venture Agreement (“JVA”), the Company had assessed that the contractual arrangement with the joint venture party has given rise to joint control over the relevant activities of IJMC – KEB JV. In addition, both the joint venture parties have rights to the assets and obligations for the liabilities relating to the IJMC – KEB JV. Accordingly, the IJMC – KEB JV is accounted for as a joint operation of the Group and of the Company in accordance with FRS 11 Joint Arrangements.


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5. PROPERTY, PLANT AND EQUIPMENT

Furniture, Freehold Leasehold Plant and fixtures and Office Motor Group land land Buildings Renovation machinery fittings equipment vehicles Total2017 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

CostAt 1 April 2016 117 15,387 15,909 1,665 10,745 69 1,150 1,352 46,394 Additions - - - 210 101 - 99 163 573 Disposal - - - - - - - (223) (223)Disposal of a subsidiary - (1,699) (4,284) (1,073) (10,846) - (631) (25) (18,558)

At 31 March 2017 117 13,688 11,625 802 - 69 618 1,267 28,186

Accumulated Depreciation

At 1 April 2016 - 2,087 1,289 332 9,873 33 898 751 15,263 Depreciation for the

financial year - 28 98 89 109 10 73 229 636 Disposal - - - - - - - (223) (223)Disposal of a subsidiary - (140) (564) (174) (9,982) - (505) (25) (11,390)

At 31 March 2017 - 1,975 823 247 - 43 466 732 4,286

Accumulated Impairment Loss

At 1 April 2016 31 10,873 9,646 - - - - - 20,550 Impairment for the

financial year - - 231 - - - - - 231

At 31 March 2017 31 10,873 9,877 - - - - - 20,781

Carrying AmountAt 31 March 2017 86 840 925 555 - 26 152 535 3,119


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5. PROPERTY, PLANT AND EQUIPMENT (cont’d)

Furniture, Freehold Leasehold Plant and fixtures and Office Motor Group land land Buildings Renovation machinery fittings equipment vehicles Total2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

CostAt 1 April 2015 117 15,387 15,909 1,181 10,714 68 1,072 788 45,236 Additions - - - 484 31 1 78 564 1,158 At 31 March 2016 117 15,387 15,909 1,665 10,745 69 1,150 1,352 46,394

Accumulated Depreciation

At 1 April 2015 - 2,055 1,177 249 9,744 31 823 515 14,594 Depreciation for the

financial year - 32 112 83 129 2 75 236 669

At 31 March 2016 - 2,087 1,289 332 9,873 33 898 751 15,263

Accumulated Impairment Loss

At 1 April 2015/ 31 March 2016 31 10,873 9,646 - - - - - 20,550

Carrying AmountAt 31 March 2016 86 2,427 4,974 1,333 872 36 252 601 10,581


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Office Company Renovation equipment Total2017 RM’000 RM’000 RM’000

CostAt 1 April 2016 215 46 261 Additions - - -

At 31 March 2017 215 46 261

Accumulated DepreciationAt 1 April 2016 61 10 71 Depreciation for the financial year 22 6 28

At 31 March 2017 83 16 99

Carrying AmountAt 31 March 2017 132 30 162

Office Company Renovation equipment Total2016 RM’000 RM’000 RM’000

CostAt 1 April 2015 215 37 252 Additions - 9 9

At 31 March 2016 215 46 261

Accumulated DepreciationAt 1 April 2015 39 4 43 Depreciation for the financial year 22 6 28

At 31 March 2016 61 10 71

Carrying AmountAt 31 March 2016 154 36 190

The depreciation of the Group and the Company are allocated as follows:

Group Company 2017 2016 2017 2016 RM’000 RM’000 RM’000 RM’000

Profit or loss- From continuing operations 66 66 28 28 - From discontinued operation 247 294 - - Infrastructure development expenditure 323 309 - -

636 669 28 28


80 WCE HOLDINGS


Berhad)


(a) Impairment Loss

During the financial year, an impairment loss of RM231,000 was recognised in profit or loss under other expenses, representing the impairment of buildings to its recoverable amount.

The estimated recoverable amount of RM415,000 (2016: RM665,000) on freehold land and buildings is determined using fair value less costs of disposal, which is based on comparison method by reference to independent valuation carried out by a professional valuer. The fair value is within Level 3 of the fair value hierarchy. The key assumptions used in estimating the fair value are the price per square foot and the adjustments on the differences in location, size and shapes, accessibility, infrastructure available and other value considerations.

(b) Land Titles

As at the reporting date, the titles to the freehold and leasehold land and buildings of the Group with net carrying amount of RM1,444,000 (2016: RM1,697,000) are not registered in the name of the Group.

6. GOODWILL ON CONSOLIDATION

Group 2017 2016 RM’000 RM’000

At costAt the beginning/end of the financial year 8,955 8,955

Accumulated impairment lossAt the beginning/end of the financial year (3,586) (3,586)

Carrying amountAt the end of the financial year 5,369 5,369

Goodwill on consolidation has been allocated to the Group’s cash generating units (“CGU”) identified according to business segments as follows:

Group 2017 2016 RM’000 RM’000

Toll concession 5,369 5,369

The recoverable amount of the goodwill on consolidation is determined based on a value-in-use calculation using cash flow projections from financial budgets approved by the management as follows:

• Cashflowscoveringa48-year(2016:49-year)periodwhichistheremainingperiodoftheconcession;

• WestCoastExpresswaySdn.Bhd.(“WCESB”)’srevenuewillmainlybederivedfromtollcollectionbasedonprojectedtraffic-volumeand where toll rates are expected to increase at regular intervals;

• Operationalexpenseswereprojectedbythemanagementbasedonpastexperience;and

• Thepre-taxdiscountrateof6%(2016:7%)wasusedindeterminingthevalue-in-useofthegoodwillonconsolidation.Thediscountrate was estimated based on the weighted average cost of capital derived from industry average.

The value assigned to the key assumptions represents the management’s assessment on the future trends of the expressway operation services industry and are based on both external and internal sources. The Directors are of the opinion that the key bases and assumption used are reasonable and there is no impairment to the carrying amount of goodwill.

Sensitivity to changes in assumption

There are no reasonable possible changes in key assumptions which would cause the carrying value of goodwill on consolidation to exceed its recoverable amount.


81

7. INFRASTRUCTURE DEVELOPMENT EXPENDITURE

Group 2017 2016 RM’000 RM’000

At costAt the beginning of the financial year 691,411 155,732 Additions 900,432 535,679 At the end of the financial year 1,591,843 691,411

The recoverable amount of the infrastructure development expenditure on consolidation is determined based on a value-in-use calculation using cash flow projections from financial budgets approved by the management and the value assigned to the key assumptions are disclosed in Note 6 to the financial statements.

Included in the additions of infrastructure development expenditure during the financial year are as follows:

Group 2017 2016 RM’000 RM’000

Depreciation of property, plant and equipment 323 309 Interest expense 35,895 6,344 Rental of premises 45 65 Staff costs - salaries, bonus and allowances 5,365 5,437 - Employees Provident Fund 580 554

Included in staff costs are director’s remuneration amounting to RM1,714,000 (2016: RM1,587,000) and an estimated monetary value of benefits-in-kind received and receivable by the directors from the Group amounting to RM24,000 (2016: RM24,000).

During the financial year, the Group made the following cash payments for infrastructure development expenditure:

Group 2017 2016 RM’000 RM’000

Additions during the financial year 900,432 535,679 Movement in payables and accruals 115,206 (335,056)Movement in GST refundable 4,569 1,874 Capitalised depreciation (323) (309)Profit arising from IC Int 12 Service Concession Arrangement (18,491) (5,233)

Cash payments 1,001,393 196,955

On 2 January 2013, West Coast Expressway Sdn. Bhd. (“WCESB”), an 80%-owned subsidiary of the Company signed the Concession Agreement (“CA”) with the Government of Malaysia in relation to the West Coast Expressway Project (“WCE Project”). The WCE Project involves the development of the West Coast Expressway from Banting in Selangor to Taiping in Perak with 233km of tolled highway. The project cost is estimated to be in the region of RM6 billion and the construction period is for 5 years.


82 WCE HOLDINGS


Berhad)

7. INFRASTRUCTURE DEVELOPMENT EXPENDITURE (cont’d)

The key agreed terms of the CA are as follows:

(i) the WCE Project is a build-operate-transfer project with a concession period of 50 years. The concession period will be extended for another 10 years if the agreed targeted Internal Rate of Return (“IRR”) is not achieved;

(ii) to enhance the viability of the WCE Project, a Government Support Loan (“GSL”) of RM2.24 billion at an interest rate of 4% per annum is provided by the Government of Malaysia subject to the Government Support Loan Facility Agreement executed with the Ministry of Finance as disclosed in Note 19(b);

(iii) the land acquisition cost of up to RM980 million for the WCE Project will be borne by the Government of Malaysia;

(iv) toll revenue in excess of an agreed traffic volume will be shared as follows:

• duringtheGSLtenure,70%oftheexcessrevenuewillbeutilisedasrepaymentorprepaymentoftheGSL;and

• aftersettlementoftheGSL,onthebasisof30:70betweentheGovernmentofMalaysiaandWCESBifthetargetedIRRisnotachieved and 70:30 if the actual IRR is more than the targeted IRR.

(v) the construction works of the WCE Project will be implemented by WCESB through a tender committee;

(vi) liquidated and ascertained damages of RM100,000 shall be paid by WCESB to the Government of Malaysia for each day of delay of construction if the construction is not completed by the agreed completion date; and

(vii) cost savings from the construction costs shall be utilised to repay the GSL amount or for other purposes as may be determined by the Government of Malaysia.

On 19 May 2014, the Government of Malaysia approved the appointment of a consortium comprising IJM Construction Sdn. Bhd. and the Company (known as the “IJMC-KEB Joint Venture”) as the Turnkey/Engineering and Procurement Contractor for the construction of the WCE Project.

On 25 August 2014, WCESB received a letter from Lembaga Lebuhraya Malaysia to confirm the date of commencement of construction.

8. INVESTMENT IN SUBSIDIARIES

Company 2017 2016 RM’000 RM’000

Unquoted shares, at costAt the beginning of the financial year 180,581 180,581 Disposal (3,185) -

177,396 180,581 Less: Accumulated impairment loss (16,650) (16,650)

At the end of the financial year 160,746 163,931


83

8. INVESTMENT IN SUBSIDIARIES (cont’d)

The following information relates to the subsidiaries all of which have their principal place of business and are incorporated in Malaysia:

Effective Ownership Interest/Voting Rights

2017 2016Name of Company % % Principal Activities

Direct subsidiaries

Ambang Vista Sdn. Bhd. 100 100 InactiveAsian Resinated Felt Sdn. Bhd. - 82.8 Manufacturing and distribution of resinated felt.Angsana Mestika Sdn. Bhd. 100 100 Inactive.KEB Management Sdn. Bhd. 100 100 Inactive.KEB Plantations Holdings Sdn. Bhd. 100 100 Inactive. Keuro Leasing Sdn. Bhd. 100 100 Inactive.Keuro Trading Sdn. Bhd. 100 100 Inactive.West Coast Expressway Sdn. Bhd. 80 80 Design, construction and development of the West

Coast Expressway Project and managing its toll operations.

Indirect subsidiaries

Held through KEB Plantations Holdings Sdn. Bhd.

KEB Builders Sdn. Bhd. 100 100 Inactive.Tiasa Ria Sdn. Bhd. 63 63 Inactive.

Held through KEB Management Sdn. Bhd.

Irama Bijak Sdn. Bhd. -* 70 Dormant. Tiasa Ria Sdn. Bhd. 7 7 Inactive.

Held through Ambang Vista Sdn. Bhd.

Ratus Prestij Sdn. Bhd. 100 100 Dormant.

Held through Angsana Mestika Sdn. Bhd.

Europlus Holdings Sdn. Bhd. -* 50.1 Dormant.

Held through Keuro Trading Sdn. Bhd.

Maximix Sdn. Bhd. 100 100 Inactive.

Held through Maximix Sdn. Bhd.

Perkasa Jati Holdings Sdn. Bhd. 100 100 Inactive.

* These subsidiaries were struck off by the Registrar on 24 February 2017.


84 WCE HOLDINGS


Berhad)


(a) Disposal of subsidiary

2017

The Company had on 21 June 2016 entered into a Share Purchase Agreement (“SPA”) binding the Company, KEB Management Sdn. Bhd., a wholly owned subsidiary of the Company and United Geofelt Sdn. Bhd. for the disposal of the Group’s entire equity interest comprising 2,535,000 ordinary shares of RM1 each and 650,000 5% cumulative redeemable preference shares of RM1 each held in the total issued and paid-up capital of Asian Resinated Felt Sdn. Bhd. (“ARF”) to United Geofelt Sdn. Bhd., at a total consideration of RM5,372,059.

On 19 January 2017, the Company completed the disposal of its entire equity interest in ARF, comprising 2,535,000 ordinary shares and 650,000 preference shares, for a cash consideration of RM4,722,059 for the ordinary shares and RM650,000 for the preference shares.

The effects of the disposal of ARF on the financial position of the Group are as follows: 2017 RM’000

AssetsProperty, plant and equipment 7,168 Inventories 1,805 Trade and other receivables 2,797 Prepayments 153 Tax recoverable 1,137Cash and bank balances 633 13,693 LiabilitiesDeferred tax liabilities 172 Trade and other payables 2,176 2,348

11,345 Non controlling interest (2,107)

Net assets 9,238 Cash consideration received (5,372)

Loss on disposal of subsidiaries 3,866

Cash consideration received 5,372 Less: Cash and cash equivalents of subsidiary (633)

Net cash inflows on disposal 4,739


85


(b) Non-controlling interests in subsidiaries

The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:

Asian Other West Coast Resinated individually Expressway Felt immaterial Sdn. Bhd. Sdn. Bhd. subsidiaries Total RM’000 RM’000 RM’000 RM’000

2017

NCI percentage of ownership interest and voting interest 20% - Carrying amount of NCI 39,310 - (5) 39,305

(Loss)/profit allocated to NCI in current financial year (257) 210 (1) (48)

Summarised financial information before intra-group elimination

As at 31 March 2017Non-current assets 1,638,260 - Current assets 1,065,194 - Non-current liabilities (1,974,564) - Current liabilities (532,337) - Net assets 196,553 -

Financial year ended 31 March 2017Revenue 861,554 7,820 Profit for the financial year 6,277 846 Total comprehensive income 6,277 846 Cash flows (used in)/from operating activities (1,835) 957 Cash flows (used in)/from investing activities (964,016) 3,065 Cash flows from/(used in) financing activities 742,203 (7,933) Net decrease in cash and cash equivalents (223,648) (3,911)


86 WCE HOLDINGS


Berhad)


(b) Non-controlling interests in subsidiaries (cont’d)

Asian Other West Coast Resinated individually Expressway Felt immaterial Sdn. Bhd. Sdn. Bhd. subsidiaries Total RM’000 RM’000 RM’000 RM’000

2016

NCI percentage of ownership interest and voting interest 20% 17.16%Carrying amount of NCI 39,567 3,401 (4) 42,964

Profit/(loss) allocated to NCI in current financial year 903 (36) (1) 866

Summarised financial information before intra-group elimination

As at 31 March 2016Non-current assets 740,927 7,050 Current assets 1,338,538 13,029 Non-current liabilities (1,230,935) (172) Current liabilities (658,180) (1,476)

Net assets 190,350 18,431

Financial year ended 31 March 2016Revenue 577,634 5,674 Profit/(loss) for the financial year 4,516 (289) Total comprehensive income/(loss) 4,516 (289)

Cash flows from/(used in) operating activities 378 (599) Cash flows used in investing activities (863,862) (37) Cash flows from financing activities 1,192,866 -

Net increase/(decrease) in cash and cash equivalents 329,382 (636)

(c) There are no significant restrictions on the Group’s ability to access or use the assets of the subsidiaries and settle the liabilities of the Group except for West Coast Expressway Sdn. Bhd. (“WCESB”) which is restricted to make any distribution of profits and create any contract or obligation to pay money or money’s worth to the Group unless prior approval is obtained from the non-controlling interests shareholder and upon fulfilment of certain financial covenants underlying the borrowings of WCESB. The assets to which such restrictions apply are the cash and cash equivalents and other investments included in the consolidated financial statements totalling RM1,027,330,000 (2016: RM1,295,071,000).


87

9. INVESTMENT IN ASSOCIATES

Investment in associates consists of:


At CostUnquoted shares 400 400 - -

400 400 - - Share of post-acquisition reserves, net of dividends received 96,546 72,819 - -

96,946 73,219 - -

Investment in associates is accounted for in the consolidated financial statements using the equity method.

The following information relates to the associates which have principal place of business and are all incorporated in Malaysia:

Effective Ownership Interest/Voting Rights

2017 2016Name of Companies % % Nature of the relationship

Held through direct subsidiary

Held through KEB Management Sdn. Bhd.

Radiant Pillar Sdn. Bhd. + 10 10 Investment holding and property development.

Held through indirect subsidiary

Held through KEB Builders Sdn. Bhd.

Radiant Pillar Sdn. Bhd. + 30 30 Investment holding and property development.Ambang Usaha Sdn. Bhd. 50 50 Dormant.

+ This company was audited by another firm of chartered accountants other than Messrs. Baker Tilly Monteiro Heng.


88 WCE HOLDINGS


Berhad)

9. INVESTMENT IN ASSOCIATES (cont’d)

The following table summarises the information of the Group’s material associates, adjusted for any differences in accounting policies and reconciles the information to the carrying amount of the Group’s interest in the associate.

2017 Radiant Pillar Other Sdn. Bhd. individually and its immaterial subsidiaries associate TotalGroup RM’000 RM’000 RM’000

Summarised financial informationAs at 31 March 2017Non-current assets 95,683 Current assets 1,082,337 Non-current liabilities (132,676) Current liabilities (802,978) Net assets 242,366

Financial year ended 31 March 2017Profit for the financial year 63,451 Other comprehensive income - Total comprehensive income 63,451

Included in the total comprehensive income is:Revenue 359,613

As at 31 March 2017Group’s share of net assets 96,946 - 96,946

Group’s share of resultsFinancial year ended 31 March 2017Group’s share of profit/(loss) 24,675 (948) 23,727 Group’s share of other comprehensive income - - -

Group’s share of total comprehensive income/(loss) 24,675 (948) 23,727


89

9. INVESTMENT IN ASSOCIATES (cont’d)

2016 Radiant Pillar Other Sdn. Bhd. individually and its immaterial subsidiaries associate TotalGroup RM’000 RM’000 RM’000

Summarised financial informationAs at 31 March 2016Non-current assets 71,308 Current assets 1,083,165 Non-current liabilities (205,687)Current liabilities (771,388) Net assets 177,398

Financial year ended 31 March 2016Profit for the financial year 57,568 Other comprehensive income - Total comprehensive income 57,568

Included in the total comprehensive income is:Revenue 268,401

As at 31 March 2016Group’s share of net assets less accumulated impairment losses 72,271 948 73,219

Group’s share of resultsFinancial year ended 31 March 2016Group’s share of profit/(loss) 23,027 (1) 23,026 Group’s share of other comprehensive income - - -

Group’s share of total comprehensive income/(loss) 23,027 (1) 23,026


90 WCE HOLDINGS


Berhad)

10. OTHER INVESTMENTS


Non-currentHeld-to-maturity investments- Private debt securities - - 64,800 -

CurrentFinancial assets at fair value through profit or loss - Unquoted unit trusts in Malaysia 73,931 109,017 73,519 108,618 Available-for-sale (“AFS”) financial asset- Quoted equity securities in Malaysia 4,178 - 4,178 -

78,109 109,017 77,697 108,618

Market Value- Quoted equity securities 4,178 - 4,178 -

Private debt securities are investment in the Murabahah loan stocks issued by a subsidiary of the Company. The profit rate of the Murabahah loan stocks is at 10% per annum, cumulative and non-compounding. The maturity date of the Murabahah loan stocks is 12 July 2056. The profit payment and principal redemption will be subject to the issuer’s financing covenants.

Unit trusts are funds invested mainly in money market and fixed income instruments and are managed by investment management companies.

11. INVENTORIES

Group 2017 2016 RM’000 RM’000

At cost:Raw materials - 783 Finished goods - 562 Consumables - 806

- 2,151

Recognised in profit or loss:Inventories recognised as cost of sales 5,340 4,707


91

12. TRADE AND OTHER RECEIVABLES


Trade receivablesTrade receivables 11,971 13,451 - - Amount owing by subsidiary - - 70,352 123,842 Amount owing by former associate 696 696 - - 12,667 14,147 70,352 123,842

Less:Accumulated impairment lossTrade receivables (11,971) (12,059) - -

(11,971) (12,059) - -

Trade receivables, net 696 2,088 70,352 123,842

Other receivablesOther receivables 126,855 90,755 80,737 39,872 GST refundable 6,443 1,874 6,443 1,894 Amount owing by subsidiaries - - 303,491 279,747 Amount owing by associates 88 2,321 79 2,306 Amount owing by subsidiaries of former associate 27,384 27,854 24,684 24,684 Refundable deposits 88 228 15 12

160,858 123,032 415,449 348,515

Less:Accumulated impairment lossOther receivables (85,481) (85,607) (39,851) (39,857)Amount owing by subsidiaries - - (72,127) (71,918)Amount owing by associates (11) (11) (11) (11)

(85,492) (85,618) (111,989) (111,786)

Other receivables, net 75,366 37,414 303,460 236,729

Prepayments 37,796 38,664 4 4

Total trade receivables, other receivables and prepayments 113,858 78,166 373,816 360,575


92 WCE HOLDINGS


Berhad)

12. TRADE AND OTHER RECEIVABLES (cont’d)

(a) Trade and other receivables

Trade receivables are non-interest bearing and are generally on 30 to 90 (2016: 30 to 90) days terms. Other credit terms are assessed and approved on a case-by-case basis.

Ageing analysis on trade receivables

The ageing analysis of the Group’s and the Company’s trade receivables is as follows:

Ageing analysis on trade receivables


Neither past due nor impaired - 626 - 60,962

Past due 1 - 30 days but not impaired - 297 - - Past due 31 - 120 days but not impaired - 377 70,190 20,648 Past due more than 120 days but not impaired 696 788 162 42,232

696 1,462 70,352 62,880 Impaired 11,971 12,059 - -

12,667 14,147 70,352 123,842

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group and the Company. None of the Group’s and the Company’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

There were no significant concentration of credit risk of the Group’s and the Company’s trade receivables that are past due but not impaired and are unsecured in nature other than the amount owing by subsidiaries. The management is confident that the amounts due are still recoverable as there has not been a significant change in the credit quality of these receivables.


93


(a) Trade and other receivables (cont’d)

Receivables that are impaired

The Group’s and the Company’s trade and other receivables that are impaired at the reporting date are as follows:


Individually impairedTrade and other receivables- nominal amounts 97,481 97,693 112,073 111,844 Less: Accumulated Impairment loss (97,463) (97,677) (111,989) (111,786)

18 16 84 58

Movements in accumulated impairment loss:


Trade receivablesAt the beginning of the financial year 12,059 12,010 - - Charge for the financial year - 49 - - Reversal of impairment loss - * - - - Disposal/struck off of subsidiaries (88) - - -

At the end of the financial year 11,971 12,059 - -

Other receivablesAt the beginning of the financial year 85,618 78,727 111,786 104,615 Charge for the financial year - 6,891 209 7,171 Reversal of impairment loss (6) - (6) - Disposal/struck off of subsidiaries (120) - - -

At the end of the financial year 85,492 85,618 111,989 111,786

Total impairment loss 97,463 97,677 111,989 111,786

* represent amount less than RM1,000.

Receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.


94 WCE HOLDINGS


Berhad)


(b) Amount owing by subsidiaries (non-trade)

The amount owing by subsidiaries is non-trade in nature, unsecured, non-interest bearing, repayable on demand and expected to be settled in cash.

(c) Amount owing by associates (non-trade)

The amount owing by associates of the Group and of the Company is non-trade in nature, unsecured, repayable on demand, expected to be settled in cash and non-interest bearing except for amounts of RM69,000 and RM67,000 (2016: RM2,305,000 and RM2,293,000) respectively which bear interest at rate of 7.85% (2016: 7.85%) per annum.

(d) Prepayments

Included in prepayments of the Group is an amount of RM33,790,400 (2016: RM38,230,000) which represent transaction costs in relation to the undrawn loan facilities of the Group.

(e) Other receivables

Included in other receivables is an amount of RM38,000,000 (2016: RM NIL) representing amount receivable from the disposal of investment in an associate which is receivable by July 2017.

13. DEPOSITS PLACED WITH LICENSED BANKS

The effective interest rates as at the reporting date of the deposits placed with licensed banks range from 3.20% to 4.60% (2016: 2.30% to 4.60%) per annum. The deposits placed with licensed banks have maturity periods ranging from 1 day to 12 months (2016: 1 day to 12 months).

Included in the deposits placed with licensed banks of the Group is an amount of RM978,832,000 (2016: RM1,293,451,000) representing the excess funds from the drawdown of financing facilities for the purpose of financing WCE Project and therefore is restricted from use in other operations.


95

14. FORMER ASSOCIATE CLASSIFIED AS NON-CURRENT ASSET HELD FOR SALE

Group and Company 2017 2016 RM’000 RM’000

At lower of carrying amount and fair value less costs to sell:Investment in an associate - 85,470

In the previous financial year:

(a) On 17 October 2014, the Company had entered into a conditional share sale agreement (“SSA”) with Tan Sri Dato’ (Dr.) Ir Chan Ah Chye @ Chan Chong Yoon for the disposal of 900,000,000 ordinary shares of RM0.20 each held in Talam Transform Berhad (“Talam”), an associate of the Company. In addition, the Company also intended and is committed to dispose of the remaining 92,840,517 ordinary shares of RM0.20 each held in Talam. The entire investment in the former associate was classified as held for sale as the investment is expected to be recovered primarily through sale rather than continuing use.

(b) the Company had on 28 August 2015 entered into a supplemental agreement to the SSA with Tan Sri Dato’ (Dr.) Ir Chan Ah Chye @ Chan Chong Yoon to amend and vary certain provision in the SSA which entails, amongst others, the proposed disposal of the Sale Shares in two separate tranches as follows:

• 500,000,000unitsofTalamSharesat thepriceofRM0.085perTalamShareand tobecompletedwithin30daysafter theUnconditional Date or such other extension of time or later date the parties may agree in writing; and

• 400,000,000unitsofTalamSharesatthepriceofRM0.095perTalamShareandtobecompletedwithin18monthsaftertheUnconditional Date or such other extension of time or later date the parties may agree in writing.

During the financial year, the Company had on 18 April 2016 completed the disposal of the first tranche of 500,000,000 units of Talam Shares which resulted in Talam ceasing to be an associate of the Company. Accordingly, the Group and the Company derecognised their investment in the associate.

15. SHARE CAPITAL

Group and Company 2017 2016 Number Number of Shares of Shares ‘000 Units RM’000 ‘000 Units RM’000

Issued and fully paid:Ordinary sharesAt the beginning of the financial year 1,002,736 1,002,736 1,002,736 1,002,736 Transition to no-par value regime - 42,345 - - At the end of the financial year 1,002,736 1,045,081 1,002,736 1,002,736

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

The new Companies Act 2016 (the “Act”), which came into operation on 31 January 2017, abolished the concept of authorised share capital and par value of share capital. Consequently, the amounts standing to the credit of the share premium account of RM42,345,550 becames part of the Company’s share capital pursuant to the transitional provisions set out in Section 618(2) of the Act. Notwithstanding this provision, the Company may within 24 months from the commencement of the Act, use the amount standing to the credit of its share premium account of RM42,345,550 for purposes as set out in Section 618(3). There is no impact on the number of ordinary shares in issue or the relative entitlement of any of the members as a result of this transition.


96 WCE HOLDINGS


Berhad)

16. RESERVES


Share premium - 42,345 - 42,345 Foreign exchange reserve classified as held for sale - (529) - - Warrant reserve - 51,569 - 51,569 Accumulated losses (359,421) (446,146) (444,825) (512,748)

(359,421) (352,761) (444,825) (418,834)

(a) Foreign Exchange Reserve Classified as Held for Sale

The foreign exchange reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations of a former associate classified as non-current asset held for sale.

(b) Warrant Reserve

On 3 September 2014, the Company allotted and issued 214,871,911 warrants which were constituted under the Deed Poll dated 16 July 2014.

Salient features of the above warrants are as follows:

(i) each of the warrant entitles the holder to the right of exercise of one ordinary share in the Company. The number of warrants is subject to adjustments under certain circumstances in accordance with the provisions of Deed Poll;

(ii) the warrants may be exercised any time over a period of two (2) years including and commencing from the issue date of the warrants. Any warrants not exercise during the Exercise Period will thereafter lapse and become void;

(iii) the new ordinary shares allotted and issued upon exercise of the warrants shall be fully paid and rank pari passu with the then existing ordinary shares of the Company. The warrant holders will not have any voting rights in any general meeting of the Company unless the warrants are exercised into new ordinary shares and registered prior to the date of the general meeting of the Company; and

(iv) each warrant entitles its holder the right to subscribe for one ordinary share of RM1 each in the Company at any time up to the expiry date of 26 August 2016 at an exercise price of RM1.18 each payable in cash.

The number of warrants remains unexercised at the end of the financial year are as follows:

Group and Company 2017 2016 ’000 units ’000 units

Unexercised warrants - 214,872

The warrant reserve was computed based on fair value per warrant of RM0.24. The key assumptions used to arrive at this fair value were as follows:

Valuation model : Black ScholesShare price : RM1.18 Exercise price : RM1.18 Expiry date : 2 yearsVolatility : 31.421%Risk free rate : 3.849%

The exercise rights of the warrants had expired on 26 August 2016 and subsequently were removed from the official list of Bursa Securities on 27 August 2016.


97

17. DEFERRED TAX LIABILITIES


At the begninning of the year 1,683 232 - - Charge to profit or loss (Note 26) 2,238 1,511 300 - Disposal of a subsidiary (172) (60) - -

At the end of the year 3,749 1,683 300 -

Deferred tax assets (6,473) (3,026) - - Deferred tax liabilities 10,222 4,709 300 -

3,749 1,683 300 -

Representing the tax effects of:Deferred tax assets:Property, plant and equipment (235) (203) - - Unutilised tax losses (6,238) (2,823) - -

(6,473) (3,026) - -

Deferred tax liabilities:Property, plant and equipment - 181 - - Infrastructure development expenditure 10,222 4,528 - - Interest from murabahah stock - - 300 -

10,222 4,709 300 -

18. DEFERRED INCOME

Group 2017 2016 RM’000 RM’000

Non-currentGovernment grant:At 31 March 286,162 120,294

West Coast Expressway Sdn. Bhd. (“WCESB”), an 80%-owned subsidiary of the Company, had entered into Government Support Loan Facility Agreement with the Government of Malaysia for a term loan facility of RM2.24 billion at interest rate of 4% per annum to finance the construction and operation of West Coast Expressway Project (“WCE Project”).

As at 31 March 2017, the Group received total drawdown of RM650,000,000 (2016: RM250,000,000) from the Government Support Loan Facility. The repayment of the loan commences on the 6th year from first draw down. The fair value of the loan is estimated using the prevailing market interest rate of 6.0% (2016: 6.5%) per annum for an equivalent loan. The difference of the net of gross proceeds and the fair value of the loan is recognised as deferred income.


98 WCE HOLDINGS


Berhad)

19. LOANS AND BORROWINGS

Group 2017 2016 Note RM’000 RM’000

Non-current (secured)Bond - Sukuk Murabahah (“Sukuk”) (a) 924,888 942,486 Government support loan (b) 360,491 128,173 Term loans (c) 318,661 38,472

1,604,040 1,109,131

Non-current (unsecured)Murabahah loan stocks (d) 15,813 -

Total non-current 1,619,853 1,109,131

Current (secured)Trust receipts and revolving credit (e) - 4,277 Bank overdrafts (f) - 2,347

- 6,624

Current (unsecured)Bank overdrafts - 1

Total current - 6,625

Total loans and borrowings 1,619,853 1,115,756

(a) Bond - Sukuk Murabahah (“Sukuk”)

Group 2017 2016 RM’000 RM’000

Proceeds from issuance of bond 1,000,000 1,000,000 Transaction costs (75,112) (57,514)

924,888 942,486

On 28 August 2015, West Coast Expressway Sdn. Bhd. (“WCESB”), an 80%-owned subsidiary of the Company, issued RM1,000,000,000 secured Sukuk under an Islamic Securities Programme.

The Sukuk was issued at its nominal value with profit rates ranging from 4.95% to 5.38% per annum. It is repayable in 10 annual instalments, commencing on the 12th year after the issue date.

As at 31 March 2017, the effective profit rate of the Sukuk range from 5.84% to 6.06% (2016: 5.60% to 5.87%) per annum.

The Sukuk is guaranteed by financial guarantors and contains covenants which require WCESB to maintain a financial service cover ratio of at least 1.25 times and debt equity ratio of not greater than 80:20 upon the commencement of toll collection.

(b) Government support loan

On 30 June 2015, WCESB entered into a Government Support Loan Facility Agreement with the Government of Malaysia for a term loan facility of RM2.24 billion at interest rate of 4% per annum.

The Group received total drawdown of RM650,000,000 (2016: RM250,000,000) from the Government Support Loan Facility The repayment of the loan commences on 6th year from first draw down. The fair value of the loan is estimated using the prevailing market interest rate of 6.0% (2016: 6.5%) per annum for an equivalent loan.


99

19. LOANS AND BORROWINGS (cont’d)

(c) Term loans

The effective interest rate of the term loans of the Group as at the reporting date ranges from 6.69% to 6.80% (2016: 6.69% to 6.80%) per annum.

(d) Murabahah loan stocks

During the financial year, WCESB issued Islamic loan stocks based on the Shariah principle of Murabahah via Tawarruq arrangement under redeemable unsecured Murabahah stocks. The profit rate of the Murabahah loan stocks is 10% per annum, cumulative and non-compounding. The maturity date of Murabahah loan stocks is on 12 July 2056. The profit payment and the principal redemption will be subject to the fulfilment of the WCESB’s financing covenants.

As at 31 March 2017, the Group has issued Murabahah loan stocks to the minority shareholder of WCESB.

(e) Trust receipts and revolving credit

In the previous financial year, the effective interest rate of the trust receipts and revolving credit of the Group as at the reporting date was 10.03% per annum and secured and supported as follows:

(i) third party legal charge over a leasehold land of an associate; and

(ii) corporate guarantee by the Company.

(f) Bank overdrafts

The bank overdrafts of the Group are granted on the undertaking that the Group and the Company will not pledge or execute any charges on its assets.

In the previous financial year, the effective interest rate of the bank overdraft of the Group as at the reporting date was 10.03% per annum and secured and supported as follows:

(i) third party legal charge over a leasehold land of an associate; and

(ii) corporate guarantee by the Company.

(g) Security

The bond, government support loan and term loans are secured as follows:

(i) Commercial Financier’s Debenture;

(ii) Assignment and Charge I

• anassignmentofallWCESB’spresentand futurerights, title, interestandbenefits in, toandunder theWCEProjectDocument including any and all monies which may now or hereafter or from time to time be due, paid or payable to WCESB under or arising from or in connection with any of the WCE Project Document; and

• allpropertyasmaybeaddedtheretofromtimetotimebywayofretentioninvestmentand/orreinvestmentofincome.


100 WCE HOLDINGS


Berhad)

19. LOANS AND BORROWINGS (cont’d)

(g) Security (cont’d)

(iii) Assignment and Charge II

• Proceedsofalltollcollection,incomeandotherrevenueofWCESBarisingfromorinconnectionwiththeConcessionAgreement (“CA”);

• anycompensationpayabletoWCESBforanyreductionintollrateundertheCA;

• WCESB’spresentandfuturerights,interest,titleandbenefitsinrelationtotheMoneyInsurance;

• thecreditbalanceandallofWCESB’spresentandfuturerights,title,interestandbenefitinandtotheCreditBalanceandeach of the Designated Accounts and all other accounts as may be required to be opened in relation to the financing of the WCE Project;

• allPermittedInvestmentmadeorheldbyoronbehalfofWCESBorstandingtothecreditoforpayabletoWCESB,theproceeds and all income and or profit earned or derived from the Permitted Investment and all of WCESB’s present and future rights, title, interest and benefit therein and thereto; and

• theShareholderAgreementandalloftheWCESB’spresentandfuturerights,titleinterestandbenefitsthereinandthereto.

(iv) Assignment and Charge III

• thecreditbalanceandalloftheWCESB’spresentandfuturerights,title,interestandbenefitinandtotheCreditBalanceand each of the Disbursement Account; and

• allPermittedInvestmentinrelationtotheDisbursementAccountmadeorheldbyoronbehalfofWCESBorstandingto the credit of or payable to WCESB, the proceeds and all income and or profit earned or derived from the Permitted Investment and all of WCESB’s present and future rights, title, interest and benefit therein and thereto.

20. TRADE AND OTHER PAYABLES


Trade payablesTrade payables 246,215 385,441 60,590 75,991 Accruals 6,474 6,474 - -

252,689 391,915 60,590 75,991

Other payablesOther payables 10,099 13,806 2,969 4,688 GST payable - 19 - - Deposits 133 126 - - Accruals 31,242 13,033 1,976 1,364 Amount owing to subsidiaries - - - 3,592 Amount owing to associates 403 2,696 - - Amount owing to subsidiaries of former associate 12,610 5,501 2,926 2,926

54,487 35,181 7,871 12,570

Total trade and other payables 307,176 427,096 68,461 88,561


101

20. TRADE AND OTHER PAYABLES (cont’d)

(a) Trade payables

The Group’s normal trade credit term ranges from 14 to 90 (2016: 14 to 90) days.

Included in trade payables of the Group and of the Company is retention sum payable of RM925,000 and RM nil (2016: RM8,284,000 and RM7,359,000) respectively.

Included in trade payables of the Group and of the Company is an amount of RM239,527,000 and RM60,590,000 (2016: RM378,632,000 and RM75,991,000) respectively owing to IJM Group, a major shareholder of the Company.

(b) Other payables

Included in other payables of the Group and of the Company are amounts of RM6,269,000 and RM1,766,000 (2016: RM6,766,000 and RM1,689,000) respectively owing to IJM Group, a major shareholder of the Company and companies in which certain directors have interest. The amounts owing are unsecured, interest free and repayable on demand except for the amounts of RM1,766,000 (2016: RM 1,689,000) which bear interest ranges from 7.85% to 8.85% (2016: 7.85% to 8.85%) per annum.

(c) Accruals

Included in accruals of the Group are amounts of RM28,705,000 (2016: RM10,402,000) which represent interest charges in relation to the borrowings of the Group.

(d) Amount owing to subsidiaries

The amount owing to subsidiaries is non-trade in nature, unsecured, interest free, repayable on demand and expected to be settled in cash.

(e) Amount owing to associates

The amount owing to associates is non-trade in nature, unsecured, repayable on demand, expected to be settled in cash and non-interest bearing except for the amount of RM403,000 (2016: RM2,695,000) which bear interest at rate of 7.85% (2016: 7.85%) per annum.

21. AMOUNT DUE TO CUSTOMERS FOR CONTRACT WORKS


Aggregate costs incurred to date - - 338,680 122,073 Recognised profits - - 10,457 -

- - 349,137 122,073 Progress billings - - (382,697) (170,372)

- - (33,560) (48,299)

Amount due to customers for contract works included in current liabilities - - (33,560) (48,299)

Construction contracts costs recognised as contract expenses during the financial year - - 217,103 122,073

Progress billings recognised as contract revenue during the financial year - - 227,063 122,073


102 WCE HOLDINGS


Berhad)

21. AMOUNT DUE TO CUSTOMERS FOR CONTRACT WORKS (cont’d)

During the financial year, the following expenses have been included in the aggregate costs incurred to date:

Company 2017 2016 RM’000 RM’000

Staff costs - Wages, salaries and bonus - 636 - Defined contribution retirement plan - 99 - Other employee benefits - 84

22. REVENUE

Group Company 2017 2016 2017 2016 RM’000 RM’000 RM’000 RM’000 (Restated)

Dividend received from subsidiary - - 6,429 - Construction contracts 817,489 529,335 227,063 122,073 817,489 529,335 233,492 122,073

The revenue from construction contracts of the Group represents construction revenue recognised pursuant to IC Interpretation 12 Service Concession Arrangements from the construction of a public service infrastructure.

23. COST OF SALES


Construction contracts 798,998 523,616 217,103 122,073 Leasing, management services and investment holding 460 606 - -

799,458 524,222 217,103 122,073

The cost of sales from construction contracts of the Group represents construction cost recognised pursuant to IC Interpretation 12 Service Concession Arrangements from the construction of a public service infrastructure.

24. FINANCE COSTS


Others- Amount owing to associate 197 2,039 - 1,829 - Other payables 77 1,182 77 204 Unwinding of discounts on trade payables 1,368 - 1,368 -

1,642 3,221 1,445 2,033


103

25. PROFIT BEFORE TAXATION

Profit before taxation has been arrived at:


After charging:Auditor’s remuneration - statutory audit

- current year 254 222 140 125 - (over)/under accrual in prior years (6) 5 (5) -

- other services 13 13 13 13 Depreciation of property, plant and equipment 66 66 28 28 Directors’ remuneration- fees 885 885 885 885 - other emoluments 24 24 - - Impairment loss on receivablestrade and other receivables - 6,940 - 6,891 - subsidiaries - - 209 280 Impairment loss on property, plant and equipment 231 - - - Rental of premises - current year 42 36 41 28 Staff costs- Salaries, wages, overtime, bonus and allowances 1,422 1,211 1,337 958 - Employees Provident Fund 202 144 188 130 - Other staff related expenses 63 70 62 68 Loss on disposal of an assosiate classified as held for sale 1,457 - 928 -

And crediting: Distribution income from unit trusts 4,898 5,374 4,885 4,857 Fair value gain on other investments - 2,153 - 1,933 Gain on disposal of subsidiary - - 2,187 - Gain on disposal of property, plant and equipment 40 - - - Impairment loss on other receivable no longer required 6 - 6 - Reversal of write down of a former associate classified as

non-current asset held for sale - 6,965 - 6,965 Interest income - deposits with licensed banks 396 167 396 144 - murabahah loan stocks - - 1,250 - - others 262 1,112 262 1,112 Rental income 24 24 - - Waiver of debt 197 8 197 -


104 WCE HOLDINGS


Berhad)

26. TAXATION


Continuing operations Current taxationcurrent year (2,399) (6) (2,390) - - over/(under) accrual in prior year 233 (513) (1) -

(2,166) (519) (2,391) -

Deferred taxation (Note 17)- current year (2,239) (1,410) (300) - - over/(under) accrual in prior year 1 (101) - -

(2,238) (1,511) (300) -

Tax expense for the financial year (4,404) (2,030) (2,691) -

Income tax expense attributable to continuing operations (4,404) (2,030) (2,691) - Income tax expense attributable to discontinuing operations (Note 27) (282) 141 - -

(4,686) (1,889) (2,691) -

The income tax is calculated at the statutory tax rate of 24% (2016: 24%) of the estimated taxable profit for the financial year.

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


Profit before taxation from continuing operations 42,531 29,999 19,045 3,412 Loss before taxation from discontinued operations (2,737) (350) - -

39,794 29,649 19,045 3,412

Taxation at statutory tax rate of 24% (2016: 24%) (9,550) (7,116) (4,571) (819)

Tax effects of: - non-deductible expenses (2,678) (3,382) (1,427) (2,851)- utilisation of deferred tax assets previously not recognised 461 - - - - deferred tax assets not recognised - (147) - - - tax effect on share of results of associates 5,695 5,526 - - - non-taxable income 1,152 3,783 3,308 3,670 - over/(under) accrual in prior year 234 (553) (1) -

Tax expense for the financial year (4,686) (1,889) (2,691) -

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


Unutilised tax losses 77,408 78,959 - - Unabsorbed capital allowances 399 399 - - Other (taxable)/deductible differences (2) 368 - -

77,805 79,726 - -

Potential deferred tax assets not recognised at 24% (2016: 24%) 18,673 19,134 -


105

27. DISCONTINUED OPERATION

As mentioned in Note 8(a)(i) above, the Company had disposed a subsidiary on 19 January 2017 and hence discontinued its manufacturing and trading of industrial products business. The comparative consolidated statement of comprehensive income has been re-presented to show the discontinued operation separately from continuing operation.

(a) The results attributable to the discontinued operation were as follows:

Group 2017 2016 RM’000 RM’000

Revenue 7,820 5,674 Cost of sales (5,340) (4,707)

Gross profit 2,480 967 Other income 26 69 Administrative and selling expenses (1,377) (1,386)

Profit/(Loss) from operations of discontinued operation 1,129 (350)Loss on disposal of a subsidiary (3,866) -

Loss before taxation from discontinued operation (2,737) (350)

TaxationCurrent taxation:- current year (282) - - over accrual in prior year - 81

(282) 81

Deferred taxation:- current year - 80 - under accrual in prior year - (20)

- 60

(282) 141

Loss after taxation from discontinued operation (3,019) (209)Other comprehensive income, net of tax - -

Total comprehensive income from discontinued operation (3,019) (209)

(b) The following items had been charged/crediting in arriving at profit/(loss) before taxation :

Group 2017 2016 RM’000 RM’000

Audit fees - statutory

- current year 10 12 - under accrual in prior years - 13

Depreciation of property, plant and equipment 247 294 Rental of premises - current year 16 17 Staff costs- Salaries, wages, overtime, bonus and allowances 1,597 1,512 - Employees Provident Fund 152 133 - Other staff related expenses 55 67 Interest income - deposits with licensed banks 14 49


106 WCE HOLDINGS


Berhad)

27. DISCONTINUED OPERATION (cont’d)

(c) Cash flows generated from/(used in) discontinued operation:

Group 2017 2016 RM’000 RM’000

Operating activities 957 (599)Investing activities 3,065 (37)Financing activities (7,933) -

Net cash outflows (3,911) (636)

28. EARNINGS/(LOSS) PER ORDINARY SHARE

(a) Basic earnings/(loss) per ordinary share

Basic earnings per ordinary share is calculated by dividing the net profit for the financial year attributable to owners of the Company by the weighted average number of ordinary shares in issue during the financial year:

Group 2017 2016 RM’000 RM’000

Net profit/(loss) for the financial year attributable to owners of the Company- from continuing operations 38,385 27,067 - from discontinued operation (3,229) (173)

35,156 26,894

Weighted average number of shares (‘000 unit) 1,002,736 1,002,736

Basic earnings/(loss) per ordinary share (sen):- from continuing operations 3.83 2.69 - from discontinued operation (0.32) (0.02)

3.51 2.67

(b) Diluted earnings/(loss) per ordinary share

The diluted earnings/(loss) per ordinary share is equal to the basic earnings/(loss) per ordinary share as the outstanding warrants are anti-dilutive due to the average market price of the Company’s shares being lower than the exercise price of the warrants.

There have been no transactions involving ordinary shares or potential ordinary shares since the reporting date and before the authorisation of these financial statements.


107

29. INTEREST IN JOINT OPERATION

Details of the joint operation are as follows:

Name of Joint Operation Participation Interest Economic Activity

2017 2016

% %

Unincorporated in Malaysia

IJM Construction Sdn. Bhd. - Kumpulan Europlus Berhad Joint Venture (“IJMC - KEB JV”)*

30 30 Undertake engineering, procurement and construction of West Coast Expressway Project

* audited by another firm of chartered accountants other than Baker Tilly Monteiro Heng.

Pursuant to FRS 11 Joint Arrangements, IJMC – KEB JV is deemed to be a joint operation of the Company as the parties involved that have joint control have rights to the assets and obligations for the liabilities relating to the arrangement.

30. CONTINGENT LIABILITY (UNSECURED)

A subsidiary of the Company was indebted to a bank which had on 7 September 2010 auctioned and disposed of a piece of land belonging to a subsidiary of Talam Transform Berhad (“Talam”), a former associate, which secured the borrowings of this subsidiary. Talam had taken legal action against the bank for foreclosing and auctioning the pledged land. The difference between the auction price and the market value of the land amounts to RM33.7 million. In the previous financial year, the High Court has dismissed Talam’s claim against the Bank and subsequently, Talam had filed an appeal to the Court of Appeal. On 22 August 2016, the Court of Appeal dismissed this appeal. On 19 September 2016, Talam further filed a Notice of Motion for leave to appeal to the Federal Court which was dismissed on 2 March 2017. Based on correspondences with Talam, Talam indicated its intention to claim against the Company for compensation of RM38.78 million (which includes legal fees, court charges incurred on civil suit against the bank and interest charges). Talam and the Company are in negotiation and expect to reach an amicable settlement of the matter within 6 months from 2 February 2017.

The Group and the Company may be liable for the claim amount as indicated by Talam. The directors are of the opinion, after taking appropriate legal advice, that Talam has no valid claim against the Company and as such, no provision is necessary.

31. CAPITAL COMMITMENT

The outstanding commitment in respect of infrastructure development expenditure as follows:

Group 2017 2016 RM’000 RM’000

Infrastructure development expenditure- Contracted but not provided for 4,222,926 4,472,085


108 WCE HOLDINGS


Berhad)

32. RELATED PARTY DISCLOSURES

Other than as disclosed elsewhere in the financial statements, the related parties and their relationship with the Company and its subsidiaries are as follows:

Radiant Group Radiant Pillar Sdn. Bhd. (“Radiant”), an associate of the Group, and its subsidiary. IJM Group has substantial direct and indirect equity interests in Radiant Group. Radiant Group became subsidiaries of IJM Group with effect from 24 January 2014.

IJM Group IJM Corporation Berhad (“IJM”) and its subsidiaries. IJM is a major shareholder of the Company.

Ambang Usaha Sdn. Bhd. Ambang Usaha Sdn. Bhd. is an associate of the Group. IJM Group is the shareholder of its remaining equity interest.

MWE Group MWE Holdings Berhad (“MWE”) and its subsidiaries. MWE is a major shareholder of the Company.

IJMC- KEB Joint Venture A joint operation between the Company and IJM Construction Sdn. Bhd.

(a) Transactions with related parties


Radiant Group:Interest income 262 1,112 262 1,112 Interest expenses (197) (2,039) - (1,829)

IJM Group:Waiver of interest expenses 1,020 - - - Interest expenses (77) (4,629) (77) (204)Construction works (673,433) (519,516) (217,103) (122,073)

MWE Group:Share registration fees (107) (118) (107) (118)

West Coast Expressway Sdn. Bhd.:Construction works - - 271,128 170,372 Murabahah loan stocks profit - - 1,250 -


109

32. RELATED PARTY DISCLOSURES (cont’d)

(b) Balances with related parties


Other receivablesIJM Group - 98 - -

Trade payablesIJM Group 239,527 378,632 60,590 75,991

Other payables IJM Group 6,269 6,766 1,766 1,689

Amount owing by associates Radiant Group 69 2,305 67 2,294 Ambang Usaha Sdn. Bhd. 8 5 1 1

77 2,310 68 2,295

Amount owing to associates Radiant Group 403 2,696 - -

403 2,696 - -

Amount owing by subsidiary (trade)West Coast Expressway Sdn. Bhd. - - 80,857 123,842


110 WCE HOLDINGS


Berhad)

32. RELATED PARTY DISCLOSURES (cont’d)

(c) Key management compensation

The remuneration of key management personnel and directors’ remuneration (including directors who retired or resigned during the financial year), are disclosed as follows:


DirectorNon-executive directors of the Company:- Fees 885 885 885 885 - Other emoluments 24 24 - -

909 909 885 885 Executive directors of subsidiary:- Salaries 1,690 1,368 - - - Estimated monetary value of benefits-in-kind 24 24 - - - Employees Provident Fund 24 219 - -

1,738 1,611 - -

2,647 2,520 885 885

Other key management personnel- Salaries, allowance and bonus 524 656 402 495 - Other emoluments 261 175 261 175 - Employees Provident Fund 48 67 48 50

833 898 711 720

3,480 3,418 1,596 1,605

The director’s remuneration of a subsidiary incurred and capitalised in Infrastructure Development Expenditure amounted to RM1,738,000 (2016: RM1,611,000).

33. OPERATING SEGMENTS

Measurement of reportable segments

Operating segments are prepared in a manner consistent with the internal reporting provided to the Group in order to allocate resources to segments and to assess their performance. For management purposes, the Group is organised into business units based on their products and services provided.

The Group assesses the performance of the operating segments based on operating profit or loss which is measured differently from those disclosed in the consolidated financial statements.

Assets, liabilities and expenses which are common and cannot be meaningfully allocated to the operating segments are presented under unallocated items. Unallocated items comprise mainly former associate classified as non-current asset held for sale, investment in associates, other investments, tax refundable, tax payable and deferred tax liabilities.


111

33. OPERATING SEGMENTS (cont’d)

Business segments

The Group’s operating businesses are classified according to the nature of activities as follows:

Toll concession segment : Involved in the business of construction, management and tolling of highway operation;

Construction segment : Involved in the business of construction contracting; and

Others : Involved in the business of construction contracting, leasing, management services, and investment holding.

(Note 27) Toll Discontinued2017 Concession Construction Others Operation Elimination ConsolidatedGroup RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

RevenueExternal sales 817,489 ^ - - 7,820 - 825,309 Inter-segment sales 227,063 - 6,429 - (233,492) -

Total revenue 1,044,552 - 6,429 7,820 (233,492) 825,309

ResultsSegment results 8,712 (31) 3,427 (2,751) 7,679A 17,036

Finance costs (1,642)Share of results of associates 23,727 Interest income 673 Profit before tax 39,794 Taxation (4,686) Profit for the financial year 35,108

Consolidated Statement of Financial Position

AssetsSegment assets 2,703,039 3,602 644,900 - (583,411)B 2,768,130 Investment in associates - 300 96,646 - - 96,946 Other investments 412 - 77,697 - - 78,109 Tax recoverable 2 - 143 - - 145

Consolidated total assets 2,703,453 3,902 819,386 - (583,411) 2,943,330

LiabilitiesSegment liabilities 2,438,353 55,729 292,351 - (573,242)C 2,213,191 Tax payables/deferred tax liabilities 3,749 - 1,425 - - 5,174

Consolidated total liabilities 2,442,102 55,729 293,776 - (573,242) 2,218,365

Other InformationCapital expenditure 945,955 - - 365 (45,315) 901,005D Depreciation of property,

plant and equipment - - 66 247 - 313 Non-cash expenses

other than depreciation - - 231 - - 231E


112 WCE HOLDINGS


Berhad)


Business segments (cont’d)

(Note 27) Toll Discontinued2016 Concession Construction Others Operation Elimination ConsolidatedGroup RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

RevenueExternal sales 529,335^ - - 5,674 - 535,009 Inter-segment sales 122,074 - - - (122,074) -

Total revenue 651,409 - - 5,674 (122,074) 535,009

ResultsSegment results 7,657 (52) 1,538 (399) (228)A 8,516

Finance costs (3,221)Share of results of associates 23,026 Interest income 1,328

Profit before tax 29,649 Taxation (1,889)

Profit for the financial year 27,760

Consolidated Statement of Financial Position

AssetsSegment assets 2,206,571 3,604 407,946 19,035 (548,018)B 2,089,138 Former associate classified as

non-current asset held for sale - - 85,470 - - 85,470 Investment in associates - 300 72,919 - - 73,219 Other investments 399 - 108,618 - - 109,017 Tax recoverable 2 - - 1,044 - 1,046

Consolidated total assets 2,206,972 3,904 674,953 20,079 (548,018) 2,357,890

LiabilitiesSegment liabilities 2,013,632 55,730 193,149 1,476 (600,841)C 1,663,146 Tax payables/deferred tax liabilities 1,511 - 122 172 - 1,805

Consolidated total liabilities 2,015,143 55,730 193,271 1,648 (600,841) 1,664,951

Other InformationCapital expenditure 585,042 - 9 85 (48,299) 536,837 D

Depreciation of property, plant and equipment - - 66 294 - 360

Non-cash expenses other than depreciation - - 7,221 -* (281) 6,940E

Other non-cash income 220 22 8,929 - (53) 9,118F

^ Represents construction revenue recognised pursuant to IC Interpretation 12 Service Concession Arrangements from the construction of a public service infrastructure.

Note: Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements.


113



A The following items are (deducted from)/added in segment results to arrive at profit before taxation:

2017 2016 RM’000 RM’000

Impairment loss on amount owing by subsidiaries - 280 Dividend received from subsidiary (6,429) -Impairment loss on amount owing by subsidiaries no longer required - (53)Murabahah loan stocks from subsidiary (1,250) -

(7,679) 227

B The following items are deducted from segment assets to arrive at total assets reported in the consolidated statement of financial position:

2017 2016 RM’000 RM’000

Investment in subsidiaries (160,746) (163,931)Inter-segment assets (422,665) (384,087)

(583,411) (548,018)

C The following items are deducted from segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:

2017 2016 RM’000 RM’000

Inter-segment liabilities (573,242) (600,841)

D Additions of capital expenditure consist of:

2017 2016 RM’000 RM’000

Property, plant and equipment 573 1,158 Infrastructure development expenditure 900,432 535,679

901,005 536,837


114 WCE HOLDINGS


Berhad)



E Other non-cash expenditure consist of:

2017 2016 RM’000 RM’000

Impairment loss on receivablestrade and other receivables - 6,940 Impairment loss on property, plant and equipment 231 -

231 6,940

F Other non-cash income consist of:

2017 2016 RM’000 RM’000

Fair value gain on other investment - 2,153 Reversal of write down in a former associate classified as non-current asset held for sale - 6,965

- 9,118

Geographical segment

The activities of the Group are mainly carried out in Malaysia and as such, geographical segment reporting is not presented.

Information about major customers

A major customer with revenue of RM817,489,000 (2016: RM529,335,000) from the toll concession segment accounted for more than 10% of the Group revenue.


115

34. FINANCIAL INSTRUMENTS

(a) Categories of financial instruments

The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis:

Financial Fair value Held-to- Available- liabilities Loans through maturity for-sale at and profit financial financial amortised receivables or loss assets assets cost Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2017GroupFinancial assetsOther investments - 73,931 - 4,178 - 78,109 Trade receivables 696 - - - - 696 Other receivables and deposits 68,923 - - - - 68,923 Deposits with licensed banks 1,004,602 - - - - 1,004,602 Cash and bank balances 49,339 - - - - 49,339

1,123,560 73,931 - 4,178 - 1,201,669

Financial liabilitiesLoans and borrowings - - - - (1,619,853) (1,619,853)Trade payables - - - - (246,215) (246,215)Other payables,deposits and accruals - - - - (54,487) (54,487)

- - - - (1,920,555) (1,920,555)

CompanyFinancial assetsOther investments - 73,519 64,800 4,178 - 142,497 Trade receivables 70,352 - - - - 70,352 Other receivables and deposits 297,017 - - - - 297,017 Deposits with licensed banks 25,770 - - - - 25,770 Cash and bank balances 976 - - - - 976

394,115 73,519 64,800 4,178 - 536,612

Financial liabilitiesTrade payables - - - - (60,590) (60,590)Other payables,deposits and accruals - - - - (7,871) (7,871)

- - - - (68,461) (68,461)


116 WCE HOLDINGS


Berhad)

34. FINANCIAL INSTRUMENTS (cont’d)

(a) Categories of financial instruments (cont’d)

The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis: (cont’d)

Financial Fair value liabilities Loans through at and profit amortised receivables or loss cost Total RM’000 RM’000 RM’000 RM’000

2016GroupFinancial assetsOther investments - 109,017 - 109,017 Trade receivables 2,088 - - 2,088 Other receivables and deposits 35,540 - - 35,540 Deposits with licensed banks 1,296,751 - - 1,296,751 Cash and bank balances 4,709 - - 4,709 1,339,088 109,017 - 1,448,105

Financial liabilitiesLoans and borrowings - - (1,115,756) (1,115,756)Trade payables - - (385,441) (385,441)Other payables,deposits and accruals - - (41,636) (41,636)

- - (1,542,833) (1,542,833)

CompanyFinancial assetsOther investments - 108,618 - 108,618 Trade receivables 123,842 - - 123,842 Other receivables and deposits 234,835 - - 234,835 Deposits with licensed banks 1,500 - - 1,500 Cash and bank balances 478 - - 478

360,655 108,618 - 469,273

Financial liabilitiesTrade payables - - (75,991) (75,991)Other payables,deposits and accruals - - (12,570) (12,570)

- - (88,561) (88,561)


117

34. FINANCIAL INSTRUMENTS (cont’d)

(b) Fair values

(i) Fair value of financial instruments that are carried at fair value

The fair value hierarchy used to measure the fair value of financial asset carried at fair value are as follows:

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data (observable inputs).

As at 31 March 2017, the fair value of other investments as disclosed in Note 10 to the financial statements is measured under Level 1, of which is determined directly by reference to prices provided by investment management companies.

During the financial year ended 31 March 2017, there were no transfers between Level 1 and Level 2 fair value measurements.

(ii) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value at the reporting date:

Note

Trade and other receivables 12Deposits placed with licensed banks 13Cash and bank balances -Loans and borrowings (current) 19Trade and other payables 20

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The carrying amounts of the current portion of loans and borrowings are reasonable approximation of fair values due to the insignificant impact of discounting.


118 WCE HOLDINGS


Berhad)

34. FINANCIAL INSTRUMENTS (CONT’D)

(b) Fair values (cont’d)

(iii) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows:

2017 Company

Carrying amount Fair value

Financial asset Note RM’000 RM’000Other investments (categorised as held-to-maturity) - Private debt securities 12 64,800 64,800

2017 2016 Group Group Carrying Carrying amount Fair value amount Fair valueFinancial liabilities Note RM’000 RM’000 RM’000 RM’000

Loans and borrowings:- Bond 19 924,888 920,243 942,486 942,203 - Government support loan 19 360,491 363,837 128,173 130,230 - Murabahah loan stocks 19 15,813 15,813 - -

1,301,192 1,299,893 1,070,659 1,072,433


119

34. FINANCIAL INSTRUMENTS (CONT’D)

(b) Fair values (cont’d)

(iii) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value (cont’d)

The following table provides the fair value measurement hierarchy of the Group’s financial instruments:

Fair value of financial instruments not carried at fair value

Fair Fair value Value Level 1 Level 2 Level 3 Total Note RM’000 RM’000 RM’000 RM’000 RM’000

2017CompanyFinancial assetsOther investment(categorised as held-to-maturity)- Murabahah loan stocks 12 64,800 - 64,800 - -

2017GroupFinancial liabilitiesLoans and borrowings:- Bond 19 920,243 - 920,243 - - - Government support loan 19 363,837 - 363,837 - - - Murabahah loan stocks 19 15,813 - 15,813 - -

1,299,893 - 1,299,893 - -

2016GroupFinancial liabilitiesLoans and borrowings:- Bond 19 942,203 - 942,203 - - - Government support loan 19 130,230 - 130,230 - -

1,072,433 - 1,072,433 - -

Fair value of financial instruments not carried at fair value

The fair value of the bond, government support loan and murabahah loan stocks are calculated based on the present value of future principal and interest cash flows, discounted at the market interest rates of similar liabilities and issuer’s borrowing rate.


120 WCE HOLDINGS


Berhad)

35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The operations of the Group and of the Company are subject to a variety of financial risks, including credit risk, liquidity risk and interest rate risk. The Group and the Company have formulated a financial risk management framework whose principal objective is to minimise the Group’s and the Company’s exposure to risks and/or costs associated with the financing, investing and operating activities of the Group and of the Company.

(i) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including other investments, deposits placed with licensed banks and cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group and the Company do not hold any collateral as security and other credit enhancements for the above financial assets.

The management has a credit policy in place to monitor and minimise the exposure of default. The Group trades only with recognised and credit worthy third parties. Trade receivables are monitored on an ongoing basis.

As at the reporting date, there were no significant concentration of credit risk in the Group. The maximum exposure to credit risk for the Group is represented by the carrying amount of each financial instrument. The Company also has credit risk exposure arising form of financial guarantees given to banks in respect of loans granted to a subsidiary.

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 12 to the financial statements. Deposits with licensed banks that are neither past due nor impaired are placed with reputable financial institutions with no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are past due or impaired is disclosed in Note 12 to the financial statements.

Financial guarantee contract

The Company is exposed to credit risk in relation to financial guarantees given to banks in respect of loans granted to a subsidiary. The maximum exposure to credit risk amounted to nil (2016: RM7,000,000) representing the maximum amount the Company could pay if the guarantee is called on as disclosed in Note 35(ii) to the financial statements. As at the reporting date, there was no indication that the subsidiary would default on repayment.

The financial guarantees have not been recognised since the fair value on initial recognition was not material.


121

35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)

(ii) Liquidity risk

Liquidity risk is the risk that the Group or the Company will not be able to meet their financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.

The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

Maturity analysis

The table below summarises the maturity profile of the Group’s and of the Company’s liabilities as at the reporting date based on contractual undiscounted repayment obligations:

Contractual cash flows On demand Carrying or within One to Over five Amount one year five years years Total RM’000 RM’000 RM’000 RM’000 RM’000

2017GroupFinancial liabilitiesTrade payables 246,215 246,215 - - 246,215 Other payables and accruals 60,961 60,961 - - 60,961Loans and borrowings:- Bond 924,888 51,040 206,797 1,561,326 1,819,163 - Government support loan 360,491 - 151 1,902,381 1,902,532 - Term loans 318,661 32,096 83,873 422,034 538,003 - Murubahah loan stocks 15,813 - - 16,125 16,125

Total undiscounted financial liabilities 1,927,029 390,312 290,821 3,901,866 4,582,999

CompanyFinancial liabilitiesTrade payables 60,590 60,590 - - 60,590 Other payables and accruals 7,871 7,871 - - 7,871

Total undiscounted financial liabilities 68,461 68,461 - - 68,461


122 WCE HOLDINGS


Berhad)


(ii) Liquidity risk (cont’d)

Maturity analysis (cont’d)

Contractual cash flows On demand Carrying or within One to Over five Amount one year five years years Total RM’000 RM’000 RM’000 RM’000 RM’000

2016GroupFinancial liabilitiesTrade payables 385,441 385,441 - - 385,441 Other payables and accruals 41,636 41,636 - - 41,636 Loans and borrowings:- Bond 942,486 51,778 206,797 1,612,990 1,871,565 - Government support loan 128,173 - - 731,791 731,791 - Term loans 38,472 3,098 10,140 53,557 66,795 - Bank overdrafts 2,348 2,348 - - 2,348 - Trust receipts and revolving credit 4,277 4,277 - - 4,277

Total undiscounted financial liabilities 1,542,833 488,578 216,937 2,398,338 3,103,853

CompanyFinancial liabilitiesTrade payables 75,991 75,991 - - 75,991 Other payables and accruals 12,570 12,570 - - 12,570 Financial guarantee contract # - 7,000 - - 7,000

Total undiscounted financial liabilities 88,561 95,561 - - 95,561

# The Company has given corporate guarantee to bank on behalf of a subsidiary. The potential exposure of the financial guarantee contract is equivalent to the amount of the banking facilities of the said subsidiary.


123


(iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and of the Company’s financial instruments will fluctuate 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.

The Group and the Company manage the net exposure to interest rate risks by maintaining sufficient lines of credit to obtain acceptable lending costs and by monitoring the exposure to such risks on an ongoing basis. Management does not enter into interest rate hedging transactions since it considers that the cost of such instruments outweigh the potential risk of interest rate fluctuation.

The fixed deposit placed with licensed bank at fixed rate exposes the Group to fair value interest rate risk. The bank overdraft, revolving credits and term loans totalling RM318,661,000 (2016: RM45,097,000) at floating rate expose the Group to cash flow interest rate whilst the bond, murabahah loan stocks and government support loan of RM1,301,192,000 (2016: RM1,070,659,000) expose the Group to fair value interest rate risk.

The information on maturity dates and effective interest rate of financial assets and liabilities are disclosed in their respective notes.

Sensitivity analysis for interest rate risk

Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets at fair value through profit or loss and equity. Therefore a change in interest rates at the reporting date would not affect profit or loss and equity.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Profit or Loss/Equity 100bp 100bp decrease increase RM’000 RM’000

2017GroupVariable rate instruments (3,187) 3,187

2016GroupVariable rate instruments (451) 451


124 WCE HOLDINGS


Berhad)

36. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The directors monitor and determine to maintain an optimal debt-to-equity ratio that complies with debt covenants and regulatory requirements.

The debt-to-equity ratio as at 31 March 2017 and 31 March 2016 were as follows:

Group 2017 2016 RM’000 RM’000

Total borrowings 1,619,853 1,115,756

Equity attributable to owners of the Company 685,660 649,975

Debt-to-equity ratio (times) 2.36 1.72

There were no changes in the Group’s approach to capital management during the financial year.

As part of its financing covenants, a subsidiary is required to maintain a financial service cover ratio of at least 1.25 times and debt equity ratio of not greater than 80:20 upon the commencement of toll collection.


125

On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the retained profits or accumulated losses as at the end of the reporting period, into realised and unrealised profits and losses.

On 20 December 2010, Bursa Malaysia further issued guidance on the disclosure and the format required.

Pursuant to the directive, the amounts of realised and unrealised profits or losses included in the accumulated losses of the Group and of the Company as at the reporting date are as follows:


Total accumulated losses of the Company and its subsidiaries:- realised (681,139) (747,279) (444,825) (514,681)- unrealised (3,749) 470 - 1,933

(684,888) (746,809) (444,825) (512,748)Total share of retained earnings of associates- realised 74,268 52,854 - - - unrealised 22,678 19,967 - -

96,946 72,821 - -

Add: Consolidation adjustments 228,521 227,842 - -

Total accumulated losses (359,421) (446,146) (444,825) (512,748)

The determination of realised and unrealised profits or losses is based on Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits and Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.

The disclosure of realised and unrealised profits or losses above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia and should not be applied for any other purposes.

SUPPLEMENTARY INFORMATIONOn The Breakdown Of Realised And Unrealised Profits Or Losses

126 WCE HOLDINGS


Berhad)

We, DATO’ ABDUL HAMID BIN MUSTAPHA and DATUK OH CHONG PENG, being two of the directors of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad), do hereby state that in the opinion of the directors, the accompanying financial statements as set out on pages 47 to 125 are drawn up in accordance with the Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of Group and of the Company as at 31 March 2017 and of their financial performance and cash flows for the financial year then ended.

The supplementary information set out on page 126 has been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

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

DATO’ ABDUL HAMID BIN MUSTAPHADirector

DATUK OH CHONG PENGDirector


STATEMENT BY DIRECTORSPursuant to Section 251(2) of the Companies Act 2016


127

I, LYNDON ALFRED FELIX, being the officer primarily responsible for the financial management of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad), do solemnly and sincerely declare that to the best of my knowledge and belief, the accompanying financial statements as set out on pages 47 to 125 and the supplementary information set out on page 126 are 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.

LYNDON ALFRED FELIX

Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory on 29 June 2017.

Before me,

TAN KIM CHOOI (W 661)Commissioner for Oaths

STATUTORY DECLARATIONPursuant to Section 251(1) of the Companies Act 2016

128 WCE HOLDINGS


Berhad)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad), which comprise the statements of financial position as at 31 March 2017 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 47 to 125.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 March 2017, and of their financial performance and their cash flows for the financial year then ended in accordance with the Financial Reporting Standards and the requirements of the Companies Act 2016 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 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 fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

INFRASTRUCTURE DEVELOPMENT EXPENDITURE (NOTE 4(v) AND 7TO THE FINANCIAL STATEMENTS)

The Group has significant infrastructure development expenditure. We focused on this area because the impairment assessment of the infrastructure development expenditure requires the application of significant judgements and estimates by the directors on the discount rate applied in the recoverable amount calculation and the assumptions supporting the underlying cash flow projections, including the forecast traffic volume, operational expenses and forecast growth rates over the projection period.

Our response:

Our audit procedures focused on evaluating the cash flow projections and the Group’s forecasting procedures which included, among others:

• evaluatingthedesignandimplementationofcontrolsovertheupdatingoftheassumptionsusedinthepreparationoftheimpairmentassessment,monitoring changes to the assumptions and approval by appropriate personnel of the final cash flow projections;

• comparingtheactualresultswithpreviousyearprojectiontoassesstheperformanceofthesegmentandreliabilityoftheforecastingprocess;

• comparing the Group’s assumptions to externally derived data as well as our assessments in relation to key assumptions based on ourunderstanding of the project and analysis of changes in assumptions from previous year;

• comparingthediscountrateappliedagainsttheweightedaveragecostofcapitalderivedfromaselectionofcomparablecompanies;

• testingthemathematicalaccuracyoftherecoverableamountcalculation;and

• performingasensitivityanalysisaroundthekeyassumptionsthatareexpectedtobemostsensitivetotherecoverableamount.

INDEPENDENT AUDITORS’ REPORTTo The Members of WCE Holdings Berhad (Formerly Known As Kumpulan Europlus Berhad)(Incorporated in Malaysia)


129

AMOUNT OWING BY A FORMER ASSOCIATE AND ITS SUBSIDIARIES (NOTE 4(vii) AND12 TO THE FINANCIAL STATEMENTS)

The Group has significant receivables owing by its former associate and its subsidiaries as at 31 March 2017 which have been long outstanding. The directors assessed that there is no objective evidence that these amounts are impaired and that the Company is in negotiation with the former associate on the settlement of the outstanding amount. We focused on this area because the assessment on the recoverability of these receivables involve subjective judgement of the directors.

Our response:

Our audit procedures included, among others:

• obtainingconfirmationofbalancesfromtheformerassociate;

• reviewingreconciliationspreparedbythemanagementonthedifferencesinoutstandingbalancewiththerepliedconfirmationandconsidertheappropriateness of the management’s justification for not adjusting those differences in the financial statements; and

• reviewingcorrespondences,otherexternalevidenceandmanagementexplanationonrecoverabilityofthereceivables.

CONTINGENT LIABILITY (NOTE 4(ix) AND 30 TO THE FINANCIAL STATEMENTS)

A subsidiary of the Company was indebted to a bank which had on 7 September 2010 auctioned and disposed of a piece of land belonging to a subsidiary of a former associate of the Company, which secured the borrowings of this subsidiary. The Group and the Company may be liable for the claim amount as indicated by the former associate. We focused on this area because the determination of the treatment of contingent liability in the financial statements is based on the directors’ view of the expected outcome of the contingency.

Our response:

Our audit procedures included, among others:

• understandingthestatusofthelegalsuitundertakenbytheformerassociateagainstthebankandtheimplicationonthecontingentliability;

• discussingwiththemanagementandreadingcorrespondencesandotherexternalevidence;

• obtaining and reviewing the solicitor’s confirmation on the possible obligation in respect of the contingent liability and considering theprobability of the liability crystalising; and

• assessingtheadequacyofdisclosuremadeinthefinancialstatements.

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 information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements 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 financial 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 financial 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 this other information, we are required to report that fact. We have nothing to report in this regard.

INDEPENDENT AUDITORS’ REPORT (cont’d)

To The Members of WCE Holdings Berhad (Formerly Known As Kumpulan Europlus Berhad)(Incorporated in Malaysia)

130 WCE HOLDINGS


Berhad)

RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with the Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial 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.

The directors of the Company are responsible for overseeing the Group’s financial reporting process.

AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial 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 standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

• identifyandassesstherisksofmaterialmisstatementofthefinancialstatementsoftheGroupandoftheCompany,whetherduetofraudorerror, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient 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.

• obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriateinthecircumstances,but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

• evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelateddisclosuresmadebythedirectors.

• concludeontheappropriatenessof thedirectors’useof thegoingconcernbasisofaccountingand,basedontheauditevidenceobtained,whether a material uncertainty exists related to events or conditions that may cast significant 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 financial statements of the Group and of the Company or, if such disclosures 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 Group or the Company to cease to continue as a going concern.

• evaluatetheoverallpresentation,structureandcontentofthefinancialstatementsoftheGroupandoftheCompany,includingthedisclosures,and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.

• obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitieswithintheGrouptoexpressan opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.


131

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies 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 significance in the audit of the financial statements of the Group and of the Company for the current financial 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 circumstances, 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 benefits of such communication.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out on page 126 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial 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 Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the contents of this report.

Baker Tilly Monteiro Heng No. AF 0117 Chartered Accountant

Lee Kong WengNo. 2967/07/2017(J)Chartered Accountants


INDEPENDENT AUDITORS’ REPORT (cont’d)

To The Members of WCE Holdings Berhad (Formerly Known As Kumpulan Europlus Berhad)(Incorporated in Malaysia)

132 WCE HOLDINGS


Berhad)

Owner

Location

Land/

Built Up Area

Development/

Proposed Developement

Date of Acquisition

Tenure

Expiry

Approximate Age of

Building (Years)

Net Book Value as at

31.3.2017 RM’000


31.3.2016 RM’000

1. KEURO Trading Sdn Bhd

Mukim of Ampang District of Hulu Langat Selangor Darul Ehsan

1,775 sq.m.

13 parcels of residential land at

Pandan Perdana

24.01.1990 Leasehold (99 years)

29.10.2100 – 396 401


1-1A, 1st Floor Jalan U/P 1/3 Taman Ukay Perdana 68000 Ampang Selangor

165 sq.m.

4 units of shop office at

Ukay Perdana


10.10.2100 14 517 523

1-1B, 1st Floor Jalan U/P 1/3 Taman Ukay Perdana 68000 Ampang Selangor

173 sq.m.

3-1B, 1st Floor Jalan U/P 1/3 Taman Ukay Perdana 68000 Ampang Selangor

61 sq.m.

26-3B, 3rd Floor Jalan U/P 1/2 Taman Ukay Perdana 68000 Ampang Selangor

114 sq.m.



546 sq.m.


Pandan Perdana


30.10.2195 – 154 155



248 sq.m.


Pandan Perdana


11.01.2091 – 71 72



783 sq.m.


Pandan Perdana


10.12.2195 – 220 223


No. 11, Jalan Orkid 10 Seksyen BB1 Bandar Bukit Beruntung 48300 Rawang Selangor

601 sq.m.

1 unit of bungalow lot

01.07.2008 Freehold – – 85 85

LIST OF PROPERTIES


133

Owner

Location

Land/

Built Up Area

Development/

Proposed Developement

Date of Acquisition

Tenure

Expiry

Approximate Age of

Building (Years)


31.3.2017 RM’000


31.3.2016 RM’000


No. 63, Jalan Widuri 2B Seksyen BB18 Bukit Beruntung 3 48300 Rawang Selangor

1,179 sq.m.

4 units of single storey

house

01.04.2009 Freehold – – 409 420

No. 63, Jalan Widuri 2D/2 Seksyen BB18 Bukit Beruntung 3 48300 Rawang Selangor

No. 21, Jalan Widuri 2F Seksyen BB18 Bukit Beruntung 3 48300 Rawang Selangor

No. 2, Jalan Widuri 2F/3 Seksyen BB18 Bukit Beruntung 3 48300 Rawang Selangor


Metro Larkin District of Johor Bahru Johor Darul Ta’zim

58 sq.m.

2 units of shop office and

retail space


21.04.2094 9 – –

9. KEURO Leasing Sdn Bhd


1,397 sq.m.


retail space


21.04.2094 9 – –


F05 & F06, 1st Floor Pandan Safari Lagoon 1, Jalan Pandan Perdana 6/10A Pandan Perdana 55100 Kuala Lumpur

1,011 sq.m.

2 units of shop office

lots at Pandan Perdana


08.03.2092 10 – 240



321 sq.m.


retail space


21.04.2094 9 – –

12. KEB Builders Sdn Bhd


72 sq.m.

1 unit of shop office and

retail space


21.04.2094 9 – –

LIST OF PROPERTIES (cont’d)

134 WCE HOLDINGS


Berhad)

THE COMPANY

ORDINARY SHARES

No. of Ordinary Shares Direct % Deemed Interest Interest %The Company1. Tan Sri Pang Tee Chew 35,000 0.003 93,415,100*1 9.312. U Chin Wei 30,000 0.003 11,500*2 0.0013 Tang King Hua 350,000 0.035 0 0.0004. Dato’ Neoh Soon Hiong 0 0 322,200*3 0.032

Notes: *1 Deemed interested by virtue of his interests in United Frontiers Holdings Limited pursuant to Section 8 of the Companies Act, 2016 (“Act”). *2 Deemed interested through his spouse, Madam Goh Siew Thing pursuant to Section 59(11)(c) of the Act. *3 Deemed interested through his spouse, Datin Tan Yoke Sum pursuant to Section 59(11)(c) of the Act.

Save as disclosed above, none of the other Directors of the Company have any interests in the securities of the Company and its related corporation as at 30 June 2017.

STATEMENT ON DIRECTORS’ AND CHIEF EXECUTIVE OFFICER’S INTERESTAs At 30 June 2017


135

ANALYSIS OF SHARE CAPITAL

Issued and paid-up share capital : 1,002,735,588 Ordinary shares

DISTRIBUTION OF SHAREHOLDINGS

Size of Holdings No. of % of No. of % of Shareholders Shareholders Shares held Shares held1 – 99 792 8.370 30,469 0.003100 – 1,000 1,886 19.930 1,461,695 0.1461,001 – 10,000 4,832 51.062 20,740,186 2.06810,001 – 100,000 1,572 16.612 50,511,946 5.038100,001 – 50,136,780* 376 3.973 339,969,068 33.90450,136,781 and above** 5 0.053 590,022,224 58.841

Total 9,463 100.000 1,002,735,588 100.000

NOTES:There is only one class of shares in the paid-up share capital of the Company. Each share entitles the holder to one vote. * Less than 5% of issued shares** 5% and above of issued shares

THIRTY LARGEST SHAREHOLDERS

Name of Shareholders No. of Shares %

1 IJM CORPORATION BERHAD 265,041,624 26.4319

2 UNITED FRONTIERS HOLDINGS LIMITED 93,415,100 9.3160

3 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 90,000,000 8.9754 Pledged Securities Account for MWE HOLDINGS BERHAD

4 MWE HOLDINGS BERHAD 85,765,500 8.5532

5 HLB NOMINEES (TEMPATAN) SDN BHD 55,800,000 5.5648 Pledged Securities Account for MWE HOLDINGS BERHAD

6 HSBC NOMINEES (ASING) SDN BHD 43,254,400 4.3136 Exempt An for CREDIT SUISSE (HK BR-TST-ASING)

7 CITIGROUP NOMINEES (ASING) SDN BHD 36,284,200 3.6185 Exempt An for UBS AG SINGAPORE (FOREIGN)

8 HSBC NOMINEES (ASING) SDN BHD 26,887,200 2.6814 Exempt An for CREDIT SUISSE (SG BR-TST-ASING)

9 CIMB ISLAMIC NOMINEES (TEMPATAN) SDN BHD 25,000,000 2.4932 Pledged Securities Account for MWE HOLDINGS BERHAD

10 HSBC NOMINEES (ASING) SDN BHD 7,176,400 0.7157 Exempt An for BANK JULIUS BAER & CO. LTD. (SINGAPORE BCH)

ANALYSIS OF SHAREHOLDINGSAs at 30 June 2017

136 WCE HOLDINGS


Berhad)

THIRTY LARGEST SHAREHOLDERS

Name of Shareholders No. of Shares %

11 LIEW KHANG @ LIEW WAN KHANG 5,920,000 0.5904

12 AZIZ BIN BAHAMAN 5,775,000 0.5759

13 MPI GENERALI INSURANS BERHAD 5,525,275 0.5510

14 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 4,000,000 0.3989 Pledged Securities Account for SI THO YOKE MENG

15 CIMSEC NOMINEES (TEMPATAN) SDN BHD 4,000,000 0.3989 CIMB for SEOW LUN HOO @ SEOW WAH CHONG

16 GENERAL TECHNOLOGY SDN BHD 3,582,099 0.3572

17 ONG YENG TIAN & ONG WENG TIAN 3,297,993 0.3289

18 DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD 3,256,900 0.3248 Exempt An for BANK OF SINGAPORE LIMITED

19 MAYBANK NOMINEES (TEMPATAN) SDN BHD 3,246,000 0.3237 Pledged Securities Account for YOONG KAH YIN

20 HSBC NOMINEES (ASING) SDN BHD 3,100,000 0.3092 KBL EURO PB for HALLEY SICAV – HALLEY ASIAN PROSPERITY

21 MAYBANK NOMINEES (TEMPATAN) SDN BHD 2,980,000 0.2972 Pledged Securities Account for TEE SEE KIM

22 MAYBANK NOMINEES (TEMPATAN) SDN BHD 2,958,100 0.2950 Pledged Securities Account for ANG PIANG KOK

23 ONG SIOK LIAN 2,956,800 0.2949

24 CHEE KOK SENG 2,700,000 0.2693

25 RESON SDN BHD 2,588,300 0.2581

26 ONG SEH CHOON 2,500,000 0.2493

27 TEE SEE KIM 2,390,000 0.2383

28 ONG SEH YEW 2,275,000 0.2269

29 OSK TECHNOLOGY VENTURES SDN BHD 2,250,000 0.2244

30 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 2,249,600 0.2243 Pledged Securities Account for TAN KIAN CHUAN

796,175,491 79.4003


137

LIST OF SUBSTANTIAL SHAREHOLDERS

As shown in the Register of Substantial Shareholders

Name of Substantial Shareholders Number of Ordinary Shares Direct Deemed Interest % Interest %

1. IJM CORPORATION BERHAD 265,225,374 26.45 - -2. MWE HOLDINGS BERHAD 256,565,500 25.58 - -3. UNITED FRONTIERS HOLDINGS LIMITED 93,415,100 9.31 - -4. PINJAYA SDN BHD - - 256,565,500(1) 25.585. TAN SRI DATO’ SURIN UPATKOON - - 256,565,500(2) 25.586. TAN SRI PANG TEE CHEW 35,000 0.003 93,415,100(3) 9.317. DATUK WIRA PANG TEE NAM - - 93,415,100(3) 9.31

Notes:(1) Deemed interested by virtue of its interest in MWE Holdings Berhad pursuant to Section 8 of the Companies Act, 2016 (“Act”).(2) Deemed interested by virtue of his interest in Pinjaya Sdn Bhd pursuant to the Act.(3) Deemed interested by virtue of their interest in United Frontiers Holdings Limited pursuant to the Act.

ANALYSIS OF SHAREHOLDINGS (cont’d)

As at 30 June 2017

138 WCE HOLDINGS


Berhad)

NOTICE IS HEREBY GIVEN THAT the 16th Annual General Meeting of WCE Holdings Berhad (formerly known as Kumpulan Europlus Berhad) (“the Company”) will be held at Victorian Ballroom, Level 1, Holiday Villa Hotel & Suites Subang, 9 Jalan SS12/1, 47500 Subang Jaya, Selangor Darul Ehsan on Monday, 28 August 2017 at 2.30 p.m. for the following purposes: -

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements of the Company for the financial year ended 31 March 2017 and the Reports of the Directors and Auditors thereon.

(Please refer to Explanatory Note A)

2. To approve the payment of the Directors’ fees of RM885,000.00 for the financial year ended 31 March 2017.

(Ordinary Resolution 1)

3. To re-elect the following Directors who are retiring by rotation pursuant to Article 97 of the Constitution of the Company:-

3.1 Lee Chun Fai (Ordinary Resolution 2)

3.2 Datuk Ir. Hamzah bin Hasan (Ordinary Resolution 3)

4. To re-appoint the following Directors who retire at the conclusion of this 16th Annual General Meeting, as Directors of the Company:

4.1 Dato’ Abdul Hamid bin Mustapha (Ordinary Resolution 4)

4.2 Datuk Oh Chong Peng (Ordinary Resolution 5)

5. To re-appoint Messrs Baker Tilly Monteiro Heng as Auditors of the Company and to authorise the Directors to fix their remuneration.


AS SPECIAL BUSINESSTo consider and if thought fit, to pass the following Ordinary Resolutions: -

6. PAYMENT OF DIRECTORS’ BENEFITS

To approve the payment of the Directors’ Benefits of up to an amount of RM150,000.00 for the period from 1 April 2017 until the 17th Annual General Meeting.


7. CONTINUATION OF SERVICE OF DATO’ ABDUL HAMID BIN MUSTAPHA AS INDEPENDENT NON-EXECUTIVE CHAIRMAN OF THE COMPANY

“THAT Dato’ Abdul Hamid bin Mustapha who has served the Board as an Independent Non-Executive Chairman of the Company since 27 October 2005, would attain a cumulative term of 12 years on 26 October 2017 and be and is hereby retained as an Independent Non-Executive Chairman of the Company.”


8. AUTHORITY TO ALLOT SHARES PURSUANT TO SECTIONS 75 AND 76 OF THE COMPANIES ACT 2016 (“THE ACT”)

“THAT, pursuant to Sections 75 and 76 of the Act and the Constitution of the Company and subject to the approvals from Bursa Malaysia Securities Berhad and other relevant government/regulatory authorities, where such approval is necessary, the Directors of the Company be and are hereby empowered pursuant to Sections 75 and 76 of the Act to issue shares in the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Board of Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued during the preceding 12 months does not exceed 10% of the total number of the issued shares (excluding treasury shares) of the Company for the time being AND THAT the Board of Directors be and are also empowered to obtain approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad.”


NOTICE OF ANNUAL GENERAL MEETING


139

9 PROPOSED RENEWAL SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED SHAREHOLDERS’ MANDATE FOR RRPT”)

“THAT, subject always to the Listing Requirements of Bursa Malaysia Securities Berhad, the Company and its subsidiary companies shall be mandated to enter into such recurrent transactions of a revenue or trading nature which are necessary for their day-to-day operations and with those related parties as specified in Section 2.4 of the Circular to Shareholders dated 28 July 2017 subject further to the following: -(i) the transactions are in the ordinary course of business of the Company and its subsidiary companies

on terms not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company; and

(ii) disclosure will be made in the Annual Report of the aggregate value of transactions of the Proposed Shareholders’ Mandate for RRPT conducted during the financial year, including amongst others, the following information: -(a) the type of the recurrent transactions made; and(b) the names of the related parties involved in each type of the recurrent related party transactions

made and their relationship with the Company and/or its subsidiary companies.

AND THAT such mandate shall commence upon passing of this resolution and shall continue to be in force until: - (i) the conclusion of the next Annual General Meeting (“AGM”) of the Company following the AGM

at which such mandate was passed, at which time it will lapse unless by the resolution passed at a general meeting, the authority is renewed; or

(ii) the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 340(2) of the Companies Act 2016 (“the Act”) (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or

(iii) revoked or varied by resolution passed by the shareholders of the Company in general meeting;

whichever is the earlier;

AND FURTHER THAT the Directors of the Company be and are hereby 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 to give effect to the Proposed Shareholders’ Mandate for RRPT.”


BY ORDER OF THE BOARD

RAW KOON BENG (MIA 8521)WONG WAI FOONG (MAICSA 7001358)LIM POH YEN (MAICSA 7009745)Company Secretaries

Kuala Lumpur28 July 2017

NOTICE OF ANNUAL GENERAL MEETING (cont’d)

140 WCE HOLDINGS


Berhad)

NOTES:

1. A member entitled to attend and vote at this meeting is entitled to appoint one (1) proxy to attend the meeting and vote in his stead. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and where a member appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportions of his holdings to be represented by each proxy. A proxy need not be a member of the Company and a member may appoint any person to be his proxy. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the meeting of the Company shall have the same rights as the members to speak at the meeting.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation, either under seal or in some other manner approved by the Directors.

3. Where a member of the Company is an Authorised Nominee, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. An Authorised Nominee shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and where an Authorised Nominee appoints two (2) proxies in respect of each Securities Account, the appointment shall be invalid unless the Authorised Nominee specifies the proportions of his holdings to be represented by each proxy.

4. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares of the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each Omnibus Account it holds. Where an Exempt Authorised Nominee appoints more than one (1) proxy in respect of each Omnibus Account, the appointment shall not be invalid unless the Exempt Authorised Nominee specifies the proportions of his holdings to be represented by each proxy.

5. All Proxy Forms must be deposited at the Registered Office of the Company situated at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, or alternatively, the Customer Services Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, not less than 48 hours before the time for holding the meeting or any adjourned meeting.

6. For the purpose of determining members who shall be entitled to attend the Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to issue a Record of Depositors as at 22 August 2017. Only depositors whose names appear therein shall be entitled to attend the said meeting or appoint a proxy to attend and vote on their behalf.

EXPLANATORY NOTE A

This Agenda item is meant for discussion only as the provision of Sections 248(2) and 340(1) of the Act, does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.

EXPLANATORY NOTES TO THE ORDINARY BUSINESS

1. Ordinary Resolutions 4 and 5 – Re-appointment of Dato’ Abdul Hamid Bin Mustapha and Datuk Oh Chong Peng as Director of the Company

Dato’ Abdul Hamid bin Mustapha and Datuk Oh Chong Peng who are over the age of 70 years, were re-appointed at the 15th Annual General Meeting held on 30 August 2016 pursuant to Section 129 of the Companies Act 1965 and shall retire at the conclusion of this 16th Annual General Meeting of the Company.

With the enforcement of the Companies Act 2016 on 31 January 2017, there is no age limit for Directors. Based on the Nominating Committee’s recommendation, the Board recommended the re-appointment of Dato’ Abdul Hamid bin Mustapha and Datuk Oh Chong Peng as Directors to the shareholders for consideration at this 16th Annual General Meeting. Dato’ Abdul Hamid bin Mustapha and Datuk Oh Chong Peng, as Chairman and member of the Nominating Committee of the Company respectively, had abstained from the deliberations and voting pertaining to their re-appointment at the Nominating Committee and Board of Directors’ meetings.

If the Proposed Ordinary Resolutions 4 and 5 are passed, Dato’ Abdul Hamid bin Mustapha and Datuk Oh Chong Peng shall be subject to retirement by rotation pursuant to Article 97 of the Constitution of the Company.


141

EXPLANATORY NOTES TO THE SPECIAL BUSINESSES

1. Ordinary Resolution 7 – Payment of Directors’ Benefits

The details of the benefits payable to the Directors are as follows:-

Description Board Member The Company/its subsidiary

Meeting Allowance (RM1,000 per meeting):• Board Meeting• General Meeting

Each Board member The Company

Benefits in kind:(a) Directors and Officers

Insurance Package(b) Car and fuel benefit

(a) All Board members (b) Datuk Ir. Hamzah bin Hasan

(a) The Company(b) West Coast Expressway Sdn. Bhd,

a subsidiary of the Company

2. Ordinary Resolution 8 – Continuation of service of Dato’ Abdul Hamid bin Mustapha as Independent Non-Executive Chairman of the Company

The Board strongly believes that a Director’s independence cannot be determined arbitrarily with reference to a set period of time. The Company benefits from long serving directors, such as Dato’ Abdul Hamid bin Mustapha, with detailed knowledge of the business and with proven commitment, experience and competence to effectively advise and oversee Management.

To be identified as independent, a Director must be independent in character and judgement, independent of management and free from any relationships or circumstances (as set out in Chapter 1 of the Listing Requirements) which are likely to affect or could appear to affect their judgement to ensure their allegiance remains aligned with shareholders. This has been assessed by the Board to be the case in Dato’ Abdul Hamid bin Mustapha.

Dato’ Abdul Hamid bin Mustapha as the Chairman of the Company’s Nominating Committee had abstained from deliberations or voting pertaining to his own independence at the Nominating Committee and Board levels.

3. Ordinary Resolution 9 – Authority to issue shares pursuant to Sections 75 and 76 of the Act

The Proposed Ordinary Resolution 9 is a renewal of the general mandate pursuant to Sections 75 and 76 of the Act (“General Mandate”) obtained from the shareholders of the Company at the previous Annual General Meeting and, if passed, will empower the Directors of the Company to issue new shares in the Company from time to time provided that the aggregate number of shares issued pursuant to the General Mandate does not exceed 10% of the issued share capital of the Company for the time being.

The General Mandate, unless revoked or varied by the Company in general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

As at the date of this Notice, no new ordinary shares in the Company were issued pursuant to the general mandate which was approved at the 15th Annual General Meeting held on 30 August 2016 and which will lapse at the conclusion of the 16th Annual General Meeting.

The General Mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding current and/or future investment project(s), working capital, acquisition and/or for issuance of shares as settlement of purchase consideration.

4. Ordinary Resolution 10 – Proposed Shareholders’ Mandate for RRPT

The detailed information on Resolution 10 pertaining to the Proposed Shareholders’ Mandate for RRPT, is set out in the Circular to Shareholders dated 28 July 2017 which is enclosed together with the Company’s 2017 Annual Report.

NOTICE OF ANNUAL GENERAL MEETING (cont’d)

142 WCE HOLDINGS


Berhad)

I/We ___________________________________________________________ (NRIC/Passport/Company No. ________________________________)(Name in full and in block letters)

of ______________________________________________________________________________________________________________________(Full address)

being a member/members of WCE HOLDINGS BERHAD (formerly known as Kumpulan Europlus Berhad) (534368-A) hereby appoint ____________________

________________________________________________________________________________________________________________________(Name in full and in block letters)

(NRIC/Passport No. ________________________________________________________________) of ______________________________________(Full address)

________________________________________________________________________________________________________________________or failing him/her, the Chairman of the meeting as my/our proxy to vote on my/our behalf at the 16th Annual General Meeting of the Company to be held at Victorian Ballroom, Level 1, Holiday Villa Hotel & Suites Subang, 9 Jalan SS12/1, 47500 Subang Jaya, Selangor Darul Ehsan on Monday, 28 August 2017 at 2.30 p.m. and at any adjournment thereof, on the resolutions referred to in the Notice of the Annual General Meeting.

My/our proxy is to vote as indicated below: -

No. Resolutions For Against

As Ordinary Business

1 To approve the payment of the Directors’ fees of RM885,000.00 for the financial year ended 31 March 2017.

2 To re-elect the Director, Lee Chun Fai who is retiring by rotation in accordance with Article 97 of the Constitution of the Company.

3 To re-elect Datuk Ir. Hamzah bin Hasan who is retiring by rotation in accordance with Article 97 of the Constitution of the Company.

4 To re-appoint Dato’ Abdul Hamid bin Mustapha as Director.

5 To re-appoint Datuk Oh Chong Peng as Director.

6 To re-appoint Messrs Baker Tilly Monteiro Heng as Auditors of the Company and to authorise the Directors to fix their remuneration.

As Special Business

7 To approve the payment of the Directors’ Benefits of up to an amount of RM150,000.00 for the period from 1 April 2017 until the 17th Annual General Meeting.

8 To approve the continuation of service of Dato’ Abdul Hamid bin Mustapha as Independent Non-Executive Chairman of the Company.

9 Authority to allot shares pursuant to Sections 75 and 76 of the Companies Act 2016.

10 Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.

(Please indicate with an “X” in the spaces as to how you wish your vote to be casted. If you do not do so, the Proxy will vote or abstain from voting at his/her discretion.)

Dated this ____________ day of _____________ 2017

____________________________________________Signature/Common Seal of member

NOTES:1. A member entitled to attend and vote at this meeting is entitled to appoint one (1)

proxy to attend the meeting and vote in his stead. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and where a member appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportions of his holdings to be represented by each proxy. A proxy need not be a member of the Company and a member may appoint any person to be his proxy. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the meeting of the Company shall have the same rights as the members to speak at the meeting.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation, either under seal or in some other manner approved by the Directors.

3. Where a member of the Company is an Authorised Nominee, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. An Authorised Nominee shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and where an Authorised Nominee appoints two (2) proxies in respect of each Securities Account, the appointment shall be invalid unless the Authorised Nominee specifies the proportions of his holdings to be represented by each proxy.

4. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares of the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each Omnibus Account it holds. Where an Exempt Authorised Nominee appoints more than one (1) proxy in respect of each Omnibus Account, the appointment shall not be invalid unless the Exempt Authorised Nominee specifies the proportions of his holdings to be represented by each proxy.

5. All Proxy Forms must be deposited at the Registered Office of the Company situated at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, or alternatively, the Customer Services Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, not less than 48 hours before the time for holding the meeting or any adjourned meeting.

6. For the purpose of determining members who shall be entitled to attend the Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to issue a Record of Depositors as at 22 August 2017. Only depositors whose names appear therein shall be entitled to attend the said meeting or appoint a proxy to attend and vote on their behalf.

PROXY FORM

CDS ACCOUNT NO.

NO. OF SHARES HELD

For appointment of two proxies, percentage of shareholdings to be represented by the proxies:-

Proxy No. of units Percentage (%)

1

2

Total 100

WCE HOLDINGS BERHAD (Formerly known as Kumpulan Europlus Berhad) (534368-A)

Customer Services Centre at Unit G-3 Ground Floor, Vertical Podium, Avenue 3, Bangsar South No. 8, Jalan Kerinchi, 59200 Kuala Lumpur

1st fold here

Then fold here

AFFIX STAMP

TAKING THE

NEXT STEPANNUAL REPORT 2017

AN

NU

AL R

EP

OR

T 2017W

CE

HO

LDIN

GS

BE

RH

AD

(534368-A) (Form

erly known as K

ump

ulan Europ

lus Berhad

)

WCE HOLDINGS BERHAD (534368-A)(Formerly known as Kumpulan Europlus Berhad)

CORPORATE OFFICE37-2, No. 8, Jalan Anggerik Vanilla BE31/BEKota Kemuning, Seksyen 3140460 Shah Alam

Tel: +603 5525 8800Fax: +603 5525 8666

REGISTERED ADDRESSUnit 30-01, Level 30, Tower AVertical Business SuiteAvenue 3, Bangsar SouthNo.8, Jalan Kerinchi59200 Kuala Lumpur

Tel: +603-2783 9191Fax: +603-2783 9111

www.wcehb.com.my

TAKING THE NEXT STEP ANNUAL REPORT 2017 ANNUAL REPORT 2017 WCE HOLDINGS BERHAD (534368-A) (Formerly...

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