THAT’S OUR SIMPLE PROMISE shops. In the development for Bukit Jalil project in Kuala Lumpur, there...

WE ALL SEEKDIFFERENT THINGS,BUT ONE THINGREMAINS AND

THAT’S OURSIMPLEPROMISETO PRESENT YOU WITH FIVE STAR LIVING

OUR RESPONSIBILITY GOES FAR BEYOND BUILDING HOUSES. AS STAKEHOLDERS IN MALAYSIA’S DEVELOPMENT, WE HAVE A DUTY TO GENERATE SUSTAINABLE VALUE - for our customers, our employees, the broader community and the

environment. Through our actions, we can create virtuous circles that bring meaningful and rewarding progress to the society we serve.

094 LBS BINA GROUP BERHAD (518482-H)

ANNUAL REPORT 2016

As a corporate entity, we have a

responsibility towards our employees,

our customers and the society at

large. This responsibility has shaped

the history of our organisation; from a

humble beginning, to where we wanted

to create sustainable value through

various innovative approaches.

This conviction is the foundation on

which the strong commitment of our

people and successful developments

of LBS are built upon. Our objective

in achieving sustainability across

the entire business operation chain

propels our year to year growth.

When we look at the different aspects

within the social, environmental and

economic landscape, our stakeholders

are at the centre of it all. From providing

affordable housing to philanthropy,

green living to efficient construction

and financial management, the

outcome is obtained for the benefit of

our stakeholders.

In our commitment to sustainability,

we are supported not only by the

knowledge and engagement of our

people and strength of our brand,

but also by the advancement in

technologies, and collaborations in all

areas of our business relations.

We believe that long term success can

be achieved through sustainability.

Dato’ Cynthia Lim

Chairperson

Sustainability Committee

19 April 2017

Messagefrom the

Chairperson Sustainability

Committee

095

SUSTAINABILITYREPORT

(CONT’D)

“Building houses for the community is

not only being profitable,

but bringing optimistic

changes to the stakeholders.”

- LBS Philosophy -

LBS has been incorporating this

philosophy in its journey of attaining

sustainability development and

striking a balance between maximising

shareholder’s value and fulfilling

the social responsibility, while

inculcating the environment, social

and governance (ESG) principles in

its value. Our Board is committed

in ensuring that sustainability is

embedded across the organisation

and adequate resources, systems and

processes are in place to manage

sustainability risks and opportunities,

which are constantly changing under

the economic, environment, social and

governance conditions.

In year 2016, we take it further by

reinforcing our existing corporate

social responsibility initiatives and

integrating them into our business

strategies and goals while maintaining

highest standards of corporate

governance. In early 2017, we have

established our Sustainability

Committee as one of the steps

in further enhancing our process

and procedures. This reflects the

great change in understanding and

approach towards sustainability in the

corporation.

our corporate behaviour to sustain

business continuity and long term

growth of the Group.

We recognise that the sustainability-

related issues can significantly affect

our organisation’s present and future

risk profile, potential liabilities and


ANNUAL REPORT 2016

SUSTAINABILITYREPORT (CONT’D)

SOCIAL - SUSTAINING OUR COMMUNITIES

Housing Affordability

The shortage of affordable housing

is an emerging issue for Malaysian

whereby Government has organised a

number of initiatives and programs to

address the growing demand and the

affordability issues. On home purchase

affordability matters, we have

streamlined our business strategy

to meet the needs of the market by

increasing our supply of small to

medium-sized residential units. Since

our inception, we have taken initiatives

to build medium cost homes for buyers

from the medium income group under

its mixed development projects like

Bandar Saujana Putra in Selangor,

Cameron Highlands in Pahang, and

Bandar Putera Indah in Batu Pahat,

Johor.

The latest affordable housing project

was the proposed development of

4 blocks of 14-storey apartments in

Bandar Saujana Putra also known as

BSP Bayuanmas to be built under the

Selangor State’s Rumah SelangorKu

(RSK) housing scheme. This project

comprises 1,352 units of apartments

with built-up area from 800 and 900

square feet and 40 units of commercial

shops. In the development for Bukit

Jalil project in Kuala Lumpur, there

will be 2 blocks of building constructed

under PPA1M (Perumahan Penjawat

Awam 1Malaysia) program. PPA1M is

an affordable house-to-own scheme

for government staff emphasizing

on comfortability in aspects of size,

design, quality, location and the

price of the house that is suited for

government staff.

During the year 2016, LBS has

collaborated with Selangor State

Government through Menteri Besar

Selangor Incorporated (MBI Selangor)

and Worldwide Holdings Berhad to

revitalize and complete the vacant 203

double-story terraced house in Taman

Alam Perdana’s Arcadia. This public

private partnership also sets out to

build 10,900 housing units across Alam

Perdana’s 909 acres of land, out of

which, about 5,000 units will be built

under the RSK scheme.

Besides, we will also include Rumah

Mampu Milik Johor (RMMJ) in our

future township development in Kulai,

Johor.

These initiatives are in line with the

aspirations of the National Housing

Council as well as the government

of Johor State and Selangor State in

ensuring home ownerships for the

people.

The Group will continue its efforts to

help those in the middle income group

to own their dream homes.

Engaged Community

We believe that a successful

development is seamlessly integrated

into the local community and thus,

our township development planning

is important to meet residents’

needs. Neighbourhood, convenience

and environment factors also play

important role in shaping a quality

community living. In our township

developments, we actively promote

our commercial projects, which

provide not only convenience but also

employment opportunities close to

home. In the meantime, the building

work itself is creating construction

jobs.

In line with the vision of providing

a better living experience, LBS has

organised various activities for the

residents of Bandar Saujana Putra

(“BSP”) to get together to strengthen

bonds and its sense of community for

positive changes towards a sustainable

community.

We believe that a successful development is seamlessly integrated into the local community and thus, our

township development planning is important to meet residents’ needs. Neighbourhood, convenience and

environment factors also play important role in shaping a quality community living.

097


(CONT’D)

January 2016Community Dialogue held in conjunction with the Chinese New Year celebrations.

August 2016“Dayung Merdeka”, a special event organized for BSP residents.

March 2016Visit from YM Tengku Muhamad Tengku Harun, Orang Besar Daerah (OBD) Kuala Langat.

April 2016“Gotong Royong Cegah Denggi” organized to beat dengue in BSP.

May 2016Junior Sports Day.

Archery Workshop in BSP.

Campaign to update identity card for residents of BSP.

BSP Community Bowling.


ANNUAL REPORT 2016


Charitable Donations

We believe that the Group has a

corporate responsibility to support

community and thus LBS continues

to support borderless charitable

initiatives through variety social

contributions to help the needs

of communities. Philanthropy or

donations to charitable causes have

been one of the corporate social events

carried out by the Group annually. This

year was no exception as the Group

continued to provide support and

participate in community development,

the Group made donations to welfare

We believe that the Group has a corporate

responsibility to support community and thus LBS

continues to support borderless charitable

initiatives through variety social contributions to help the needs of

communities.

and charity organisations, religion

organisations and schools.

For the tenth consecutive year, LBS

has participated as one of the main

sponsors for Kiwanis Treasure Hunt.

This charity event was in aid of the

Kiwanis Down Syndrome Foundation

– National Centre, The Community

Centre for the Deaf, Ti-Ratana House

of Hope, Rumah Wawasan, Sitiawan,

Joy Workshop, Melaka and Kiwanis

Orphanage, Batu Pahat organised by

The Kiwanis Club of Kuala Lumpur

(KCKL).

During the year, LBS has also

participated and sponsored for other

fund raising events, these include,

among others:-

- Sponsored for the ‘Sultan of

Selangor Cup 2016’ which is an

annual friendly match between two

great friends and football rivals,

Selangor and Singapore; and

- Sponsored to the auspicious

installation night of the most

renowned association, Malaysian

Retailer Chain Association.

We also organised a blood donation

campaign collaborating with Persatuan

Hokkien Sungai Way Selangor and

Persatuan Perniagaan & Perindustrian

Petaling Selangor. The campaign

encouraged the community to build a

health society, as well as to support

the efforts of saving lives of others.

We also sponsored, in fifth consecutive

year, The Star’s new education

programme – The Step-Up and Star NiE

to improve and promote the English

Language skills among pupils for both

the primary and secondary schools.

099


(CONT’D)

LBS Foundation

Underpinning the values of LBS is a belief that we

have a responsibility to build stronger communities.

LBS Foundation was formed on 6 June 2015 with

aims at improving the quality of life of the community

and carrying out the sustainable development through the following four pillars:

Pillar Description

Education Creating a better nation through providing financial assistance and better learning environment to students and schools

Community Building strong and harmony society by improving general well-being of the underprivileged group and promoting heritage, sports, arts and cultural

Environment Protecting and preserving environment through education and partnering programmes

Health Improving the health and welfare of the needy group

This was a move to consolidate and

accelerate LBS Bina Group’s on-going

efforts to give back to the community

through corporate social responsibility

strategy where LBS Foundation shall

provide, promote, assist and enlist

positive actions towards making

sustained positive impacts.

Besides, LBS Foundation also serves as

another continuous effort in promoting

LBS’ tradition and philosophy of

community involvement date back to

the founder of the Company, Dato’ Seri

Lim Bock Seng, who strongly adhered

to the traditional Chinese belief “取诸社会用诸社会” which means “what

is taken from the community is to be

used for the good of the community”.

Always, he reminds his successors that

“Regardless of the distance of our

travel or the heights we scale, we must

never forget our roots.”

Promoting Art and Culture

Art and Culture beautify peoples’

souls and is a common language for

people from different backgrounds

and traditions. Through various

activities, the Group shoulders the

responsibilities to bring art and culture

closer to the community. In the years to

come, the Group specifically hopes to

widen the vision of the people, inspire

them to appreciate the creativity

of art and inspire them to strive for

excellence through enchanting with

different art and cultures.

During the year, we have launched

of the Melaka Cultural and Trade

Centre in Zhuhai Holiday Resort

Hotel. A significant component in the

Transformation and Upgrading Plan,

the Melaka Cultural and Trade Centre

represents an avenue to enhance

bilateral relationship between China

and Malaysia, specifically Guangdong

and Melaka. The centre is part of

China’s ‘One Belt One Road’ strategic

initiative which was established to

revitalise and expand Maritime Silk

routes linking Asia to Europe and East

Africa.

As a cultural preservation, the Company

has also sponsored, in two consecutive

years, Astro International Hua Hee

Karaoke to promote the use of Hokkien

dialect as a tool to communicate in the

broader community through a singing

competition.


ANNUAL REPORT 2016


OUR PEOPLE & CULTURE

Always, our Chairman reminds his

successors that “Regardless of the

distance of our travel or the heights of

which we scale, we must never forget

our roots.”

LBS believes in long term efforts that

was weaved through time to affect real

change. The Chairman’s successors,

Tan Sri Lim Hock San and his brothers,

have taken this vision and evolved it

through three ways:

1. Firstly, LBS believes in building

and nurturing the community in

its organization.

LBS endeavours to hone and

grow its existing talents because

it believes that employees need

to grow in strength and stature

along with the Company. LBS

believes that in order to affect

any community, LBS first needs to

reflect the change.

“Regardless of the distance of our travel or the heights of which we scale, we must not

forget our roots”

Dato’ Seri Lim Bock SengChairman

2. Secondly, LBS values long-term

partnerships.

In pursuing their vision, LBS

worked, pushed and stretched

the strength of their partners

with progressive innovation that

resulted in sustainability growth

for the Company and best value

to the stakeholders. Many of these

partners today were with LBS from

the beginning. At LBS evolved in

strength, so did the extended LBS

community.

3. Thirdly, LBS is committed to

improving the community where

they are developing.

As the Company grows, so

does its social responsibilities.

Being a responsible developer,

LBS believes in enriching life

experiences. LBS always support

many charities and communities

around the development areas

in the form of sponsorship on

education, sports and religion, to

natural disaster relief.

In LBS we continue to maintain

the family environment. When the

employees join LBS, they are part of

the LBS family, from which the motto

of the founder still lingers.

Nurturing and Retaining the Talents

In order to have a strong-based

workforce and ensure the Group

remains competitive and continues

to attract and retain the right talents,

the Group had engaged external

consultants to benchmark the

Company’s compensation packages

against peers and other comparable

industry. LBS motivates and rewards

employees with comprehensive and

competitive benefits programmes

including short-term cash bonus and

long-term equity based rewarding

plan. Employees’ Share Option Scheme

is an attractive long-term incentive

offered to employees to provide them

with a personal stake in the Company.

Employees who wish to purchase

properties developed by the Group

are also entitled to participate in the

property purchase discount scheme.

In line with the Company’s drive for

continuous improvement, the focus on

human capital development is critical.

To enable this, LBS encourages each

employee to undergo learning to

support their career development

and performance enhancement.

The learning can be inclusive of

functional, on-the-job or people

skills that are relevant to current or

future job function. In this regard,

the Group has a comprehensive

appraisal review system which allows

the Management to evaluate the

performance of employees against

Company’s expectations and identify

their development needs. At the same

time, the employees are encouraged

to drive their own learning needs and

career advancement opportunities.

101


(CONT’D)

Channel for Communication and Interaction

The Group communicates with its

employees, amongst others, through

LBS Annual Internal Communication,

dialogue sessions held by Executive

Directors and Senior Management, its

quarterly magazine named ‘Journey

with LBS’, intranet, e-mails and Social

Medias. The LBS Annual Internal

Communication is a good channel

that allows all staff from different

ranks and subsidiaries to interact

with the Management. Besides that,

it also helps in sharing important

information with the staff on the latest

management strategies and corporate

developments.

Orientation programme is designed to

familiarize new employees with LBS

organization structure, its policies

and procedures, corporate culture and

ethics to ease their transition into the

LBS workplace.

The Group recognises the importance

of non-work related activities amongst

colleagues. To foster interaction

amongst employees and build-up

strong team spirit, LBSclub was

delegated with the responsibilities to

organise various activities in achieving

these objectives. With initiatives

from LBSclub, various activities have

been carried out during 2016, which

included monthly staff birthday

celebration, LBS Sports Day-7th Bowling

Tournament, 5th LBS Treasure Hunt,

‘Caligraphy CNY Contest’, ‘Valentine

Word Search Fun Game’, ‘Eggshell Pot

Contest’, ‘Raya Cookies Jar Contest’,

‘Fastest Ketupat Wrappings’, ‘The Map

Fun Game’, ‘Malaysia Flag Contest’,

‘Lights on Diwali Fun Game’, ‘Holidays’

Seasons Fun Game’ and ‘Joyful Green

Christmas Contest’.

Harmony Work Place in Overseas Operations

Apart from local operations, Zhuhai

International Circuit has hosted

various activities such as Staff Birthday

Celebration (员工生日会) and ZIC

Family Day (ZIC员工家庭活动日和家庭日) to promote the employees’ welfare

and enhance the communication and

interaction amongst the employees.


ANNUAL REPORT 2016


Making LBS a secure and comfortable

place continues to be an important

focus in business strategy for

health and safety improvements

and ultimately deliver benefits to

employees, contractors, purchasers,

investors as well as general public.

We understand the inherent risk

of our operations, especially in our

Construction Division. Therefore, as

an integral part of risk management

strategy to meet and comply with all

applicable Health & Safety legislations

and instil the best practices to manage

operational health and safety risks

as well as improve performance, the

Division has a stringent Health & Safety

Management system in place that is

aligned with international standards of

best practice and was accredited with

OHSAS 18001:2007 from Worldwide

Quality Assurance (WQA), United

Kingdom, a body providing various

management system certifications

to companies around the world. The

said Health & Safety Management

system was designed to prevent and

respond to accidents and emergency

situations, to mitigate consequences

that may be associated with them,

protects our workforce and helps to

reduce disruption to our operations.

Besides that, we have also obtained

certification of ISO-9001:2008 from

WQA for its quality management

system where it has demonstrated

ability to consistently provide

quality, reliable, healthy, safe and

environmental friendly products and

services to the community.

Overall, responsibility for occupational

health and safety lies with the Board

of Directors. They are supported by

Health & Safety Department which

is led by the Managing Director of

Construction Division, Datuk Richard

Lim with the assistance of Health

& Safety Committee. The Health &

Safety Committee has divided into 6

teams each taking care of different

area: legal, emergency response,

internal audit, promotion publicity

& awareness, HIRADC and machine.

The Health & Safety Department

reviewed health and safety policy

and procedures, performance at

sites, lessons learned and shared best

practice periodically. The outputs

from the Health & Safety Department,

along with relevant health and safety

reports, were reported to the Board.

Health & Safety Committee also

carries out active dialogue with our

contractors, suppliers and employees

periodically to improve practices and

bolster mutual learning. Leading by

example, our Group Managing Director

Tan Sri Lim Hock San and Executive

Director Datuk Wira Lim Hock Guan

have been actively visited the project

sites at least twice monthly.

In the calendar year 2016, a total of

25 staffs (representing 664 hours of

training) were attended training and

seminars according to the requirement

and necessity in enhancing their

knowledge in discharging their duties

at work. Below are the trainings

attended by staff and Health & Safety

Committee members:

a) Site Safety Supervisor

Certification Programme

b) Scaffolding Competency

Certification Level 2

c) 12th MOSHPA OSH National

Conference 2016

d) 19th Conference and Exhibition on

Occupational Safety and Health

e) MBAM Annual Safety and Health

Conference 2016

f) NIOSH-Tenaga Safety Passport

(NTSP)

We understand the inherent risk of our

operations, especially in our Construction Division.

103


(CONT’D)

MARKET PLACE

The Group recognises the importance

of building and maintaining positive

relationships with its customers,

suppliers and contractors.

To ours customers, the Group

continues to maintain an open

communication with its purchasers

via Customer Care Center, email at

[email protected] or Social Medias

such as Facebook, Twitter, Instagram,

Youtube and WeChat. Immediate

reply and/or action would be taken

for enquires or complaints received to

ensure customers’ satisfaction.

For the past three reporting years

2013/2014, 2014/2015 and 2015/2016,

there was no work-related fatalities

for staff and contractors, and also

recorded zero lost-time incident at

all job sites. In the reporting year

2015/2016, a total of 7.082 million

man hours worked in all sites, only 5

accidents recorded which required

in-house first aid support. Despite all

these incidents are minor in nature,

the Health & Safety Committee

viewed that it signals the need for

further diligence in ensuring robust

accident investigation leading to the

identification of probable root cause

and the implementation of an action

plan, if appropriate, to ascertain that

we take the opportunity to learn from

the incidents. Consequential thereto,

Health & Safety Committee had taken

various steps to improve the situation,

including tool box meeting, safety

induction programme provided to new

workers and revision class for existing

workers, and more safety signages/

posters/banners placed at site.

The health and safety data was

collected on a monthly basis and the

reports are submitted to Jabatan

Keselamatan dan Kesihatan Pekerjaan

(JKKP)(Department of Occupational

Safety and Health). All the data is

subject to the audit of the independent

certification body WQA at its yearly

auditing work.

The health and safety management

system established within the Group

enables us to monitor and assess

the risk performance and maintain

a high level of health and safety

culture embedded within operations.

In 2016, all the job sites (100%) have

implemented/practised OHSAS 18001

standard. For year 2016 certificate

renewal, we have used SKYVILA

project site at D’ Island Residence,

Puchong as sample site.

The Gold Award 2016 garnered under

the 12th MOSPHA OSH Excellent Award

2016 from the Malaysia Occupational

Health & Safety Practitioner’s

Association was not only serves

an attestation to our endeavors

and efforts, but also a strong

encouragement to the team.


ANNUAL REPORT 2016


Supply Chain Management

The Group has set out standards

and ethics by which the business is

conducted. It ensures that there is no

bias and all suppliers will be treated

fairly without prejudice. The Group

values and derives considerable and

competitive advantage from active

cooperation with its established

suppliers in terms of innovation

and product development. Tender

procedures have been made clear to

the contractors so that the awards of

contract are done in a fair and just

manner.

The Group has an enviable reputation

for healthy relationship with our

supply chain. Many of our business

associates are long term in nature

as this close relationship allows us

to specify and source materials and

products that we know and from

responsible source. We believe that the

development of long term relationship

with our supply chain partners helps to

maintain our reputation and brand. We

aim to provide sites with local supplies

wherever possible, helping to reduce

carbon emissions from transporting

materials and to engage human

resources from local communities.

ENVIRONMENT

In March 2017, our Construction

Division was awarded the certification

of ISO 14001:2005 from WQA. This

internationally recognised standard

provides requirements for the design,

Our Construction Division was awarded the certification of ISO 14001:2005 from WQA.

implementation and certification

of an environmental management

system that helps the organisation

to set and achieve an environmental

policy and environmental objectives

in accordance with legal requirements

applicable to work performed by the

Company.

105


(CONT’D)

Green Elements

LBS recognises protection of the

global environment. In response to

the global environmental conservation

responsibility, the Company looks

toward in putting green elements in

its projects. D’ Island Residence is the

first project incorporated with the

Rainwater Harvesting system that

harvests the water from the roof for

the usage of landscape watering, toilet

flushing and car washing. On average, a

household can save up to 15%-20% of

water based on the designed rainwater

usage. It is estimated to save up to

100,000 liters of water per household

per year. Besides, our projects in

D’ Island Residence and Bandar

Saujana Putra have also featured more

environmentally friendly and energy

efficient systems like LED street

lights and these would apply on other

projects in the near future.

LBS recognises protection of the global environment.

In response to the global environmental conservation responsibility, the Company

looks toward in putting green elements in its projects.

Waste Management

During the year, we continued to

improve our building design so that

they are simple and yet comfortable

with minimum unique design that are

highly cost on the space and materials

utilization without compromising on

the quality and customer satisfaction.

Design methodology is not only

reduced operation cost of construction,

it also reduces energy consumption

by minimising energy inputs for heat

while maximising air ventilation and

natural light. As a result, this helps to

save energy and also save money for

the residents. We are glad that our

supply chair partners have granted

much support and co-operation in

working towards this direction.

At site, the Construction Division has

also introduced a series of practices

to recycle some of the waste so as to

reduce the amount of waste generated.

Practices implemented such as brick

and block waste is re-used at site in

walkway, car porch, roads as bases for

hard standings; paint cans recycling

and so on.

Another success in reducing the

concrete/rebar wastages was the

introduction for use of aluminium

or metal formwork system for our

building structure. This engineered

formwork is much cheaper and quicker

to use than traditional formwork. The

frames are extremely strong and

rarely need replacing, thus reducing

costs. Due to the formwork systems

being engineered, their construction is

faster and requires less manpower and

therefore saving money.

At offices, we implemented practices

to reduce waste and have paper,

card and print cartridge recycling

facilities. Electronic communications

continues to reduce dependency on

printing and recycled paper is used

throughout the Group. The eBook

and slide presentations used at each

meeting including Board and Board

Committees in all offices had reduced

at least 15,000 sheets of papers in the

year 2016. Policies have been set for

efficient usage of water and electricity

arising from daily operations.

TO MAKE ITALL HAPPEN,

FOR YOU, FORTOMORROWAND FOR OURCHILDRENTHE ANSWER TO YOUR SEARCH FOR BETTER LIFE


ANNUAL REPORT 2016

STATEMENT ON CORPORATE GOVERNANCE

THE BOARD OF DIRECTORS (“BOARD”) REMAINED STEADFAST IN ITS EFFORTS TO INSTILL AND MAINTAIN A STRONG CULTURE OF CORPORATE GOVERNANCE WITHIN THE GROUP BY ADOPTING THE PRINCIPLES AND SPECIFIC RECOMMENDATIONS ON STRUCTURES AND PROCESSES PROVIDED BY THE MALAYSIAN CODE ON CORPORATE GOVERNANCE (“MCCG 2012”) TO DIRECT AND MANAGE THE BUSINESS AND AFFAIRS OF THE GROUP TOWARDS FINANCIAL SUSTAINABILITY AND CORPORATE ACCOUNTABILITY WITH THE ULTIMATE AIM OF REALISING LONG-TERM SHAREHOLDERS’ VALUE, WHILE SAFEGUARDING THE INTERESTS OF OTHER STAKEHOLDERS.

The Board is, therefore, pleased to report that this statement sets out the extent of the Group’s compliance with the Recommendations of MCCG 2012 for the financial year ended 31 December 2016 (“FY 2016”).

PRINCIPLE 1 : ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

Clear Functions, Roles and Responsibilities of the Board and Management

The Board takes full responsibility in leading, governing, guiding and monitoring the entire performance and enforces standards of accountability including the process for financial reporting, risk management and compliance.

The Board assumes, amongst others, the following roles and responsibilities:-

• to formulate, implement and evaluate the strategic plans and direction of the Group;• to oversee the conduct and performance of the Group’s businesses; • to identify principal risks affecting the Group, setting the risk appetites and to ensure the implementation of appropriate

mitigation measures; • to establish and review training programme and succession planning to the Board and all candidates appointed to senior

management positions are of sufficient calibre;• to approve the change of corporate organisation structure plan including new investments or divestments both locally or

abroad; • to oversee the development and implementation of shareholder communication policy for the Group; and• to review the adequacy and the integrity of the Group’s management information and internal control system.

The following are some of the major matters specifically reserved for the Board:-

• Review, debate and approval of corporate strategies, plans, targets and programmes proposed by management prior to their implementation and execution;

• Approval and monitoring of the progress of material investments and divestments, mergers and acquisitions, corporate restructuring both local and abroad;

• appointment of new Directors and Chief Executive Officer/Managing Director based on recommendation of the Group’s Nomination and Remuneration Committee;

• annual financial statements and the quarterly financial results prior to releasing to Bursa Malaysia Securities Berhad (“Bursa Securities”); and

• material related party transactions and capital financing.

109

STATEMENT ONCORPORATE GOVERNANCE

(CONT’D)

The Board is not involved in the day-to-day operations whereby the Board delegates the authority and accountability for the day-to-day business operations of the Company, its subsidiaries and their respective operations to the Senior Management team led by the Group Managing Director to achieve the corporate objectives. The Senior Management is responsible for assisting the Board in implementing the policies and procedures adopted by the Board to achieve the Group’s objectives. The delegation of authority includes responsibility for:-

• Developing and implementing the strategies, business plans and budgets of the organisation.• Identifying and managing operational risks on a daily basis where those risks could have a material impact on the

businesses, formulating strategies to manage these risks including the preparation of Risk Assessment Reports and/or convening of Risk Management Committee (“RMC”) Meeting for all major investments or divestments transactions prior to final decision being made.

• Managing the Company’s current financial and other reporting mechanism as well as control and monitoring systems to ensure that these mechanism and systems capture all relevant material information on a timely basis and are functioning effectively.

• Ensuring that the Board and Board Committees are provided with sufficient and updated information on a timely basis in regard to the Group’s businesses and, in particular, with respect to the performance, financial condition, operating results and prospect to enable the Board and Board Committees to fulfil their governance responsibilities.

The Board delegates the resources management to the Senior Management team and has unrestricted access to any information pertaining to the Company and the Group. As such, the Senior Management team would be invited to attend the Board Meetings as and when necessary, to furnish with explanations and comments on the relevant agenda items tabled at the Board Meetings or to provide clarification on issue(s) that may be raised by the Directors. The Board and the Senior Management team work together to make decisions that will result in growth of the Company.

A brief profile of each key senior management is presented on pages 34 to 37 of this Annual Report.

Composition of the Board

The Board presently having ten (10) members comprising three (3) Independent Non-Executive Director (“INED”)s and six (6) Executive Directors (including a Group Managing Director) led by Dato’ Seri Lim Bock Seng as the Chairman and Non-Independent Non-Executive Director of the Company.

A brief profile of each director is presented on pages 26 to 33 of this Annual Report.

The Board consists of individual with diverse wealth of qualifications, experience, skills and knowledge in areas ranging from civil engineering, accountancy, banking, business entrepreneurship, information technology and public service. The composition of the Board is deemed fairly balance to complement and provide clear and effective leadership to the Company and bring informed and independent judgement to various aspects of the Company’s strategies and performance.

The Board also recognises the pivotal role of the INED in corporate accountability as they provide unbiased and independent views, advice and judgement to issues and decisions and act in the best interest of the Group and its shareholders.

Board Appointment Process

The Board has delegated the responsibility for recommending a potential candidate to fill a Board vacancy to its Nomination and Remuneration Committee (“NRC”). The ultimate decision on the appointment of new director lies with the Board as a whole.


ANNUAL REPORT 2016

BOARD SENIOR MANAGEMENT

TOTAL NO. OF EMPLOYEES

MALE MALE MALE

90% 60% 43%10% 40% 57%FEMALE FEMALE FEMALE

The NRC will perform initial process of review and selection of candidates identified for appointment to the Board. The list of candidates available will be assessed to determine whether they possess the appropriate skills, competencies, experience, integrity and time to effectively discharge their role as director before potential candidate is recommended to the Board for consideration and approval. Besides, the diversity of the Board’s composition which include, inter-alia, board size, gender, ethnicity, age will also be taken into consideration in the board appointment process. The Company Secretaries will ensure that all appointments are properly made, all the necessary information is obtained as well as all legal and regulatory obligations are met.

Boardroom Diversity

The Board adopted a Board Diversity Policy (“Policy”) which sets out the approach by the Company to achieve diversity on the Board. Under the Policy, the Company recognises and embraces the benefits of having a diverse Board and sees increasing diversity at Board level as an essential element in maintaining its competitive advantage and supporting its sustainable development. In determining an optimum composition of the Board, the Company will consider all aspects of diversity and will also take into account factors based on its own business model and specific needs from time to time.

Board members’ appointment will be based on meritocracy and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board. Selection of candidates will be based on a range of diversity perspectives, including but not limited to gender, ethnicity, age, skills, regional and industry experience and exposure, cultural and educational background, and professional experience. The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board. The Company does not set any specific target for female directors in the Policy and will actively work towards having more female directors on the Board. The Board recognises that the evolution of the diversity is a long term process and weighs the various factors relevant to board balance and diversity when vacancies arise.

The NRC is responsible in ensuring that diversity principles are adopted in board appointments, board performance evaluation and succession planning processes.

STATEMENT ONCORPORATE GOVERNANCE(CONT’D)

111

Dato’ Seri Lim Bock Seng

Tan Sri Lim Hock San

Datuk Wira Lim Hock Guan

Maj (Hon) Dato’ Sri Lim Hock Sing

Datuk Lim Hock Seong

Dato’ Lim Mooi Pang

Dato’ Chia Lok Yuen

Datuk Dr Haji Baharum bin Haji Mohamed

Datuk Lim Si Cheng

Lim Tong Lee

21 3 4 5 6 7Number of meetings

Att

endan

ce

Board Meetings

A pre-scheduled annual calendar of the Board Meetings is circulated to all the Board members at the beginning of each year to facilitate the Directors to plan their schedules. Board Meetings are usually held a minimum of five (5) times in a year. Additional meetings would be convened as and when there are important and urgent decisions to be made, which required to be taken in between the scheduled meetings. Directors are allowed to participate in Board Meetings via tele-conference.

All the Directors have complied with the minimum 50% attendance requirement in respect of Board Meetings as stipulated in the Main Market Listing Requirements (“MMLR”) of Bursa Securities. During the FY 2016, a total of seven (7) Board Meetings were held. The attendance of each Director at the Board Meetings is tabulated as below:-

The proceedings of Board Meetings are conducted according to a structured agenda together with comprehensive management reports and supporting information including operating results, reviews and analysis, board papers in relation to corporate proposals (if any), regulatory/statutory updates which are furnished to the Directors in advance of each Board Meetings so as to accord sufficient time for the Directors to study the meeting materials prior to discussion at the meetings. As an initiative to help protect the environment, the Group has invested in tablet devices for the Board to conduct paperless Board Meetings and the meeting documents are distributed to the Directors in electronic form, which allow them to access and review the meeting documents conveniently at any time.

At the Board Meetings, the Managing Director provides updates of significant issues relating to the Group’s business outlook, major acquisition and disposal of assets/investments and updates from business development including overseas operations while the General Manager of Accounts & Finance Department presents Group’s financial results. The Chairman of the respective Board Committees would report any significant issues noted and/or deliberated by the relevant Board Committees which require the Board’s attention and approval for implementation. The Board members are constantly updated on the progress and development of any ongoing significant issues or matters at the subsequent meetings. All deliberations at Board Meetings are duly minuted as records of proceedings. Decision made, policies approved and follow-up actions at Board Meetings will be communicated to the Management accordingly.

All Directors are invited to deliberate and discuss on any issues as they deem fit. Where a potential of conflict arises in the Group’s transactions involving any Director’s interest, such Director is required to declare his/her interest and abstain from the decision making process. For the FY 2016, there is a corporate proposal which have created a situation of conflict of interests involving a few present Directors, all of which had abstained from deliberation and making decision on the proposal accordingly.


(CONT’D)


ANNUAL REPORT 2016

Supply of Information

The Management has an obligation to supply the Board and its Committees with adequate information, in a timely manner, to enable them to make informed decisions. Where more information is required than those voluntarily given by Management, all Directors are allowed to make further enquiries where necessary. Therefore, the Board and individual directors have separate and independent access to the Company’s senior management for additional information and advice at all times.

The Board is supplied with financial and non-financial information in order for them to monitor the Company’s performance against its strategic objectives. Information provided including:-

• quarterly financial performance report of the Group;• risk assessment reports on major investments and divestments of the Group;• major operational and financial report including sales analysis and debtor aging;• Group’s risk profile;• updates on corporate exercises and significant compliances; and• updates on regulatory and legislation changes.

Presentations on major proposals are made at meetings of the Board and Board Committees in a manner that ensures clear and adequate information on the subject matter is delivered. All Directors have the right and duty to make further enquiries where they consider necessary. Members of the Senior Management team are invited to the meeting to provide insight and to furnish clarification on issues that may be raised by the Board. To ensure that the Board receives information in a timely manner, the notices of meetings are sent to the Directors at least one week in advance and the meeting ebooks are delivered on the same day the notices are sent, or in any event, at least three (3) days before the meeting. This provides the Board with sufficient time to go through the meeting ebooks and to raise important issues during the meeting.

All Directors, whether as a full Board or individually, have full and unrestricted access to the advice and services of the Senior Management, Company Secretaries, Internal Auditors and External Auditors in the furtherance of their duties.

When necessary, the Board members may seek external professional advice, whether as a full Board or in their individual capacity, to enable them to discharge their duties with adequate knowledge at the expense of the Company. In addition, the Board has unrestricted access to the Company’s information and receive regular information updates from the Management. Corporate announcements released to Bursa Securities are sent via email to all the Directors.

The Company Secretaries who attend each Board Meetings play an important role to ensure that Board procedures are adhered to at all times during meetings and advised the Board on matters including corporate governance requirements and the Directors’ responsibilities in complying with relevant legislation and regulations. The Board is updated with new regulatory, regulations or requirements concerning their duties and responsibilities.

Board Committees

The Board delegates specific responsibilities to the respective committees of the Board namely Audit Committee, Nomination and Remuneration Committee, Employee Share Option Scheme (“ESOS”) Committee and Risk Management Committee in order to enhance business and corporate efficiency and effectiveness. The Chairman of the respective Board Committees will brief the Board on the matters discussed at the respective Committees’ meeting and minutes of these meetings are circulated to the Board. All Board Committees operate within their clearly defined terms of reference and operating procedures whereupon the Board receives reports of their proceedings and deliberations with their recommendations. The ultimate responsibility for decision making lies with the Board.


113

BOARDResponsible for the long-term success of the Group. It sets strategy and oversees its implementation, ensuring only acceptable risks are taken. It provides leadership and direction and is also responsible for corporate governance and the overall financial performance of the Group.

BOARD COMMITTEES

Audit CommitteeResponsible for oversight of the Group’s financial and reporting processes, the integrity of the financial statements, the external and internal audit processes, and the systems of internal control and risk management.

Please refer to the Audit Committee Report which forms part of this Annual Report for further details.

Tender CommitteeResponsible for oversight of the screening of panel contractors, Group’s project tender process and direct negotiation contracts.

ESOS CommitteeResponsible for administration and implementation of the ESOS in accordance with the Bye-Laws of ESOS.

Sustainability CommitteeResponsible for overseeing and addressing sustainability issues relating to all groups of stakeholders.

Risk Management CommitteeResponsible for oversight of the implementation of the risk management system and to ensure that the risk management process is in place and functioning effectively.

Details of the Group’s Risk Management are set out in the Statement on Risk Management and Internal Control in this Annual Report.

Other Ad-Hoc CommitteesAd-hoc Committee will be formed based on the specific corporate exercise or operation of the Group when the need arises.

The following diagram shows a brief overview of the Board Committees of the Company:-

Nomination and Remuneration CommitteeResponsible for review and recommend to the Board composition, board evalution, executive remuneration policy and recommend the remuneration packages of the Executive Directors and other members of the Executive Committee.

Please refer to Principle 2: Strengthen Composition – Nomination and Remuneration Committee on pages 120 to 123 of this Annual Report.

Health & Safety CommitteeResponsible for overseeing the Group’s health and safety operations, performance against targets and progress towards goals.

Group Managing Director Responsible for implementation of the Board’s strategy, day-to-day management of the business and all matters which have not been reserved to the Board or delegated to its Committees.

Senior Management TeamAn executive team that operates under the direction and authority of the Group Managing Director. It comprises Senior Management from across the head of departments and business units.

It assists the Group Managing Director, in implementing strategy and policies and managing the operational and financial performance of the Group. It also addresses other key business and corporate related matters, including succession planning and organisational development.

MANAGEMENT COMMITTEES


(CONT’D)


ANNUAL REPORT 2016

Re-election of Directors

The NRC is responsible for making recommendations to the Board those Directors who are eligible to stand for re-election or re-appointment. The recommendation made in accordance with the Company’s Articles of Association, one-third (1/3) of the Directors including the Managing Director shall retire from office at least once in every three (3) years in compliance with the MMLR of Bursa Securities and shall be eligible for re-election at each Annual General Meeting (“AGM”). Directors appointed during the year are subject to retirement and re-election by the shareholders at the next AGM following their appointment. The names of the Directors seeking for re-election at the forthcoming Seventeenth AGM are disclosed in the Notice of Annual General Meeting.

Formalised Ethical Standards through Code of Conduct and Business Ethics

The Group’s Code of Conduct and Business Ethics for Directors and employees continue to govern the standards of ethics and good conduct expected from the directors and employees. Details as disclosed below:-

Directors’ Code of Conduct

The Board in discharging its functions besides observed the Code of Ethics for Company Directors issued by the Companies Commission of Malaysia, the provisions of Companies Act, 2016 and MCCG 2012, has adopted its Directors’ Code of Conduct which sets out twelve (12) principles as guidance for proper standards of conduct, sound and prudent business practices as well as standard of ethical behaviour for Directors, based on the principles of integrity, responsibility, sincerity and corporate social responsibility:-

No. Principles

To observe high standards of Corporate Governance

Have a clear understanding of the aims and purpose, capabilities and capacity of the Company to observe and maintain the high standards of Corporate Governance, ethical and business conduct in the performance and exercise of their responsibilities as Directors of the Company.

To devote sufficient time and effort

Devote sufficient and reasonable time, effort, energy and attention to the Company to ensure diligent performance of his/her duties, including preparing for meetings and discussions thereby reviewing in advance materials distributed by the Company, if any and making reasonable inquiries; and

Should notify the Board’s Chairman before accepting any new Directorships in any public listed companies and the time spent on the new appointments.

12


115

No. Principles

To avoid conflict of interest

Directors have a duty to act honestly and declare any personal interests whether directly or indirectly relating to public duties and take steps to resolve any conflicts arising in a way that protects the interests of the Company;

Should dedicate their best efforts to advancing the Company’s interest and to make decisions in the best interest of the Company and independent of outside influence including but not limited to financial interests, other business interests, other employment, entertainment and gifts; and

When acting on and on behalf of the Company, the Director should never accept any benefit as an inducement or reward for taking any action (or specifically not taking any action) in their official capacity as a Director and gifts other than of token value should generally be refused.

To avoid misuse of position and information

Never uses his/her position as Directors and improper use of any information acquired by virtue of his/her position as Director, directly or indirectly, an advantage for himself/herself or for any other person; and

Directors are prohibited from dealing in securities of the Company when he/she is in the possession of unpublished price sensitive information.

To ensure integrity of records

Should not place themselves under any financial or other obligation to any person that might reasonable be thought to influence them in the performance of their duties;

Should disclose immediately all contractual interests whether directly or indirectly with the Company; and

Should be willing to exercise independent judgment and, if necessary, openly oppose if the vital interest of the Company is at stake.

To ensure confidentiality of communication and transactions

Shall maintain confidentiality of information entrusted to them by the Company. The Company’s confidential and proprietary information shall not be inappropriately disclosed or used for personal gain or advantage.

To ensure compliance with applicable laws

Should have access at all times to the advice and services of the Management, Company Secretaries, Internal Auditors and External Auditors and the Board may seek any independent professional advice at the expense of the Company if required in furtherance of their duties to ensure all applicable laws, rules and regulations, confidentiality obligations, corporate policies and procedures are complied with.

3

4

5

67


(CONT’D)


ANNUAL REPORT 2016

No. Principles

To demonstrate openness and timeliness of communication

Subject to the restrains of all applicable laws, Directors will ensure openness and timeliness of the release of announcements and to give reasons about decision and actions.

To exercise duties and act honestly in the best interest of the Company

Should at all times exercise their powers of the purposes they were conferred, for the benefit, prosperity and sustainability of the Company in any transactions and to act honestly and responsibly in the exercise of his powers in discharging his duties in the best interests of the Company and the Group.

To uphold accountability

Uphold accountability at all times. This includes ensuring that the Company’s resources are properly safeguarded and the Company conducts its operations as economically, efficiently and effectively as possible at all time.

To maintain positive relationship with shareholders, employees, creditors and customers

Should be conscious of the interest of shareholders, employees, creditors and customers of the Company;

Should at all times promote professionalism and improve the competency of Management and employees; and

Should ensure adequate safety measures and provide proper protection to workers and employees at the workplace.

Corporate Social Responsibility

Directors should be committed to acting responsibly for the Company’s actions and strive to operate in a way that encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and public as a whole.

The Board will review the Directors’ Code of Conduct when necessary to ensure it remains relevant and appropriate. The full version of the Directors’ Code of Conduct is published on the Company’s website at www.lbs.com.my.

910

12

1 1

8


117

The Board has also put in place the following Business Ethics for Directors and all employees at work of the Group:-

Insider Trading

Directors and employees who possess price sensitive information which is not available to the public, are not allowed to trade in the Company’s securities which is in consistent with Subdivision 2 – Insider Trading, Part V – Market Misconduct and Other Prohibited Conduct of the Capital Markets and Service Act, 2007 and Paragraph 14.04 of the MMLR of Bursa Securities.

Relevant notifications in relation to the dealings of the Company’s securities during close period are sent to Directors and principal officers on a quarterly basis specifying the timeframe of close period and the day of which they are prohibited from dealing in the Company’s securities.

Declaration of Interests

The Directors acknowledge that by declaring their interest in any transaction with the Company and the Group, they will abstain themselves from deliberation and voting on the relevant resolutions at the Board Meetings or any general meeting to be convened to consider the matter. If a corporate proposal has to be approved by the shareholders, the Directors with any interest in the proposal will abstain from voting on the resolution, and will further undertake to ensure that persons connected to them also will abstain from voting on the resolution.

Group IT Policies

Under the Group IT Policies, staffs are strictly prohibited from installing, copying or downloading any illegal, unlicensed and unauthorised software onto their desktop PC and notebook, as these would constitute criminal offence under the Copyright Act, 1987. Stern disciplinary actions will be taken against any staff who found committed this offence.

Standard Operating Procedures (“SOPs”)

Well documented SOPs of certain functions of the various key departments within the Group were established and approved as standard processes, procedures and responsibilities for employee. It provides as their key reference in maintaining efficiency and the uniformity of the performance of a specific function. These SOPs are made available to all staff at the internal computer network storage sharing folder of the Company which subject to review from time to time.

In 2015, the Company has engaged the service of an external consultant to review and revamp the SOPs for the entire Group, which is expected to complete by 2017.

Corporate Disclosure Policy and Procedure

The Company has adopted its Investor Relations Policy (“IR Policy”) as its official corporate disclosure policy and procedure in disseminating corporate and material information to the investing public.

The Company is committed to provide accurate, balance, clear, timely, consistent and fair disclosure of corporate information with reference to its IR Policy and Corporate Disclosure Guide 2012 introduced by Bursa Securities whilst adhering to the corporate disclosure requirements as set out in the MMLR of Bursa Securities, to enable informed and orderly market decisions by the investors.


(CONT’D)


ANNUAL REPORT 2016

Strategies Promoting Sustainability

The Board recognizes the importance of sustainability that encouraged continuous improvement process for an organisation in the modern economy which includes sound management of people and environment, and business sustainability eventually.

In view of the Group’s branches whose operations have geographically expanded in Klang Valley, Ipoh, Cameron Highlands, Kuantan and Johor, the Board will be embarking on a holistic review of the Group’s sustainable practices and to formulate a strategic methodology of a comprehensive sustainability procedure which takes into consideration the interests of the community, employees, environment, shareholders and other stakeholders when making business decision and managing resources which aim at securing sustainable elements to guide policies towards sustainability development with particular focus on the environmental, social and governance aspects of the business.

Qualified and Competent Company Secretary

The Board has appointed Ms. Doris Lee Ching Ching as the Company Secretary responsible for providing advices to the Board regarding the performance of duties in corporate compliances. The Company Secretary acts as a central source of guidance, information and advice to the Board and Board Committees on issues relating to corporate compliance with the relevant laws, rules, regulations and procedures affecting the Board and the Group, as well as best practices of governance.

Insider Trading

Group IT Policies

Standard Operating Procedures

Corporate Disclosure Policy & Procedures

Declaration of Interest

Sustainability Strategies

BUSINESS ETHIC FOR DIRECTORS


119

The Board members and Board Committees have unlimited access to the services of the Company Secretary and is updated with new regulatory, regulations or requirements of current developments in the regulatory framework and governance practice concerning their duties and responsibilities. The Company Secretary will brief the Board members and Board Committees on the proposed corporate exercise and timings of material announcements to be made to the Bursa Securities. The Company Secretary also facilitates the organization of internal training programmes or external seminar and programme for Directors and keeps record of the training attended by Directors.

The Company Secretary attends all the Board and Board Committee meetings and ensures that all board ebooks are sent to the members in a timely basis, meetings are properly convened and appropriate records of the deliberations and proceedings are accurately recorded and duly signed by the Chairman. The Company Secretary also facilitates the communications of decisions made and policies set by the Board to the Senior Management for action. The Company Secretary works closely with the Management to ensure that there are timely information flows within and to the Board and Board Committees, and between the Non-Executive Directors and Management.

The Company Secretary holds a senior position with adequate authority and report directly to the Board. The appointment and removal of the Company Secretary will be subjected to the approval of the Board.

The profile of the Company Secretary is presented on page 35 of this Annual Report.

Board Charter The Board has adopted a Board Charter which sets how its roles, powers and responsibilities are exercised, having regard to principles of good governance, best practices and applicable laws.

The Board Charter upholds high standard of governance and clarifies, amongst others, the roles and responsibilities of the Board and serves as a general statement of intent and expectation as to how the Board discharge its duties and responsibilities. The Board Charter will be reviewed and updated periodically as and when necessary to ensure its appropriateness and relevance to the Company from time to time and its compliance with the the relevant laws, rules and regulations. The last review of the Board Charter has been made in August 2016. The Board Charter is made available at the Company’s website at www.lbs.com.my.

The Board Charter comprises, amongst others, the following key areas:-

• Roles of the Board and Board Committees

• Roles of Chairman and Managing Director

• Board Size and Composition

• Code of Ethics for the Board

• Board Efficiency

• Stakeholder Communication

• Process of the Board

• Board Effectiveness Assessment

• Training and Development

• Directors’ Selection Criteria

• Terms and Tenure of Appointment


(CONT’D)


ANNUAL REPORT 2016


Whistleblowing Policy and Procedures The Board believes in promoting high standard of integrity and accountability in managing its day-to-day businesses and operations and aims to conduct its affairs in an ethical, responsible and transparent manner.

The Board is in the process of formalising a whistleblowing policy and procedures for the Group to encourage employees and stakeholders to report or disclose any improper conduct in accordance with set procedures and to provide protection to them from reprisal as consequences of making such disclosure.

PRINCIPLE 2 : STRENGTHEN COMPOSITION

Nomination and Remuneration Committee

NRC was established with defined terms of reference to assists the members of NRC in discharging their duties. The composition of NRC comprises three (3) members exclusively are INEDs pursuant to Paragraph 15.08A(1) of the MMLR of Bursa Securities. Currently, the members of NRC are as follows:-

(a) Datuk Dr Haji Baharum bin Haji Mohamed, Chairman* (Senior Independent Non-Executive Director)

(b) Mr. Lim Tong Lee (Independent Non-Executive Director)

(c) Datuk Lim Si Cheng (Independent Non-Executive Director) Notes:-* Redesignated as Chairman on 12 April 2017.

The NRC has assessed the effectiveness of the Board as a whole and the Board Committees through the completion of assessment questionnaires. The assessment parameters included board structure, operations, tenure, roles and responsibilities, Chairman’s roles and responsibilities and the effectiveness of the Board in its monitoring role.

Through Evaluation Panel comprising Chairman of the Board, Chairman of NRC and Chairman of Audit Committee, has assessed each Director’s contribution to the effectiveness of the Board. The assessment parameters include attendance record, contribution to interaction, quality of input and understand of roles.

The evaluation process is a constructive mechanism for improving board effectiveness, maximising strengths and tackling weaknesses, leading to an immediate improvement of performance throughout the organisation. When assessing performance of board members, the assessment forms will be distributed to the every member of the Evaluation Panel. Upon completion, the Company Secretary gathered the forms, summarized and presented the results of the performance assessment to the NRC. The assessment for the Board as a whole and Board Committees will be carried out by the NRC at the meeting. A questionnaire which forms part of the meeting documents will be completed by the NRC after discussion. The findings of the all evaluations later will be reported to the Board.

The NRC also reviews remuneration package comprising salaries, bonuses, benefits-in-kind and allowances of Executive Directors annually to ensure that the remuneration packages are fair and reasonable. The determination of the remuneration of the INEDs is a matter for the Board as a whole.


121

A summary of the activities of the NRC in discharging its duties during the year under review is as follows:-

(a) Reviewed the composition of the Board in respect of its structure, size and the required mix of skills and experience;

(b) Reviewed the re-election of directors retiring by rotation pursuant to Article 100 of the Company’s Articles of Association and re-appointment of director retiring pursuant to Section 129 of the Companies Act, 1965 at the Sixteenth AGM of the Company;

(c) Assessed the independence of INEDs and external auditors;

(d) Reviewed remuneration package comprising salaries, incentives, bonuses, benefits-in-kind and allowances of Executive Directors. The determination of the remuneration of the INEDs is a matter for the Board as a whole; and

(e) Annual assessment and evaluation of the Board, Board Committees and the individual directors.

The NRC, upon its annual assessment, confirms that the present size and composition of the Board has the requisite competencies and capacity to effectively oversee the overall businesses and handle all matters pertaining to the Group.

The Board is satisfied that the current function of NRC in respect of nomination and remuneration matters is in accordance with its terms of reference.

Directors’ Remuneration

The Group is committed to achieving sustained improvements in performance and this depends crucially on the individual contributions made by the executive members of the Board and by employees at all levels. Accordingly, the Board believes that an effective remuneration policy plays an essential part in the future success of the Group.

In reviewing the remuneration of Executive Directors, NRC with the assistance of Human Resource Department considers the level of remuneration has achieved the following main objectives of the Company’s policy on Directors’ remuneration :-

• to ensure remuneration package is competitive to attract and retain its Executive Directors who are capable in meeting the Company’s goal;

• to reward Executive Directors for achieving corporate and individual performance targets in a fair and equitable way;

• to ensure the remuneration package reflects the Executive Director’s duties and responsibilities and contain incentives to motivate the Executive Director to deliver the Group’s performance objectives without encouraging excessive risk taking; and

• the remuneration policy must be sufficiently flexible to take account of changes in the Group’s business environment and market practices;

The remuneration package for Executive Directors comprises a fixed component (in the form of basic salary, contractual bonus and benefits-in-kind) and variable components (which includes variable year-end bonus and employee share options).


(CONT’D)


ANNUAL REPORT 2016

When reviewing and determining the structure of Directors’ remuneration, the NRC takes into the following criteria:-

• Individual performance

• Skills and knowledge

• Involvement in the Group’s affairs

• Achievement of Group’s internal targets

• Performance and profitability of the Group

The NRC also considered other factors such as salary paid by comparable companies, time commitment, scope of duties and responsibilities. The NRC may consult the Group Managing Director on the remuneration of other Executive Directors and has access to independent professional advice, if necessary.

The Board as a whole recommends the proposed fees for the Non-Executive Directors with the individual directors concerned abstaining from decisions in respect of their individual remuneration. The fees payable to the Non-Executive Directors are subject to the approval of shareholders at the Company’s AGM.

The remuneration of the Directors for the FY 2016 is set out below:-

(a) The aggregate directors’ remuneration received/receivable from the Company during the FY 2016 are as follows:-

Category Fees(RM)

Salaries(RM)

Bonuses Allowances

and Other Emoluments

(RM)Benefits-In-Kind

(RM)Total(RM)

Executive Directors - - - - -

Non-Executive Directors 137,214.00 - 903,303.20 53,162.47 1,093,679.67

The number of Directors whose remuneration falls in each successive band of RM50,000 at Company level are as follows:-

Range of Remuneration(RM)

No. of Directors

Executive Non-Executive

50,000 – 100,000 3

700,000 – 750,000 1

Total - 4


123

(b) The aggregate directors’ remuneration received/receivable on a Group basis during the FY 2016 are as follows:-

Category Fees(RM)

Salaries(RM)

Bonuses Allowances

and Other Emoluments

(RM)Benefits-In-Kind

(RM)Total(RM)

Executive Directors 679,674.00 6,039,875.98 4,386,533.30 834,657.15 11,940,740.43

Non-Executive Directors* 137,214.00 - 903,303.20 53,162.47 1,093,679.67

* Non-Executive Directors refers to 3 Independent Directors and the Chairman.

The number of Directors whose remuneration falls in each successive band of RM50,000 at Group level are as follows:-

Range of Remuneration(RM)

No. of Directors

Executive Non-Executive

50,000 – 100,000 3

700,000 – 750,000 1

1,150,001 – 1,200,000 1

1,650,001 – 1,700,000 3

2,650,001 – 2,700,000 1

3,050,001 – 3,100,000 1

Total 6 4

The remuneration of individual Director is not disclosed as the Board is of the view that the transparency and accountability aspects of corporate governance as applicable to Directors’ Remuneration are appropriately served by the above band disclosure.

PRINCIPLE 3 : REINFORCE INDEPENDENCE Annual Assessment of Independence

Paragraph 1.01 of the MMLR of Bursa Securities provides that an INED is one who is independent of management and free from any business or other relationship that could interfere with the exercise of independent judgement or the ability to act in the best interest of a listed company.

The present composition of the Board is in compliance with Paragraph 15.02(1) of the MMLR of Bursa Securities where 3 out of its total 10 board members are independent directors. The Board assess the independence of its INED annually for appropriate proper functioning of the Board and provides effective check and balance in discharging its responsibilities. No individual or small group of individuals dominates the Board’s decision making. For purpose of determination of independence, the INEDs who are not related to the substantial shareholders of the Company provide declarations regarding their independences.

When reviewing the independence of the INEDs, the NRC has considered their other directorships, annual declaration regarding their independence, disclosure of interest in transactions in which they have a direct or indirect interest, their ability to avoid any apparent conflicts of interests especially by abstaining from deliberation on such transactions and their ability to maintain objectivity in their conduct as Directors of the Company.


(CONT’D)


ANNUAL REPORT 2016

The Board is satisfied with the assessment of the INEDs especially with the level of independence demonstrated by all the INEDs of the Company and their ability to provide objective judgement to the Board, which mitigate conflict of interest and undue influence from interest parties.

Tenure of Independent Directors

In accordance with the Recommendation 3.2 of the MCCG 2012, the Board has adopted a policy that the tenure of an independent director should not exceed nine (9) years cumulatively. Upon completion of a nine (9) years’ term, such independent director may continue to serve on the Board subject to his re-designation as a Non-Independent Director.

None of the INED’s tenure has exceeded a cumulative term of nine (9) years for the FY 2016.

Separation of Positions of the Chairman and Managing Director

The roles of the Chairman and Managing Director are distinct and separate to ensure balance of power and authority. The Chairman of the Board is primarily responsible for ensuring Board effectiveness and monitoring the workings of the Board whilst Managing Director has the overall responsibilities over the Group’s operation, organisational performance effectiveness and implementation of strategy, overseeing and managing the day-to-day operations of the Group and the Board policies, decisions, consideration and approval. He is also responsible for determination of strategic direction of the Group for the Board’s consideration and approval. The Managing Director also acts as the Group’s official spokesperson.

Dato’ Seri Lim Bock Seng, is the founder of LBS Group of Companies who founded the construction business in 1960s. Under his vision and guidance, the business has grown into one of Malaysia’s leading property developer. In appreciation of his contribution, the Company’s name was named after each initial of his name, Lim Bock Seng, in abbreviation LBS. He was appointed as Chairman & Non-Independent Non-Executive Director of the Company on 6 December 2001 prior to the listing of the Company on the Main Market of Bursa Securities on 30 January 2002.

Notwithstanding the Chairman is not an Independent Director as recommended in the MCCG 2012, the Board has not found it necessary to identify an independent director as Chairman for the time being. The Board is satisfied that there is a sufficient balance between independent and non-independent directors on the Board to ensure no one individual had unfettered decision making powers. Further, the NRC was of opinion that an independent Chairman may not necessarily improve the function of the Board. Accordingly, the members believe that since the Chairman is the founder of the corporation and also a significant driver behind the business, this will add value to the Company and all shareholders’ benefit.

PRINCIPLE 4 : FOSTER COMMITMENT

Time Commitment

None of the members of the Board has more than five directorships in listed companies. All Directors are obliged to notify the Board before accepting any new directorships in other listed companies. The notification will include an indication of time that will be spent on the new appointments to ensure that the Directors have sufficient time to discharge their duties to the Board and the various committees on which they serve.


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The directorships of the Company’s Directors in other public listed companies do not exceed the prescribed limits under the MMLR. This ensures that their commitment, resources and time are more focus and enables them to discharge their duties efficiently.

The Directors of the Company acknowledge the importance of allocating sufficient time to attend the affairs of the Company and at the same time ensure their full commitment towards the business needs of the Company and its Group.

Although there is no specified time commitment required of the Directors’ in terms of number of days per year, 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. Besides attending Board, Board Committees and general meetings, the time spent by Directors also include attending informal meetings and discussions with Management relating to the Group’s affairs, corporate events like project launching, project site visit, inhouse professional development and training and all other major corporate events, functions, briefing and dinners organised by the Company.

During the FY 2016, all the Directors of the Company have attended more than 50% of the attendance required by the MMLR. In the intervals between Board Meetings, for any matters requiring Board’s decisions, the Board’s approval is obtained through circular resolutions which are then noted at the next Board Meeting.

Directors’ Training and Induction

For newly appointed Director, a formal letter detailing the general duties and obligations as a Director pursuant to the relevant legislations and regulations will be given. The new Director will also be provided with books and printed materials relating to the roles and responsibilities of a director, the Group’s principal businesses, corporate governance practices, company policies and procedures as well as a board meeting calendar for the year.

The Company Secretary would lead a comprehensive induction programme for newly appointed Director. The induction programme includes meetings with various key executives of the Management to allow the new Directors to be acquainted with the Management team and to facilitate their independent access in future to the Management team. The programme also includes briefing by the Company Secretary on the Company’s board processes, internal controls and governance practices and by the Management team on key areas of the Company’s operations. Project site visits would be arranged for the new Director to view the developments of the Group.

For a first time Director, he or she would be attending the Mandatory Accreditation Programme as prescribed by the MMLR of Bursa Securities in order to acquire relevant knowledge of what is expected of a listed company director.

All Directors are also provided with updates and/or briefings from time to time by professional advisers, consultants, Management and the Company Secretary in areas such as corporate governance practices, relevant legislations and regulations and financial reporting standards. The Company Secretary has periodically informed the Directors of the availability of appropriate courses, conferences and seminars, and the Directors are encouraged to attend such training at the Company expense.


(CONT’D)


ANNUAL REPORT 2016

The Board members attended training programmes, conferences, seminars, courses and/or workshops during the financial year. A summary of selected in-house education programmes and external training’s attended by directors are set out as follows:-

Directors Topics

Dato Seri Lim Bock Seng Highlights of the Companies Act 2016 - Changes & Implications

Tan Sri Lim Hock San Highlights of the Companies Act 2016 - Changes & Implications

The 8th Conference for Friendship of Overseas Chinese Associations

8th World Chinese Economic Summit (WCES)

Maj (Hon) Dato’ Sri Lim Hock Sing Highlights of the Companies Act 2016 - Changes & Implications

Dato’ Chia Lok Yuen Highlights of the Companies Act 2016 - Changes & Implications

Dato’ Lim Mooi Pang Highlights of the Companies Act 2016 - Changes & Implications

8th World Chinese Economic Summit (WCES)

Datuk Dr Haji Baharum bin Haji Mohamed Highlights of the Companies Act 2016 - Changes & Implications

Datuk Lim Si Cheng Highlights of the Companies Act 2016 - Changes & Implications

Lim Tong Lee Highlights of the Companies Act 2016 - Changes & Implications

Anti-Money Laundering (AML) (APAC)

Save as disclosed above, Datuk Wira Lim Hock Guan, JP and Datuk Lim Hock Seong did not attended any seminars and training programmes during the financial year due to overseas travelling and working tight schedule. However, Datuk Wira Lim Hock Guan and Datuk Lim Hock Seong have studied and/or continuoes learning on the financial and business matter via readings books, magazines and/or journal which allow them to contribute to the Board. They were fully aware of their duties and resposibilities and shall continue to undergo seminars and other relevant training programmes to keep abreast with new regulatory developments.

The Board will continue to evaluate and determine the training needs of its members to assist them in discharging of their duties as Directors of the Company.

PRINCIPLE 5 : UPHOLD INTEGRITY IN FINANCIAL REPORTING

Financial Reporting

The Board endeavours to provide a clear, balanced and fair assessment of the Group’s financial performance and prospect primarily through the audited financial statements, quarterly announcement of financial results and annual report to shareholders.

The Board is assisted by the Audit Committee to oversee the integrity of the Group’s financial reporting processes. The processes are aimed at providing assurance that the financial statements and related notes were prepared and drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia for the financial year ended 31 December 2016. The quarterly financial results and audited financial statements were reviewed and recommended by the Audit Committee and approved by the Board before being released to Bursa Securities.


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Statement of Directors’ Responsibility in respect of the Financial Statements

The Directors are responsible to ensure the Company’s financial statements are drawn up in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs, the results and cash flow of the Group and of the Company during the FY 2016. The Board is also responsible for ensuring that the financial results are released to Bursa Securities within the stipulated time frame.

In preparing the financial statements, the Directors have ensured compliance with the applicable approved accounting standards and applied consistently and made judgements and estimates that are reasonable and prudent. The Directors have also confirmed that the financial statements have been prepared on a going concern basis.

The Audit Committee had its annual private session with the external auditors during the FY 2016 to review the scope and adequacy of the audit planning memorandum, the audit findings and the annual financial statement in the absence of the Executive Directors and the Management representatives. The private session would allow the Audit Committee members and the external auditors to exchange independent views on matters which require Audit Committees’ attention.

The external auditors attended all the Audit Committee’s meetings held to review the quarterly results and the financial statements. They are also invited to attend the AGM of the Company and are available to answer shareholders’ enquiries on the conduct of the statutory audit and the preparation and contents of their audit report.

The Directors are responsible in ensuring the Group and the Company keep proper accounting records which disclose with reasonable accuracy the financial position of the Group and the Company at any time and which enable them to ensure that the financial statements comply with the provisions of the Companies Act, 1965 and 2016 (whichever applicable) and the applicable approved accounting standards. It is the Board’s general responsibility for taking reasonable steps to safeguard the assets of the Group and to detect as well as prevent any fraud and other irregularities to occur.

Assessment of Suitability and Independence of External Auditors

The Audit Committee annually carries out the assessment procedures to determine the suitability and independence of the external auditors including quality and performance of their audit to ensure the external auditors should be free from any business or other relationships with the Group that could materially interfere with their ability to act with integrity and objectivity. The annual assessment also ensures that the provision of other non-audit services by the external auditors is not in conflict with their audit function. As an industry practice, the external auditors rotate their engaging partner in charge of audit of the Group’s financial statements once every 5 years to maintain their independence from the Group.

The external auditors provide mainly audit-related services to the Company and also undertake certain non-audit services such as quarterly review, regulatory review and reporting, and other services as and when requested by the Group. The independence of external auditors can be impaired by the provision of non-audit services to the Company.

During the FY 2016, the Audit Committee undertook review of the independence of Messrs. UHY and gave careful consideration to the Group’s relationships with them. In determining the independence of UHY, the Audit Committee reviewed various aspects of their relationships with them including the nature and amount of the non-audit services paid to UHY for the FY 2016 and the corresponding fees. The review showed that the non-audit fees did not impair or threaten the audit independence of UHY as such amount is not significant as compared to the total audit fees paid to UHY. Based on the review, the Audit Committee is of the opinion that UHY is, and is perceived to be, independent for the purpose of the Group statutory financial audit. UHY has declared its independence to the Group and its compliance pursuant to Paragraph 290.173 of the By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants.


(CONT’D)


ANNUAL REPORT 2016

The Audit Committee has initiated to formalise the External Auditors Policy in year 2016. This External Auditors Policy outline the guidelines and procedures for the Audit Committee to assess and monitor the external auditors. This External Auditors Policy was adopted by Audit Committee in early 2017.

To provide support for an assessment on independence, the Audit Committee has also obtained written assurance from the external auditors confirming that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

In reviewing the nomination of UHY for re-appointment for the financial year 2017, the Audit Committee had considered the adequacy of the resources, experience and competence of UHY. Consideration was also given to the experience of the engagement partner and key team members in handling the audit of listed corporation with more than 70 subsidiaries and associated companies under different jurisdiction and business segments. The quality, size and complexity of the audit of the Group, and the number and experience of the supervisory and professional staff assigned were taken into consideration. Review was also on the level of co-operative manner with Management while maintaining integrity and objectivity and to deliver their services professionally and within stipulated time-lines.

The Audit Committee is satisfied with the competence and independence of the external auditors and had recommended to the Board the re-appointment of the external auditors, upon which the shareholders’ approval will be sought at the forthcoming Seventeenth Annual General Meeting.

PRINCIPLE 6 : RECOGNISE AND MANAGE RISKS

Sound Risk Management Framework

The Board is aware of the importance of establishing and maintaining a sound system of risk management framework and internal control in the Company and the Group to safeguard shareholders’ interest and Group’s assets. The Board continuously reviews and examines the effectiveness and efficiency of the risk management framework and internal control system on areas such as financial, operational and compliance, and seek alternative ways for improvement should any weakness be detected and identified.

Internal Control

The Board has overall responsibility for maintaining sound internal control systems that cover financial controls, operational and compliance controls and risk management to ensure shareholders’ investments, customers’ interests and the Group’s assets are safeguarded.

The Board has established its in-house Internal Audit function. The Head of Internal Audit Department (“IAD”) reports directly to the Audit Committee on audit matters and to the Managing Director on administrative matters. The Group’s IAD provides independent and objective reports on the Group’s management, operational, policies and controls to the Audit Committee and also ensures that recommendations to improve controls are followed through by Management at the same time. The internal audit function conducted its works based on an annual Internal Audit Plan which was tabled before, and approved by, the Audit Committee.

IAD is responsible to conduct review on the systems of internal control; report the state of the systems of internal control and provide recommendations for improvement. All Internal Audit Reports were tabled and reviewed by the Audit Committee during Audit Committee Meetings. Follow-up reviews would subsequently be performed to ascertain the extent of implementation of the recommended corrective actions for improvement.


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The systems of internal controls are continuously reviewed to ensure that they are working via the on-going review through internal audit process. The Audit Committee regularly evaluates the effectiveness and adequacy of the Group’s internal control systems by reviewing the actions taken on internal control issues identified in the reports prepared by IAD during Audit Committee Meetings. The Audit Committee also reviews audit recommendations and Management’s response to these recommendations. Besides performing regular operational and compliance audit, the Internal Auditors may conduct investigation and any ad-hoc review upon the requisition from the Audit Committee or the Management.

The engagement of Internal Auditors is one of the many ways of reviewing and assessing the effectiveness of the risk management framework and internal control system of the Group. Both the Board and Management will rectify the weaknesses detected by the Internal Auditors through either adopting the recommendations made by the Internal Auditors or developing its own alternatives to eliminate such weaknesses.

The Statement on Risk Management and Internal Control is set out on pages 140 to 142 of this Annual Report. Relationship with External Auditors

The Board maintains a formal and transparent relationship with its External Auditors in seeking valuable professional advice and in ensuring compliance with the applicable accounting standards. The External Auditors regularly bring up relevant matters that need to be addressed during the Audit Committee Meetings and Board Meetings.

The Audit Committee was accorded the power to communicate directly with both the External and Internal Auditors in providing independent assessment on the adequacy, efficiency and effectiveness of the Group’s internal control system.

A full Audit Committee Report enumerating its role in relation to the External Auditors is set out from pages 136 to 139 of this Annual Report.

PRINCIPLE 7 : ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

Corporate Disclosure Policies and Procedures

The Company recognizes the importance of effective and timely disclosure of corporate and material information to ensure that shareholders, investors and general public make informed assessments of the Company’s business value and prospect.

The Company has its IR Policy which serves as a guide to ensure broad dissemination of material information in a comprehensive, accurate and timely manner to the shareholders, stakeholders, investors and public.

All announcements for release to Bursa Securities are subject to approval by the Executive Directors. The Managing Director, Executive Directors, Senior Management and Company Secretary who are privy to the information, are obliged to maintain strict confidentiality of the information.

All information made available to Bursa Securities is immediately available to shareholders and the public at large on the Investors section of the Company’s corporate website: www.lbs.com.my.


(CONT’D)


ANNUAL REPORT 2016

Leverage on Information Technology for Effective Dissemination of Information

The Board acknowledges the importance of communication with the shareholders and investors of the Group’s businesses and corporate developments. The following various mean of communications were utilised as channels for sharing of substantial information with its shareholders, investors and members of the public:-

a) Investor Relations Department (“IR”)

The Company’s IR actively involved in conducting regular briefings, dialogues and presentations with institutional investors, fund managers, analysts as well as financial institutions aimed at developing and maintaining a positive relation with all the shareholders and investors through active two-way communication, and to promote and demonstrate a high standard of integrity and transparency through timely, accurate and full disclosure and to enhance the shareholders and investors understanding of the Group, thereby enabling the shareholders and investors to make informed decisions in valuing the Company’s shares.

The Board has committed to embark on various initiatives to further improve on its Investor Relations and dialogues with shareholders, investors, research analysts, bankers and press.

b) Annual General Meeting

The Company’s AGM remains the principal forum for dialogue and interaction with the shareholders. The Board regards the AGM as an important channel of communication, as it serves as a forum for direct two-way interaction between the shareholders, Board and Management on the Company’s strategy, operations, performance and major developments. Shareholders are given the opportunity to participate in the question and answer session during the AGM on the proposed resolutions and the Group’s operations. The Chairman will provide sufficient time to shareholders’ questions on matters pertaining to the Company’s performance and would respond to the shareholders with regards to their concern and question raised.

The Notice and Agenda of AGM together with Form of Proxy are given to shareholders at least twenty-one (21) days before the AGM, which gives shareholders sufficient time to prepare themselves to attend the AGM or to appoint a proxy to attend and vote on their behalf. Each item of special business included in the Notice of AGM is accompanied by an explanatory statement for the proposed resolution to facilitate the full understanding and evaluation of issues involved.

c) Annual Report

Annual Report contains comprehensive and easy to understand details of the business, financial performance, direction and other activities of the Company. These contents are continually enhanced in order that shareholders and investing public are provided with clear and accurate information and are suitably briefed on matters that are to be discussed to enable their effective participation during AGM. An online version of the Annual Report is also available at the Company’s corporate website.


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d) Website

The Company’s corporate website www.lbs.com.my also provides an avenue for accessing to the latest corporate information and development of the Company easily and immediately. It houses information of the Group which includes corporate profile, development products for both residential and commercial (including current and future launches), financial results, press releases, corporate news and Company’s newsletter – Journey With LBS. Alternatively, Bursa Securities’ website www.bursamalaysia.com would be another source of information to the shareholders, investors and public community on the various announcements made by the Company from time to time in addition to the Annual Report, Circular to Shareholders and Annual Audited Accounts submitted to Bursa Securities.

e) Newsletter

The Group’s newsletter which was introduced in 2011 has evolved into a magazine format with the new name of “Journey With LBS” which is issued half yearly. It was the Company’s in-house corporate bilingual magazine serves as an internal communication device, it also engages shareholders, investors, media, fund managers, analysts and suppliers as an additional mode of communication and provides insightful information of the Company on latest corporate events and development (locally and internationally), projects events, products launched and to be launched, operations, directions, media coverage, corporate social responsibility activities as well as employee welfare activities and lifestyle column. The publication of Journey With LBS is also available at the Company’s corporate website.

f) Online Social Networking

By recognising broader communication, the Company has embarked on its social media journey by registered itself with online social networking platform such as Facebook, Twitter, WeChat, Instagram and Youtube to serve as an alternate channel of communication in view of better engagement with the shareholders, investors and other stakeholders whereby all the real time status and updates of the Company is accessible at any point of time. All the corporate information will be synchronized across Facebook, Twitter, WeChat, Instagram and Youtube.

g) Marketing Communication Department

The Marketing Communication Department of the Company or better known as MARCOM, its primary role is to coordinate all the media interviews including one-on-one meetings with media either through print media or TV coverage at regular intervals to provide wider publicity and improve general understanding of the Group’s businesses and operations.

MARCOM also responsible for the issuance of press releases and uploading of corporate news and events onto the Company’s website, Facebook, Twitter, WeChat, Instagram and Youtube to keep the shareholders and investing public abreast with the latest information of the Group.

h) Senior Independent Non-Executive Director

As there may be instance where investors and shareholders may prefer to express their concern to an Independent Director, the Board has appointed Datuk Dr Haji Baharum bin Haji Mohamed, as the Senior Independent Non-Executive Director of the Company to whom the concerns pertaining to the Group may be directed.


(CONT’D)


ANNUAL REPORT 2016

PRINCIPLE 8 : STRENGTHEN RELATIONSHIP BETWEEN THE COMPANY AND SHAREHOLDERS Encourage Shareholders Participation at General Meetings

The Company recognizes the importance of effective and timely disclosure of corporate and material information to ensure that shareholders and investors make informed assessments of the Company’s value and prospect.

a) Encourage Shareholder Participation at General Meetings

The Company maintained an active dialogue with shareholders with the objective of giving a clearer picture of the Company’s performance. At the Company’s AGM, shareholders can express their views or raise questions in relation to the Group’s financial performance and business operations. Members of the Board as well as the auditors of the Company are present to respond to questions raised at the meeting. The shareholders are given the opportunity to raise questions on the Group’s activities and prospects as well as to communicate their expectations and concerns to the Company.

Extraordinary General Meeting is held as and when shareholders’ approvals are required on specific matters.

The Board will ensure sufficient and relevant information are given for each agenda in the notice of meetings.

The Board will consider adopting electronic voting to facilitate greater shareholders’ participation when the facilities for electronic voting mechanism are more prevalent in the future.

b) Queries and Feedback

The Company welcomes inquiries and feedback from shareholders and the investment community. The IR Department of the Company provides investors with a channel of communication through which they can provide feedback to the Company.

Queries and concerns regarding the Group may be conveyed to the IR Team where details of the contacts are published in the Company’s corporate website.

Poll Voting

To comply with Paragraph 8.29A of the MMLR of Bursa Securities, the Board will ensure that all resolutions set out in the notices of general meeting are voted by poll and at least one (1) scrutiniser is appointed to validate the votes cast at every general meeting of the Company.


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Additional Compliance Information

In compliance with the MMLR of Bursa Malaysia, the following information is provided:-

Options

During the FY 2016, options were exercised pursuant to the Employees’ Share Option Scheme (“ESOS”) which was approved by the shareholders at the Extraordinary General Meeting held on 28 June 2012. Main features of the ESOS are stated in the Report of Directors on pages 255 and 260 of this Annual Report.

The Options applicable to Directors and Senior Management under the ESOS during the FY 2016 are as follows:-

Directors and Senior Management During the financial year ended 31 December 2016

Since commencement on 18 September 2012 up to

31 December 2016

Aggregate maximum allocation 80% 80%

Actual percentage granted 1.43% 31.65%

During the FY 2016, Options granted to and exercised by Non-Executive Directors are as follows:-

No. Name of Director

Number ofOptions asat 1.1.2016

Number ofOptions

Granted in 2016

Number ofOptions

Exercised

Number ofOptionsForfeited

Number ofOptions

as at31.12.2016

1. Dato’ Seri Lim Bock Seng - - - - -

2. Datuk Dr Haji Baharum bin Haji Mohamed 119,000 119,000 - - 238,000

3. Datuk Lim Si Cheng 119,000 119,000 - - 238,000

4. Lim Tong Lee 119,000 119,000 - - 238,000

Audit and Non-Audit Fees

(a) The amount of audit fee paid or payable to the external auditors, Messrs. UHY, and their affiliated companies for services rendered to the Group and the Company for the FY 2016 amounted to RM421,950 and RM68,000 respectively.

(b) The amount of non-audit fee paid or payable to the external auditors, Messrs. UHY, and their affiliated companies for services rendered to the Group and the Company for the FY 2016 amounted to RM265,075 and RM41,500 respectively.


(CONT’D)


ANNUAL REPORT 2016

Utilisation of Proceeds from Disposal of 100% Equity Interests in Lamdeal Consolidated Development Limited and Lamdeal Golf & Country Club Limited

On 12 August 2013 (“Completion Date”), the Company has announced the completion of proposed disposal of 100% equity interests in Lamdeal Consolidated Development Ltd and Lamdeal Golf & Country Club Ltd to Jiuzhou Tourism Property Company Limited, a wholly-owned subsidiary company of Zhuhai Holdings Investment Group Limited (“Zhuhai Holdings”) for an aggregate sale consideration of HKD1.65 billion.

Total sale consideration shall be satisfied by cash of HKD500 million, Zhuhai Holdings shares and deferred cash payment of HKD850 million from Promissory Note.

Cash proceeds of HKD500 million and Zhuhai Holdings shares have been received on the completion date. Cash proceeds of HKD500 million has been fully utilised in February 2015.

The details of deferred cash payment of HKD850 million from Promissory Note were as follows:-

Amount HKD’000 Receipt Date Full Utilisation Date

(a) Tranche 1 250,000 30-Dec-14 Feb-16(b) Tranche 2 200,000 1-Sep-15 May-16(c) Tranche 3 200,000 16-Mar-16 not yet fully utilised(d) Final tranche 200,000 3-Jun-16 not yet fully utilised

850,000

The utilisation status of all tranches of Promissory Note as at 31 March 2017 were as follows :-

(a) Tranche 1 of Promissory Note (HKD250 million)

Note Proposed Utilisation

HKD’000

Proposed Utilisation

RM’000

Actual Utilisation

RM’000

Proceeds Balance

RM’000

Deviation Timeframefor

utilisationRM’000 %

Reduction of Bank Borrowings

1,2,3 121,951 54,976 (42,181) 12,795 - 0% 1 year

Special Dividend 1,2,3 78,049 35,184 (31,427) 3,757 - 0% 1 month

Payment for Trade and Other Payables

1,2,3 24,390 10,995 (36,837) (25,842) (25,842) -235% 1 year

Operating Expenses 1,2,3 25,610 11,545 (2,255) 9,290 - 0% 1.5 year

250,000 112,700 (112,700) - (25,842) -235%

(b) Tranche 2 of Promissory Note (HKD200 million)


HKD’000


RM’000

Actual Utilisation

RM’000

Proceeds Balance

RM’000

Deviation Timeframe for

utilisation

Explanations (deviation is 5% or more)

RM’000 %


1,2,3 70,000 37,618 (21,867) 15,751 - 0% 1 year N/A

Special Dividend 1,2,3 80,000 42,992 (31,931) 11,061 - 0% 1 year N/A


1,2,3 30,000 16,122 (39,810) (23,688) (23,688) -147% 1 year Note 5

Operating Expenses 1,2,3 20,000 10,748 (13,872) (3,124) (3,124) -29% 1 year Note 5

200,000 107,480 (107,480) - (26,812) -176%


135

(c) Tranche 3 of Promissory Note (HKD200 million)


HKD’000


RM’000

Actual Utilisation

RM’000

Proceeds Balance

RM’000


utilisation


RM’000 %


1,2 100,000 53,270 (53,270) - - 0% 1 year N/A

Special Dividend 1,2,4 80,000 42,616 (26,133) 16,483 - 0% 1.5 year N/A


1,2 20,000 10,654 (10,654) - - 0% 1 year N/A

200,000 106,540 (90,057) 16,483 - 0%

(d) Final tranche of Promissory Note (HKD200 million)


HKD’000


RM’000

Actual Utilisation

RM’000

Proceeds Balance

RM’000


utilisation


RM’000 %


1,2 123,750 66,008 (66,008) - - 0% 1 year N/A

Special Dividend 1,2,4 65,000 34,671 - 34,671 - 0% 2 years N/A

Operating Expenses 1,2 11,250 6,001 (6,001) - - 0% 1 year N/A

200,000 106,680 (72,009) 34,671 - 0%

Note:-

1) (a) HKD250 million Adopted the exchange rate of HKD1.00 : RM0.4510, being the closing rate as at 30 December 2014 published by Bank Negara.

(b) HKD200 million Adopted the exchange rate of HKD1.00 : RM0.5374, being the closing rate as at 1 September 2015 published by Bank Negara.

(c) HKD200 million Adopted the exchange rate of HKD1.00 : RM0.5327, being the closing rate as at 16 March 2016 published by Bank Negara.

(d) HKD200 million Adopted the exchange rate of HKD1.00 : RM0.5334, being the closing rate as at 3 June 2016 published by Bank Negara.

2) The proceeds balance is expected to be utilised within the timeframe from the receipt of the proceeds.

3) Any shortfall in the funds allocated for specific purpose will be funded from the funds allocated for other approved purposes.

4) Any unutilised proceeds have been placed in short term deposits until such relevant expenses have been identified.

5) The excess fund arising after special dividend payment and settlement of bank borrowings which is no longer required subsequently, have been utilised for the Group’s project and/or operating expenses.

Material Contracts

There was no material contract (not being contracts entered into the ordinary course of business) entered into by the Company or its subsidiary companies involving the interests of the directors, chief executive who is not a directoror major shareholders, either still subsisting at the end of the financial year end under review or which were entered into since the end of the previous financial year.


(CONT’D)


ANNUAL REPORT 2016

AUDIT COMMITTEEREPORT

The report of the Audit Committee (“Committee”) of LBS Bina Group Berhad (“LBGB” or “Company” or “Group”) for the financial year ended 31 December 2016 (“FY 2016”) is presented as follows:

A. MEMBERS AND ATTENDANCE

During the FY 2016, the Committee held seven (7) meetings. The details of the membership and record of attendance of these meetings are as follows:

Committee Member Appointment Attendance

Lim Tong Lee*Chairman, Independent Non-Executive Director

04.06.2013 7 100%

Datuk Dr Haji Baharum Bin Haji MohamedMember/Senior Independent Non-Executive Director

20.08.2013 7 100%

Datuk Lim Si ChengMember/Independent Non-Executive Director

20.08.2013 7 100%

Notes:* Member of Malaysian Institute of Accountants

Nomination and Remuneration Committee has reviewed and evaluated the performance of the Committee as a whole and its members individually through an Annual Board & Board Committees Performance Evaluation. All the deliberations, recommendations and discussions were recorded in the Minutes and Performance Evaluation Sheet. The same were tabled to the Board members for deliberations at the subsequent Board meeting. The Board is satisfied that the Committee has effectively performed all their functions, duties and responsibilities in accordance with its Terms of Reference.

The Audit Committee meetings were attended by the external and/or internal auditors, when necessary.

B. TERMS OF REFERENCE OF AUDIT COMMITTEE

The principal functions of the Committee are to provide oversight of the financial statements in compliance with legal, regulatory requirements and applicable accounting standards and to assess the effectiveness of the system internal controls as well as internal and external audit functions.

The Terms of Reference of the Committee covers the following parts:-

1. Composition and size; 2. Quorum; 3. Proceedings of Meeting; 4. Authority; and 5. Duties and Functions.

The Board will review the Terms of Reference of the Audit Committee when necessary to ensure they remain relevant and appropriate. The full version of the Terms of Reference of the Audit Committee are published on the Company’s website at www.lbs.com.my.

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(CONT’D)

C. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

The summary of the activities of the Audit Committee in discharging its functions and duties during the year under review are as follow:-

1. Financial Reporting:

• Reviewed the unaudited quarterly results of the Group in respect of FY 2016 prior to recommending the same to the Board of Directors’ (“Board”) for approval and release to Bursa Malaysia Securities Berhad (“Bursa Securities”). The review included discussion on the Group’s overall performance for the quarter and material changes in the quarter results compared with the immediate preceeding quarter.

• Reviewed with the External Auditors, the audited financial statements of the Group for the year ended 31 December 2015 including the audit report, issues and reservations arising from statutory audit prior to recommending the same to the Board for approval.

• Reviewed the unaudited quarter financial results, audited financial statements and announcements of the Company, amongst others, any changes in accounting policies and practices, significant adjustments arising from the audit, major judgement areas, significant and unusual events, the going concern assumption and compliance with accounting standards and other legal requirements for the Board of Directors’ approval before release to Bursa Securities.

• Reviewed the impact of any changes to the accounting standards and adoption of new acconting Standards on the Group’s Financial Statements.

2. External Audit:

• Reviewed the External Auditors’ scope of work and annual audit plan of the Company and the Group for the FY 2016 inclusive of audit approach, areas of audit emphasis, timeline for reporting and deliverables and audit fees prior to the commencement of the annual audit.

• Reviewed the verification on allocation of option to employees under LBGB Employees’ Share Option Scheme (“ESOS”).

• Reviewed the Company’s Audit Committee Report and Statement on Risk Management and Internal Control before recommending the same to the Board for inclusion in the Company’s Annual Report for 2015.

• Reviewed the extent of asistance rendered by management and issues ad reservations arising from audits with the external auditors with the presence of management and the executive board members.

• Assessed and evaluated the performance, independence and suitability of the external auditors for re-appointment as Auditors of the Company and made recommendation to the Board with respect to their re-apppointment and fees. The assessment was undertaken with written assurance from the External Auditors of their independence including policies and measures used to control their work quality.

• Reviewed the audit and non-audit fees of the external auditors for the financial year ended 31 December 2015.


ANNUAL REPORT 2016

3. Internal Audit:

• Reviewed and approved the risk-based Internal Audit Plan and its scope of work proposed by the Internal Audit Department for the FY 2016.

• Reviewed the audit activities carried out by the Internal Audit Department on areas encompassing Funds Acquisition, Marketing Costs Effectiveness and Control, Site Controls for Projects, Assets Maintenance, Credit Control, Related Party Transaction, Debtors’ and Creditors’ Aging and Maintenance and their relevant risks and audit findings and ensure corrective actions were taken in addressing the risk issues reported.

• Reviewed the progress and timeline of the external consultant in the project which involved the development and revamp of the Group’s Standard Operating Procedures.

4. Risk Management:

• Reviewed the Risk Register to ensure that all major risks are well managed and reported to the Board.

• Reviewed the Risk Assessment Report on the investment of the Group for the year 2016.

5. Related Party Transactions:

• Reviewed the terms of the proposed renewal of general mandate for recurrent related party transactions of a revenue or trading nature and the procedures for these proposed transactions.

• Reviewed all related party transactions (“RPTs”) entered by the Company and the Group to ensure the transactions entered into were at arm’s length basis and on normal commercial terms including the adequacy, appropriateness and compliance procedures established to monitor the RPTs.

6. Other Matter

• Reviewed and revised the Terms of Reference of the Audit Committee to be in line with the latest amendments to the Listing Requirements of Bursa Securities prior to the Board’s adoption.

• Reported to the Board of Directors on significant issues and concerns discussed at the Committee’s meetings together with the appropriate recommendations.

• Reviewed the special requested audit report on negotiated contract by the Management for Midhills Project.

D. STATEMENT BY COMMITTEE ON THE COMPANY’S ESOS

The Committee, with the assistance of verification work performed by the External Auditors, is satisfied that the allocation of options pursuant to the Company’s ESOS during FY 2016, has complied with the criteria set out in the ESOS Bye-Laws.

E. INTERNAL AUDIT FUNCTION

LBGB has an in-house Internal Audit Department (“IAD”) that carries out its appraisal function independently from the Management, with the Head of IAD reporting directly to the Audit Committee. The key function of IAD is assessing and enhancing the effectiveness of internal control, governance and risk management processes.

AUDIT COMMITTEEREPORT(CONT’D)

139


(CONT’D)

The IAD adopts a risk-based auditing approach approved by the Audit Committee whilst taking into account of the standards set by recognised professional bodies, global best practices and industry standards.

During the financial year under review, the IAD has carried out audit review on the following areas in accordance with the Internal Audit Plan approved by the Audit Committee:-

a. Funds Acquisition; b. Marketing Costs Effectiveness and Control;c. Site Controls for Projects;d. Assets Maintenance;e. Credit Control; f. Related Party Transaction;g. Debtors’ and Creditors’ Aging; andh. Maintenance.

Besides reviewing the findings of internal control system of the Group, IAD also provides recommendations to improve such internal controls. The Internal Audit Reports and relevant follow-up reports together with management responses were circulated to all members of the Audit Committee for review and discussion before the Committee Meeting on a quarterly basis. Upon the recommendation of the Committee, the said internal audit reports were tabled at the Committee Meeting for approval. The total cost incurred for maintaining the internal audit function for the FY 2016 was RM493,771.06.

The summary of the activities of the Internal Audit Work undertaken during the year under review are as follow:-

i. Performed risk-based audit on the Group’s business units or processes, which covered reviews of the internal control, accounting and management information systems and risk management;

ii. Issued internal audit reports and/or special report requested by the management to the Audit Committee with weaknesses and issues identified;

iii. made recommendations for improvement on processes where weaknesses and/or non-compliances were identified;

iv. Follow-up on matters or concerns raised by Audit Committee and reported on status periodically; and

v. conducted follow-up reviews to determine adequacy, effectiveness and timeliness of actions taken by the Management on audit recommendation and provided updates on the status to the Audit Committee.


ANNUAL REPORT 2016

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

Pursuant to Paragraph 15.26(b) and the Practice Note No. 9 of Bursa Malaysia Securities Berhad Listing Requirements and as guided by the Statement on Internal Control: Guidance for Directors of Public Listed Companies, the Board of Directors (“Board”) is committed to maintain a sound system of risk management and internal control to safeguard shareholders’ investment and the Company’s assets. The Board of LBS Bina Group Berhad (“LBGB” or “Group” or “Company”) is pleased to present the below mentioned statement for the financial year ended 31 December 2016.

BOARD RESPONSIBILITY

The Board assumes overall responsibility for the Group’s system of internal control and for reviewing its adequacy and integrity. The Group’s internal control system and management information systems includes compliance with existing laws, regulations, rules, directives and guidelines. The Board ensures that appropriate policies on risk management and internal control are set and seeks regular assurance that the system is functioning adequately and that integrity is maintained. The Board also confirms that necessary actions have been or are being taken to remedy any significant failings and weakness identified from the review.

The Board recognises that such a system of internal controls has its inherent limitations as it is designed to manage, rather than to eliminate risks that may hinder the achievement of the Group’s business objectives. Accordingly, the system can only provide reasonable assurance, and not absolute assurance against material misstatement or loss.

INTERNAL AUDIT FUNCTION

The Internal Auditors conducts regular reviews and appraisals of the effectiveness of the system of internal controls of the Company impartially, proficiently, and with due professional care. Reports will be presented to the Audit Committee on a quarterly basis or more frequently, if required.

RISK FRAMEWORK

Risk Management and internal controls are treated as an integral part of overall management process. Risk Management framework consists mainly of the Risk Manager and Risk Management Committee (“RMC”).

VARIOUS DEPT/RISK

MANAGEMENT UNITS

RISKMANAGER

RISK MANAGEMENT

COMMITTEE

BOD / AUDIT COMMITTEE

141

STATEMENT ONRISK MANAGEMENT AND

INTERNAL CONTROL(CONT’D)

MAIN FEATURES OF RISK MANAGEMENT FRAMEWORK

The Risk Management Committee is to maintain and mitigate the risks oversight within the Group.

The risk management framework outlines the Group’s risk management system, defines management’s responsibilities, and sets the Group’s risk appetite and risk tolerance. The framework is incorporated into the risk policy and guideline document that has been approved by the Board.

RISK IDENTIFICATION

Risk assessments are undertaken by Risk Manager together with each of the Head of Departments (HODs) to identify and update risks profile bi-yearly.

RISK EVALUATION

On a bi-yearly basis, the Risk Management Committee meets to deliberate on the significant risks profiles identified by each of the HODs in the Group. Matters deliberated include the revised risk profiles, control procedures and status of management action plans.

RISK MANAGEMENT

The significant risk issues evaluated by the Risk Management Committee are to discuss during Audit Committee meetings. The Risk Management Committee reports to the Audit Committee at least twice a year. The Audit Committee reviews the Group’s risks profile and effectiveness of the mitigating measures or management action plans that implemented by management.

KEY ELEMENTS AND PROCESSES OF INTERNAL CONTROLS

Other key elements and processes of the Group’s system of internal control are:

- The Group’s Internal Audit Department, which reports to the Audit Committee, performed regular reviews of business processes to assess the effectiveness of internal controls. Internal audits were carried out to review the adequacy of the internal control systems, compliance with policies and procedures. The work of the internal auditors is in accordance with audit plans approved by the Audit Committee and revised as and when deemed appropriate.

- Operational structure with defined lines of responsibilities and delegation of authority. A process of hierarchical reporting has been established that is documented and provides auditable trails to ensure accountability.

- The operational policies and procedures are periodically reviewed and updated if any to ensure effective management of the Group’s operations.

- The Audit Committee holds regular meetings to deliberate on findings and recommendations for improvement by the internal auditors on the state of the internal control system, and reports to the Board.


ANNUAL REPORT 2016

- The Audit Committee and the Board monitor and review the Group performance and financial results at their quarterly meetings; and

- Weekly HOD and other relevant meetings are held periodically to deliberate and discuss on operational issues that are in-progress or outstanding.

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

The Board has received assurance from the Group Managing Director and an Executive Director who are both primarily responsible for the management of the financial affairs of the Group that the Group’s risk management and internal control is operating adequately and effectively in all material aspects. It is therefore of the view that risk management and internal control system is satisfactory and no material internal control failures nor have any reported weaknesses resulted in material losses or contingencies during the financial year.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

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

SUMMARY

The Board is satisfied that the present Risk Management and Internal Controls available is overall satisfactory, adequate and effective for the Group’s business. The Board however recognizes the ever changing dynamic business environment, and hence will endeavor to continue improving, and enhancing the existing system of risk management and internal controls to ensure their continued relevance.

STATEMENT ONRISK MANAGEMENT AND INTERNAL CONTROL(CONT’D)

143

RECURRENT RELATED PARTY TRANSACTIONS

The details of Recurrent Related Party Transactions of the Company entered into during the financial year ended 31 December 2016 pursuant to Paragraph 10.09(2)(b) and Paragraph 3.1.5 of Practice Note 12 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad were as follows:-

No. Related Party Nature of Recurrent

Transactions

Value ofTransactions

(RM’000)

Nature of relationship between LBGB Group and the Related Party

1. CLY Resource Holdings Sdn Bhd

Purchase of properties

428 Dato’ Chia Lok Yuen who is the Executive Director of the Company and his spouse, Datin Lum Sook Yin are both the directors and shareholders of CLY Resource Sdn Bhd.

2. Dato’ Chia Lok Yuen

Andy Chia Kah Chun


423 Dato’ Chia Lok Yuen is the Executive Director of the Company.

Andy Chia Kah Chun is the son of Dato’ Chia Lok Yuen.

3. Dato’ Chia Lok Yuen

Kelvin Chia Mun Hoe


423 Dato’ Chia Lok Yuen is the Executive Director of the Company.

Kelvin Chia Mun Hoe is the son of Dato’ Chia Lok Yuen.

4. Dato’ Lim Mooi Pang Purchase of properties

428 Dato’ Lim Mooi Pang is the Executive Director of the Company.

5. Datuk Lim Hock Seong

Datin Wong Poh Lean


543 Datuk Lim Hock Seong is the Executive Director of the Company.

Datin Wong Poh Lean is the spouse of Datuk Lim Hock Seong.

6. Datuk Wira Lim Hock Guan Purchase of properties

542 Datuk Wira Lim Hock Guan is the Executive Director of the Company.

7. Datuk Wira Lim Hock Guan

Datin Wira Tan Wei Kian


568 Datuk Wira Lim Hock Guan is the Executive Director of the Company.

Datin Wira Tan Wei Kian is the spouse of Datuk Wira Lim Hock Guan.

8. Lim Ee Theng Purchase of properties

1,637 Lim Ee Theng is the daughter of Maj (Hon) Dato’ Sri Lim Hock Sing, the Executive Director of the Company.

9. Lim Ee Ying Purchase of properties

1,057 Lim Ee Ying is the daughter of Maj (Hon) Dato’ Sri Lim Hock Sing, the Executive Director the Company.

10. LY Innovation Sdn Bhd Purchase of properties

633 Dato’ Chia Lok Yuen who is the Executive Director of the Company and his spouse, Datin Lum Sook Yin are both the directors and shareholders of LY Innovation Sdn Bhd.


ANNUAL REPORT 2016

RECURRENT RELATEDPARTY TRANSACTIONS(CONT’D)

No. Related Party Nature of Recurrent

Transactions

Value ofTransactions

(RM’000)

Nature of relationship between LBGB Group and the Related Party

11. Maj (Hon) Dato’ Sri Lim Hock Sing


1,203 Maj (Hon) Dato’ Sri Lim Hock Sing is the Executive Director of the Company.

12. Mohammad Reza Bin Ab Rahim


520 Mohammad Reza Bin Ab Rahim is a director of a subsidiary of the Company.

13. Prisma Kasturi Sdn Bhd (“PKSB”)


2,147 PKSB is an indirect wholly-owned subsidiary of ML Global Berhad, which in turn is a 55.34%-owned subsidiary of the Company.

14. Tan Seng Teong Purchase of properties

661 Tan Seng Teong is a director of a subsidiary of the Company.

15. Tan Sri Lim Hock San

Yeoh Keong Hoong

Lim Chew Yee


631 Tan Sri Lim Hock San is the Group Managing Director of the Company.

Yeoh Keong Hoong is the son-in-law of Tan Sri Lim Hock San and spouse of Lim Chew Yee.

Lim Chew Yee is the daughter of Tan Sri Lim Hock San.

FINANCIAL STATEMENTS

Directors’ Report 146 - 155

Statement by Directors 156

Statutory Declaration 157

Independent Auditors’ Report to the Members 158 - 165

Statements of Financial Position 166 - 167

Statements of Profit or Loss and

other Comprehensive Income 168 - 169

Statements of Changes in Equity 170 - 173

Consolidated Statement of Cash Flows 174 - 177

Statement of Cash Flows 178 - 179

Notes to the Financial Statements 180 - 296


ANNUAL REPORT 2016

DIRECTORS’REPORT

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

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and provision of management services to its subsidiary companies in the Group. The principal activities of the subsidiary companies are disclosed in Note 50 to the financial statements.

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

FINANCIAL RESULTS

Group Company RM RM

Net profit for the financial year 85,201,568 75,655,416

Attributable to: Owners of the Parent 85,300,772 75,655,416 Non-controlling interests (99,204) -

85,201,568 75,655,416

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

147

DIRECTORS’REPORT

(CONT’D)

DIVIDENDS

Since the end of the last financial year, the Company paid the following dividends:

RM In respect of the financial year ended 31 December 2015 : A tax exempt special dividend of 6 sen per ordinary share on 545,320,317 ordinary shares of RM1.00 each, paid on 26 January 2016 32,719,219 A single tier first and final dividend of 3.5 sen per ordinary share on 612,899,598 ordinary shares of RM1.00 each, paid on 5 September 2016 21,451,485 In respect of the financial year ended 31 December 2016 : A tax exempt special dividend of 2 sen per ordinary share on 637,337,773 ordinary shares of RM1.00 each, paid on 11 November 2016 12,746,756 A tax exempt special dividend of 2 sen per ordinary share on 651,391,198 ordinary shares of RM1.00 each, paid on 17 March 2017 13,027,823

79,945,283

On 5 April 2017, the directors:

(i) confirmed the payment date of a tax exempt special dividend of 2 sen per ordinary share of RM1.00 each in respect of the financial year ended 31 December 2016 pursuant to the announcement made on 6 May 2016. This dividend will be paid on 30 June 2017 to depositors registered in the Record of Depositors on 20 June 2017. The financial statements for the current financial year do not reflect this special dividend. Such dividend will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2017; and

(ii) declared a tax exempt special dividend of 6 sen per ordinary share of RM1.00 each in respect of the financial year ending 31 December 2017. This dividend will be paid in 3 tranches, 2 sen for each tranche. The date of entitlement and payment will be confirmed later. The financial statements for the current financial year do not reflect this special dividend. Such dividend will be accounted for in equity as an appropriation of retained earnings in the financial years ending 31 December 2017 and 31 December 2018.


(i) declared a single tier interim dividend of 2 sen per ordinary share of RM1.00 each in respect of the financial year ended 31 December 2016. This interim dividend will be paid on 24 July 2017 to depositors registered in the Record of Depositors on 11 July 2017; and

(ii) proposed a single tier final dividend of 2 sen per ordinary share of RM1.00 each in respect of the financial year ended 31 December 2016. The proposed dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company.

The financial statements for the current financial year do not reflect the dividends declared or proposed on 25 April 2017. Such dividends will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2017.


ANNUAL REPORT 2016

ISSUE OF SHARES AND DEBENTURES

During the financial year, the Company increased its issued and paid-up share capital from 551,437,117 to 641,424,473 by way of issuance of 89,987,356 new ordinary shares of RM1.00 each as follows:

(a) 2,997,900 new ordinary shares of RM1.00 each for cash arising from the exercise of share options under Employees’ Share Option Scheme at a weighted average exercise price of RM1.30 per ordinary share;

(b) 24,676,306 new ordinary shares of RM1.00 each for cash arising from the exercise of Warrants A at an exercise price of RM1.00 per ordinary share; and

(c) 62,313,150 new ordinary shares of RM1.00 each for cash arising from the exercise of Warrants B at an exercise price of RM1.25 per ordinary share.

The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company.

There was no issuance of debentures during the financial year.

TREASURY SHARES

The shareholders of the Company, by a resolution passed in the last Annual General Meeting held on 9 June 2016, renewed their approval for the Company’s plan to repurchase its own shares. The directors of the Company are committed to enhance the value of the Company for its shareholders and believe that the repurchase plan can be applied in the best interest of the Company and its shareholders.

During the financial year, the Company repurchased 15,000 of its issued shares from the open market. The average price paid for the shares repurchased was RM1.61 per share. The total consideration paid for the repurchase including transaction costs was RM24,185. The repurchased transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

During the financial year, the Company has also disposed of 6,071,800 of its treasury shares in the open market for a total consideration of RM8,835,542.

As at 31 December 2016, the total number of treasury shares held by the Company was 60,000 out of the total 641,424,473 issued ordinary shares. Further relevant details are disclosed in Note 23 to the financial statements.

WARRANTS

Warrants 2008/2018 (“Warrants A”)

The Warrants A were constituted under the Deed Poll dated 30 April 2008.

As at 31 December 2016, the total number of Warrants A that remain unexercised were 21,937,712.

The salient terms of the Warrants A are detailed in Note 24(e)(i) to the financial statements.

DIRECTORS’REPORT(CONT’D)

149

DIRECTORS’REPORT

(CONT’D)

WARRANTS (CONT’D)

Warrants 2015/2020 (“Warrants B”)

The Warrants B were constituted under the Deed Poll dated 3 September 2015.

As at 31 December 2016, the total number of Warrants B that remain unexercised were 74,101,747.

The salient terms of the Warrants B are detailed in Note 24(e)(ii) to the financial statements.

Details of Warrants issued to Directors are disclosed in the section of Directors’ Interests in this report.

OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up unissued shares of the Company during the financial year apart from the issue of options pursuant to the Employees’ Share Option Scheme (“ESOS”).

EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)

The Company has established an Employees’ Share Option Scheme (“ESOS”) of not more than 15% of the issued share capital of the Company at the point of time throughout the duration of the scheme to eligible directors and employees of the Group, which was approved by shareholders at an Extraordinary General Meeting (“EGM”) held on 28 June 2012.

The ESOS shall be in force for a period of 10 years from 18 September 2012 to 17 September 2022. The salient features and other terms of the ESOS and the movement of options over unissued shares of the Company granted under the ESOS during the financial year are disclosed in Note 37 to the financial statements.

Details of the options granted to directors are disclosed in the section of directors’ interests in this report.

During the financial year, the Company has been granted an exemption by the Companies Commission of Malaysia from having to disclose the name of option holders, other than directors, who have been granted options during the financial year to subscribe for less than 95,200 ordinary shares of RM1.00 each and details of their holdings as required by Section 169(11) of the Companies Act, 1965. This information has been separately filed with the Companies Commission of Malaysia.


ANNUAL REPORT 2016

EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”) (CONT’D)

The list of employees who have been granted options to subscribe for ordinary shares of RM1.00 each of 95,200 and more during the financial year are as follows:

No. of options over ordinary shares of RM1.00 each granted Chen Sau Hiong 95,200Datuk Dr Haji Baharum Bin Haji Mohamed 119,000Datuk Lim Lit Chek 119,000Datuk Lim Si Cheng 119,000Lee Hon Meng 345,100Lim Seng Lee 119,000Lim Tong Lee 119,000Loh Yin Hui 357,000Ng Kian Lai 95,200Tan Seng Teong 95,200Ter Chiew Yen 208,300Thanasegaran Sukumaran 136,900Wong Tack Leong 95,200

DIRECTORS

The directors in office since the date of the last report are:

Dato’ Seri Lim Bock Seng, SSSA, DPMS, AMNTan Sri Lim Hock San, PSM, SSAP, DSSA, JPDatuk Wira Lim Hock Guan, DCSM, DMSM, PJK, JPMaj (Hon) Dato’ Sri Lim Hock Sing, SSAP, DIMP, JPDatuk Lim Hock Seong, DMSMDato’ Chia Lok Yuen, DIMPDato’ Lim Mooi Pang, DIMPLim Tong LeeDatuk Dr Haji Baharum Bin Haji Mohamed, DMSM, AMN, PISDatuk Lim Si Cheng, PJN, PIS


151

DIRECTORS’ INTERESTS

The interests and deemed interests in the share capital, warrants and options over the shares and debentures of the Company and of its related corporations (other than wholly-owned subsidiary companies) of those who were directors at the end of the financial year (including their spouses or children) according to the register of directors’ Shareholdings are as follows:

No. of ordinary shares of RM1.00 each At At 1.1.2016 Acquired Disposed 31.12.2016 Gaterich Sdn. Bhd. Direct interests Tan Sri Lim Hock San 2,500,000 - - 2,500,000 Datuk Wira Lim Hock Guan 1,000,000 - - 1,000,000 Maj (Hon) Dato’ Sri Lim Hock Sing 750,000 - - 750,000 Datuk Lim Hock Seong 750,000 - - 750,000 LBS Bina Group Berhad Direct interests Dato’ Seri Lim Bock Seng 1,540,000 - 500,000 1,040,000 Tan Sri Lim Hock San 12,141,700 666,500 9,000,000 3,808,200 Datuk Wira Lim Hock Guan 7,868,360 - - 7,868,360 Maj (Hon) Dato’ Sri Lim Hock Sing 825,000 - 800,000 25,000 Datuk Lim Hock Seong 1,009,500 100,000 1,000,000 109,500 Dato’ Chia Lok Yuen 1,980,000 250,000 1,200,000 1,030,000 Dato’ Lim Mooi Pang 959,900 100,000 - 1,059,900 No. of ordinary shares of RM1.00 each At At 1.1.2016 Acquired Disposed 31.12.2016 LBS Bina Group Berhad Indirect interests Dato’ Seri Lim Bock Seng 2 2,626,000 55,000 677,000 2,004,000 Tan Sri Lim Hock San 3 297,538,660 66,526,646 35,078,500 328,986,806 Datuk Wira Lim Hock Guan 3 297,439,160 66,378,946 35,000,000 328,818,106 Maj (Hon) Dato’ Sri Lim Hock Sing 3 296,737,160 66,414,946 35,000,000 328,152,106 Datuk Lim Hock Seong 3 296,667,160 66,400,946 35,000,000 328,068,106

DIRECTORS’REPORT

(CONT’D)


ANNUAL REPORT 2016

DIRECTORS’ INTERESTS (CONT’D)

No. of options over ordinary shares of RM1.00 each (“ESOS”) At At 1.1.2016 Granted Exercised 31.12.2016

LBS Bina Group Berhad Direct interests Dato’ Lim Mooi Pang 153,000 - - 153,000 Lim Tong Lee 119,000 119,000 - 238,000 Datuk Dr Haji Baharum bin Haji Mohammed 119,000 119,000 - 238,000 Datuk Lim Si Cheng 119,000 119,000 - 238,000 No. of Warrants A of RM1.00 each At At 1.1.2016 Acquired Exercised 31.12.2016

LBS Bina Group Berhad Direct interests Dato’ Seri Lim Bock Seng 140,000 - - 140,000 Tan Sri Lim Hock San 331,400 861,500 666,500 526,400 Dato’ Chia Lok Yuen 50,000 450,000 - 500,000 Dato’ Lim Mooi Pang - 120,000 - 120,000 Indirect interests Dato’ Seri Lim Bock Seng 2 404,000 - - 404,000 Tan Sri Lim Hock San ¹ 8,378,946 - 8,378,946 - Datuk Wira Lim Hock Guan ¹ 8,378,946 - 8,378,946 - Maj (Hon) Dato’ Sri Lim Hock Sing 3 8,433,746 14,000 8,378,946 68,800 Datuk Lim Hock Seong ¹ 8,378,946 - 8,378,946 - No. of Warrants B of RM1.25 each At At 1.1.2016 Acquired Exercised 31.12.2016

LBS Bina Group BerhadDirect interests Dato’ Seri Lim Bock Seng 385,000 - - 385,000 Tan Sri Lim Hock San 3,060,425 419,800 - 3,480,225 Datuk Wira Lim Hock Guan 1,967,090 - - 1,967,090 Maj (Hon) Dato’ Sri Lim Hock Sing 206,250 - - 206,250 Datuk Lim Hock Seong 252,375 - 100,000 152,375 Dato’ Chia Lok Yuen 495,000 110,000 250,000 355,000 Dato’ Lim Mooi Pang 239,975 - - 239,975


153

DIRECTORS’ INTERESTS (CONT’D) No. of Warrants B of RM1.25 each At At 1.1.2016 Acquired Exercised 31.12.2016

LBS Bina Group BerhadIndirect interests Dato’ Seri Lim Bock Seng 2 656,500 - - 656,500 Tan Sri Lim Hock San 3 74,384,664 - 58,147,700 16,236,964 Datuk Wira Lim Hock Guan 3 74,359,789 - 58,000,000 16,359,789 Maj (Hon) Dato’ Sri Lim Hock Sing 3 74,184,289 9,000 58,000,000 16,193,289 Datuk Lim Hock Seong 3 74,166,789 - 58,022,000 16,144,789 Note:

1 Deemed interests pursuant to Section 6A of the Companies Act, 1965 by virtue of their direct interests in Gaterich Sdn. Bhd.

2 Deemed interests pursuant to Section 134(12)(c) of the Companies Act, 1965 in compliance with the Companies (Amendment) Act, 2007 by virtue of their spouse and/or child direct interests in the Company.

3 Deemed interests pursuant to Section 134(12)(c) of the Companies Act, 1965 in compliance with the Companies (Amendment) Act, 2007 by virtue of their spouse and/or child direct interests in the Company and Section 6A of the Companies Act, 1965 by virtue of their direct interests in Gaterich Sdn. Bhd.

By virtue of their interests in the shares of the Company, Tan Sri Lim Hock San, Datuk Wira Lim Hock Guan, Maj (Hon) Dato’ Sri Lim Hock Sing and Datuk Lim Hock Seong are also deemed to have interests in the shares of all the subsidiary companies to the extent that the Company has an interest under Section 6A of the Companies Act, 1965.

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 directors as shown in 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, other than certain directors who have significant financial interests in the companies which traded with certain companies in the Group in the ordinary course of business as disclosed in Note 41 to the financial statements.

Neither during nor at the end of the financial year was the Company a party to any arrangement whose object was 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, other than those arising from the share options granted under the ESOS.

DIRECTORS’REPORT

(CONT’D)


ANNUAL REPORT 2016

OTHER STATUTORY INFORMATION

(a) Before the statements of financial position and statements of profit or loss and other comprehensive income of the Group and of the Company were made out, the directors took reasonable steps:

(i) 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 for doubtful debts had been made; and

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

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

(i) which would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or

(ii) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or

(iii) 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; or

(iv) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(c) 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 liability of any other person; or

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

(d) In the opinion of the directors:

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

(ii) the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature, except as disclosed in the notes to the financial statements; and

(iii) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature 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.


155

SIGNIFICANT EVENTS

Details of significant events are disclosed in Note 45 to the financial statements.

SUBSEQUENT EVENTS

Details of subsequent events are disclosed in Note 46 to the financial statements.

HOLDING COMPANY

The holding company is Gaterich Sdn. Bhd., a private limited liability company, incorporated under the Company Act, 1965 and domiciled in Malaysia.

AUDITORS

The Auditors, Messrs UHY, have expressed their willingness to continue in office.

Signed on behalf of the board of directors in accordance with a resolution of the directors dated 25 April 2017.

TAN SRI LIM HOCK SAN MAJ (HON) DATO’ SRI LIM HOCK SING

KUALA LUMPUR

DIRECTORS’REPORT

(CONT’D)


ANNUAL REPORT 2016

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

We, the undersigned, being two of the directors of the Company, do hereby state that, in the opinion of the directors, the financial statements set out on pages 166 to 295 are drawn up in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2016 and of their financial performance and cash flows for the financial year then ended.

The supplementary information set out in Note 54 to the financial statements on page 296 have been compiled in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.

Signed on behalf of the board of directors in accordance with a resolution of the directors dated 25 April 2017.

TAN SRI LIM HOCK SAN MAJ (HON) DATO’ SRI LIM HOCK SING

KUALA LUMPUR

157

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

I, Dato’ Lim Mooi Pang, being the director primarily responsible for the financial management of LBS Bina Group Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 166 to 296 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provision of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the )abovenamed at Kuala Lumpur in the )Federal Territory on 25 April 2017 ) DATO’ LIM MOOI PANG

Before me,

NO. W710 MOHAN A.S. MANIAM COMMISSIONER FOR OATHS


ANNUAL REPORT 2016

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF LBS BINA GROUP BERHAD (Company No. : 518482-H) (Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of LBS Bina Group Berhad, which comprise the statements of financial position as at 31 December 2016 of the Group and of the Company, and the statements of profit and loss and other 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 166 to 295.

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 December 2016, and of their financial performance and their cash flows for the financial year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Basis for Opinion

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

Independence and Other Ethical Requirements

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 IESBA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, 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.

159

Key Audit Matters (cont’d)

Key audit matters

1. Carrying value of land and property development costs and revenue recognition

The Group’s assessment of the carrying value of land and property development costs, being the lower of cost and net realisable value, is a judgemental process. This requires the estimation of selling prices, sales rates and costs to complete, determined on a project by project basis. These factors drive the gross margin for each project and hence the profit recognised at the point of sale.

There is a risk that the actual revenue and costs are different to those forecast across the whole projects resulting in material misstatement of land and property development costs and gross profit recognised.

There is also a risk that costs are inappropriately recognised within land and property development costs or that the allocation of costs that relate to the whole projects, such as land and infrastructure, is inappropriate across development phases, resulting in a material misstatement of land and property development or gross profit of each project.

How we addressed the key audit matters

We conducted testing in relation to the revenue recognised under FRS 201

2004 Property Development

Activities. This testing involved both tests of detail and analytical procedures.

We have performed the following audit procedures: • we assessed the judgements in relation to the

future profitability of the project with reference to the project budget; and

• we recalculated the percentage of completion as at the reporting date. We assessed the management’s assumption in estimating the costs to completions and verified the budgeted cost to suppliers’ contracts and sub-contractors’ contracts. We verified the costs to work certifications and the total sales value agreed to contracts.

At the analytical level, we developed an expectation of the income that should be recognised in the financial year from this revenue stream, with reference to the level of completion.

We assessed the competence and objectivity of the qualified surveyors employed by the Group and the use of these experts to estimate the level of completion.

We visited a sample of sites to verify how surveyors measure the degree of build completion of the developments.

We inspected the sales and purchase contracts for all significant new land acquisitions to understand the terms and identify any deferred or contingent payments therein.

We have considered the adequacy of the Group’s disclosures regarding this revenue stream and whether they are in accordance with FRS 201

2004 Property

Development Activities.

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF LBS BINA GROUP BERHAD(Company No. : 518482-H) (Incorporated in Malaysia)

(CONT’D)


ANNUAL REPORT 2016


Key audit matters

2. Goodwill impairment review

The Group has significant goodwill allocated to the property development cash generating units (“CGUs”). Goodwill shall be tested for impairment annually in accordance to FRS 136 Impairment of Assets. The estimation of recoverable amount is complex and significant judgement is required for estimates, specifically cashflows projections, discount rates and short term growth rates. Due to the inherent uncertainty involved in forecasting and discounting future cash flows, this is the key judgemental area that our audit was concentrated on.


We assessed the reasonableness of the cash flows forecasts and supporting evidence of the underlying assumptions, by checking to approved budgets and comparing expected growth rates to relevant market expectations.

We performed sensitivity analysis on the key inputs (including discount rates and long term growth rates) to the impairment model, to understand the impact that reasonably possible changes to key assumptions would have on the overall carrying value of the goodwill at the end of the reporting period.

We tested the discount rates assigned to the cash generating units, as well as the long-term growth rates, with reference to our understanding of the business, comparisons to other similar companies, economic and industry forecasts where appropriate. We considered evidence available to support the discount rates used, and consistency with findings from other areas of the audit.

We considered the adequacy of management’s disclosures in respect of impairment testing and whether the disclosures appropriately communicate the underlying sensitivities.

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF LBS BINA GROUP BERHAD(Company No. : 518482-H) (Incorporated in Malaysia)

(CONT’D)

161


Key audit matters

3. Acquisition of ML Global Berhad – purchase price allocation

During the financial year, the Group completed the acquisition of 19.23% equity interest in ML Global Berhad for a total consideration of RM9.65 million. Accounting for business combinations is complex and requires the recognition of both consideration paid and acquired assets and liabilities at the acquisition date at fair values, which can involve significant judgement and estimates.

In addition, accounting policies of the acquired entities must be aligned to the group’s accounting policies, which may involve significant judgement and estimates.

FRS 3 Business Combinations requires the Group to recognise the identifiable assets, liabilities and contingent liabilities at fair value at the date of acquisition, with the excess of the acquisition cost over the identified fair values recognised as goodwill. This requires a significant amount of management estimation, particularly in relation to the identification and valuation of intangible assets and assignment of their useful lives.


We have discussed with management and their external specialists to assess the appropriateness and reasonableness of the purchase price allocation. Our procedures included the followings:- reviewed the appropriateness of the acquisition

accounting applied, including the timing at which control was deemed to have passes;

- reviewed and considered the appropriateness of the fair values ascribed to assets and liabilities of the acquired business;

- challenged the assumptions in the specialist valuation report supporting goodwill;

- assessed management’s key assumptions applied in the purchase price allocation in arriving at the fair value of the assets acquired and liabilities assumed, including the fair valuation of identified intangible assets, to be within a reasonable range of our audit expectations; and

- assessed the adequacy of the disclosure in the financial statements.



(CONT’D)


ANNUAL REPORT 2016

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 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.

Responsibilities of Directors for the Financial Statements

The Directors of the Company are responsible for the preparation of the financial statements of the Group and of the Company that give a true and fair view in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of 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 has no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 auditor’s 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 the financial statements.


(CONT’D)

163

Auditors’ Responsibilities for the Audit of the Financial Statements (cont’d)

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

• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is 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.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

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

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast 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 auditor’s 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.

• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, 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.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an 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.

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 finance 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.



(CONT’D)


ANNUAL REPORT 2016

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiary companies of which we have not acted as auditors, which are indicated in Note 8 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the

Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) The audit reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174 (3) of the Act.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 54 on page 296 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 Disclosures 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.


(CONT’D)

165

OTHER MATTERS

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

UHY Firm Number: AF 1411Chartered Accountants

TAN TIAN WOOIApproved Number: 2969/05/18 (J)Chartered Accountant

KUALA LUMPUR25 April 2017



(CONT’D)


ANNUAL REPORT 2016

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2016

Group Company 2016 2015 2016 2015 Note RM RM RM RM Non-Current Assets Property, plant and equipment 4 261,064,455 240,941,611 - - Capital work-in-progress 5 5,368,273 6,229,079 - - Land and property development costs 6 730,525,633 515,026,439 - - Investment properties 7 61,469,204 33,767,090 - - Investment in subsidiary companies 8 - - 614,931,383 393,366,006 Investment in associated companies 9 2,635,882 13,879,340 - 7,305,338 Promissory note 10 - 100,498,924 - - Other investments 11 99,949,920 94,983,631 - - Goodwill on consolidation 12 126,979,868 84,217,235 - -

Total Non-Current Assets 1,287,993,235 1,089,543,349 614,931,383 400,671,344

Current Assets Land and property development costs 6 359,130,876 437,734,614 - - Inventories 13 187,867,294 76,537,272 - - Amount owing by customers on contracts 14 206,607 56,017 - - Accrued billings in respect of land and property development costs 326,708,441 149,080,582 - - Trade receivables 15 315,463,599 196,123,831 - - Other receivables 16 110,490,839 92,873,289 340,736 3,318,220 Promissory note 10 - 105,523,704 - - Other investments 11 - 38,488,161 - 11,029,697 Amount owing by subsidiary companies 17 - - 186,165,269 256,720,778 Tax recoverable 6,844,123 8,042,029 - 160,778 Fixed deposits with licensed banks 18 49,079,352 33,471,075 31,442,414 15,670,959 Cash held under Housing Development Accounts 19 74,387,290 87,735,381 - - Cash and bank balances 20 107,332,047 106,385,800 23,577,418 4,739,917

Total Current Assets 1,537,510,468 1,332,051,755 241,525,837 291,640,349

Total Assets 2,825,503,703 2,421,595,104 856,457,220 692,311,693

167

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

STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016(CONT’D)

Group Company 2016 2015 2016 2015 Note RM RM RM RM Equity Share capital 21 641,424,473 551,437,117 641,424,473 551,437,117 Share premium 22 74,235,266 48,298,035 74,235,266 48,298,035 Treasury shares 23 (88,081) (8,634,411) (88,081) (8,634,411)Other reserves 24 (131,065,516) (24,605,115) 10,153,615 16,999,926 Retained profits/(Accumulated losses) 503,461,661 465,165,545 (67,062,890) (95,713,650)

Equity attributable to owners of the Parent 1,087,967,803 1,031,661,171 658,662,383 512,387,017 Non-controlling interests 119,055,761 (19,288,472) - -

Total Equity 1,207,023,564 1,012,372,699 658,662,383 512,387,017

Non-Current Liabilities Trade payables 25 248,138,494 93,613,370 - - Other payables 26 54,991,839 56,228,935 - - Amount owing to a subsidiary company 17 - - 62,411,867 - Finance lease payables 27 4,126,928 5,099,292 - - Bank borrowings 28 314,144,391 287,939,163 18,390,117 18,783,730 Deferred tax liabilities 29 18,232,322 32,271,601 - -

Total Non-Current Liabilities 639,633,974 475,152,361 80,801,984 18,783,730

Current Liabilities Amount owing to customers on contracts 14 11,841,075 5,602,800 - - Progress billings in respect of land and property development costs 13,299,227 45,209,124 - - Trade payables 25 314,376,329 315,942,280 - - Other payables 26 318,287,973 281,302,004 14,436,686 33,471,401 Bank overdrafts 30 100,901,943 43,665,940 42,650,845 8,631,290 Finance lease payables 27 2,107,504 1,700,660 - - Bank borrowings 28 195,544,663 229,765,752 57,579,230 62,060,247 Amount owing to subsidiary companies 17 - - 2,236,183 56,978,008 Tax payable 22,487,451 10,881,484 89,909 -

Total Current Liabilities 978,846,165 934,070,044 116,992,853 161,140,946

Total Liabilities 1,618,480,139 1,409,222,405 197,794,837 179,924,676

Total Equity and Liabilities 2,825,503,703 2,421,595,104 856,457,220 692,311,693


ANNUAL REPORT 2016

STATEMENTS OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

Group Company 2016 2015 2016 2015 Note RM RM RM RM Revenue 31 993,619,057 680,295,861 80,841,184 65,599,000 Cost of sales 32 (673,997,786) (445,041,756) - -

Gross profit 319,621,271 235,254,105 80,841,184 65,599,000 Other income 53,690,034 28,072,285 22,803,211 12,116,782 Administrative and operating expenses (204,520,156) (135,025,557) (17,416,642) (14,262,660)

Profit from operations 168,791,149 128,300,833 86,227,753 63,453,122 Finance costs 33 (23,625,102) (21,831,551) (7,346,121) (6,384,242)Share of (losses)/profits in associated companies, net of tax (1,211,779) 2,365,638 - -

Profit before taxation 34 143,954,268 108,834,920 78,881,632 57,068,880 Taxation 35 (58,752,700) (38,338,935) (3,226,216) (2,387,634)

Net profit for the financial year 85,201,568 70,495,985 75,655,416 54,681,246

Other comprehensive income, net of tax : Exchange translation differences for foreign operations (2,101,650) 64,911,675 - - Gain/(Loss) on revaluation of available- for-sale financial assets 752,318 (21,232,278) - 19,750 Reclassification adjustment for impairment loss on available-for-sale financial assets 27,025,897 - - - Reclassification adjustment for disposal of available-for-sale financial assets - 1,888,206 - (73,824)

25,676,565 45,567,603 - (54,074)

Total comprehensive income for the financial year 110,878,133 116,063,588 75,655,416 54,627,172

169

STATEMENTS OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016(CONT’D)

Group Company 2016 2015 2016 2015 Note RM RM RM RM Net profit for the financial year attributable to: Owners of the Parent 85,300,772 76,074,430 75,655,416 54,681,246 Non-controlling interests (99,204) (5,578,445) - -

85,201,568 70,495,985 75,655,416 54,681,246

Total comprehensive income for the financial year attributable to: Owners of the Parent 112,712,168 126,835,601 75,655,416 54,627,172 Non-controlling interests (1,834,035) (10,772,013) - -

110,878,133 116,063,588 75,655,416 54,627,172

Earnings per share attributable to owners of the Parent (sen) Basic earnings per share 36(a) 14.47 14.09

Diluted earnings per share 36(b) 13.85 13.13



ANNUAL REPORT 2016

Attributable to owners of the Parent

Non - distributable

Distributable Non-

Share Share Other Treasury Retained Controlling Total

Capital Premium Reserves Shares Profits Total Interests Equity

Group Note RM RM RM RM RM RM RM RM

At 1 January 2015 538,298,257 44,586,608 (38,422,577) (14,678,685) 439,277,991 969,061,594 (7,207,160) 961,854,434

Net profit for the

financial year - - - - 76,074,430 76,074,430 (5,578,445) 70,495,985

Foreign currency

translation - - 70,105,243 - - 70,105,243 (5,193,568) 64,911,675

Loss on revaluation of

available-for-sale

financial assets - - (21,232,278) - - (21,232,278) - (21,232,278)

Reclassification

adjustment for

disposal of

available-for-sale

financial assets - - 1,888,206 - - 1,888,206 - 1,888,206

Total comprehensive

income for the

financial year - - 50,761,171 - 76,074,430 126,835,601 (10,772,013) 116,063,588

Transactions

with owners:

Changes in ownership

interest in subsidiary

companies 8(d) - - (38,826,791) - - (38,826,791) (473,240) (39,300,031)

Net changes of

non-controlling

interests - - - - - - 2,163,941 2,163,941

Dividends paid/payable 39 - - - - (50,478,466) (50,478,466) - (50,478,466)

Dividends paid to non-

controlling interests - - - - - - (3,000,000) (3,000,000)

Issuance of ordinary

shares :

- Exercise of warrants 21, 22, 24(e) 9,668,560 969,106 (965,356) - - 9,672,310 - 9,672,310

- Exercise of ESOS 21, 22 3,470,300 391,361 - - - 3,861,661 - 3,861,661

Own shares sold 22, 23 - 2,350,960 - 16,944,663 - 19,295,623 - 19,295,623

Realisation of ESOS

reserve 24(b) - - (291,590) - 291,590 - - -

Share-based payment 24(b) - - 3,140,028 - - 3,140,028 - 3,140,028

Shares repurchased 23 - - - (10,900,389) - (10,900,389) - (10,900,389)

13,138,860 3,711,427 (36,943,709) 6,044,274 (50,186,876) (64,236,024) (1,309,299) (65,545,323)

At 31 December 2015 551,437,117 48,298,035 (24,605,115) (8,634,411) 465,165,545 1,031,661,171 (19,288,472) 1,012,372,699

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

171

STATEMENTS OF CHANGES IN EQUITY


Attributable to owners of the Parent

Non - distributable

Distributable Non-

Share Share Other Treasury Retained Controlling Total

Capital Premium Reserves Shares Profits Total Interests Equity

Group Note RM RM RM RM RM RM RM RM

At 1 January 2016 551,437,117 48,298,035 (24,605,115) (8,634,411) 465,165,545 1,031,661,171 (19,288,472) 1,012,372,699

Net profit for the

financial year - - - - 85,300,772 85,300,772 (99,204) 85,201,568

Foreign currency

translation - - (366,819) - - (366,819) (1,734,831) (2,101,650)

Gain on revaluation of

available-for-sale

financial assets - - 752,318 - - 752,318 - 752,318

Reclassification

adjustment for

impairment loss on

available-for-sale

financial assets - - 27,025,897 - - 27,025,897 - 27,025,897

Total comprehensive

income for the

financial year - - 27,411,396 - 85,300,772 112,712,168 (1,834,035) 110,878,133

Transactions with owners:

Changes in ownership

interest in subsidiary

companies 8(d) - - (127,025,486) - - (127,025,486) 136,055,329 9,029,843

Net changes of

non-controlling

interests - - - - - - 16,106,921 16,106,921

Realisation of subsidiary

company’s reserve - - - - - - (9,983,982) (9,983,982)

Dividends paid/payable 39 - - - - (47,226,064) (47,226,064) - (47,226,064)

Dividends paid to non-

controlling interests - - - - - - (2,000,000) (2,000,000)

Issuance of ordinary

shares :

- Exercise of warrants 21, 22, 24(e) 86,989,456 18,045,919 (2,467,631) - - 102,567,744 - 102,567,744

- Exercise of ESOS 21, 22, 24(b) 2,997,900 7,626,285 (6,730,885) - - 3,893,300 - 3,893,300

Own shares sold 22, 23 - 265,027 - 8,570,515 - 8,835,542 - 8,835,542

Realisation of ESOS

reserve 24(b) - - (221,408) - 221,408 - - -

Share-based payment 24(b) - - 2,573,613 - - 2,573,613 - 2,573,613

Shares repurchased 23 - - - (24,185) - (24,185) - (24,185)

89,987,356 25,937,231 (133,871,797) 8,546,330 (47,004,656) (56,405,536) 140,178,268 83,772,732

At 31 December 2016 641,424,473 74,235,266 (131,065,516) (88,081) 503,461,661 1,087,967,803 119,055,761 1,207,023,564


ANNUAL REPORT 2016

Non - distributable

Share Share ESOS Warrants Treasury Fair value Accumulated

Capital Premium Reserve Reserves Shares Reserve Losses Total

Company Note RM RM RM RM RM RM RM RM

At 1 January 2015 538,298,257 44,586,608 9,945,172 5,171,672 (14,678,685) 54,074 (100,208,020) 483,169,078

Net profit for the

financial year - - - - - - 54,681,246 54,681,246

Gain on revaluation

of available-for-sale

financial assets - - - - - 19,750 - 19,750

Reclassification

adjustment for disposal

of available-for-sale

financial assets - - - - - (73,824) - (73,824)

Total comprehensive

income for the

financial year - - - - - (54,074) 54,681,246 54,627,172

Transactions

with owners:

Dividends paid/payable 39 - - - - - - (50,478,466) (50,478,466)

Issuance of shares:

- Exercise of warrants 21, 22, 24(e) 9,668,560 969,106 - (965,356) - - - 9,672,310

- Exercise of ESOS 21, 22 3,470,300 391,361 - - - - - 3,861,661

Own shares sold 22, 23 - 2,350,960 - - 16,944,663 - - 19,295,623

Issuance of Warrants B 24(e) - - - 64,122,052 - (64,122,052) - -

Realisation of warrants

reserves 24(e) - - - (7,050) - 7,050 - -

Realisation of ESOS

reserve 24(b) - - (291,590) - - - 291,590 -

Share-based payment 24(b) - - 3,140,028 - - - - 3,140,028

Shares repurchased 23 - - - - (10,900,389) - - (10,900,389)

13,138,860 3,711,427 2,848,438 63,149,646 6,044,274 (64,115,002) (50,186,876) (25,409,233)

At 31 December 2015 551,437,117 48,298,035 12,793,610 68,321,318 (8,634,411) (64,115,002) (95,713,650) 512,387,017

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016(CONT’D)

173

STATEMENTS OF CHANGES IN EQUITY


Non - distributable

Share Share ESOS Warrants Treasury Fair value Accumulated

Capital Premium Reserve Reserves Shares Reserve Losses Total

Company Note RM RM RM RM RM RM RM RM

At 1 January 2016 551,437,117 48,298,035 12,793,610 68,321,318 (8,634,411) (64,115,002) (95,713,650) 512,387,017

Net profit for the

financial year - - - - - - 75,655,416 75,655,416

Total comprehensive

income for the

financial year - - - - - - 75,655,416 75,655,416

Transactions

with owners:

Dividends paid/payable 39 - - - - - - (47,226,064) (47,226,064)

Issuance of shares:

- Exercise of warrants 21, 22, 24(e) 86,989,456 18,045,919 - (2,467,631) - - - 102,567,744

- Exercise of ESOS 21, 22, 24(b) 2,997,900 7,626,285 (6,730,885) - - - - 3,893,300

Own shares sold 22, 23 - 265,027 - - 8,570,515 - - 8,835,542

Realisation of warrants

reserves 24(e) - - - (29,287,181) - 29,287,181 - -

Realisation of ESOS

reserve 24(b) - - (221,408) - - - 221,408 -

Share-based payment 24(b) - - 2,573,613 - - - - 2,573,613

Shares repurchased 23 - - - - (24,185) - - (24,185)

89,987,356 25,937,231 (4,378,680) (31,754,812) 8,546,330 29,287,181 (47,004,656) 70,619,950

At 31 December 2016 641,424,473 74,235,266 8,414,930 36,566,506 (88,081) (34,827,821) (67,062,890) 658,662,383



ANNUAL REPORT 2016

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

2016 2015 RM RM Cash Flows From Operating Activities Profit before taxation : 143,954,268 108,834,920 Adjustments for: Allowance for impairment losses on: - Available-for-sale financial assets 27,025,897 - - Goodwill arising on consolidation 6,040,342 2,926,366 - Investment in an associated company - 3,578,431 - Other investments - 100,000 - Trade and other receivables 651,782 - Bad debts written off 313,971 29,263 Depreciation of : - Investment properties 796,128 757,554 - Property, plant and equipment 16,371,172 17,546,711 Interest expense 23,625,102 21,831,551 Inventories written down - 36,400 Deposits written off 124,617 - Property, plant and equipment written off 381,496 78,946 Property development cost written off 210,009 - Share-based payment 2,573,613 3,140,028 Fair value loss/(gain) on revaluation of financial assets at fair value through profit or loss 32,067 (25,554) Share of losses/(profits) in associated companies 1,211,779 (2,365,638) Unrealised (gain)/loss on foreign exchange (2,276,457) 1,841,631 Dividend income from : - Available-for-sale financial assets (1,478,101) (720,386) - Financial assets at fair value through profit or loss (471,586) (97,547) (Gain)/Loss on disposal of : - Available-for-sale financial assets (3,420,254) (588,190) - Financial assets at fair value through profit or loss (36,730) (333,757) - Investment properties (1,427,482) - - Property, plant and equipment (286,796) 305,830 - Non-current assets classified as held for sale (4,963,823) - Provision for staff economic compensation written back (3,475,201) - Gain on remeasurement of previously held equity interest (2,928,131) - Interest income (10,052,298) (5,108,038) Interest income from financial assets measured at amortised cost (1,490,070) (12,234,392) Reversal of allowance for impairment losses on receivable (1,522) (12,718) Grant income (21,665,128) - Waiver of debts (7) (14,300)

Operating profit before working capital changes 169,338,657 139,507,111

175

CONSOLIDATED STATEMENT OF CASH FLOWS


2016 2015 RM RM Changes in working capital Land and property development costs (116,674,564) (100,189,463) Inventories (110,687,600) (66,421,061) Amount owing by/to customers on contracts 6,087,685 4,146,785 Accrued/Progress billings in respect of land and property development costs (209,537,756) (96,982,135) Trade receivables (112,756,211) (16,427,273) Other receivables 157,827,544 24,932,287 Trade payables 234,907,116 77,276,886 Other payables (58,466,803) 25,271,860 Foreign exchange reserve 1,979,787 123,197 (207,320,802) (148,268,917)

Cash used in operations (37,982,145) (8,761,806)

Dividends received 1,478,101 720,386 Interest received 10,052,298 5,108,038 Interest paid (44,056,003) (31,704,807) Grant income received 20,424,317 - Tax paid (60,099,885) (46,996,726) Tax refund 1,212,276 997,333 (70,988,896) (71,875,776)

Net cash used in operating activities (108,971,041) (80,637,582)


ANNUAL REPORT 2016

2016 2015 Note RM RM

Cash Flows From Investing Activities Additional investment in : - Associated company - (773,608) - Available-for-sale financial assets - (166,592) - Subsidiary companies (51,712,774) (35,800,226) - Financial assets at fair value through profit or loss (44,000,000) (128,200,000) Capital work-in-progress incurred (4,056,604) (6,209,768) Net cash (outflows)/inflows from acquisition of subsidiary companies 8(b) (53,903,713) 451 Proceeds from disposal of : - Available-for-sale financial assets 33,570,254 44,782,439 - Financial assets at fair value through profit or loss 82,122,159 117,190,595 - Non-current assets classified as held for sale 17,050,000 - - Promissory note 199,718,596 105,683,759 - Property, plant and equipment 1,000,410 754,483 Purchase of : - Investment properties - (317,045) - Property, plant and equipment 4(e) (8,080,121) (6,840,482) Deposits and consideration paid for the acquisition and joint venture of development lands (134,945,689) (145,799,618) Repayment of prior year investment in subsidiary and associated companies (4,167,780) (8,886,000)

Net cash generated from/(used in) investing activities 32,594,738 (64,581,612)

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016(CONT’D)

177

CONSOLIDATED STATEMENT OF CASH FLOWS


2016 2015 RM RM Cash Flows From Financing Activities (Increase)/decrease in fixed deposits pledged (19,769,355) 22,217,635 Increase in cash and bank balances pledged (764,684) (398,607) Drawdown of bank borrowings 351,813,173 247,794,135 Repayment of bank borrowings (375,731,489) (228,423,687) Dividends paid (66,917,460) (49,562,724) Dividends paid to non-controlling interests (2,000,000) (3,000,000) Purchase of treasury shares (24,185) (10,900,389) Proceeds from : - Exercise of ESOS 3,893,300 3,861,661 - Exercise of warrants 102,567,744 9,672,310 - Disposal of treasury shares 8,835,542 19,295,623 Repayment of : - Finance lease payables (2,062,384) (2,129,940) - Islamic Securities - (10,000,000)

Net cash used in financing activities (159,798) (1,573,983)

Net decrease in cash and cash equivalents (76,536,101) (146,793,177)Effects of exchange rate changes 1,972,492 33,363,908 Cash and cash equivalents at the beginning of the financial year 154,359,794 267,789,063

Cash and cash equivalents at the end of the financial year 79,796,185 154,359,794

Cash and cash equivalents at the end of the financial year comprise: Fixed deposits with licensed banks 49,079,352 33,471,075 Cash held under Housing Development Accounts 74,387,290 87,735,381 Cash and bank balances 107,332,047 106,385,800 Bank overdrafts (100,901,943) (43,665,940)

129,896,746 183,926,316 Less: Fixed deposits pledged to licensed banks (40,221,758) (20,452,403) Cash and bank balances pledged (9,878,803) (9,114,119)

79,796,185 154,359,794



ANNUAL REPORT 2016

2016 2015 RM RM Cash Flows From Operating Activities Profit before taxation 78,881,632 57,068,880 Adjustments for: Allowance for impairment losses on investment in an associated company - 3,578,431 Dividend income from financial assets at fair value through profit or loss (122,938) (40,141) Interest expense 7,346,121 6,384,242 Share-based payment 2,573,613 3,140,028 Unrealised loss on foreign exchange 5,495,212 2,230,125 Reversal of allowance for impairment losses on investment in an associated companies (4,072) - Fair value gain on revaluation of financial assets at fair value through profit or loss - (29,697) Gain on disposal of financial assets at fair value through profit or loss (27,602) (104,141) Gain on remeasurement of previously held equity interest (5,602,897) - Interest income (14,980,963) (10,977,325) Dividend income (80,277,184) (65,035,000)

Operating loss before working capital changes (6,719,078) (3,784,598) Changes in working capital Other receivables (222,518) 33,986,543 Other payables 1,284 85,293 Amount owing to/by subsidiary companies (124,184,184) (110,134,482) (124,405,418) (76,062,646)

Cash used in operations (131,124,496) (79,847,244) Dividends received 83,477,184 95,818,360 Interest received 14,980,963 10,977,325 Interest paid (7,346,121) (6,384,242) Tax refund - 155,374 Tax paid (2,975,526) (2,336,749) 88,136,500 98,230,068

Net cash (used in)/generated from operating activities (42,987,996) 18,382,824

Cash Flows From Investing Activities Additional investment in : - Financial assets at fair value through profit or loss (7,000,000) (29,000,000) - An associated company - (763,458) - An subsidiary company (13,147,672) - Proceeds from disposal of financial assets at fair value through profit or loss 18,180,236 40,160,980

Net cash (used in)/generated from investing activities (1,967,436) 10,397,522

STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

179

STATEMENT OF CASH FLOWS


2016 2015 Note RM RM Cash Flows From Financing Acitivities Dividends paid (66,917,460) (49,562,724) (Increase)/decrease in fixed deposits pledged (21,100,448) 1,450,227 Decrease/(increase) in cash and bank balances pledged 20,883 (176,515) Drawdown of bank borrowings 9,390,117 15,000,000 Repayment of bank borrowings (12,431,997) (6,762,975) Repayment of Islamic Securities - (10,000,000) Proceeds from: - Exercise of ESOS 3,893,300 3,861,661 - Exercise of warrants 102,567,744 9,672,310 - Disposal of treasury shares 8,835,542 19,295,623 Purchase of treasury shares (24,185) (10,900,389)

Net cash generated from/(used in) financing activities 24,233,496 (28,122,782)

Net (decrease)/increase in cash and cash equivalents (20,721,936) 657,564 Effects of exchange rate changes 231,772 943,978 Cash and cash equivalents at beginning of the financial year 713,006 (888,536)

Cash and cash equivalents at end of the financial year # (19,777,158) 713,006

Cash and cash equivalents at end of the financial year comprise: Fixed deposits with licensed banks 31,442,414 15,670,959 Cash and bank balances 23,577,418 4,739,917 Bank overdrafts (42,650,845) (8,631,290)

12,368,987 11,779,586 Less: Fixed deposits pledged with licensed banks (31,442,414) (10,341,966) Cash and bank balances pledged (703,731) (724,614)

# (19,777,158) 713,006


# Negative cash and cash equivalents was due to pledge of a fixed deposit to secure a bank overdraft. In February 2017, the bank overdraft was fully settled and the pledge of fixed deposit was subsequently discharged.


ANNUAL REPORT 2016

NOTES TO THEFINANCIAL STATEMENTS

1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The registered office and principal place of business of the Company is located at Plaza Seri Setia, Level 1 - 4, No. 1, Jalan SS9/2, 47300 Petaling Jaya, Selangor Darul Ehsan.

The principal activities of the Company are investment holding and provision of management services to subsidiary companies in the Group. The principal activities of its subsidiary companies are disclosed in Note 50 to the financial statements. There have been no significant changes in the nature of these activities of the Company and its subsidiary companies during the financial year.

The holding company is Gaterich Sdn. Bhd., a private limited liability company, incorporated under the Company Act, 1965 and domiciled in Malaysia.

2. BASIS OF PREPARATION

(a) Statement of compliance

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

The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise indicated in the significant accounting policies below.

Adoption of new and amended standards

During the financial year, the Group and the Company have adopted the following amendments to FRSs issued by the Malaysian Accounting Standards Board (“MASB”) that are mandatory for the current financial year:

FRS 14 Regulatory Deferral Accounts Amendments to FRS 10, Investment Entities: Applying to Consolidation Exception FRS 12 and FRS 128 Amendments to FRS 11 Accounting for Acquisitions of Interests in Joint Operations Amendments to FRS 101 Disclosure Initiative Amendments to FRS 116 and FRS 138 Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to FRS 127 Equity Method in Separate Financial Statements Annual Improvements to FRSs 2012 – 2014 Cycle

Adoption of above amendments to FRSs did not have any significant impact on the financial statements of the Group and of the Company.

181


(CONT’D)

2. BASIS OF PREPARATION (CONT’D)

(a) Statement of compliance (cont’d)

Standards issued but not yet effective

The Group and the Company have not applied the following new FRSs, interpretation and amendments to FRSs that have been issued by the MASB but are not yet effective for the Group and for the Company:

Effective dates for financial periods beginning on or after

Amendments to FRS 107 Disclosure Initiative 1 January 2017 Amendments to FRS 112 Recognition of Deferred Tax Assets for 1 January 2017 Unrealised Losses Annual Improvements to FRSs 2014 – 2016 Cycle • Amendments to FRS 12 1 January 2017 • Amendments to FRS 1 1 January 2018 • Amendments to FRS 128 1 January 2018 FRS 9 Financial Instruments (IFRS 9 issued by 1 January 2018 IASB in July 2014) Amendments to FRS 2 Classification and Measurement of Share-based 1 January 2018 Payment Transactions Amendments to FRS 140 Transfer of Investment Property 1 January 2018 Amendments to FRS 4 Applying FRS 9 Financial Instruments with 1 January 2018 * FRS 4 Insurance Contracts IC Interpretation 22 Foreign Currency Transactions and Advance 1 January 2018 Consideration Amendments to FRS 10 Sale or Contribution of Assets between an Investor Deferred until and FRS 128 and its Associate or Joint Venture further notice

Note:* Entities that meet the specific criteria in FRS 4, paragraph 20B, may choose to defer the application of FRS

9 until that earlier of the application of the forthcoming insurance contracts standard or annual periods beginning before 1 January 2021.


ANNUAL REPORT 2016

NOTES TO THEFINANCIAL STATEMENTS(CONT’D)



Standards issued but not yet effective (cont’d)

The Group and the Company intend to adopt the above FRSs when they become effective.

The initial application of the abovementioned FRSs are not expected to have any significant impact on the financial statements of the Group and of the Company except as mentioned below:

FRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014)

FRS 9 (IFRS 9 issued by IASB in July 2014) replaces earlier versions of FRS 9 and introduces a package of improvements which includes a classification and measurement model, a single forward looking ‘expected loss’ impairment model and a substantially reformed approach to hedge accounting. FRS 9 when effective will replace FRS 139 Financial Instruments: Recognition and Measurement.

FRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial assets. Investment in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income without subsequent recycling to profit or loss. There is now a new expected credit losses model that replaces the incurred loss impairment model used in FRS 139.

For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. FRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under FRS 139.

The adoption of FRS 9 will result in a change in accounting policy. The Group is currently examining the financial impact of adopting FRS 9.

New Malaysian Financial Reporting Standards (“MFRS Framework”) issued but not yet effective

On 19 November 2011, the MASB issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (“MFRS Framework”). The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture and IC Interpretation 15 Agreements for Construction of Real Estate, including its parent, significant investor and venturer (hereinafter called “Transitioning Entities”).

Transitioning Entities will be allowed to defer adoption of the new MFRS Framework and continue to use the existing FRS Framework. The adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2018.

183


(CONT’D)



New Malaysian Financial Reporting Standards (“MFRS Framework”) issued but not yet effective (cont’d)

The Group and the Company fall within the scope definition of Transitioning Entities and accordingly, will be required to prepare financial statements using the MFRS Framework in their first MFRS financial statements for the financial year ending 31 December 2018. In presenting their first MFRS financial statements, the Group and the Company will be required to restate the comparative financial statements to amounts reflecting the application of the MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained earnings.

The Group and the Company have not completed its assessment of the financial effects of the differences between FRSs and accounting standards under the MFRS Framework. Accordingly, the consolidated and separate financial performance and financial position as disclosed in these financial statements for the financial year ended 31 December 2016 could be different if prepared under the MFRS Framework.

(b) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”) which is the Group’s and the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest RM except when otherwise stated.

(c) Significant accounting judgements, estimates and assumptions

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

Judgments

There are no significant areas of critical judgement in applying accounting policies that have significant effect on the amounts recognised in the financial statements.


ANNUAL REPORT 2016



(c) Significant accounting judgements, estimates and assumptions (cont’d)

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below:

(i) Useful lives of property, plant and equipment and investment properties

The Group regularly review the estimated useful lives of property, plant and equipment and investment properties based on factors such as business plan and strategies, expected level of usage and future technological developments. Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned above. A reduction in the estimated useful lives of property, plant and equipment and investment properties would increase the recorded depreciation and decrease the value of property, plant and equipment and investment properties. The carrying amount at the reporting date for property, plant and equipment and investment properties are disclosed in Notes 4 and 7 respectively.

(ii) Property development

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

Significant judgement is required in determining the stage of completion, the extent of the property development cost incurred, the estimated total property development revenue and costs, as well as the recoverability of the development projects. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists. The carrying amount of the Group’s property development costs at the reporting date is disclosed in Note 6.

(iii) Impairment of investment in subsidiary companies

The Company reviews its investments in subsidiary companies when there are indicators of impairment. Impairment is measured by comparing the carrying amount of an investment with its recoverable amount. Significant judgement is required in determining the recoverable amount. Estimating the recoverable amount requires the Company to make an estimate of the expected future cash flows from the cash-generating units and also to determine a suitable discount rate in order to calculate the present value of those cash flows.

The carrying amount at the reporting date for investment in subsidiary companies is disclosed in Note 8.

185


(CONT’D)



Key sources of estimation uncertainty (cont’d)

(iv) Impairment of investment in associated companies

The Group reviews its investments in associated companies when there are indicators of impairment. Impairment is measured by comparing the carrying amount of an investment with its recoverable amount. Significant judgement is required in determining the recoverable amount. The Group evaluates the recoverable amount based on market performance, economic and political situation of the country in which the associated companies operate.

The carrying amount at the reporting date for investment in associated companies are disclosed in Note 9.

(v) Impairment of loans and receivables

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

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience of assets with similar credit risk characteristics. The carrying amount at the reporting date for loan and receivables are disclosed in Notes 10, 15, 16, and 17 respectively.

(vi) Impairment of goodwill on consolidation

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units to which the goodwill is allocated. Estimating the value-in-use amount requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The key assumptions used to determine the value-in-use is disclosed in Note 12.

(vii) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses, unabsorbed capital allowances and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the unused tax losses, unabsorbed capital allowances and other deductible temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The details of carrying value of recognised and unrecognised of deferred tax assets are disclosed in Note 29.


ANNUAL REPORT 2016





(viii) Inventories valuation

Inventories are measured at the lower of cost and net realisable value. The Group estimates the net realisable value of inventories based on an assessment of expected sales prices. Demand levels and pricing competition could change from time to time. If such factors result in an adverse effect on the Group’s products, the Group might be required to reduce the value of its inventories. The details of inventories are disclosed in Note 13.

(ix) Construction contracts

The Group recognises construction contracts revenue and expenses in the profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that construction costs incurred for work performed to date bear to the estimated total construction costs.

Significant judgement is required in determining the stage of completion, the extent of the construction costs incurred, the estimated total construction revenue and costs, as well as the recoverability of the construction projects. In making the judgement, the Group evaluates based on experience and by relying on the work of specialists. The details of construction contracts are disclosed in Note 14.

(x) Income taxes

Judgment is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business.

The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. As at 31 December 2016, the Group and the Company have tax recoverable and tax payable of RM6,844,123 and RM Nil (2015: RM8,042,029 and RM160,778) and RM22,487,451 and RM89,909 (2015: RM10,881,484 and RM Nil) respectively.

(xi) Employees’ Share Option Scheme

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The details of assumptions made in respect of the share-based payment scheme are disclosed in Note 37.

187


(CONT’D)




(xii) Fair value of financial instruments

Management uses valuation techniques in measuring the fair value of financial instruments where active market quotes are not available. Details of the assumptions used are given in the Note 43(c) regarding financial assets and liabilities. In applying the valuation techniques, management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the end of the reporting period.

(xiii) Contingent liabilities

Determination of the treatment of contingent liabilities is based on management’s view of the expected outcome of the contingencies after consulting internal and external experts to the Group, for matters in the ordinary course of business. The details of contingent liabilities are disclosed in Note 49.

3. SIGNIFICANT ACCOUNTING POLICIES

The Group and the Company apply the significant accounting policies set out below, consistently throughout all periods presented in the financial statements unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiary companies

Subsidiary companies are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiary companies are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary company is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interests in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.


ANNUAL REPORT 2016


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Basis of consolidation (cont’d)

(i) Subsidiary companies (cont’d)

Acquisition-related costs are expensed off in profit or loss as incurred.

If the business combination is achieved in stages, previously held equity interest in the acquiree is re-measured at its acquisition date fair value and the resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instruments and within the scope of FRS 139 Financial Instruments: Recognition and Measurement, is measured at fair value with the changes in fair value recognised in profit or loss. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Inter-company transactions, balances and unrealised gains or losses on transactions between Group

companies are eliminated. Unrealised losses are eliminated only if there is no indication of impairment. Where necessary, accounting policies of subsidiary companies have been changed to ensure consistency with the policies adopted by the Group.

In the Company’s separate financial statements, investment in subsidiary companies is stated at cost less accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts are recognised in profit or loss. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy Note 3(m)(i) to the financial statements on impairment of non-financial assets.

(ii) Changes in ownership interests in subsidiary companies without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary company is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

(iii) Disposal of subsidiary companies

If the Group loses control of a subsidiary company, the assets and liabilities of the subsidiary company, including any goodwill, and non-controlling interests are derecognised at their carrying value on the date that control is lost. Any remaining investment in the entity is recognised at fair value. The difference between the fair value of consideration received and the amounts derecognised and the remaining fair value of the investment is recognised as a gain or loss on disposal in profit or loss. Any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities.

189


(CONT’D)


(a) Basis of consolidation (cont’d)

(iv) Goodwill on consolidation

The excess of the aggregate of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary company acquired (ie. a bargain purchase), the gain is recognised in profit or loss.

Following the initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually or more frequent when there is objective evidence that the carrying value may be impaired. See accounting policy Note 3(m)(i) to the financial statements on impairment of non-financial assets.

(b) Investment in associated companies

An associated company is an entity over which the Group and the Company have significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

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

An associated company is equity accounted for from the date on which the investee becomes an associated company. Under the equity method, on initial recognition of the investment in an associated company is recognised at cost and the carrying amount is increased or decreased to recognise the Group’s share of profit or loss and other comprehensive income of the associated companies after the date of acquisition. When the Group’s share of losses in an associated company exceeds the carrying amount of the investment, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associated companies.

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

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


ANNUAL REPORT 2016



(b) Investment in associated companies (cont’d)

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

Upon loss of significant influence over the associated companies, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associated companies upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

In the Company’s separate financial statements, investment in associated companies is stated at cost less accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts are recognised in profit or loss. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy Note 3(m)(i) to the financial statements on impairment of non-financial assets.

(c) Foreign currency transaction

(i) Foreign currency transactions and balances

Transactions in foreign currency are recorded in the functional currency of the respective Group entities using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are included in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. These are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation are recognised in profit or loss in the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate.

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

191


(CONT’D)


(c) Foreign currency transaction (cont’d)

(ii) Foreign operations

The assets and liabilities of foreign operations denominated in functional currencies other than RM are translated to RM at the rate of exchange prevailing at the reporting date and income and expenses, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.

Goodwill and fair value adjustment which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (“FCTR”) in equity. However, if the operation is a non-wholly-owned subsidiary company, 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 the FCTR related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary company that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

(d) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The policy for the recognition and measurement of impairment is in accordance with Note 3(m)(i) to the financial statements.

(i) Recognition and measurement

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, cost of replacing component parts of the assets, and the present value of the expected cost for the decommissioning of the assets after their use. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. All other repair and maintenance costs are recognised in profit or loss as incurred.


ANNUAL REPORT 2016



(d) Property, plant and equipment (cont’d)

(i) Recognition and measurement (cont’d)

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items.

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

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss.

(ii) Reclassification to investment property

When the use of a property changes from owner-occupied to investment property, the property is reclassified as investment property and accounted for in accordance with Note 3(g) to the financial statements.

(iii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss as incurred.

(iv) Depreciation

Depreciation is recognised in the profit or loss on a straight-line basis over the estimated useful lives of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

193


(CONT’D)


(d) Property, plant and equipment (cont’d)

(iv) Depreciation (cont’d)

Property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows: Leasehold land Over the remaining period of the lease Buildings 20 to 50 years Motor vehicles 5 years Office equipment, furniture and fittings 2 to 10 years Renovations 5 to 10 years Plant, machinery and equipment 5 to 10 years Motor racing circuit 20 years

The residual values, useful lives and depreciation method are reviewed at each reporting period end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the property, plant and equipment.

(e) Capital work-in-progress

Capital work-in progress consists of expenditure incurred on construction of property, plant and equipment and investment properties which takes a substantial period of time to be ready for their intended use.

Capital work-in-progress is stated at cost during the period of construction. No depreciation is provided on capital work-in-progress and upon completion of construction, the cost will be transferred to property, plant and equipment or investment properties.

(f) Land and property development costs

(i) Land held for property development

Land held for property development consists of land held for future development activities where no development activities has been undertaken or where development activities are not expected to be completed within normal operating cycle. Such land is classified as non-current asset and is stated at cost less any accumulated impairment losses. The policy of recognition and measurement of impairment is in accordance with Note 3(m)(i) to the financial statements.

Land held for property development shall be reclassified to current asset when the development activities have commenced or development activities are expected to commence within the period of twelve months after the end of financial year and where it can be demonstrated that the development activities can be completed within the normal operating cycle.

Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies.


ANNUAL REPORT 2016



(f) Land and property development costs (cont’d)

(ii) Property development costs

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

Property development costs shall be classified as non-current asset where no development activities have been carried out or development activities are not expected to commence within the period of twelve months after the end of financial year or where development activities are not expected to be completed within the normal operating cycle.

Property development costs shall be reclassified to current asset when the development activities have been commenced or development activities are expected to commence within the period of twelve months after the end of financial year and where the activities are expected to be completed within the normal operating cycle.

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

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

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

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

When the revenue recognised in the profit or loss exceeds billings to purchasers, the balance is shown as accrued billings under current assets. When the billings to purchasers exceed the revenue recognised in the profit or loss, the balance is shown as progress billings under current liabilities.

(g) Investment properties

Investment properties are properties held either to earn rental income or for capital appreciation or for both. Investment properties are measured at cost, including transaction costs, less any accumulated depreciation and impairment losses.

The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property.

195


(CONT’D)


(g) Investment properties (cont’d)

Investment properties are depreciated on a straight-line basis to write down the cost of each asset to their residual values over their estimated useful lives. The principal annual depreciation rate for buildings is 20 to 50 years. The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount. See accounting policy Note 3(m)(i) to the financial statements on impairment of non-financial assets.

Investment properties are derecognised upon disposal or when they are permanently withdrawn from use and no future economic benefits are expected from their disposal. Upon disposal, the difference between the net disposal proceeds and the carrying amount is recognised in the profit or loss.

(h) Financial assets

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

Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are recognised immediately in profit or loss.

The Group and the Company classify their financial assets depends on the purpose for which the financial assets were acquired at initial recognition, into the following categories:

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

Financial assets at fair value through profit or loss include financial assets held for trading, contingent consideration in a business combination or financial assets that are designated into this category upon initial recognition. A financial asset is classified in this category if it is acquired principally for the purpose of selling it in the near term. Derivatives, including separated embedded derivatives, are also categorised as held for trading unless they are designated as effective hedging instruments. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.

After initial recognition, financial assets in this category are measured at fair value with any gains or losses arising from changes in the fair values recognised in profit or loss in the period in which the changes arise.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.


ANNUAL REPORT 2016



(h) Financial assets (cont’d)

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those maturing later than 12 months after the end of the reporting period which are classified as non-current assets.

After initial recognition, financial assets categorised as loans and receivables are measured at amortised cost using the effective interest method, less impairment losses. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group and the Company have the positive intention and ability to hold to maturity. They are classified as non-current assets, except for those having maturity within 12 months after the end of the reporting period which are classified as current.

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

(iv) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of the assets within 12 months after the end of the reporting period.

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

Investment in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less impairment loss.

197


(CONT’D)


(h) Financial assets (cont’d)

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

A financial asset is derecognised when the contractual rights to receive cash flows from the financial assets has expired or have been transferred and the Group and the Company has transferred substantially all risks and rewards of ownership. On derecognition of a financial asset, the difference between the carrying amount and the sum of consideration received and any cumulative gains or loss that had been recognised in equity is recognised in the profit or loss.

(i) Financial liabilities

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

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

The Group and the Company classify their financial liabilities at initial recognition, into the following categories:

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

Financial liabilities at fair value through profit or loss include financial liabilities held for trading, contingent consideration in a business combination or financial liabilities designated into this category upon initial recognition.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivatives financial instruments that are not designated as effective hedging instruments. Separated embedded derivatives are also categorised as held for trading unless they are designated as effective hedging instruments.

Gains or losses on financial liabilities held for trading are recognised in profit or loss.

(ii) Other financial liabilities measured at amortised cost

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

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

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

Gains and losses on financial liabilities measured at amortised cost are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.


ANNUAL REPORT 2016



(i) Financial liabilities (cont’d)

(iii) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specific payment to reimburse the holder for a loss it incurs because a specific 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, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, 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 recognised less cumulative amortisation.

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

(j) Offsetting of financial instruments

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

(k) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdrafts and short term highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits, if any.

(l) Construction costs

Construction contracts are contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use.

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised over the period of contract as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period. The stage of completion method is determined by the proportion that contract costs incurred for work performed to date bear to the estimated total contract cost.

199


(CONT’D)


(l) Construction costs (cont’d)

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that is probable recoverable and contract costs are recognised as expenses in the period in which they are incurred.

Irrespective whether the outcome of a construction contract can be estimated reliably, when it is probable that contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

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

The aggregate of the costs incurred and the profit or loss recognised on each contract is compared against the progress billings up to the year end. Where costs incurred and recognised profits (less recognised losses) exceed progress billings, the balance is presented as amounts owing by customers on contracts. Where progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is presented as amounts owing to customers on contracts.

(m) Impairment of assets

(i) Non-financial assets

The carrying amounts of non-financial assets (except for inventories, amount owing by customers on contracts, deferred tax assets, assets arising from employee benefits, investment property measured at fair value and non-current assets (or disposal groups) classified as 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 asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives, or that are not yet available for use, the recoverable amount is estimated each period at the same time.

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 other assets or cash-generating units. Subject to operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units 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 cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating units is the greater of its value in use and its fair value less costs of disposal. 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 cash-generating unit.


ANNUAL REPORT 2016



(m) Impairment of assets (cont’d)

(i) Non-financial assets (cont’d)

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount. Impairment loss is recognised in profit or loss, unless the asset is carried at a revalued amount, in which such impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (group of cash-generating units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for asset in prior years. Such reversal is recognised in the profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

(ii) Financial assets

All financial assets, other than those categorised as fair value through profit or loss, investment in subsidiary companies and investment in associated companies, are assessed at each reporting date 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 asset.

Financial assets carried at amortised cost

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

If any such evidence exists, the amount of impairment loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of impairment loss is recognised in the profit or loss. Receivables together with the associated allowance are written off when there is no realistic prospect of future recovery.

201


(CONT’D)


(m) Impairment of assets (cont’d)

(ii) Financial assets (cont’d)

Financial assets carried at amortised cost (cont’d)

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

Available-for-sale financial assets

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

If an available-for-sale financial asset is impaired, the amount of impairment loss is recognised in profit or loss and is measured as the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised. When a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.

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

(n) Inventories

Raw material, finished goods and completed properties are stated at the lower of cost and net realisable value.

Cost of raw material is determined on a first-in-first out basis. Cost of finished goods consists of direct material and direct labour.

The cost of completed properties includes costs of land and related development cost or its purchase costs and incidental cost of acquisition.

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.


ANNUAL REPORT 2016



(o) Share capital

(i) Ordinary shares

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

Dividend distribution to the Company’s shareholders is recognised as a liability in the period they are approved by the Board of Directors except for the final dividend which is subject to approval by the Company’s shareholders.

(ii) Preference shares

Preference share capital is classified as equity if it is non-redeemable, or is redeemable but only at the Company’s option, and any dividends are discretionary. Dividends thereon are recognised as distributions within equity. Preference share capital is classified as financial liability if it is redeemable on a specific date or at the option of the equity holders, or if dividend payments are not discretionary. Dividends thereon are recognised as interest expense in profit or loss as accrued.

(iii) Treasury shares

When issued share of the Company are repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares in the statements of changes in equity. No gain or loss is recognised in profit or loss on the sale, re-issuance or cancellation of the treasury shares.

When treasury shares are distributed as share dividends, the cost of the treasury shares is applied as a reduction of the share premium account or the distributable retained profits, or both.

When treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity.

(p) Contingencies

Where it is not probable that an inflow or outflow of economic benefits will be required, or the amount cannot be estimated reliably, the asset or the obligation is disclosed as a contingent asset or contingent liability, unless the probability of inflow or outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets or contingent liabilities unless the probability of inflow or outflow of economic benefits is remote.

203


(CONT’D)


(q) Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date 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, even if that right is not explicitly specified in an arrangement.

As lessee

(i) Finance lease

Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and 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 asset.

Minimum lease payments made under finance leases are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the profit or loss. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as a property, plant and equipment or as investment property if held to earn rental income as capital appreciation or both.

(ii) Operating lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised in the statements of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property and measured using cost model.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land which in substance is an operating lease is classified as prepaid land lease payments.

As lessor

Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.


ANNUAL REPORT 2016



(r) Revenue recognition

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

(i) Property development

Revenue derived from property development activities is recognised based on the percentage of completion method. The stage of completion is determined based on the total actual costs incurred to date over the estimated total property development costs.

(ii) Construction contracts

Revenue from work done on construction contracts is recognised based on the percentage of completion method. The stage of completion is determined based on the total actual costs incurred to date over the estimated total contract costs. Allowance for foreseeable losses is made in the financial statements when such losses can be determined.

(iii) Sale of goods and services rendered

Revenue from sale of goods is measured at the fair value of consideration received or receivable, net of returns and allowances, trade discount and volume rebates. Revenue from sale of goods is recognised when the transfer of significant risk and rewards of ownership of the goods to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

Revenue from services rendered is recognised in the profit or loss based on the value of services performed and invoiced to customers during the period.

(iv) Sale of completed properties

Revenue from the sale of completed development properties is measured at the fair value of the consideration receivable and is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer.

(v) Dividend income

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

(vi) Rental income

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

205


(CONT’D)


(r) Revenue recognition (cont’d)

(vii) Interest income

Interest income is recognised on accruals basis using the effective interest method.

(viii) Management fees

Management fees are recognised on accrual basis when services are rendered.

(ix) Motor racing event income

Motor racing event income is recognised when the event is completed and services are rendered.

(x) Motor racing sponsorship income

Motor racing sponsorship income is recognised at the fair value of the sponsorship received or receivable.

(s) Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

When the grant relates to an expense item, it is recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Where the grant relates to an asset, it is recognised as deferred income and transferred to profit or loss on a systematic basis over the useful lives of the related asset.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs to be recognised in profit or loss in the period in which they become receivable.

Where the Group receives non-monetary government grants, the asset and the grant are recorded at nominal amount and transferred to profit or loss on a systematic basis over the life of the depreciable asset by way of a reduced depreciation charge.

(t) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-makers are responsible for allocating resources and assessing performance of the operating segments and make overall strategic decisions. The Group’s operating segments are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.


ANNUAL REPORT 2016



(u) Non-current assets (or disposal groups) 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 through continuing use. Such non-current assets (or disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group). Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Property, plant and equipment and investment properties are not depreciated or amortised once classified as held for sale.

(v) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

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.

(w) Provisions

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

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

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. The relating expense relating to any provision is presented in the statements of profit or loss and other comprehensive income net of any reimbursement.

207


(CONT’D)


(x) Income taxes

Tax expense in profit or loss comprises current and deferred tax. Current tax and deferred tax is 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.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates

enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the liability method for all temporary differences between the carrying amounts

of assets and liabilities in the statements of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction which is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax is based on the expected manner of realisation or settlement of the carrying

amount of the assets and liabilities, at the end of the reporting period, except for investment properties carried at fair value model. Where investment properties measured using fair value model, the amount of deferred tax recognised is measured using the tax rates that would apply on sale of those assets at their carrying amounts at the reporting date unless the property is depreciable and is held with the objective to consume substantially all of the economic benefits embodied in the property over time, rather than through sale. Deferred tax assets and liabilities are not discounted.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities

and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available

against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of

an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.


ANNUAL REPORT 2016



(y) Employee benefits

(i) Short term employee benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which

the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick and medical leave are recognised when the absences occur. The expected cost of accumulating compensated absences is measured as additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period.

(ii) Defined contribution plans

As required by law, companies in Malaysia contribute to the state pension scheme, the Employee Provident Fund (“EPF”). Some of the Group’s foreign subsidiary companies also make contributions to their respective countries’ statutory pension schemes. Such contributions are recognised as an expense in the profit or loss as incurred. Once the contributions have been paid, the Group has no further payment obligations.

(iii) Share-based compensation

LBS Bina Group Berhad Employees’ Share Option Scheme (“ESOS”), an equity-settled, share-based compensation plan, allows the Company and its subsidiary companies’ employees to acquire ordinary shares of the Company. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period and taking into account the probability that the options will vest. The fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date. At the end of each reporting date, the Group revises its estimates of the number of options that are expected to become exercisable on vesting date. It recognised the impact of the revision of original estimates, if any, in the profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to retained earnings. The proceeds received net of any directly attributable transaction costs are credited to equity when the options are exercised.

209


(CONT’D)

4. PROPERTY, PLANT AND EQUIPMENT Office Plant, Leasehold equipment, machinery Motor land and Motor furniture and racing buildings vehicles and fittings Renovations equipment circuit Total Group RM RM RM RM RM RM RM

Cost At 1 January 2016 339,899,411 10,051,879 17,208,106 5,444,342 8,555,767 90,791,424 471,950,929

Additions 1,770,000 819,720 2,558,245 2,891,988 2,409,279 - 10,449,232

Transfer from capital

work-in-progress 42,204 - 3,126,103 1,881,059 - - 5,049,366

Transfer from inventories 218,954 - - - - - 218,954

Transfer from investment

properties 2,065,670 - - 2,222,494 - - 4,288,164

Disposals - (154,563) (169,539) (247,686) (705,693) - (1,277,481)

Write off - - (1,383,904) (3,357,851) (1,184) - (4,742,939)

Acquisition of subsidiary

company 23,485,074 271,841 1,440,905 1,393,010 9,509,690 - 36,100,520

Exchange differences (7,152,089) - (177,035) - - (1,997,507) (9,326,631)

At 31 December 2016 360,329,224 10,988,877 22,602,881 10,227,356 19,767,859 88,793,917 512,710,114

Accumulated depreciation At 1 January 2016 121,896,476 3,419,153 11,350,564 4,226,549 2,887,464 87,223,059 231,003,265

Charge for the

financial year 10,350,422 993,190 1,823,702 760,338 1,898,443 545,077 16,371,172

Transfer from

investment properties 423,280 - - 96,800 - - 520,080

Disposals - (28,073) (147,174) (128,463) (260,157) - (563,867)

Write off - - (1,143,791) (3,217,593) (59) - (4,361,443)

Acquisition of

subsidiary company 5,349,455 18,123 1,374,258 909,964 5,338,723 - 12,990,523

Exchange differences (2,288,176) - (133,210) - - (1,898,738) (4,320,124)

At 31 December 2016 135,731,457 4,402,393 13,124,349 2,647,595 9,864,414 85,869,398 251,639,606

Accumulated impairment losses At 1 January 2016/

31 December 2016 - 6,053 - - - - 6,053

Carrying amount At 31 December 2016 224,597,767 6,580,431 9,478,532 7,579,761 9,903,445 2,924,519 261,064,455


ANNUAL REPORT 2016


4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Office Plant, Leasehold equipment, machinery Motor land and Motor furniture and racing buildings vehicles and fittings Renovations equipment circuit Total Group RM RM RM RM RM RM RM

Cost

At 1 January 2015 290,296,169 9,238,817 14,810,682 4,778,320 3,972,949 78,459,135 401,556,072

Additions 3,196,500 2,669,292 1,818,928 666,022 4,807,753 - 13,158,495

Transfer from inventories 1,871,620 - - - - - 1,871,620

Transfer from capital

work-in-progress 400,000 - - - - - 400,000

Disposals - (1,856,230) (243,747) - - - (2,099,977)

Write off (23,142) - (234,239) - (224,935) - (482,316)

Exchange differences 44,158,264 - 1,056,482 - - 12,332,289 57,547,035

At 31 December 2015 339,899,411 10,051,879 17,208,106 5,444,342 8,555,767 90,791,424 471,950,929

Accumulated depreciation At 1 January 2015 96,474,389 3,263,163 9,507,978 3,938,227 2,185,831 71,735,700 187,105,288

Charge for the

financial year 9,953,151 967,937 1,459,265 288,322 885,593 3,992,443 17,546,711

Disposals - (811,947) (227,717) - - - (1,039,664)

Write off (23,142) - (196,268) - (183,960) - (403,370)

Exchange differences 15,492,078 - 807,306 - - 11,494,916 27,794,300

At 31 December 2015 121,896,476 3,419,153 11,350,564 4,226,549 2,887,464 87,223,059 231,003,265

Accumulated impairment losses At 1 January 2015/

31 December 2015 - 6,053 - - - - 6,053

Carrying amount

At 31 December 2015 218,002,935 6,626,673 5,857,542 1,217,793 5,668,303 3,568,365 240,941,611

211


(CONT’D)

4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

(a) Included in the property, plant and equipment of the Group are leasehold land and buildings with carrying amount of RM30,569,078 (2015: RM10,973,167) which have been pledged to licensed banks as securities for banking facilities granted to the Group as disclosed in Notes 28 and 30.

(b) Included in the property, plant and equipment of the Group are:(i) Motor vehicles under finance lease arrangement with carrying amount of RM6,195,325 (2015: RM6,528,497).(ii) Plant, machinery and equipment under finance lease arrangement with carrying amount of RM2,588,982

(2015: RM2,413,979).

The above assets are pledged as securities for the related financing facilities as disclosed in Note 27.

(c) The remaining lease period of the leasehold land and buildings ranges from 27 to 97 (2015: 28 to 98) years.

(d) Leasehold land with carrying amount of RM184,804,756 (2015: RM195,960,718) situated in mainland China is held under medium term lease.

Management has performed an impairment assessment on the carrying amount of the leasehold land by reference to a report prepared by an independent professional valuer on the business operations of a motor racing circuit run by a subsidiary company on such leasehold land, and considers that there is no impairment in value of the leasehold land. The valuation is based on cash flow projections which involve assumptions on and estimations of future cash flows, growth rates, discount factors etc. The assessment of impairment therefore requires considerable judgement by the management.

(e) The aggregate additional cost for the property, plant and equipment of the Group during the financial year acquired under finance lease arrangement, term loan financing and cash payment are as follows:

Group 2016 2015 RM RM Aggregate costs 10,449,232 13,158,495 Less payment by : Finance lease (1,264,109) (4,215,600) Term loan financing (1,105,002) (2,102,413)

Cash payments 8,080,121 6,840,482


ANNUAL REPORT 2016


5. CAPITAL WORK-IN-PROGRESS

Group 2016 2015 RM RM

At 1 January 6,229,079 208,447 Additions 25,370,095 6,209,768 Transfer to property, plant and equipment (Note 4) (5,049,366) (400,000) Transfer to investment properties (Note 7) (21,390,988) - Exchange differences 209,453 210,864

At 31 December 5,368,273 6,229,079

6. LAND AND PROPERTY DEVELOPMENT COSTS


Non-Current Freehold land, at cost At 1 January 100,914,374 73,068,787 Additions 191,539 8,455,658 Transfer from current portion 1,100,000 17,211,929 Transfer from property development costs - 2,178,000

At 31 December 102,205,913 100,914,374

Long term leasehold land, at cost At 1 January 132,204,001 60,353,585 Additions 460,713 111,102,243 Transfer to current portion (1,995,784) (39,247,984) Transfer from/(to) property development costs 55,089,092 (3,843)

At 31 December 185,758,022 132,204,001

Property development costs At 1 January 281,908,064 214,126,629 Additions 150,804,116 107,607,627 Transfer from/(to) current portion 65,148,619 (37,652,035) Transfer to freehold and leasehold land (55,089,092) (2,174,157) Property development cost written off (210,009) -

At 31 December 442,561,698 281,908,064

Total non-current land and property development costs 730,525,633 515,026,439

213


(CONT’D)

6. LAND AND PROPERTY DEVELOPMENT COSTS (CONT’D)


Current Freehold land,at cost At 1 January 15,235,771 5,412,455 Additions - 23,789,796 Transfer to non-current portion (1,100,000) (17,211,929) Transfer from property development costs - 5,708,324 Transfer to profit or loss (6,179,638) (2,462,875)

At 31 December 7,956,133 15,235,771

Long term leasehold land, at cost At 1 January 88,362,199 80,827,790 Additions 30,099,761 14,228,255 Transfer from non-current portion 1,995,784 39,247,984 Transfer from property development costs - 500,000 Transfer to profit or loss (5,153,511) (44,993,123) Transfer to inventories (5,794,311) (1,448,707)

At 31 December 109,509,922 88,362,199

Property development costs At 1 January 643,865,577 834,129,658 Additions 661,058,200 417,207,770 Transfer (to)/from non-current portion (65,148,619) 37,652,035 Transfer to freehold and leasehold land - (6,208,324) Transfer to profit or loss (204,679,342) (572,424,348) Transfer to inventories (122,194,852) (66,491,214)

At 31 December 912,900,964 643,865,577

Less: Costs recognised in profit or loss At 1 January 309,728,933 536,640,189 Recognised during the financial year 577,519,701 392,969,090 887,248,634 929,609,279 Less: Portion related to completed projects (216,012,491) (619,880,346)

At 31 December 671,236,143 309,728,933

Total current land and property development costs 359,130,876 437,734,614


ANNUAL REPORT 2016


6. LAND AND PROPERTY DEVELOPMENT COSTS (CONT’D)

(a) Certain development lands are pledged to licensed banks as securities for banking facilities granted to the Group as disclosed in Notes 28 and 30.

(b) Certain subsidiary companies entered into agreements with third parties (the landowners) to develop the lands, solely at the cost of the subsidiary companies and based on the agreements, the landowners are entitled to the followings:

(i) certain percentage of the respective development profits;(ii) certain percentage of the respective development gross sales value;(iii) agreed contract sum as specified in the agreement; and/or(iv) certain units of completed properties.

(c) Certain subsidiary companies (developers) entered into joint venture agreements with its subsidiary companies (the landowners) to develop the lands, solely at the cost of the developers and based on the agreements, the landowners are entitled to the followings:

(i) certain units of completed properties; and/or(ii) certain percentage of the respective development profits.

(d) Included in the property development costs for the financial year are as follows:

Group 2016 2015 Note RM RM Finance costs 33 20,430,901 9,873,256 Landowners consideration 220,741,927 67,000,000

7. INVESTMENT PROPERTIES

Group 2016 2015 RM RM Cost At 1 January 36,809,398 35,482,317 Additions 14,391,856 317,045 Transfer from capital work-in-progress (Note 5) 21,390,988 - Transfer from inventories (Note 13) - 1,010,036 Transfer to property, plant and equipment (Note 4) (4,288,164) - Disposals (3,694,500) - Write off (365,750) -

At 31 December 64,243,828 36,809,398

215


(CONT’D)

7. INVESTMENT PROPERTIES (CONT’D)


Accumulated depreciation At 1 January 2,366,573 1,609,019 Charge for the financial year 796,128 757,554 Transfer to property, plant and equipment (Note 4) (520,080) - Disposals (177,982) -

At 31 December 2,464,639 2,366,573

Accumulated impairment losses At 1 January 675,735 675,735 Write off (365,750) -

At 31 December 309,985 675,735

Carrying amount 61,469,204 33,767,090

Included in the above are: Cost Leasehold land and buildings 50,220,867 22,118,839 Freehold land and buildings 568,043 517,800 Commercial properties 13,454,918 14,172,759

64,243,828 36,809,398

Fair value 77,912,327 41,490,045

Investment properties with carrying amount of RM39,940,405 (2015: RM32,963,944) have been pledged to licensed

banks as securities for banking facilities granted to the Group as disclosed in Notes 28 and 30.

During the financial year, investment properties with carrying amount of RM3,768,084 have been transferred to property, plant and equipment, since the properties’ usage has been changed from investment properties to owner-occupied properties.

Certain investment properties are leasehold properties with remaining lease periods range from 75 to 94 (2015: 76 to 95) years.

During the financial year, certain investment properties have generated rental income and incurred direct operating expenses amounting to RM865,472 and RM238,181 (2015: RM852,229 and RM216,877) respectively.


ANNUAL REPORT 2016


7. INVESTMENT PROPERTIES (CONT’D)

Investment properties comprise a number of freehold land and buildings, leasehold land and buildings and commercial properties that are leased to third parties. Each of the leases contains cancellable periods range from one to three years. Subsequent renewals are negotiated with the lessee on renewal periods range from one to two years.

Fair value of investment properties are arrived at by reference to market evidence of transaction prices for similar properties and are performed by registered valuers having appropriate recognised professional qualification and recent experiences in the locations and category of properties being valued. The fair values are within Level 2 of the fair value hierarchy.

8. INVESTMENT IN SUBSIDIARY COMPANIES

(a) Investment in subsidiary companies

Company 2016 2015 RM RM Quoted shares, at cost In Malaysia 225,139,736 - Unquoted shares, at cost In Malaysia 393,554,395 393,554,395 Outside Malaysia 4,075 4,075 Less: Accumulated impairment losses (3,766,823) (192,464)

614,931,383 393,366,006

The Group’s subsidiary companies which have non-controlling interests are not material individually or in

aggregate to the financial position, financial performance and cash flows of the Group except as disclosed in Note 8(e).

Details of the subsidiary companies are set out in Note 50.

The movement in the allowance for impairment losses are as follows:

Company 2016 2015 RM RM At 1 January 192,464 192,464 Transfer from investment in an associated company 3,578,431 - Reversal of impairment losses (4,072) -

At 31 December 3,766,823 192,464

217


(CONT’D)

8. INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D) (b) Acquisition of subsidiary companies during the financial year

(i) On 24 June 2016, LBS Bina Holdings Sdn. Bhd. (“LBS”), a wholly-owned subsidiary company of the Company, acquired 230,000 ordinary shares of RM1.00 each in Seloka Sinaran Sdn. Bhd. (“SSSB”) for a total cash consideration of RM36,100,000 only. Consequently, SSSB became a 46% associated company of LBS.

On 3 August 2016, LBS further acquired 25,000 ordinary shares of RM1.00 each in SSSB for a total cash consideration of RM3,900,000 only. Consequently, SSSB became a 51% owned subsidiary company of LBS.

(ii) On 2 February 2016, the Company acquired 7,000,000 ordinary shares of RM0.50 each in ML Global Berhad (“MGB”) for a total cash consideration of RM3,500,200 only. Consequently, MGB became a 31.95% associated company of the Company.

On 5 July 2016, the Company further acquired 17,232,696 ordinary shares of RM0.50 each in MGB for a total cash consideration of RM9,647,472 only. Consequently, MGB became a 51.18% owned subsidiary company of the Company.

On 14 September 2016, MGB acquired MITC Engineering Sdn. Bhd. (“MITCE”), an indirect subsidiary company of the Company, for a purchase consideration of RM300,000,000 only from MITC Sdn. Bhd. (“MITC”), an indirect subsidiary company of the Company and Datuk Lim Lit Check. Consequently, MITCE became a wholly-owned subsidiary company of MGB.

The purchase consideration shall be satisfied by MGB in the following manner:

(1) MGB granting the right of allotment at the issue price of RM0.67 for each consideration ordinary share to MITC and Datuk Lim Lit Check at 200,820,896 and 66,940,298 units of ordinary shares respectively.

(2) MGB effecting the allotment and issuance of the consideration Irredeemable Convertible Preference Shares (“ICPS”) at the issue price of RM0.67 each to MITC and Datuk Lim Lit Check at 135,000,000 and 45,000,000 units of ICPS respectively.

On 28 November 2016, MITC placed out 45,000,000 consideration ordinary shares at RM0.75 for each consideration ordinary share for RM33,750,000 in order to meet public spread. Consequently, the acquisition completed on the even date and MGB became a 56.43% owned subsidiary company of the Company.

(iii) On 3 August 2016, LBS subscribed 51 ordinary shares of RM1.00 each in Kemudi Ehsan Sdn. Bhd. (“KESB”) for a total cash consideration of RM51 only. Consequently, KESB became a 51% owned subsidiary company of LBS.

(iv) On 19 December 2016, LBS acquired 51 ordinary shares of RM1.00 each in Induk Pelita Sdn. Bhd. (“IPSB”) for a total cash consideration of RM51 only. Consequently, IPSB became a 51% owned subsidiary company of LBS.


ANNUAL REPORT 2016


8. INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D)

(b) Acquisition of subsidiary companies during the financial year (cont’d)

The effect of the acquisition on the financial results of the Group in respect of the financial year is as follows:


Revenue 70,379,031 5,173,466 Cost of sales (63,461,751) (4,938,133)

Gross profit 6,917,280 235,333 Other income 6,205,115 - Administrative and operating expenses (9,061,237) (13,615) Finance costs (569,442) - Share of profit in an associated company 15,620 -

Profit before taxation 3,507,336 221,718 Taxation (1,830,751) (46,000)

Total comprehensive income for the financial year 1,676,585 175,718

Net profit for the financial year attributable to: Owners of the Parent 1,676,059 130,662 Non-controlling interests 526 45,056

1,676,585 175,718

Impact of the acquisition on the Statements of Profit or Loss and Other Comprehensive Income

From the date of acquisition, acquired subsidiary companies have contributed RM70,379,031 (2015: RM5,173,466) and RM1,676,585 (2015: RM175,718) to the Group’s revenue and profit for the financial year respectively. If the business combination had taken place at the beginning of the financial year, the Group’s revenue for the financial year would have been RM92,532,519 (2015: RM5,173,466) and Group’s profit for the financial year would have been decreased by RM131,590 (2015: increased by RM175,525).

219


(CONT’D)



The following summarises the major classes of consideration transferred, and the recognised amount of assets acquired and liabilities assumed at the acquisition date:


Property, plant and equipment 23,109,997 - Inventories 858,448 - Trade and other receivables 24,369,586 - Deferred tax assets 58,003 - Non-current assets classified as held for sale 12,086,177 - Cash and bank balances 1,242,316 1,006 Bank overdrafts (1,998,258) - Trade and other payables (12,549,459) (2,315) Finance lease payables (232,755) - Bank borrowings (13,949,710) -

Total identifiable assets and liabilities 32,994,345 (1,309)

Net cash inflows arising from the acquisition was as follows: Group 2016 2015 RM RM

Purchase consideration satisfied by cash 53,147,771 555 Less: Cash and bank balances (1,242,316) (1,006) Bank overdrafts 1,998,258 -

Net cash outflows/(inflows) from the acquisition of subsidiary companies 53,903,713 (451)


ANNUAL REPORT 2016




Goodwill was recognised as a result of the acquisition as follows:


Fair value of consideration transferred 65,690,399 555 Non-controlling interests, based on their proportionate interest in the recognised amounts of the assets and liabilities of the acquiree 16,106,921 (590) Fair value of identifiable assets acquired and liabilities assumed (32,994,345) 1,309

Goodwill on consolidation 48,802,975 1,274

The goodwill recognised on the acquisition is attributable mainly to the skills and technical talent of the acquired business’s work force and the synergies expected to be achieved from integrating the subsidiary companies into the Group’s property development and construction business.

Certain fair values of assets acquired and liabilities assumed and purchase consideration have been determined on a provisional basis pending completion of purchase price allocation exercise. The purchase price allocation exercise is expected to be completed not exceeding one year from the acquisition date. The goodwill on acquisition is provisionally estimated to be RM40,023,304, it will be adjusted accordingly on a retrospective basis if any identified intangible assets is allocated when the purchase price allocation is finalised.

(c) Additional investment in subsidiary companies during the financial year

(i) On 29 March 2016, LBS Capital Sdn. Bhd. (“LCSB”), a wholly-owned subsidiary company of LBS, increased its paid up share capital from 25,000 to 2,000,000 ordinary shares of RM1.00 each. LBS subscribed additional 1,975,000 ordinary shares of RM1.00 each in LCSB by way of cash.

(ii) On 17 May 2016, Prisma Craft Sdn. Bhd. (“PCSB”), a wholly-owned subsidiary company of MITCE, increased its paid up share capital from 2 to 750,000 ordinary shares of RM1.00 each. MITCE subscribed additional 749,998 ordinary shares of RM1.00 each in PCSB by way of cash.

(iii) On 19 August 2016, Kemudi Ehsan Sdn. Bhd. (“KESB”), a 51% owned subsidiary company of LBS, increased its paid up share capital from 100 to 500,000 ordinary shares of RM1.00 each. LBS subscribed for additional 254,949 ordinary shares of RM1.00 each in KESB by way of cash. KESB remained as a 51% owned subsidiary company of LBS.

221


(CONT’D)


(d) Acquisition of non-controlling interests during the financial year

(i) On 27 January 2016, LBS entered into a Share Sale Agreement (“SSA”) to acquire 150,000 ordinary shares of RM1.00 each representing 15% of the equity interest in Puncak Gama Sdn. Bhd. (“PGSB”) for a total cash consideration of RM11,000,000 only. The SSA completed in March 2016. Consequently, LBS’s shareholding in PGSB increased from 51% to 66%.

On 3 May 2016, LBS entered into another SSA to acquire 140,000 ordinary shares of RM1.00 each in PGSB for a total cash consideration of RM10,300,000 only. Consequently, PGSB became a 80% owned subsidiary company of LBS.

(ii) On 13 May 2016, Pelangi Homes Sdn. Bhd. (“PHSB”), a wholly-owned subsidiary company of LBS, acquired 100 ordinary shares of RM1.00 each in Restu Bidara Sdn. Bhd. (“RBSB”) from MITCE for a total cash consideration of RM100 only. Consequently, RBSB became a wholly-owned subsidiary company of PHSB.

(iii) On 1 August 2016, LBS acquired 600 ordinary shares of RM1.00 each in Nuevo Attraction & Destination Sdn. Bhd. (“NADSB”) from MITCE for a total cash consideration of RM600 only. Consequently, NADSB became a 60% owned subsidiary company of LBS.

(iv) On 1 November 2016, LBS acquired 1,000 ordinary shares of RM1.00 each in Nuevoprima Development Sdn. Bhd. (“NDSB”) from NDSB for a total cash consideration of RM1,000 only. Consequently, NDSB became a wholly-owned subsidiary company of LBS.

(v) On 19 October 2014, LBS entered into a SSA to acquire additional 27,500 ordinary shares of RM1.00 each in Casa Inspirasi Sdn. Bhd. (“CISB”) for a total cash consideration of RM10,000,000 only. Upon conditions precedent met on 5 December 2016, CISB became a 68% owned subsidiary company of LBS.

The effect of changes in the equity interest that is attributable to the owners of the Parent is as follows:

Group 2016 2015 RM RM Carrying amount of non-controlling interests acquired (136,055,329) 473,240 Consideration paid to non-controlling interests (31,300,000) (39,300,031) Arising from group reorganisation 40,329,843 -

Decrease in Parent’s equity (127,025,486) (38,826,791)


ANNUAL REPORT 2016



(e) Material partly owned subsidiary companies

The summarised financial information of the Group’s subsidiary companies that have material non-controlling interests (amounts before inter-company elimination) is as follows:

Proportion of ownership interests and voting rights Profit/(Loss) allocated held by non-controlling to non-controlling Accumulated non- interests interests controlling interests Name of company 2016 2015 2016 2015 2016 2015 % % RM RM RM RM MGB Group * 43.57 - 1,167,635 - 151,490,694 - Zhuhai International Circuit Limited (“ZIC”) 40 40 (3,394,769) (5,953,297) (33,552,936) (29,186,839) Mayang Jelatek Sdn. Bhd. (“MJSB”) 49 49 (10,062) 318,890 8,685,078 8,695,140 MITCE - 25 - 3,086,246 - 6,539,262

126,622,836 (13,952,437) Individually immaterial subsidiary companies with non-controlling interests (7,567,075) (5,336,035)

Total non-controlling interests 119,055,761 (19,288,472)

* MGB Group represents ML Global Berhad and its subsidiary companies

The summarised financial information for each subsidiary company that has non-controlling interests that are material to the Group is set out below. The summarised financial information below represents amounts before inter-company elimination.

(i) Summarised Statements of Financial Position

MGB Group ZIC MJSB MITCE RM RM RM RM 2016 Non-current assets 361,660,623 196,018,006 6,251,436 - Current assets 274,547,244 44,059,174 15,365,929 - Non-current liabilities (31,467,004) (200,676,278) - - Current liabilities (268,980,491) (113,555,620) (3,892,711) -

Net assets/(liabilities) 335,760,372 (74,154,718) 17,724,654 -

Equity attributable to : Owners of the Parent 335,762,513 (40,601,782) 17,724,654 - Non-controlling interests (2,141) (33,552,936) - -

Total Equity 335,760,372 (74,154,718) 17,724,654 -

223


(CONT’D)


(e) Material partly owned subsidiary companies (cont’d)

The summarised financial information for each subsidiary company that has non-controlling interests that are material to the Group is set out below. The summarised financial information below represents amounts before inter-company elimination. (cont’d)

(i) Summarised Statements of Financial Position (cont’d)

ZIC MJSB MITCE RM RM RM 2015 Non-current assets 210,338,812 6,262,723 44,224,395 Current assets 40,735,169 17,366,940 133,175,963 Non-current liabilities (204,360,814) - (21,272,212) Current liabilities (110,364,615) (5,884,474) (129,971,102)

Net (liabilities)/assets (63,651,448) 17,745,189 26,157,044

Equity attributable to : Owners of the Parent (34,464,609) 17,745,189 26,157,044 Non-controlling interests (29,186,839) - -

Total Equity (63,651,448) 17,745,189 26,157,044

(ii) Summarised Statements of Profit or Loss and Other Comprehensive Income MGB Group ZIC MJSB MITCE RM RM RM RM 2016 Revenue 92,532,519 24,540,411 5,520,930 418,384,553

Net profit/(loss) for the financial year 322,961 (11,477,055) (20,536) 21,156,980 Other comprehensive income for the financial year 5,162,495 4,393,398 - -

Total comprehensive income/(loss) for the financial year 5,485,456 (7,083,657) (20,536) 21,156,980

ZIC MJSB MITCE RM RM RM 2015 Revenue 22,469,122 5,595,581 263,222,219

Net (loss)/profit for the financial year (17,465,440) 650,797 12,344,982 Other comprehensive income for the financial year 3,273,727 271,482 -

Total comprehensive (loss)/ income for the financial year (14,191,713) 922,279 12,344,982


ANNUAL REPORT 2016





(iii) Summarised Statements of Cash Flows

MGB Group ZIC MJSB MITCE RM RM RM RM 2016 Net cash (used in)/generated from operating activities (12,704,852) (2,455,082) 2,638,994 - Net cash generated from/(used in) investing activities 19,582,346 (1,200,458) - - Net cash (used in)/generated from financing activities (4,659,867) 3,617,422 - -

Net increase/(decrease) in cash and cash equivalents 2,217,627 (38,118) 2,638,994 -

ZIC MJSB MITCE RM RM RM 2015 Net cash (used in)/generated from operating activities (1,836,294) 1,687,596 9,594,937 Net cash used in investing activities (502,494) - (2,445,500) Net cash generated from/ (used in) financing activities 2,830,269 (1,594,793) (8,543,364)

Net increase/(decrease) in cash and cash equivalents 491,481 92,803 (1,393,927)

(iv) Dividends paid MGB Group ZIC MJSB MITCE RM RM RM RM 2016 Dividends paid to non-controlling interests - - - (2,000,000)

225


(CONT’D)




(iv) Dividends paid (cont’d)

ZIC MJSB MITCE RM RM RM 2015 Dividends paid to non-controlling interests - - (3,000,000)

(f) There are no significant restrictions on the ability of the subsidiary companies to transfer funds to the Group in

the form of cash dividends or repayment of loans and advances. Generally, for all subsidiary companies which are not wholly-owned by the Company, non-controlling shareholders hold protective rights restricting the Company’s ability to use the assets of the subsidiary companies and settle the liabilities of the Group, unless approval is obtained from the non-controlling shareholders.

9. INVESTMENT IN ASSOCIATED COMPANIES

(a) Investment in associated companies

Group Company 2016 2015 2016 2015 RM RM RM RM At cost Quoted shares in Malaysia - 10,883,769 - 10,883,769 Unquoted shares in Malaysia 4,100,070 4,100,070 - -

4,100,070 14,983,839 - 10,883,769 Accumulated impairment losses At 1 January 3,778,430 199,999 3,578,431 - Impairment during the financial year - 3,578,431 - 3,578,431 Reversal of impairment loss (3,578,431) - (3,578,431) - At 31 December 199,999 3,778,430 - 3,578,431 Group’s share of post acquisition reserves (1,264,189) 2,673,931 - -

2,635,882 13,879,340 - 7,305,338


ANNUAL REPORT 2016


9. INVESTMENT IN ASSOCIATED COMPANIES (CONT’D)

(a) Investment in associated companies (cont’d)

Details of the associated companies are set out in Note 51.

During the financial year, the Company acquired 24,232,696 ordinary shares of RM0.50 each in MGB for a total cash consideration of RM13,147,672 only. Consequently, MGB became a 51.18% owned subsidiary company of the Company.

An reversal of impairment loss amounting to RM3,578,431 was recognised during the financial year.

In previous financial year, the recoverable amount of the Company’s investment in MGB estimated based on value-in-use method was RM7,305,338. In determining value-in-use for MGB, the cash flows were discounted at a rate of 6.79% on a pre-tax basis.

(b) The summarised financial information of the associated companies is as follows:


Assets and liabilities Non-current assets 1,259,122 21,386,850 Current assets 1,273,406 34,510,051 Non-current assets classified as held for sale - 12,086,177

Total assets 2,532,528 67,983,078 Non-current liabilities (850,750) (14,663,759) Current liabilities (1,204,387) (22,103,524)

Total net assets 477,391 31,215,795

Financial results Revenue 139,240 37,026,211

(Loss)/Profit before taxation (459,289) 6,701,819 Taxation (4,000) 3,096,840

Net (loss)/profit for the financial year (463,289) 9,798,659

227


(CONT’D)


(b) The summarised financial information of the associated companies is as follows: (cont’d)

The unrecognised share of losses of the associated companies is as follows: Group 2016 2015 RM RM

At 1 January 225,467 206,676 Additions during the financial year 18,993 18,791

At 31 December 244,460 225,467

(c) The Group’s associated companies are not material individually to the financial position, financial performance

and cash flows of the Group except for MGB Group.

The summarised financial information of the Group’s material associated company is set out below:

Proportion of ownership Investment in Name of company interests and voting rights held associated companies 2016 2015 2016 2015 % % RM RM MGB Group - 24.13 - 11,073,306 Individually immaterial associated companies 2,635,882 2,806,034

2,635,882 13,879,340


ANNUAL REPORT 2016



(c) The Group’s associated companies are not material individually to the financial position, financial performance and cash flows of the Group except for MGB Group. : (cont’d)

The summarised financial information represents the amounts in the financial statements of MGB Group and not the Group’s share of those amounts.

MGB Group 2016 2015 RM RM Assets and liabilities Non-current assets - 20,109,742 Current assets - 32,892,852 Non-current assets classified as held for sale - 12,086,177

Total assets - 65,088,771

Non-current liabilities - (13,976,087) Current liabilities - (20,837,768)

Total liabilities - (34,813,855)

Total net assets - 30,274,916

Market value: Quoted shares in Malaysia - 40,335,480

Financial results Revenue - 37,026,211

Profit before taxation - 7,076,998 Taxation - 3,096,840

Net profit for the financial year - 10,173,838

229


(CONT’D)

10. PROMISSORY NOTE

Group 2016 2015 RM RM Non-current - 100,498,924 Current - 105,523,704

- 206,022,628

The promissory note had a principal amount of HKD850 million which was interest free and receivable by four annual

instalments. The promissory note was carried at amortised cost based on an effective interest rate of 5% per annum. The third and fourth instalments in aggregate of HKD400 million were early repaid by the issuer during the year.

11. OTHER INVESTMENTS

Group Company 2016 2015 2016 2015 RM RM RM RM

Non-Current Available-for-sale financial assets Equity securities listed in Hong Kong measured at fair value on recurring basis and classified as level 1 of the fair value hierarchy 98,801,419 93,835,130 - -

98,801,419 93,835,130 - -

Other investments At cost Transferable corporate club membership 1,248,501 1,248,501 - - Accumulated impairment losses At 1 January 100,000 - - - Impairment during the financial year - 100,000 - - At 31 December 100,000 100,000 - -

1,148,501 1,148,501 - -

99,949,920 94,983,631 - -

The fair value of the listed equity securities was determined by reference to the quoted price in an active market. In

view of the significant and prolonged decline in the fair value of the available-for-sale financial assets, impairment loss thereon amounting to RM27,025,897 (2015: RMNil) was recycled from other comprehensive income to profit or loss during the financial year. The impairment loss recognised in profit or loss shall not be reversed in the future.


ANNUAL REPORT 2016


11. OTHER INVESTMENTS (CONT’D)

The listed equity securities with carrying amount of RM98,801,419 (2015: RM93,835,130) have been pledged to licensed banks to partially secure the bank overdrafts as disclosed in Note 30.

An impairment loss of RM100,000 on transferable corporate club membership was recognised during the previous financial year.


Current Financial assets at fair value through profit or loss Over the counter trust funds measured at fair value on recurring basis and classified as level 1 of the fair value hierarchy - 38,488,161 - 11,029,697

The fair value of the trust funds was determined by reference to the quoted prices provided by a financial intermediary.

12. GOODWILL ON CONSOLIDATION


Cost At 1 January 134,646,168 134,644,894 Acquisition of subsidiary companies 48,802,975 1,274

At 31 December 183,449,143 134,646,168

Accumulated impairment losses At 1 January 50,428,933 47,502,567 Impairment during the financial year 6,040,342 2,926,366

At 31 December 56,469,275 50,428,933

Carrying amount 126,979,868 84,217,235

231


(CONT’D)

12. GOODWILL ON CONSOLIDATION (CONT’D)

(a) Impairment test for goodwill on consolidation

Goodwill on consolidation has been allocated to Group’s cash-generating units (“CGUs”) identified according to business segments as property development and construction as follows:


Property development 120,125,182 84,217,235 Construction 6,854,686 -

126,979,868 84,217,235

(b) Key assumptions used to determine the recoverable amount

The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a five to ten years period. The key assumptions used for value-in-use calculations are based on future projection of the Group in Malaysia as follows:

Property development Construction

Gross Margin 21% 8% Growth rate N/A 10% Pre-tax discount rate 6.07% p.a. 11% p.a.

The key assumptions that the directors have used in the cash flow projections to undertake impairment testing are as follows:

(i) Gross margin - Budgeted value based on the average margins achieved in the year immediately before the budgeted year, increased for expected efficiency improvements and market development.

(ii) Growth rate - Not applicable for property development segment as the cash flow projections made is for a period of 5 to 10 years, in accordance with the expected life cycle of the CGU.

(iii) Pre-tax discount rate - Rate that reflects specific risks relating to the relevant CGU.

The values assigned to the key assumptions represent management’s assessment of future trends in the industry and are based on both external sources and internal sources.

The management believes that no reasonably possible change in any of the above key assumptions would cause the carrying values of the units to materially exceed their recoverable amounts.


ANNUAL REPORT 2016


12. GOODWILL ON CONSOLIDATION (CONT’D)

(c) Sensitivity to changes in assumptions

The management believes that a reasonably possible changes in the key assumptions on which management has based on its determination of the CGU’s recoverable amount would not cause the CGU’s carrying amount to exceed its recoverable amount.

(d) Impairment recognised during the financial year

The Group recognised an impairment of RM6,040,342 (2015: RM2,926,366) during the financial year in respect of the goodwill arising on consolidation. The goodwill relates to certain subsidiary companies which mainly undertake development projects which are expected to complete within the next 5 years. As a decrease in development activities or other significant cash generating activities is expected from the subsidiary companies, the related goodwill has been impaired accordingly.

13. INVENTORIES


At cost: Stock of completed properties 185,439,203 74,160,419 Finished goods 168,091 116,853 At net realisable value: Stock of completed properties 2,260,000 2,260,000

187,867,294 76,537,272

Recognised in profit or loss Inventories recognised in cost of sales 24,560,725 2,360,216 Inventories written down - 36,400

Included in the inventories above was an carrying amount of RM132,961,147 (2015: RM27,449,832) which have been

pledged to licensed banks as securities for banking facilities granted to the Group as disclosed in Note 28.

233


(CONT’D)

14. AMOUNT OWING BY/(TO) CUSTOMERS ON CONTRACTS

Group 2016 2015 RM RM Contract cost incurred to date 142,036,686 81,130,755 Attributable profits recognised to-date 16,404,289 9,314,693

158,440,975 90,445,448 Less: Progress billings (170,075,443) (95,992,231)

(11,634,468) (5,546,783)

Presented as: Amount owing by customers on contracts 206,607 56,017 Amount owing to customers on contracts (11,841,075) (5,602,800)

(11,634,468) (5,546,783)

Included in contract cost incurred to-date for the financial year is rental of premises of RM101,772 (2015: RM72,700).

Included in progress billings is retention sum of RM10,223,772 (2015: RM4,197,412).

15. TRADE RECEIVABLES


Trade receivables - Third parties 309,347,321 194,636,534 - Related parties 7,639,091 2,915,203

316,986,412 197,551,737 Less: Allowance for impairment losses - Third parties (1,522,813) (1,427,906)

315,463,599 196,123,831

The Group’s normal trade credit terms range from 14 to 180 days (2015: 14 to 180 days). Other credit terms are

assessed and approved on a case-by-case basis.

Included in the trade receivables was an amount of RM14,289,559 (2015: RM28,711,184) retained by stakeholders which are due upon the expiry of retention period as stipulated in the sale and purchase agreements. The retention periods range from 8 to 24 months.


ANNUAL REPORT 2016


15. TRADE RECEIVABLES (CONT’D)

Analysis of the trade receivables ageing are as follows:

Group 2016 2015 RM RM Neither past due nor impaired 107,420,273 70,425,190 Past due less than 30 days not impaired 33,686,772 41,812,056 Past due for 31-60 days not impaired 27,827,677 17,834,164 Past due for more than 60 days not impaired 146,528,877 66,052,421 208,043,326 125,698,641

315,463,599 196,123,831 Individually impaired 1,522,813 1,427,906

316,986,412 197,551,737

Trade receivables that are neither past due nor impaired are creditworthy receivables with good track record with the Group.

As at 31 December 2016, trade receivables of RM208,043,326 (2015: RM125,698,641) were past due but not impaired. These mainly relate to amounts due from property purchasers with end financing facilities from reputable end financiers. In respect of property purchasers with no end financing facilities, the Group retains the legal title to all the properties sold until the full contracted sale value is settled. Accordingly, no impairment has been made on these amounts and the Group is closely monitoring these receivables and is confident of their eventual recovery.

The movements in the allowance for impairment losses (individually assessed) during the financial year are as follows:

Group 2016 2015 RM RM At 1 January 1,427,906 1,364,204 Impairment during the financial year 106,804 - Reversal of allowance for impairment losses (1,522) - Exchange differences (10,375) 63,702

At 31 December 1,522,813 1,427,906

The trade receivables of the Group that are individually assessed to be impaired amounting to RM1,522,813 (2015: RM1,427,906), related to property purchasers who are in financial difficulties or have defaulted on payments. These balances are expected to be recovered through the debt recovery process.

Concentration of credit risk with respect to trade receivables is limited due to the Group’s large number of customers, who are widely distributed and cover a broad range of end markets. There is no objective evidence that the trade receivables are not fully recoverable.

235


(CONT’D)

16. OTHER RECEIVABLES

Group Company 2016 2015 2016 2015 RM RM RM RM Other receivables - Third parties 53,098,506 33,607,678 326,236 113,720 - Related parties 241,770 621,145 - 3,200,000

53,340,276 34,228,823 326,236 3,313,720 Less: Allowance for impairment losses - Third parties (10,397,164) (9,852,186) - - Acquisition of subsidiary company (845,679) - - -

42,097,433 24,376,637 326,236 3,313,720 Deposits - Third parties 29,908,092 21,067,029 14,500 4,500 - Related parties 20,400 76,538 - - Prepayments 38,464,914 47,353,085 - -

Total other receivables 110,490,839 92,873,289 340,736 3,318,220

Included in other receivables of the Group mainly comprise of the followings:

(i) Deposits and prepaid purchase consideration of RM15,213,000 and RM33,275,016 (2015: RM9,680,000 and RM39,750,000) paid for the acquisition and joint venture of development lands that have not been completed as at 31 December 2016. The balance of these deposits and prepaid purchase consideration are disclosed as capital commitments in Note 48.

(ii) An amount of RM5,690,311 (2015: RM4,012,645) provided for settlement with the purchasers of a development project of a subsidiary company in accordance with the Workout Proposals of Instangreen Corporation Berhad. This amount will be settled upon receipt of claims from all the purchasers.

(iii) An amount of RM687,822 (2015: RM686,857) arising from a project management agreement signed with a developer. The projects have been completed and collection is pending strata titles issuance and closure of housing development accounts by the developer.

Other receivables of the Company amounting to RM3,200,000 in the previous financial year was arising from the dividend receivable from a subsidiary company.

The Group and the Company have not recognised any impairment on certain receivables that are past due at the end of financial year, as there is no objective evidence that the receivables are not fully recoverable.


ANNUAL REPORT 2016


16. OTHER RECEIVABLES (CONT’D)

The movements in the allowance for impairment losses (individually assessed) during the financial year are as follows:


At 1 January 9,852,186 9,864,904 - - Impairment during the financial year 544,978 - - - Acquisition of subsidiary company 845,679 - - - Reversal of allowance for impairment losses - (12,718) - -

At 31 December 11,242,843 9,852,186 - -

A reversal of allowance for impairment losses amounting to RM12,718 was recognised in the previous financial year

when these balances were written off.

Other receivables that are individually determined to be impaired at the reporting date related to debtors that are in financial difficulties and have defaulted on payment.

17. AMOUNT OWING BY/(TO) SUBSIDIARY COMPANIES

(a) Amount owing by subsidiary companies

These represent unsecured interest free advances and repayable on demand except for an amount of RM185,815,664 (2015: RM252,653,104) which bears interest ranging from 5.09% to 6.07% (2015: 5.20% to 5.96%) per annum.

(b) Amount owing to a subsidiary company

These represent unsecured interest free advances and repayable on demand except for an amount of RM62,411,867 (2015: RM56,946,384) which bears interest ranging from 3.88% to 4.17% (2015: 3.87% to 3.89%) per annum.

18. FIXED DEPOSITS WITH LICENSED BANKS

Included in the fixed deposits of the Group and of the Company are amounts of RM40,221,758 and RM31,442,414 (2015: RM20,452,403 and RM10,341,966) respectively which are pledged to licensed banks as securities for banking facilities granted to the Company and certain subsidiary companies as disclosed in Notes 28 and 30.

The interest rates and maturities of deposits of the Group and of the Company at the reporting date ranging from 0.05% to 3.90% (2015: 0.28% to 4.50%) per annum and 1 to 365 days (2015: 1 to 365 days) respectively. All unpledged deposits have maturity periods of less than three months.

237


(CONT’D)

19. CASH HELD UNDER HOUSING DEVELOPMENT ACCOUNTS

Cash held under the Housing Development Accounts which are not freely available for use represents monies received from purchasers of residential properties less payments or withdrawals in accordance with the Housing Development (Controls and Licensing) Act, 1966.

The interest rates of cash held under Housing Development Accounts at the reporting date ranging from 0.19% to 2.10% (2015: 0.20% to 2.20 %) per annum.

20. CASH AND BANK BALANCES

Included in cash and bank balances of the Group and of the Company are deposits with licensed banks amounting to RM9,878,803 and RM703,731 (2015: RM9,114,119 and RM724,614) respectively which have been pledged to licensed banks for banking facilities granted to the Group and to the Company as disclosed in Note 28.

21. SHARE CAPITAL

Group/Company Number of Shares Amount 2016 2015 2016 2015 Units Units RM RM

Ordinary shares of RM1.00 each Authorised 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000

Issued and fully paid shares: At 1 January 551,437,117 538,298,257 551,437,117 538,298,257 Issuance of shares: - Exercise of ESOS 2,997,900 3,470,300 2,997,900 3,470,300 - Exercise of warrants 86,989,456 9,668,560 86,989,456 9,668,560

At 31 December 641,424,473 551,437,117 641,424,473 551,437,117

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary

shares carry one vote per share without restriction and rank equally with regard to the Company’s residual assets. In respect of the Company’s treasury shares that are held by the Company, all rights are suspended until those shares are reissued.

During the financial year, the Company increased its issued and paid-up share capital from 551,437,117 to 641,424,473 by way of issuance of 89,987,356 new ordinary shares of RM1.00 each as follows:

(a) 2,997,900 new ordinary shares of RM1.00 each for cash arising from the exercise of share options under Employees’ Share Option Scheme at a weighted average exercise price of RM1.30 per ordinary share;

(b) 24,676,306 new ordinary shares of RM1.00 each for cash arising from the exercise of Warrants A at an exercise price of RM1.00 per ordinary share; and

(c) 62,313,150 new ordinary shares of RM1.00 each for cash arising from the exercise of Warrants B at an exercise price of RM1.25 per ordinary share.

The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company.


ANNUAL REPORT 2016


22. SHARE PREMIUM

Group/Company 2016 2015 RM RM Non-distributable At 1 January 48,298,035 44,586,608 Exercise of ESOS 7,626,285 391,361 Exercise of warrants 18,045,919 969,106 Own shares sold 265,027 2,350,960

At 31 December 74,235,266 48,298,035

23. TREASURY SHARES


At 1 January 6,116,800 10,830,000 8,634,411 14,678,685 Shares repurchased 15,000 7,606,800 24,185 10,900,389 Own shares sold (6,071,800) (12,320,000) (8,570,515) (16,944,663)

At 31 December 60,000 6,116,800 88,081 8,634,411

Treasury shares relate to ordinary shares of the Company that are held by the Company. The amount consists of the

acquisition costs of treasury shares net of the proceeds received on their subsequent sale or issuance.

The shareholders of the Company, by a resolution passed in the last Annual General Meeting held on 9 June 2016, renewed their approval for the Company’s plan to repurchase its own shares. The directors of the Company are committed to enhance the value of the Company for its shareholders and believe that the repurchase plan can be applied in the best interest of the Company and its shareholders.

During the financial year, the Company repurchased 15,000 (2015: 7,606,800) of its issued shares from the open market. The average price paid for the shares repurchased was RM1.61 (2015: RM1.43) per share. The total consideration paid for the repurchase including transaction costs was RM24,185 (2015: RM10,900,389). The repurchased transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

During the financial year, the Company has also disposed of 6,071,800 (2015: 12,320,000) of its treasury shares in the open market for a total consideration of RM8,835,542 (2015: RM19,295,623).

239


(CONT’D)

23. TREASURY SHARES (CONT’D)

The Company has the right to resell these shares at a later date. As treasury shares, the rights attached as to voting, dividends and participation in other distribution are suspended.

Details of the repurchase and resale of treasury shares during the financial year are as follows:

Number of Highest Lowest Average Total shares price paid price paid price per consideration repurchased per share per share share paid Unit RM RM RM RM

2016 June 10,000 1.58 1.58 1.59 15,922 November 5,000 1.64 1.64 1.65 8,263

15,000 24,185

2015 March 380,000 1.51 1.49 1.51 572,898 April 1,090,000 1.55 1.49 1.52 1,661,802 May 20,000 1.62 1.55 1.56 31,278 June 74,600 1.64 1.60 1.62 120,635 July 1,543,200 1.56 1.45 1.49 2,296,211 August 2,850,400 1.50 1.28 1.39 3,953,346 September 1,108,400 1.46 1.28 1.37 1,519,359 October 110,200 1.42 1.39 1.41 155,634 November 260,000 1.39 1.34 1.37 356,769 December 170,000 1.37 1.35 1.37 232,457

7,606,800 10,900,389

Number of Highest Lowest Average Total treasury price resold price resold price resold consideration shares resold per share per share per share received Unit RM RM RM RM

2016 March 6,071,800 1.47 1.46 1.46 8,835,542

2015 May 12,320,000 1.62 1.57 1.57 19,295,623


ANNUAL REPORT 2016


24. OTHER RESERVES

Group Company 2016 2015 2016 2015 RM RM RM RM Non-distributable Fair value reserves (34,809,309) (92,969,940) (34,827,821) (64,115,002) ESOS reserves 8,414,930 12,793,610 8,414,930 12,793,610 Foreign exchange reserves 119,865,996 121,328,050 - - Other reserves (261,103,639) (134,078,153) - - Warrants reserves 36,566,506 68,321,318 36,566,506 68,321,318

(131,065,516) (24,605,115) 10,153,615 16,999,926

(a) Fair value reserves

Fair value reserves represents the cumulative net change in the fair value of available-for-sale financial assets until they derecognised or impaired and fair value allocated to the bonus issue of free detachable Warrants B.

(b) ESOS reserves

Group/Company 2016 2015 RM RM Non-distributable At 1 January 12,793,610 9,945,172 Share-based payment 2,573,613 3,140,028 Exercise of ESOS (6,730,885) - Realisation of ESOS reserve (221,408) (291,590)

At 31 December 8,414,930 12,793,610

Employees’ Share Option Scheme reserves represent the equity-settled share options granted to employees. The reserves is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share options, and is reduced by the expiry, cancellation or exercise of the share options.

The Employees’ Share Option Scheme are disclosed in Note 37 to the financial statements.

(c) Foreign exchange reserves

The foreign currency translation reserves represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

241


(CONT’D)

24. OTHER RESERVES (CONT’D)

(d) Other reserves

Other reserves represents the difference between the Group’s share of net assets before and after the acquisition of equity interest from its non-controlling interests, and any consideration paid.

(e) Warrants reserves


Non-distributable Warrants A At 1 January 46,614,018 56,267,578 4,206,316 5,171,672 Realisation of Warrants reserve (24,676,306) (9,653,560) (2,467,631) (965,356)

At 31 December 21,937,712 46,614,018 1,738,685 4,206,316

Warrants B At 1 January 136,414,897 - 64,115,002 - Issued during the year - 136,429,897 - 64,122,052 Realisation of Warrants reserve (62,313,150) (15,000) (29,287,181) (7,050)

At 31 December 74,101,747 136,414,897 34,827,821 64,115,002

Total warrant reserves 96,039,459 183,028,915 36,566,506 68,321,318

Warrants reserves represent reserves allocated to the detachable Warrants A and Warrants B.

The salient terms of Warrants A and Warrants B are as follows:

(i) Warrants A

In the financial year 2008, the Company issued renounceable rights issue of 154,076,578 Warrants A on the basis of two (2) new warrants for every five (5) existing ordinary shares of RM1.00 each. The Company executed a Deed Poll constituting the warrants and the issue price and exercise price of the warrants have been fixed at RM0.10 and RM1.00 each respectively.

The Warrants A may be exercised at any time commencing on the date of issue of warrants on 12 June 2008 but not later than 11 June 2018. Any warrants which have not been exercised at the date of maturity will lapse and cease to be valid for any purpose.


ANNUAL REPORT 2016


24. OTHER RESERVES (CONT’D)

(e) Warrants reserves (Cont’d)

(ii) Warrants B

On 5 October 2015, the Company had issued 136,429,897 Warrants B to all the entitled shareholders of the Company on the basis of one (1) free Warrant B for every four (4) existing ordinary shares of RM1.00 each held in the Company.

The Warrants B are constituted under a Deed Poll executed on 3 September 2015 and each warrant entitles the registered holder the right at any time during the exercise period from 5 October 2015 to 4 October 2020 to subscribe in cash for one new ordinary share of RM1.00 each of the Company at an exercise price of RM1.25 each.

The new ordinary shares allotted and issued upon exercise of the warrants shall rank pari passu in all respects with the existing ordinary shares of the Company, save and except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new ordinary shares arising from the exercise of the warrants.

As at 31 December 2016, the total number of Warrants A and Warrants B that remain unexercised were 21,937,712 (2015: 46,614,018) and 74,101,747 (2015: 136,414,897) respectively.

25. TRADE PAYABLES Group 2016 2015 RM RM Non-current Trade payables 248,138,494 93,613,370

Current Trade payables - Third parties 247,521,477 250,668,191 - Related parties 1,511,238 12,902,298 249,032,715 263,570,489 Retention sum - Third parties 62,916,781 47,098,766 - Related parties 2,426,833 5,273,025 65,343,614 52,371,791

314,376,329 315,942,280

Total trade payables 562,514,823 409,555,650

243


(CONT’D)

25. TRADE PAYABLES (CONT’D)

(a) Non-current trade payables

This mainly represents payables for the acquisition and joint venture of project development lands. Payment will be made as stipulated in the agreements.

(b) Current trade payables

The normal trade credit terms granted to the Group range from cash basis to 60 days (2015: cash basis to 60 days). Other credit terms are assessed and approved on a case-by-case basis.

26. OTHER PAYABLES

Group Company 2016 2015 2016 2015 RM RM RM RM Non-current Other payables - Related parties 54,991,839 56,228,935 - -

Current Other payables - Third parties 66,311,154 63,982,005 173,470 177,142 - Related parties 36,971,374 6,745,166 - - 103,282,528 70,727,171 173,470 177,142 Accruals - Third parties 198,822,027 175,549,814 214,387 575,040 - Related parties - - 1,021,006 - 198,822,027 175,549,814 1,235,393 575,040 Deposits - Third parties 3,153,595 2,303,800 - - - Related party 2,000 2,000 - - 3,155,595 2,305,800 - - Dividend payable 13,027,823 32,719,219 13,027,823 32,719,219

318,287,973 281,302,004 14,436,686 33,471,401

Total other payables 373,279,812 337,530,939 14,436,686 33,471,401

(a) Non-current other payables

This represents unsecured advances of RM54,991,839 (2015: RM56,228,935) from a joint venture partner which is not expected to be settled within the next twelve months.


ANNUAL REPORT 2016


26. OTHER PAYABLES (CONT’D)

(b) Current other payables

Included in other payables of the Group mainly comprise of the followings:

(i) An amount of RM34,670,608 (2015: RM7,271,320) for equity interest acquisition from minority shareholders.

(ii) An amount of RM5,690,311 (2015: RM4,012,645) provided for settlement with the purchasers of a development project of a subsidiary company in accordance with the Workout Proposals of Instangreen Corporation Berhad. This amount will be settled upon receipt of claims from all the purchasers.

27. FINANCE LEASE PAYABLES

Group 2016 2015 RM RM (a) Minimum lease payments Within one year 2,392,870 2,043,833 Between one and five years 4,032,482 4,948,460 After five years 453,747 673,164

6,879,099 7,665,457 Less: Future finance charges (644,667) (865,505)

Present value of minimum lease payments 6,234,432 6,799,952

(b) Present value of finance lease payables Within one year 2,107,504 1,700,660 Between one and five years 3,695,058 4,468,297 After five years 431,870 630,995

6,234,432 6,799,952

Analysed as: Repayable within twelve months 2,107,504 1,700,660 Repayable after twelve months 4,126,928 5,099,292

6,234,432 6,799,952

Interest is charged at rates ranging from 2.18% to 4.25% (2015: 2.18% to 4.25%) per annum.

The Group leases motor vehicles and plant, machinery and equipment under finance lease as disclosed in Note 4. At the end of the lease term, the Group has the option to acquire the assets at a nominal price deemed to be a bargain purchase option. There are no restrictive covenants imposed by the lease agreement and no arrangements have been entered into for contingent rental payments.

245


(CONT’D)

28. BANK BORROWINGS

Group Company 2016 2015 2016 2015 RM RM RM RM Secured Floating rates: Bridging loans 37,737,671 23,955,181 - - Term loans 264,678,942 190,321,839 16,542,777 15,542,470 Revolving credits 207,272,441 303,427,895 59,426,570 65,301,507

Total bank borrowings 509,689,054 517,704,915 75,969,347 80,843,977

Analysed as: Repayable within twelve months Floating rates: Bridging loans 6,933,029 3,954,800 - - Term loans 20,814,392 53,336,233 7,152,660 8,758,740 Revolving credits 167,797,242 172,474,719 50,426,570 53,301,507

195,544,663 229,765,752 57,579,230 62,060,247

Repayable after twelve months Floating rates: Bridging loans 30,804,642 20,000,381 - - Term loans 243,864,550 136,985,606 9,390,117 6,783,730 Revolving credits 39,475,199 130,953,176 9,000,000 12,000,000

314,144,391 287,939,163 18,390,117 18,783,730

Total bank borrowings 509,689,054 517,704,915 75,969,347 80,843,977

The banking facilities of the Group and of the Company obtained from licensed banks are secured by:

(a) fixed charge over certain property, plant and equipment as disclosed in Note 4;(b) fixed charge or specific debenture over certain lands for property development as disclosed in Note 6;(c) fixed charge and deed of assignment over rental proceeds in relation to certain investment properties as

disclosed in Note 7;(d) legal assignment of cash flows or insurance proceeds in relation to projects developed by subsidiary companies;(e) fixed charge over certain inventories of certain subsidiary companies as disclosed in Note 13;(f) assignment of promissory note as disclosed in Note 10;(g) a charge on certain quoted shares;(h) a pledge of fixed deposits as disclosed in Note 18;(i) first charge over certain subsidiary companies’ shares and/or warrants and/or quoted shares; and(j) corporate guarantees provided by the Company and/or certain subsidiary companies.


ANNUAL REPORT 2016


28. BANK BORROWINGS (CONT’D)

Maturities of bank borrowings are as follows:

Group Company 2016 2015 2016 2015 RM RM RM RM Within one year 195,544,663 229,765,752 57,579,230 62,060,247 Between one and two years 100,376,687 95,307,500 18,390,117 9,783,730 Between two and three years 72,864,002 104,037,317 - 9,000,000 Between three and four years 51,156,939 18,749,589 - - Between four and five years 31,846,406 19,815,113 - - After five years 57,900,357 50,029,644 - -

509,689,054 517,704,915 75,969,347 80,843,977

The range of interest rates at the reporting date is as follows:

Group Company 2016 2015 2016 2015 % % % % Bridging loans 7.47 - 8.43 7.10 - 8.35 - - Term loans 3.27 - 8.31 2.68 - 8.35 3.27 - 8.10 2.67 - 2.73 Revolving credits 4.25 - 7.10 3.43 - 7.10 4.25 - 7.00 4.51 - 7.10

29. DEFERRED TAX ASSETS/(LIABILITIES)

Group 2016 2015 RM RM At 1 January (32,271,601) (37,996,706) Recognised in profit or loss 12,938,734 11,929,472 Arising from acquisition of a subsidiary company 58,003 - Exchange differences 1,042,542 (6,204,367)

At 31 December (18,232,322) (32,271,601)

247


(CONT’D)

29. DEFERRED TAX ASSETS/(LIABILITIES) (CONT’D)

The net deferred tax assets and liabilities shown on the Statements of Financial Position after appropriate offsetting are as follows:

Group 2016 2015 RM RM Deferred tax assets 27,223,591 13,295,290 Deferred tax liabilities (45,455,913) (45,566,891)

(18,232,322) (32,271,601)

The components and movements of deferred tax assets and liabilities at the end of reporting period prior to offsetting

are as follows:

Deferred tax assets of the Group

Unutilised Unused capital tax losses allowances Others Total RM RM RM RM At 1 January 2016 - - 13,295,290 13,295,290 Recognised in profit or loss (465,263) (474,456) 10,082,427 9,142,708 Under provision in prior year - - 1,789,165 1,789,165 Arising from acquisition of subsidiary company 2,335,242 661,186 - 2,996,428

At 31 December 2016 1,869,979 186,730 25,166,882 27,223,591

At 1 January 2015 118,552 - 2,870,713 2,989,265 Recognised in profit or loss (118,552) - 10,424,577 10,306,025

At 31 December 2015 - - 13,295,290 13,295,290


ANNUAL REPORT 2016


29. DEFERRED TAX ASSETS/(LIABILITIES) (CONT’D)

Deferred tax liabilities of the Group

Accelerated capital allowances RM At 1 January 2016 (45,566,891) Recognised in profit or loss 1,920,800 Under provision in prior year 86,061 Arising from acquisition of subsidiary company (2,938,425) Exchange difference 1,042,542

At 31 December 2016 (45,455,913)

At 1 January 2015 (40,985,971) Recognised in profit or loss 1,623,447 Exchange difference (6,204,367)

At 31 December 2015 (45,566,891)

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

Group 2016 2015 RM RM Unutilised capital allowances 2,450,587 1,665,566 Unused tax losses 67,511,243 52,021,277 Deductible temporary differences 8,972,730 3,953,380

78,934,560 57,640,223

Deferred tax assets and liabilities are off-set when there is a legally enforceable right to set-off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority.

249


(CONT’D)

30. BANK OVERDRAFTS Group Company 2016 2015 2016 2015 RM RM RM RM Secured Repayable within twelve months 100,901,943 43,665,940 42,650,845 8,631,290

The bank overdrafts obtained from licensed banks are secured by:(a) fixed charge over certain property, plant and equipment as disclosed in Note 4; (b) fixed charge or specific debenture over certain land for property development as disclosed in Note 6;(c) fixed charge over certain investment properties as disclosed in Note 7;(d) legal assignment of cash flows or insurance proceeds in relation to projects developed by subsidiary companies;(e) a pledge of fixed deposits as disclosed in Note 18;(f) first charge over certain subsidiary companies’ shares and/or warrants and/or quoted shares; (g) certain equity securities listed in Hong Kong as disclosed in Note 11; and(h) corporate guarantees provided by the Company and certain subsidiary companies.

The interest rates of the Group and of the Company at the reporting date are as follows:

Group Company 2016 2015 2016 2015 % % % % Bank overdrafts 4.45 - 8.31 6.85 - 8.35 4.45 - 8.00 8.10

31. REVENUE

Group Company 2016 2015 2016 2015 RM RM RM RM Property development 813,441,607 574,730,317 - - Construction contracts 65,454,432 67,313,756 - - Trading and others 52,775,680 13,384,916 - - Completed properties 37,406,927 2,397,750 - - Motor racing events and sponsorship 24,540,411 22,469,122 - - Management fees from a subsidiary company - - 564,000 564,000 Dividends from subsidiary companies - - 80,277,184 65,035,000

993,619,057 680,295,861 80,841,184 65,599,000


ANNUAL REPORT 2016


32. COST OF SALES

Group Company 2016 2015 2016 2015 RM RM RM RM Property development 526,585,245 364,750,675 - - Construction contracts 61,105,780 59,413,393 - - Trading and others 51,411,021 12,455,767 - - Completed properties 23,548,511 1,327,754 - - Motor racing events and sponsorship 11,347,229 7,094,167 - -

673,997,786 445,041,756 - -

33. FINANCE COSTS

Group Company 2016 2015 2016 2015 Note RM RM RM RM Interest expenses on: Term loans 13,729,802 11,655,747 474,258 503,138 Bank overdrafts 4,774,164 1,603,510 1,276,967 452,438 Bridging loans 4,846,766 2,775,290 - - Revolving credit 18,945,649 14,094,481 4,084,594 3,606,467 Finance lease 387,585 242,068 - - Islamic Securities - 109,731 - 109,731 Trade finance facilities 45,389 - - - Inter-company advances - - 1,510,302 1,712,468 Others 1,326,648 1,223,980 - -

44,056,003 31,704,807 7,346,121 6,384,242 Less: Interest capitalised in property development costs 6 (20,430,901) (9,873,256) - -

23,625,102 21,831,551 7,346,121 6,384,242

251


(CONT’D)

34. PROFIT BEFORE TAXATION

Profit before taxation is derived at after charging/(crediting):

Group Company 2016 2015 2016 2015 RM RM RM RM Allowance for impairment losses on: - Available-for-sale financial assets 27,025,897 - - - - Other investments - 100,000 - - - Goodwill arising on consolidation 6,040,342 2,926,366 - - - Investment in an associated company - 3,578,431 - 3,578,431 - Trade and other receivables 651,782 - - - Auditors’ remuneration - Statutory 569,854 416,044 68,000 60,000 - Others 220,849 96,677 28,000 28,000 - Under provision in prior years 47,967 33,216 8,000 10,000 Bad debts written off 313,971 29,263 - - Deposits written off 124,617 - - - Depreciation on: - Investment properties 796,128 757,554 - - - Property, plant and equipment 16,371,172 17,546,711 - - Inventories written down - 36,400 - - Property, plant and equipment written off 381,496 78,946 - - Property development costs written off 210,009 - - - Rental expense on : - Premises 514,123 543,691 - - - Office equipment 152,801 121,186 - - Non-Executive Directors’ remuneration: Company’s directors - Fees 137,214 130,680 137,214 130,680 - Salaries and other emoluments 696,200 628,000 696,200 628,000 - Share-based payment 202,788 175,656 202,788 175,656 - Other benefits 4,315 - 4,315 - Subsidiary companies’ directors - Fees 203,994 250,657 - - - Salaries and other emoluments 37,100 99,100 - -

The Company’s non-executive directors’ remuneration does not include the estimated monetary value of benefits-in-kind amounting to RM53,162 (2015: RM48,900).


ANNUAL REPORT 2016


34. PROFIT BEFORE TAXATION (CONT’D)

Profit before taxation is derived at after charging/(crediting): (cont’d)

Group Company 2016 2015 2016 2015 RM RM RM RM Net loss/(gain) on foreign exchange - Realised 2,322,278 (2,568,617) 3,242,817 1,424,430 - Unrealised (2,276,457) 1,841,631 5,495,212 2,230,125 (Gain)/Loss on disposal of: - Available-for-sale financial assets (3,420,254) (588,190) - - - Financial assets at fair value through profit or loss (36,730) (333,757) (27,602) (104,141) - Investment properties (1,427,482) - - - - Non-current assets classified as held for sale (4,963,823) - - - - Property, plant and equipment (286,796) 305,830 - - Dividend income from: - Available-for-sale financial assets (1,478,101) (720,386) - - - Financial assets at fair value through profit or loss (471,586) (97,547) (122,938) (40,141) - Subsidiary companies - - (80,277,184) (65,035,000) Fair value loss/(gain) on revaluation of financial assets at fair value through profit or loss 32,067 (25,554) - (29,697) Grant income (21,665,128) - - - Gain on remeasurement of previously held equity interest (2,928,131) - (5,602,897) - Interest income from: - Advances to subsidiary companies - - (14,722,804) (10,737,310) - Financial assets measured at amortised cost (1,490,070) (12,234,392) - - - Licensed banks (3,039,029) (3,784,197) (258,159) (240,015) - Trade receivables (7,013,269) (1,323,841) - - Recover of bad debts written off (760) - - - Receipt on unclaimed monies (4,898) (549) - (549) Rental income from: - Investment properties (865,472) (852,229) - - - Others (547,964) (259,323) - - Reversal of impairment losses on: - Trade receivables (1,522) - - - - Others receivables - (12,718) - - - Subsidiary companies - - (4,072) - Provision for staff economic compensation written back (3,475,201) - - - Waiver of debts (7) (14,300) - -

253


(CONT’D)

35. TAXATION

Group Company 2016 2015 2016 2015 RM RM RM RM Current income tax Current year tax provision 67,032,695 47,205,433 2,960,391 2,309,395 Under provision in prior years 4,658,739 3,062,974 265,825 78,239

71,691,434 50,268,407 3,226,216 2,387,634

Deferred taxation Relating to origination and reversal of temporary differences (11,063,508) (10,615,222) - - Relating to changes in tax rate - 399,344 - - Over provision in prior year (1,875,226) (1,713,594) - -

(12,938,734) (11,929,472) - -

Total tax expense 58,752,700 38,338,935 3,226,216 2,387,634

Malaysian Income tax is calculated at the statutory tax rate of 24% (2015: 25%) of the estimated assessable profit for the financial year.

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


Profit before taxation 143,954,268 108,834,920

At Malaysian statutory rate of 24% (2015: 25%) 34,549,025 27,208,730 Effects of changes in tax rate - 399,344 Differential in tax rate in other jurisdiction 2,136,380 1,421,450 Subsidiary companies domiciled in tax heaven country (1,189,508) (1,259,708) Income not subject to tax (7,070,004) (5,047,997) Expenses not deductible for tax purposes 26,302,281 17,131,951 Deferred tax assets not recognised 4,556,070 2,562,625 Utilisation of previously unrecognised tax losses and unabsorbed capital allowances (3,745,232) (6,139,504) Under provision of taxation in prior years 4,658,739 3,062,974 Over provision of deferred tax in prior years (1,875,226) (1,713,594) Others 430,175 712,664

58,752,700 38,338,935


ANNUAL REPORT 2016


35. TAXATION (CONT’D)

Company 2016 2015 RM RM

Profit before taxation 78,881,632 57,068,880

At Malaysian statutory rate of 24% (2015: 25%) 18,931,592 14,267,220 Expenses not deductible for tax purposes 5,180,089 3,484,775 Income not subject to tax (21,151,290) (15,442,600) Under provision of taxation in prior years 265,825 78,239

3,226,216 2,387,634

The Group has estimated unused tax losses and unutilised capital allowances of RM75,302,823 (2015: RM52,002,260) and RM3,228,628 (2015: RM2,412,017) respectively available for set-off against future taxable profit.

36. EARNINGS PER SHARE

(a) Basic earnings per share

The basic earnings per share are calculated based on the consolidated profit for the financial year attributable to the owners of the Parent and the weighted average number of ordinary shares in issue during the financial year as follows:

Group 2016 2015 Net profit for the financial year attributable to owners of the Parent (RM) 85,300,772 76,074,430

Weighted average number of ordinary shares in issue - Ordinary shares in issue as at 1 January 551,437,117 538,298,257 - Effect of ordinary shares issued during the year 38,155,184 7,650,033 - Effect of treasury shares held (84,327) (6,188,997)

Weighted average number of ordinary shares as at 31 December 589,507,974 539,759,293

Basic earnings per share (sen) 14.47 14.09

255


(CONT’D)

36. EARNINGS PER SHARE (CONT’D) (b) Diluted earnings per share

Diluted earnings per share are calculated based on the consolidated profit for the financial year attributable to the owners of the Parent and the adjusted weighted average number of ordinary shares issued and issuable during the financial year adjusted for the dilutive effects of all potential ordinary shares as follows:

Group 2016 2015 Net profit for the financial year attributable to owners of the Parent (RM) 85,300,772 76,074,430

Weighted average number of ordinary shares used in the calculation of basic earnings per share 589,507,974 539,759,293 Weighted average number of ordinary shares deemed issued at no consideration - ESOS 3,508,721 5,666,801 - Warrants A 6,808,255 12,177,873 - Warrants B 16,028,278 21,896,011

Adjusted weighted average number of ordinary shares as at 31 December 615,853,228 579,499,978

Diluted earnings per share (sen) 13.85 13.13

37. EMPLOYEES’ SHARE OPTION SCHEME

The Company has established Employees’ Share Option Scheme (“ESOS”) of not more than 15% of the issued share capital of the Company at the point of time throughout the duration of the scheme to eligible directors and employees of the Group, which was approved by shareholders at an Extraordinary General Meeting (“EGM”) held on 28 June 2012.

The ESOS became effective for a period of 10 years from 18 September 2012 to 17 September 2022.

The salient features of the ESOS are as follows:

(a) Eligible employees include directors of the Company and confirmed full time employees of the Company and its eligible subsidiary companies or under a fixed term employment contract, the contract should be for a duration of at least one (1) year, whom must be a Malaysian citizen, shall have attained the age of eighteen (18) years old and have served for at least one year of full continuous service in the Group.

(b) The maximum number of new ordinary shares which may be available under the ESOS shall not exceed 15% of the total issued and paid-up share capital of the Company at the point in time during the tenure of the ESOS.


ANNUAL REPORT 2016


37. EMPLOYEES’ SHARE OPTION SCHEME (CONT’D)

The salient features of the ESOS are as follows: (cont’d)

c) The new Company’s shares of RM1.00 each (“new Shares”) to be allotted and issued upon the exercise of the ESOS Option shall, upon allotment and issue, rank pari passu in all respects with the existing Company’s ordinary shares of RM1.00 each save and except that the said new Shares so allotted will not be entitled to any dividends, rights, allotments and/or other distributions that may be declared, made or paid prior to the date of allotment of the said new Shares.

(d) The ESOS shall be in force for a period of ten years.

(e) The option is personal to the grantee and is non-assignable.

(f) The option price shall be determined at a discount of not more than 10% from the weighted average market price of the Company’s ordinary shares of RM1.00 each for five (5) market days preceding the date of offer, or the par value of the shares, whichever is higher.

(g) The options granted may be exercised in full or in lesser number of ordinary shares provided that the number shall be in multiples of 100 shares.

(h) The options granted may be exercised, subject to the maximum limit of options exercisable in each particular year, at any time within a period of ten years from the date of offer of the option or such period as may be specifically stated in the offer upon giving notice in writing.

(i) The persons to whom the options have been granted shall not participate in more than one Employees’ Share Option Scheme implemented by any company within the Group.

Movements in the number of share options outstanding and their related weighted average exercise prices (“WAEP”) are as follows:

Number of share options over ordinary shares of RM1.00 each At At Exercisable at 1 January Granted Forfeited Exercised 31 December 31 December 2016 ESOS First Grant 2,493,350 - - (213,500) 2,279,850 2,279,850 Second Grant 1,824,900 - (50) (470,200) 1,354,650 1,354,650 Third Grant 180,700 - - (102,300) 78,400 78,400 Fourth Grant 180,100 - - (8,500) 171,600 171,600 Fifth Grant 301,650 - - - 301,650 301,650 Sixth Grant 141,850 - - (95,200) 46,650 46,650 Seventh Grant 101,050 - - (12,000) 89,050 89,050 Eighth Grant 146,150 - - - 146,150 146,150 Ninth Grant 13,600 - - (8,500) 5,100 5,100 Tenth Grant 573,850 - (15,300) (17,000) 541,550 541,550 Eleventh Grant 106,200 - - - 106,200 106,200 Twelfth Grant 299,900 - - - 299,900 299,900

257


(CONT’D)


Movements in the number of share options outstanding and their related weighted average exercise prices (“WAEP”) are as follows: (cont’d)

Number of share options over ordinary shares of RM1.00 each At At Exercisable at 1 January Granted Forfeited Exercised 31 December 31 December 2016 ESOS Thirteenth Grant 424,600 - (104,550) (23,800) 296,250 296,250 Fourteenth Grant 127,500 - - - 127,500 127,500 Fifteenth Grant 1,060,900 - - (55,900) 1,005,000 1,005,000 Sixteenth Grant 364,600 - - (8,500) 356,100 356,100 Seventeenth Grant 207,500 - - - 207,500 207,500 Eighteenth Grant 152,100 - - (98,600) 53,500 53,500 Nineteenth Grant 108,800 - - - 108,800 108,800 Twentieth Grant 152,100 - - (3,400) 148,700 148,700 Twenty-First Grant 39,900 - (7,600) - 32,300 32,300 Twenty-Second Grant 141,900 - - (63,800) 78,100 78,100 Twenty-Third Grant 1,708,900 - - (383,700) 1,325,200 1,325,200 Twenty-Fourth Grant 172,700 - (5,100) (23,500) 144,100 144,100 Twenty-Fifth Grant 382,400 - (89,200) (37,400) 255,800 255,800 Twenty-Sixth Grant 408,600 - - (26,300) 382,300 382,300 Twenty-Seventh Grant 397,700 - - (57,700) 340,000 340,000 Twenty-Eighth Grant 664,600 - (29,700) (107,900) 527,000 527,000 Twenty-Ninth Grant 338,100 - (3,400) (52,600) 282,100 282,100 Thirtieth Grant 175,100 - - (133,500) 41,600 41,600 Thirty-First Grant 248,200 - - (175,900) 72,300 72,300 Thirty-Second Grant - 176,900 - (5,100) 171,800 171,800 Thirty-Third Grant - 100,300 (7,700) (56,100) 36,500 36,500 Thirty-Fourth Grant - 168,300 - (96,000) 72,300 72,300 Thirty-Fifth Grant - 1,691,600 - (268,000) 1,423,600 1,423,600 Thirty-Sixth Grant - 181,600 (2,500) (15,500) 163,600 163,600 Thirty-Seventh Grant - 371,400 - (175,900) 195,500 195,500 Thirty-Eighth Grant - 510,100 - (61,300) 448,800 448,800 Thirty-Ninth Grant - 366,500 - (33,200) 333,300 333,300 Fortieth Grant - 485,300 - (11,900) 473,400 473,400 Forty-First Grant - 456,500 - - 456,500 456,500 Forty-Second Grant - 205,600 - (95,200) 110,400 110,400 Forty-Third Grant - 146,200 - - 146,200 146,200

13,639,500 4,860,300 (265,100) (2,997,900) 15,236,800 15,236,800

WAEP 1.31 1.43 1.47 1.30 1.35 1.35


ANNUAL REPORT 2016



Movements in the number of share options outstanding and their related weighted average exercise prices (“WAEP”) are as follows: (cont’d)

Number of share options over ordinary shares of RM1.00 each At At Exercisable at 1 January Granted Forfeited Exercised 31 December 31 December

2015 ESOS First Grant 4,337,100 - (50) (1,843,700) 2,493,350 2,493,350 Second Grant 2,685,750 - (2,600) (858,250) 1,824,900 1,824,900 Third Grant 189,200 - (8,500) - 180,700 180,700 Fourth Grant 182,600 - (2,500) - 180,100 180,100 Fifth Grant 338,150 - (36,500) - 301,650 301,650 Sixth Grant 150,350 - (8,500) - 141,850 141,850 Seventh Grant 103,600 - (2,550) - 101,050 101,050 Eighth Grant 249,850 - (8,500) (95,200) 146,150 146,150 Ninth Grant 28,900 - - (15,300) 13,600 13,600 Tenth Grant 638,850 - (49,700) (15,300) 573,850 573,850 Eleventh Grant 124,050 - (17,850) - 106,200 106,200 Twelfth Grant 299,900 - - - 299,900 299,900 Thirteenth Grant 492,950 - (40,750) (27,600) 424,600 424,600 Fourteenth Grant 130,000 - (2,500) - 127,500 127,500 Fifteenth Grant 1,082,100 - (16,100) (5,100) 1,060,900 1,060,900 Sixteenth Grant 367,200 - (2,600) - 364,600 364,600 Seventeenth Grant 349,500 - (46,800) (95,200) 207,500 207,500 Eighteenth Grant 160,600 - (8,500) - 152,100 152,100 Nineteenth Grant 111,300 - (2,500) - 108,800 108,800 Twentieth Grant - 261,800 (9,400) (100,300) 152,100 152,100 Twenty-First Grant - 135,100 (95,200) - 39,900 39,900 Twenty-Second Grant - 148,700 (6,800) - 141,900 141,900 Twenty-Third Grant - 1,875,750 (6,700) (160,150) 1,708,900 1,708,900 Twenty-Fourth Grant - 325,700 - (153,000) 172,700 172,700 Twenty-Fifth Grant - 457,200 (11,900) (62,900) 382,400 382,400 Twenty-Sixth Grant - 411,200 (2,600) - 408,600 408,600 Twenty-Seventh Grant - 397,700 - - 397,700 397,700 Twenty-Eighth Grant - 702,900 - (38,300) 664,600 664,600 Twenty-Ninth Grant - 338,100 - - 338,100 338,100 Thirtieth Grant - 175,100 - - 175,100 175,100 Thirty-First Grant - 248,200 - - 248,200 248,200

12,021,950 5,477,450 (389,600) (3,470,300) 13,639,500 13,639,500

WAEP 1.24 1.35 1.50 1.11 1.31 1.31

259


(CONT’D)


Details of share options outstanding at the end of the financial year are as follows:

Fair value of share options at Exercise prices Exercise grant date Share Options 2016 2015 periods 2016 2015 RM RM RM RM ESOS First Grant 1.00 1.00 18.09.2012 - 17.09.2022 0.12 0.12 Second Grant 1.08 1.08 01.07.2013 - 17.09.2022 0.33 0.33 Third Grant 1.22 1.22 01.08.2013 - 17.09.2022 0.39 0.39 Fourth Grant 1.46 1.46 01.09.2013 - 17.09.2022 0.77 0.77 Fifth Grant 1.69 1.69 01.10.2013 - 17.09.2022 1.07 1.07 Sixth Grant 1.61 1.61 01.11.2013 - 17.09.2022 1.10 1.10 Seventh Grant 1.50 1.50 01.12.2013 - 17.09.2022 1.03 1.03 Eighth Grant 1.43 1.43 01.01.2014 - 17.09.2022 0.96 0.96 Ninth Grant 1.35 1.35 01.02.2014 - 17.09.2022 0.91 0.91 Tenth Grant 1.55 1.55 01.03.2014 - 17.09.2022 1.04 1.04 Eleventh Grant 1.55 1.55 01.04.2014 - 17.09.2022 1.09 1.09 Twelfth Grant 1.61 1.61 01.05.2014 - 17.09.2022 1.07 1.07 Thirteenth Grant 1.56 1.56 01.06.2014 - 17.09.2022 1.03 1.03 Fourteenth Grant 1.54 1.54 01.07.2014 - 17.09.2022 0.70 0.70 Fifteenth Grant 1.54 1.54 01.08.2014 - 17.09.2022 0.74 0.74 Sixteenth Grant 1.52 1.52 01.09.2014 - 17.09.2022 0.70 0.70 Seventeenth Grant 1.53 1.53 01.10.2014 - 17.09.2022 0.71 0.71 Eighteenth Grant 1.48 1.48 01.11.2014 - 17.09.2022 0.68 0.68 Nineteenth Grant 1.51 1.51 01.12.2014 - 17.09.2022 0.59 0.59 Twentieth Grant 1.44 1.44 01.01.2015 - 17.09.2022 0.62 0.62 Twenty-First Grant 1.40 1.40 01.02.2015 - 17.09.2022 0.55 0.55 Twenty-Second Grant 1.40 1.40 01.03.2015 - 17.09.2022 0.52 0.52 Twenty-Third Grant 1.35 1.35 01.04.2015 - 17.09.2022 0.63 0.63 Twenty-Fourth Grant 1.40 1.40 01.05.2015 - 17.09.2022 0.61 0.61 Twenty-Fifth Grant 1.48 1.48 01.06.2015 - 17.09.2022 0.65 0.65 Twenty-Sixth Grant 1.44 1.44 01.07.2015 - 17.09.2022 0.61 0.61 Twenty-Seventh Grant 1.33 1.33 01.08.2015 - 17.09.2022 0.57 0.57 Twenty-Eighth Grant 1.18 1.18 01.09.2015 - 17.09.2022 0.43 0.43 Twenty-Ninth Grant 1.33 1.33 01.10.2015 - 17.09.2022 0.52 0.52 Thirtieth Grant 1.29 1.29 01.11.2015 - 17.09.2022 0.52 0.52 Thirty-First Grant 1.23 1.23 01.12.2015 - 17.09.2022 0.48 0.48 Thirty-Second Grant 1.28 - 01.01.2016 - 17.09.2022 0.51 - Thirty-Third Grant 1.22 - 01.02.2016 - 17.09.2022 0.46 - Thirty-Fourth Grant 1.21 - 01.03.2016 - 17.09.2022 0.46 - Thirty-Fifth Grant 1.42 - 01.04.2016 - 17.09.2022 0.55 - Thirty-Sixth Grant 1.43 - 01.05.2016 - 17.09.2022 0.56 - Thirty-Seventh Grant 1.41 - 01.06.2016 - 17.09.2022 0.54 - Thirty-Eighth Grant 1.40 - 01.07.2016 - 17.09.2022 0.51 - Thirty-Ninth Grant 1.45 - 01.08.2016 - 17.09.2022 0.50 - Fortieth Grant 1.45 - 01.09.2016 - 17.09.2022 0.60 - Forty-First Grant 1.61 - 01.10.2016 - 17.09.2022 0.57 - Forty-Second Grant 1.57 - 01.11.2016 - 17.09.2022 0.54 - Forty-Third Grant 1.51 - 01.12.2016 - 17.09.2022 0.53 -


ANNUAL REPORT 2016



The fair value of services received in return for share options granted during the financial year is based on the fair value of share options granted estimated by the management using Black-Scholes-Merton model, taking into account the terms and conditions upon which the options were granted. The weighted average fair value of share options measured at grant date and the assumptions are as follows:

Group/Company 2016 2015 RM RM

Weighted average fair value at grant date 0.53 0.56 Weighted average share price at grant date 1.60 1.49 Weighted average exercise price 1.43 1.35 Expected volatility (%) 18.68 - 19.82 17.49 - 29.12 Expected option life (years) 10 10 Risk-free interest rate, p.a. (%) 3.52 - 4.21 3.98 - 4.50 Expected dividend yield (%) 1.69 - 2.21 1.82 - 2.34

The expected life of the share options is based on historical data that has been adjusted accordingly to management’s best estimate for the effects of non-transferability exercise restriction and behaviours conditions. The expected volatility is based on the historical volatility, adjusted for unusual or extraordinary volatility arising from certain economic or business occurrences which is not reflective of its long term average level. While the expected volatility is assumed to be indicative of future trends, it may not necessarily be the actual outcome.

No other features of the option grant were incorporated into the measurement of fair value. The Group and the

Company recognised total share-based payment in profit or loss amounting to RM2,573,613 (2015: RM3,140,028) for the new options granted during the financial year.

Executive directors of the Group and of the Company and other members of key management have been granted the following number of options under the ESOS:

Group/Company 2016 2015 RM RM

ESOS At 1 January 5,639,000 6,814,700 Additions * - 59,500 Granted 1,375,300 1,292,000 Forfeited (119,000) (600) Exercised (711,000) (2,526,600)

At 31 December 6,184,300 5,639,000

* Unexercised share options previously granted to new key management personnel.

The share options were granted on the same terms and conditions as those offered to other employees of the Group.

261


(CONT’D)

38. STAFF COSTS

Group Company 2016 2015 2016 2015 RM RM RM RM Fees 679,674 651,114 - - Salaries and other emoluments 46,156,389 36,459,337 524,248 211,179 Defined contribution plan 5,003,937 4,187,420 67,427 26,023 Social security contributions 994,594 789,445 3,295 1,756 Share-based payment 2,370,825 2,964,372 2,370,825 2,964,372 Benefits-in-kind 332,783 411,196 - - Other benefits 1,900,805 2,370,703 67,765 49,107

57,439,007 47,833,587 3,033,560 3,252,437

The Group’s staff costs does not include the estimated monetary value of benefits-in-kind amounting to RM953,427

(2015: RM880,434). Included in staff costs is aggregate amount of remuneration received and receivable by the executive directors of the

Company and of the subsidiary companies during the financial year as below:


Executive Directors Company’s directors Fees 679,674 651,114 - - Salaries and other emoluments 9,096,687 7,979,190 - - Defined contribution plan 1,278,135 1,110,375 - - Social security contributions 3,988 620 - - Share-based payment - 93,927 - 93,927 Benefits-in-kind 332,783 411,196 - - Other benefits 47,599 28,525 - -

11,438,866 10,274,947 - 93,927

Executive Directors Subsidiary companies’ directors Salaries and other emoluments 2,834,862 1,856,516 - - Defined contribution plan 180,076 117,335 - - Social security contributions 58,546 59,987 - - Share-based payment 107,923 126,611 107,923 126,611 Other benefits 3,361 3,394 - -

3,184,768 2,163,843 107,923 126,611


ANNUAL REPORT 2016


38. STAFF COSTS (CONT’D)


Executive Directors Company’s directors 11,438,866 10,274,947 - 93,927 Subsidiary companies’ directors 3,184,768 2,163,843 107,923 126,611

14,623,634 12,438,790 107,923 220,538

The Group’s executive directors’ remuneration does not include the estimated monetary value of benefits-in-kind amounting to RM554,341 (2015: RM387,005).

39. DIVIDENDS

Group/Company 2016 2015 RM RM In respect of the financial year ended 31 December 2014 : A single tier first and final dividend of 3.25 sen per ordinary share on 546,438,417 ordinary shares of RM1.00 each - 17,759,247 In respect of the financial year ended 31 December 2015 : A tax exempt special dividend of 6 sen per ordinary share on 545,320,317 ordinary shares of RM1.00 each - 32,719,219 A single tier first and final dividend of 3.5 sen per ordinary share on 612,899,598 ordinary shares of RM1.00 each 21,451,485 - In respect of the financial year ended 31 December 2016 : A tax exempt special dividend of 2 sen per ordinary share on 637,337,773 ordinary shares of RM1.00 each 12,746,756 - A tax exempt special dividend of 2 sen per ordinary share on 651,391,198 ordinary shares of RM1.00 each 13,027,823 -

47,226,064 50,478,466

263


(CONT’D)

39. DIVIDENDS (CONT’D)


(i) confirmed the payment date of a tax exempt special dividend of 2 sen per ordinary share of RM1.00 each in respect of the financial year ended 31 December 2016 pursuant to the announcement made on 6 May 2016. This dividend will be paid on 30 June 2017 to depositors registered in the Record of Depositors on 20 June 2017. The financial statements for the current financial year do not reflect this special dividend. Such dividend will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2017; and

(ii) declared a tax exempt special dividend of 6 sen per ordinary share of RM1.00 each in respect of the financial year ending 31 December 2017. This dividend will be paid in 3 tranches, 2 sen for each tranche. The date of entitlement and payment will be confirmed later. The financial statements for the current financial year do not reflect this special dividend. Such dividend will be accounted for in equity as an appropriation of retained earnings in the financial years ending 31 December 2017 and 31 December 2018.


(i) declared a single tier interim dividend of 2 sen per ordinary share of RM1.00 each in respect of the financial year ended 31 December 2016. This interim dividend will be paid on 24 July 2017 to depositors registered in the Record of Depositors on 11 July 2017; and

(ii) proposed a single tier final dividend of 2 sen per ordinary share of RM1.00 each in respect of the financial year ended 31 December 2016. The proposed dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company.

The financial statements for the current financial year do not reflect the dividends declared or proposed on 25 April 2017. Such dividends will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2017.

40. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

Group 2016 2015 RM RM Cost At 1 January - - Acquisition of subsidiary company 15,640,055 - Disposal (15,640,055) -

At 31 December - -

Accumulated depreciation At 1 January - - Acquisition of subsidiary company 3,553,878 - Disposal (3,553,878) -

At 31 December - -

Carrying amount - -


ANNUAL REPORT 2016


40. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE (CONT’D)

On 17 February 2015, a subsidiary company has entered into a Sale and Purchase Agreement with a third party for the disposal of its freehold land and building known as HS(M) 17269 PT 6466, Mukim Rawang, Daerah Gombak, Negeri Selangor at a consideration of RM17,050,000.

The freehold land and building has been disposed in 15 September 2016.

41. RELATED PARTY DISCLOSURES

(a) Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group and/or the Company if the Group and/or the Company have the ability, directly or indirectly, to control or joint control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group and/or the Company either directly or indirectly. The key management personnel comprise the Directors and management personnel of the Group, having authority and responsibility for planning, directing and controlling the activities of the Group entities directly or indirectly.

(b) Related party transactions have been entered into in the normal course of business under negotiated terms. In addition to the related party balances disclosed elsewhere in the financial statements, the significant related party transactions of the Group and of the Company are as follows:

2016 2015 RM RM

Group Holding company: Dividends paid/payable 23,246,858 27,433,572

Other related parties: Income Sale of development properties 2,625,600 34,148,110 Rendering of insurance services 6,729 4,250 Rental income 58,211 35,825

Expense Contractors’ fees 30,883,322 32,750,445 Equity instrument 71,300,000 36,300,001 Legal fees 235,714 679,180 Purchase properties 470,000 - Rental expenses 143,200 137,500 Rendering of services 111,514 96,920 Dividends paid/payable 1,672,300 2,988,225

265


(CONT’D)

41. RELATED PARTY DISCLOSURES (CONT’D)

(b) Related party transactions have been entered into in the normal course of business under negotiated terms. In addition to the related party balances disclosed elsewhere in the financial statements, the significant related party transactions of the Group and of the Company are as follows: (cont’d)

2016 2015 RM RM

Company Holding company: Dividends paid/payable 23,246,858 27,433,572

Other related parties: Dividends paid/payable 1,247,490 2,890,548

The nature and relationship between the Group and the Company with other related parties are as follows:

(i) A firm or companies in which a close family member of certain directors of the Company or its subsidiary companies have financial interest;

(ii) A firm or companies in which certain directors of the Company or its subsidiaries have financial interest;(iii) Person who have financial interest in subsidiary companies; (iv) Companies in which the Company or its subsidiary companies have financial interest;(v) Directors or key management personnel of the Company or its subsidiaries and their close family members;

and(vi) An associated company of the Company.

(c) Information regarding outstanding balances arising from related party transactions as at 31 December 2016 is disclosed in Notes 15, 16, 17, 25 and 26.

(d) Compensation of key management personnel.

Remuneration of directors and other members of key management are as follows: Group Company 2016 2015 2016 2015 RM RM RM RM

Short-term employee benefits 18,178,788 14,790,450 890,892 807,835 Share-based payment 744,079 722,714 744,079 722,714 Defined contribution plan 1,901,724 1,522,213 - -


ANNUAL REPORT 2016


42. SEGMENT INFORMATION

The Group has five major reporting segments, as described below, which are the Group’s strategic business units. Segment information is primarily presented in respect of the Group’s business segment which is based on the Group’s management and internal reporting structure. For each of the strategic business units, the Group’s managing director reviews internal management reports on at least a quarterly basis. The following summary describes the operations in each of the Group’s reportable segments:

The main business segments of the Group comprise the followings:

Property development Development of residential, industrial and commercial properties. Construction Design and build, civil engineering and general construction activities. Management and investment Investment holding and provision of management services. Motor racing circuit Motor racing circuit development and management. Trading and others Trading in building material, insurance agent, selling of insurance membership

cards, tourism development, manufacturing and trading of roof tiles.

Investment holding and provision of management services are being managed by two different operating segments within the Group. These operating segments have been aggregated to form a reportable segment as management services taking into account that these operating segments have similar nature of the services.

Other business segments include selling of membership cards covering personal insurance and insurance agent, tourism development, manufacturing and trading of roof tiles, none of which are of a sufficient size to be reported separately. The accounting policies of the segments are consistent with the accounting policies of the Group.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements.

Transactions between segments are carried out on agreed terms between both parties. The effects of such inter-segment transactions are eliminated on consolidation. The measurement basis and classification are consistent with those adopted in the previous financial year.

The total of segment assets is measured based on all assets (including goodwill) of a segment, as included in the internal management reports that are reviewed by the Group’s managing director. Segment total assets are used to measure the return of assets of each segment.

Segment liabilities information is neither included in the internal management reports nor provided regularly to the Group’s managing director. Hence no disclosure is made on segment liabilities.

267


(CONT’D)

42. SEGMENT INFORMATION (CONT’D)

Geographical segments

In determining the Group segment, revenue and non-current assets are based on the geographical location of customers as follows:

Revenue Non-current assets 2016 2015 2016 2015 RM RM RM RM Malaysia 969,078,646 657,826,739 989,917,869 682,715,198 People’s Republic of China 24,540,411 22,469,122 199,267,695 212,486,634 Hong Kong - - 98,807,671 194,341,517

Information about major customers

There is no significant concentration of revenue from any major customers as the Group sells its development properties to individual purchaser.

Segment results Management Motor

Property and Racing Trading

Development Construction Investment Circuit and Others Total

RM RM RM RM RM RM

2016

Revenue

Sales 850,848,534 453,571,474 403,416,176 24,540,411 111,630,626 1,844,007,221

Less: Inter-segment

sales - (388,117,042) (403,416,176) - (58,854,946) (850,388,164)

Total revenue 850,848,534 65,454,432 - 24,540,411 52,775,680 993,619,057

Financial results

Segment results 139,079,385 38,739,702 (16,698,871) (6,914,057) 3,042,622 157,248,781

Interest income 9,539,542 - 1,777,394 95,432 130,000 11,542,368

Finance costs (12,873,334) (1,857,848) (7,393,842) (1,308,067) (192,011) (23,625,102)

Share of profit/(loss)

in associated

companies, net of tax - 737,989 - - (1,949,768) (1,211,779)

Profit/(Loss) before

taxation 135,745,593 37,619,843 (22,315,319) (8,126,692) 1,030,843 143,954,268

Taxation (46,901,596) (8,454,503) (3,226,216) 1,643,228 (1,813,613) (58,752,700)

Net profit/(loss) for

the financial year 88,843,997 29,165,340 (25,541,535) (6,483,464) (782,770) 85,201,568


ANNUAL REPORT 2016



Segment results (cont’d)

Management Motor



RM RM RM RM RM RM

2016 Assets Additions to non- current assets 216,879,379 20,589,569 23,867,414 2,222,392 768,598 264,327,352 Segment assets 1,952,672,926 178,572,276 428,322,606 235,430,031 30,505,864 2,825,503,703

Other non-cash expenses Allowance for impairment losses on: - Available-for-sale financial assets - - 27,025,897 - - 27,025,897 - Goodwill arising on consolidation 6,040,342 - - - - 6,040,342 - Receivables 135,001 - 482,040 - 34,741 651,782 Bad debts written off - 306,022 - 7,949 - 313,971 Deposits written off 120,617 - - - 4,000 124,617 Depreciation of: - Property, plant and equipment 2,321,006 2,224,328 45,303 10,601,325 1,179,210 16,371,172 - Investment properties 223,577 566,695 5,856 - - 796,128 Fair value loss on revaluation of financial assets at fair value through profit or loss - - 32,067 - - 32,067 Net loss on disposal of: - Property, plant and equipment 31,490 - 41,358 - - 72,848 Property development cost written off 210,009 - - - - 210,009 Property, plant and equipment written off 3 587 98,399 41,782 240,725 381,496 Share-based payment - - 2,573,613 - - 2,573,613 Unrealised loss on

foreign exchange 262 - - - - 262

269


(CONT’D)



Management Motor



RM RM RM RM RM RM

2016 Other non-cash income Interest income from financial assets measured at amortised cost - - (1,490,070) - - (1,490,070) Gain on remeasurement of previuosly held equity interest - - (2,928,131) - - (2,928,131) Net gain on disposal of: - Available-for-sale financial assets - - (3,420,254) - - (3,420,254) - Financial assets at fair value through profit or loss - - (36,730) - - (36,730) - Investment Properties - (1,427,482) - - - (1,427,482) - Non-current assets classified as held for sale - - - - (4,963,823) (4,963,823) - Property, plant and equipment (3,311) (1,422) - (59) (354,852) (359,644) Provision for staff economic compensation written back - - - (3,475,201) - (3,475,201) Reversal of allowance for impairment losses on receivable - - - (1,522) - (1,522) Unrealised gain on foreign exchange - - (2,110,900) (165,819) - (2,276,719)

Waiver of debts - - - - (7) (7)


ANNUAL REPORT 2016




Management Motor



RM RM RM RM RM RM

2015 Revenue Sales 577,128,068 255,500,138 154,732,126 22,469,122 32,085,624 1,041,915,078 Less: Inter-segment

sales - (188,186,383) (154,732,126) - (18,700,708) (361,619,217)

Total revenue 577,128,068 67,313,755 - 22,469,122 13,384,916 680,295,861

Financial results Segment results 107,703,771 18,393,785 1,828,522 (13,719,992) (3,247,683) 110,958,403 Interest income 4,542,421 2,390 12,688,511 109,108 - 17,342,430 Finance costs (9,967,697) (1,423,503) (9,220,057) (1,220,294) - (21,831,551) Share of profit/(loss)

in associated companies - 2,008,625 - - 357,013 2,365,638

Profit/(Loss) before taxation 102,278,495 18,981,297 5,296,976 (14,831,178) (2,890,670) 108,834,920

Taxation (32,566,509) (4,947,591) (2,387,634) 1,661,595 (98,796) (38,338,935)

Net profit/(loss) for

the financial year 69,711,986 14,033,706 2,909,342 (13,169,583) (2,989,466) 70,495,985

Assets Additional investment in associated companies 50,000 45,000 1,129,065 - - 1,224,065 Additions to non- current assets 235,139,402 8,027,962 9,682,872 2,623,525 2,454,425 257,928,186

Segment assets 1,675,463,888 105,687,349 386,431,503 245,430,306 8,582,058 2,421,595,104

Other non-cash expenses Allowance for impairment losses on: - Other investment - - - - 100,000 100,000 - Goodwill arising on consolidation 2,926,366 - - - - 2,926,366 - Investment in an associated company - - 3,578,431 - - 3,578,431 Bad debts written off 29,263 - - - - 29,263

271


(CONT’D)

42. SEGMENT INFORMATION (CONT’D) Segment results (cont’d)

Management Motor



RM RM RM RM RM RM

2015 Other non-cash expenses (cont’d) Depreciation of: - Investment properties 276,945 441,081 39,528 - - 757,554 - Property, plant and equipment 1,606,025 1,400,373 106 14,155,849 384,358 17,546,711 Inventories written down 36,400 - - - - 36,400 Loss on disposal of Property, plant and equipment 288,434 17,396 - - - 305,830 Property, plant and equipment written off 12,757 45,186 - 21,003 - 78,946 Share-based payment - - 3,140,028 - - 3,140,028 Unrealised loss on

foreign exchange - - 1,873,693 - - 1,873,693

Other non-cash income Fair value gain on revaluation of financial assets at fair value through profit or loss - - (25,554) - - (25,554) Interest income from financial assets measured at amortised cost - - (12,234,392) - - (12,234,392) Gain on disposal of: - Available-for-sale financial assets - - (588,190) - - (588,190) - Financial assets at fair value through profit or loss (153,441) - (180,316) - - (333,757) Reversal of allowance for impairment losses on receivables (12,718) - - - - (12,718) Unrealised gain on foreign exchange (1,609) - - (30,453) - (32,062)

Waiver of debts (14,300) - - - - (14,300)


ANNUAL REPORT 2016


43. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost. The principal accounting policies in Note 3 describe how the classes of financial instruments are measured, and how income and expense, including fair value gains and losses, are recognised.

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:

Fair value Carrying Loans and Available- Held-to- through amount receivables for-sale maturity profit or loss RM RM RM RM RM Group 2016 Financial Assets Trade receivables 315,463,599 315,463,599 - - - Other receivables 72,025,925 72,025,925 - - - Other investments 98,801,419 - 98,801,419 - - Fixed deposits with licensed banks 49,079,352 49,079,352 - - - Cash held under Housing Development Accounts 74,387,290 74,387,290 - - - Cash and bank balances 107,332,047 107,332,047 - - -

Total undiscounted financial assets 717,089,632 618,288,213 98,801,419 - -

2015 Financial Assets Trade receivables 196,123,831 196,123,831 - - - Other receivables 45,520,204 45,520,204 - - - Promissory note 206,022,628 - - 206,022,628 - Other investments 132,323,291 - 93,835,130 - 38,488,161 Fixed deposits with licensed banks 33,471,075 33,471,075 - - - Cash held under Housing Development Accounts 87,735,381 87,735,381 - - - Cash and bank balances 106,385,800 106,385,800 - - -

Total undiscounted financial assets 807,582,210 469,236,291 93,835,130 206,022,628 38,488,161

273


(CONT’D)

43. FINANCIAL INSTRUMENTS (CONT’D) (a) Classification of financial instruments (cont’d)

Financial liabilities measured at Carrying amortised amount cost RM RM

Group 2016 Financial Liabilities Trade payables 562,514,823 562,514,823 Other payables 373,279,812 373,279,812 Finance lease payables 6,234,432 6,234,432 Bank borrowings and overdrafts 610,590,997 610,590,997

Total undiscounted financial liabilities 1,552,620,064 1,552,620,064

2015 Financial Liabilities Trade payables 409,555,650 409,555,650 Other payables 337,530,939 337,530,939 Finance lease payables 6,799,952 6,799,952 Bank borrowings and overdrafts 561,370,855 561,370,855

Total undiscounted financial liabilities 1,315,257,396 1,315,257,396

Fair value through Carrying Loans and profit amount receivables or loss RM RM RM

Company 2016 Financial Assets Other receivables 340,736 340,736 - Amount owing by subsidiary companies 186,165,269 186,165,269 - Fixed deposits with licensed banks 31,442,414 31,442,414 - Cash and bank balances 23,577,418 23,577,418 -

Total undiscounted financial assets 241,525,837 241,525,837 -


ANNUAL REPORT 2016


43. FINANCIAL INSTRUMENTS (CONT’D) (a) Classification of financial instruments (cont’d)

Fair value through Carrying Loans and profit amount receivables or loss RM RM RM

Company 2015 Financial Assets Other receivables 3,318,220 3,318,220 - Other investments 11,029,697 - 11,029,697 Amount owing by subsidiary companies 256,720,778 256,720,778 - Fixed deposits with licensed banks 15,670,959 15,670,959 - Cash and bank balances 4,739,917 4,739,917 -

Total undiscounted financial assets 291,479,571 280,449,874 11,029,697

Financial liabilities measured at Carrying amortised amount cost RM RM

Company 2016 Financial Liabilities Other payables 14,436,686 14,436,686 Amount owing to subsidiary companies 64,648,050 64,648,050 Bank borrowings and overdrafts 118,620,192 118,620,192

Total undiscounted financial liabilities 197,704,928 197,704,928

2015 Financial Liabilities Other payables 33,471,401 33,471,401 Amount owing to subsidiary companies 56,978,008 56,978,008 Bank borrowings and overdrafts 89,475,267 89,475,267

Total undiscounted financial liabilities 179,924,676 179,924,676

275


(CONT’D)

43. FINANCIAL INSTRUMENTS (CONT’D)

(b) Financial risk management objectives and policies

The Group’s and the Company’s financial risk management policy is to ensure that adequate financial resources are available for the development of the Group’s and of the Company’s operations whilst managing its financial risks, including foreign currency exchange risk, interest rate risk, credit risk, liquidity risk and cash flows risk. The Group and the Company operate within clearly defined guidelines that are approved by the Board and the Group’s and the Company’s policy is not to engage in speculative transactions.

The Group and the Company have exposure to the following risks from its use of financial instruments:

(i) Credit risk

Credit risk is the risk of a financial loss to the Group and to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s and the Company’s exposure to credit risk arises principally from its trade and other receivables, fixed deposits with licensed banks, cash held under Housing Development Accounts and cash at bank. Fixed deposits with licensed banks, cash held under Housing Development Account and cash at banks are placed with financial institutions with good credit rating.

The Group and the Company have adopted a policy of only dealing with creditworthy counterparties.

Receivables are monitored on an ongoing basis via the Company’s management reporting procedures and action will be taken for long outstanding debts. Majority of the receivables are from property development segment. The credit risk is limited as the property purchasers were using financing from reputable end-financers, legal title to the properties revert to the Group in the event of default.

The Company provides unsecured loans and advances to subsidiary companies. It also provides unsecured financial guarantees to banks for banking facilities granted to certain subsidiary companies. The Company monitors on an ongoing basis the results of the subsidiary companies and repayments made by the subsidiary companies.

The carrying amounts of the financial assets recorded on the statements of financial position at the end of the financial year represent the Group’s and the Company’s maximum exposure to credit risk except for financial guarantees provided to banks and non-financial institutions granted to certain subsidiary companies. The Company’s maximum exposure in this respect is RM621,806,058 (2015: RM591,096,133), representing the outstanding financial guarantees to the subsidiary companies as at the end of the reporting period. There was no indication that any subsidiary company would default on repayment as at the end of the reporting period.

The Group has no significant concentration of credit risk as its exposure spread over a large number of customers except for loans to its subsidiary companies where risks of default have been assessed to be low.


ANNUAL REPORT 2016



(b) Financial risk management objectives and policies (cont’d)

(ii) Liquidity risk

Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations as they fall due. The Group’s and the Company’s exposure to liquidity risk arises principally from mismatches of maturities of financial assets and liabilities.

The Group’s and the Company’s funding requirements and liquidity risks is managed with the objective of meeting business obligations on a timely basis. The Group and the Company monitor its cash flows and ensure that sufficient funding is in place to meet the obligations as and when they fall due.

The following table analyses the remaining contractual maturity for financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay. It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

On demand Carrying Contractual or within amount cash flows 1 year 1 - 2 years 2 - 5 years After 5 years RM RM RM RM RM RM

Group 2016 Trade payables 562,514,823 562,514,823 314,376,329 34,100,000 36,623,535 177,414,959

Other payables 373,279,812 373,279,812 318,287,973 - - 54,991,839

Finance lease

payables 6,234,432 6,879,100 2,392,870 2,020,100 2,098,741 367,389

Bank borrowings

and overdrafts 610,590,997 704,471,425 330,693,374 123,954,922 188,689,004 61,134,125

1,552,620,064 1,647,145,160 965,750,546 160,075,022 227,411,280 293,908,312

2015

Trade payables 409,555,650 409,555,650 315,942,280 15,000,000 15,000,000 63,613,370

Other payables 337,530,939 337,530,939 281,302,004 - - 56,228,935

Finance lease

payables 6,799,952 7,665,457 2,043,833 1,919,254 2,956,438 745,932

Bank borrowings

and overdrafts 561,370,855 624,695,549 303,405,240 108,879,809 160,503,593 51,906,907

1,315,257,396 1,379,447,595 902,693,357 125,799,063 178,460,031 172,495,144

277


(CONT’D)



(ii) Liquidity risk (cont’d)

On demand Carrying Contractual or within amount cash flows 1 year 1 - 2 years 2 - 5 years After 5 years RM RM RM RM RM RM

Company 2016 Other payables 14,436,686 14,436,688 14,436,688 - - -

Amount owing

to a subsidiary

company 64,648,050 64,648,050 2,236,183 62,411,867 - -

Bank borrowings

and overdrafts 118,620,192 124,590,772 103,914,456 20,676,316 - -

197,704,928 203,675,510 120,587,327 83,088,183 - -

2015

Other payables 33,471,401 33,471,401 33,471,401 - - -

Amount owing

to subsidiary

companies 56,978,008 56,978,008 56,978,008 - - -

Bank borrowings

and overdrafts 89,475,267 95,273,081 75,359,090 10,508,091 9,405,900 -

179,924,676 185,722,490 165,808,499 10,508,091 9,405,900 -

(iii) Market risk

Foreign currency exchange risk

The Group is exposed to foreign currency risk on transactions that are denominated in currencies other than the respective functional currencies of the Group entities. The currencies giving rise to this risk are primarily United States Dollar (“USD”), Hong Kong Dollar (“HKD”), Euro and Chinese Renminbi (“RMB”).

The Group has not entered into any derivative instruments for hedging or trading purposes. Where possible, the Group will apply natural hedging by selling and purchasing in the same currency. However, the exposure to foreign currency risk is monitored from time to time by the management.


ANNUAL REPORT 2016




(iii) Market risk (cont’d)

Foreign currency exchange risk (cont’d)

The carrying amounts of the Group’s foreign currency denominated financial assets and financial liabilities that are exposed to foreign currency exchange risk at the end of the reporting period are as follows:

USD HKD EURO RMB Total RM RM RM RM RM

Group 2016 Financial Assets Other receivables - 3,760 - - 3,760 Fixed deposits with licensed banks 4,559,375 - - 82,953 4,642,328 Cash and bank balances 1,443,981 661,072 1,318,521 259,139 3,682,713

6,003,356 664,832 1,318,521 342,092 8,328,801

Financial Liabilities Trade payables 320,232 - - - 320,232 Other payables - 225,245 - - 225,245 Bank borrowings 7,087,880 - - - 7,087,880

7,408,112 225,245 - - 7,633,357

2015 Financial Assets Other receivables - 14,947 - - 14,947 Fixed deposits with licensed banks 4,330,502 - - 83,521 4,414,023 Cash and bank balances 712,536 513,882 1,320,065 312,325 2,858,808

5,043,038 528,829 1,320,065 395,846 7,287,778

Financial Liabilities Trade payables 306,507 - - - 306,507 Bank borrowings 15,542,470 - - - 15,542,470

15,848,977 - - - 15,848,977

279


(CONT’D)




Foreign currency exchange risk (cont’d)

USD HKD EURO RMB Total RM RM RM RM RM

Company 2016 Financial Assets Fixed deposits with licensed banks 4,559,375 - - - 4,559,375 Cash and bank balances 677,448 111,749 - - 789,197

5,236,823 111,749 - - 5,348,572

Financial Liabilities Bank borrowings 7,087,880 - - - 7,087,880

2015 Financial Assets Fixed deposits with licensed banks 4,330,502 - - - 4,330,502 Cash and bank balances 648,378 107,162 - - 755,540

4,978,880 107,162 - - 5,086,042

Financial Liabilities Bank borrowings 15,542,470 - - - 15,542,470

Foreign currency risk sensitivity

Foreign currency risk arises from Group entities which have a RM functional currency. The exposure to currency risk of Group entities which do not have a RM functional currency is not material and hence, sensitivity analysis is not presented.

A 10% strengthening of Ringgit Malaysia against the following foreign currencies’ net financial assets/(liabilities) at the end of the reporting period would increase/(decrease) the profit before taxation and other comprehensive income by the amounts shown below. This analysis assumes that all other variables remain unchanged.


ANNUAL REPORT 2016





Foreign currency risk sensitivity (cont’d)

USD HKD EURO RMB RM RM RM RM

Group 2016 Profit before taxation and other comprehensive income (140,476) 43,959 131,852 34,209

2015 Profit before taxation and other comprehensive income (1,080,594) 52,883 132,007 39,585

Company 2016 Profit before taxation and other comprehensive income (185,106) 11,175 - -

2015 Profit before taxation and other comprehensive income (1,056,359) 10,716 - -

A 10% weakening of Ringgit Malaysia against the above foreign currencies’ net financial assets/(liabilities)

at the end of the reporting period would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain unchanged.

Interest rate risk

The Group’s and the Company’s fixed rate deposits placed with licensed banks and borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s and the Company’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.

281


(CONT’D)




Interest rate risk (cont’d)

The Group manages the interest rate risk of its deposits with licensed financial institutions by placing them at the most competitive interest rates obtainable, which yield better returns than cash at bank and maintaining a prudent mix of short and long term deposits.

The Group manages its interest rate risk exposure from interest bearing borrowings by obtaining financing with the most favourable interest rates in the market. The Group constantly monitors its interest rate risk by reviewing its debts portfolio to ensure favourable rates are obtained. The Group does not utilise interest swap contracts or other derivative instruments for trading or speculative purposes. The carrying amounts of the Group’s and of the Company’s financial instruments that are exposed to interest rate risk at the end of the reporting period are as follows:


Fixed Rate Instruments Financial Asset Fixed deposits with licensed banks 49,079,352 33,471,075 31,442,414 15,670,959

Financial Liabilities Finance lease payables 6,234,432 6,799,952 - -

Floating Rate Instruments Financial Assets Cash Held under Housing Development Accounts 74,387,290 87,735,381 - - Cash and bank balances 9,878,803 9,114,119 703,731 724,614 Amount owing by subsidiary companies - - 185,815,664 252,653,104

Financial Liabilities Bank borrowings and overdrafts 610,590,997 561,370,855 118,620,192 89,475,267 Amount owing to subsidiary companies - - 62,411,867 56,946,384

The Group and the Company are exposed to interest rate risk arising from the Group’s and the Company’s financial instruments.


ANNUAL REPORT 2016





Interest rate risk sensitivity

The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

A change in 1% interest rate at the end of the reporting period would have increased or decreased the Group’s and the Company’s profit before taxation by RM5,263,249 and RM54,873 (2015: RM4,645,214 and RM1,069,561) respectively, arising mainly as a result of lower or higher interest expense on floating rate financial assets and financial liabilities. This analysis assumes that all other variables remain constant. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

(c) Fair value of financial instruments

The carrying amounts of short term receivables and payables, cash and cash equivalents and short term borrowings approximate their fair value due to the relatively short term nature of these financial instruments and insignificant impact of discounting.

283


(CONT’D)


(c) Fair value of financial instruments (cont’d)

The table below analyses the fixed rate non-current financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their fair values and carrying amounts shown in the statements of financial position.

Fair value of financial instruments Fair value of financial instruments not Total fair Carrying carried at fair value carried at fair value value amount Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

RM RM RM RM RM RM RM RM RM RM

Group2016 Financial asset Equity securities 98,801,419 - - 98,801,419 - - - - 98,801,419 98,801,419

98,801,419 - - 98,801,419 - - - - 98,801,419 98,801,419

Financial liabilitiesTrade payables - - - - - - 248,138,494 248,138,494 248,138,494 248,138,494 Other payables - - - - - - 54,991,839 54,991,839 54,991,839 54,991,839 Finance lease payables - - - - - - 3,769,272 3,769,272 3,769,272 4,126,928 Contingent liabilities - - - - - - @ - - 48,025,156

- - - - - - 306,899,605 306,899,605 306,899,605 355,282,417

Company Financial liabilities Contingent liabilities - - - - - - @ - - 668,543,854


ANNUAL REPORT 2016




Fair value of financial instruments Fair value of financial instruments not Total fair Carrying carried at fair value carried at fair value value amount Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

RM RM RM RM RM RM RM RM RM RM

Group2015Financial assets Over-the counter trust funds 38,488,161 - - 38,488,161 - - - - 38,488,161 38,488,161 Promissory note - - - - - - 100,498,924 100,498,924 100,498,924 100,498,924 Equity securities 93,835,130 - - 93,835,130 - - - - 93,835,130 93,835,130

132,323,291 - - 132,323,291 - - 100,498,924 100,498,924 232,822,215 232,822,215

Financial liabilities Trade payables - - - - - - 93,613,370 93,613,370 93,613,370 93,613,370 Other payables - - - - - - 56,228,935 56,228,935 56,228,935 56,228,935 Finance lease payables - - - - - - 4,515,949 4,515,949 4,515,949 5,099,292 Contingent liabilities - - - - - - @ - - 15,047,932

- - - - - - 154,358,254 154,358,254 154,358,254 169,989,529

Company Financial asset Over-the counter

trust funds 11,029,697 - - 11,029,697 - - - - 11,029,697 11,029,697

Financial liabilities Contingent liabilities - - - - - - @ - - 605,238,965

- - - - - - - - - 605,238,965

@ It is not practicable to estimate the fair value of contingent liabilities reliably due to the uncertainties of timing,

cost and eventual outcome.

285


(CONT’D)



(i) Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

There were no transfers between levels during current and previous financial years.

(ii) Level 1 fair value

Level 1 fair value is derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

(iii) Level 2 fair value

Level 2 fair value is estimated using 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).

(iv) Level 3 fair value

Level 3 fair value for the financial assets and liabilities are estimated using unobservable inputs.

44. CAPITAL MANAGEMENT

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.


ANNUAL REPORT 2016


44. CAPITAL MANAGEMENT (CONT’D)

The Group monitors capital using a gearing ratio. The Group’s policy is to maintain a prudent level of gearing ratio that complies with debt covenants and regulatory requirements. The gearing ratios at the end of the reporting period are as follows:


Debt Finance lease payables 6,234,432 6,799,952 - - Bank borrowings and overdrafts 610,590,997 561,370,855 118,620,192 89,475,267

Total debt 616,825,429 568,170,807 118,620,192 89,475,267

Deposits, cash and bank balances Fixed deposits with licensed banks 49,079,352 33,471,075 31,442,414 15,670,959 Cash and bank balances 107,332,047 106,385,800 23,577,418 4,739,917 Cash held under Housing Development Accounts 74,387,290 87,735,381 - -

Total deposits, cash and bank balances 230,798,689 227,592,256 55,019,832 20,410,876

Net debt 386,026,740 340,578,551 63,600,360 69,064,391

Total equity 1,207,023,564 1,012,372,699 658,662,383 512,387,017

Gross gearing ratio 0.51 0.56 0.18 0.17

Net gearing ratio 0.32 0.34 0.10 0.13

There were no changes in the Group’s approach to capital management during the financial year.

The Group maintains a debt to equity ratio that complies with debt covenant and regulatory requirements in countries where the Group operates. This includes minimum capital requirements and the requirements to maintain legal reserves which are non-distributable.

287


(CONT’D)

45. SIGNIFICANT EVENTS

On 14 September 2016, MGB has acquired MITCE for a purchase consideration of RM300,000,000 from MITC, an indirect subsidiary company of the Company and Datuk Lim Lit Check. Consequently, MITCE became a wholly-owned subsidiary company of MGB.

The purchase consideration shall be satisfied by MGB in the following manner:

(a) MGB granting the right of allotment at the issue price of RM0.67 for each consideration ordinary share to MITC and Datuk Lim Lit Check at 200,820,896 and 66,940,298 units of ordinary shares respectively.

(b) MGB effecting the allotment and issuance of the consideration Irredeemable Convertible Preference Shares (“ICPS”) at the issue price of RM0.67 each to MITC and Datuk Lim Lit Check at 135,000,000 and 45,000,000 units of ICPS respectively.

46. SUBSEQUENT EVENTS

Subsequent to the financial year, the following subsequent events took place for the Company and its subsidiary companies:

(a) On 2 January 2017, LBS acquired 1,748,060 ordinary shares of RM1.00 each representing 60% equity interest in Healthguard Medicare Sdn. Bhd. (“HMSB”) for a total cash consideration of RM1.00 only. Consequently, HMSB became a 60% owned subsidiary company of LBS.

(b) On 21 February 2017, ML Global Berhad (“MGB”) subscribed for 51 ordinary shares of RM1.00 each in Alunan Warta Sdn. Bhd. (“AWSB”) for a total cash consideration of RM51 only. Consequently, AWSB became a 51% owned subsidiary company of MGB.

(c) On 3 March 2017, Vintage Tiles Industries (EM) Sdn. Bhd. (“VTISB”), a wholly owned subsidiary company of MGB, acquired 2 ordinary shares of RM1.00 each in Delta Gallery Sdn. Bhd. (“DGSB”) for a total cash consideration of RM2 only. Consequently, DGSB became a wholly-owned subsidiary company of VTISB.

On 22 March 2017, DGSB has increased its paid up share capital from 2 to 250,000 ordinary shares. VTISB has subscribed for an additional of 249,998 ordinary shares in DGSB by way of cash.

(d) On 7 March 2017, Biz Bena Development Sdn. Bhd. (“BBDSB”), an associated company of PHSB, increased its paid up share capital from 500,000 to 520,000 ordinary shares of RM1.00 each. PHSB subscribed additional 20,000 ordinary shares of RM1.00 each in BBDSB for a total cash consideration of RM20,000. Consequently, BBDSB became a 51.92% owned subsidiary company of PHSB.

(e) On 9 March 2017, RHB Investment Bank Berhad (“RHBIB”), on behalf of the Company announced that the Company proposes to undertake the followings:

(i) a renounceable rights issue of up to 150,598,126 new Redeemable Convertible Preference Shares (“RCPS”) on the basis of 1 RCPS for every 5 existing Company’s shares held on the Entitlement Date (“Proposed Rights issue”); and

(ii) amendments to the Constitution of the Company.


ANNUAL REPORT 2016


46. SUBSEQUENT EVENTS (CONT’D)

Subsequent to the financial year, the following subsequent events took place for the Company and its subsidiary companies: (cont’d)

(f) On 14 March 2017, LBS acquired 150,000 ordinary shares of RM1.00 each representing 30% equity interest in Bimbingan Sumber Sdn. Bhd. (“BSSB”) for a total cash consideration of RM150,000 only. Consequently, BSSB became a 60% owned subsidiary company of LBS.

(g) On 16 March 2017, LBS disposed of its 100,000 ordinary shares of RM1.00 each representing the entire equity interest of its wholly-owned subsidiary company, Saga Serata Sdn. Bhd. (“SSSB”), for a total cash consideration of RM100,000 only.

(h) From 1 January 2017 to 31 March 2017, the Company issued and allotted 1,989,600 share options under ESOS which were granted at the subscription price ranges from RM1.51 to RM1.71 each to the eligible employees under the Forty-Fourth Grant to Forty-Sixth Grant of the ESOS.

(i) From 1 January 2017 to 31 March 2017, a total of 6,520,200 Warrants A and 6,191,375 Warrants B were exercised at RM1.00 and RM1.25 respectively.

47. MATERIAL LITIGATION

As at the date of this report, there is no material litigation against the Company and its subsidiary companies.

48. CAPITAL COMMITMENTS


Approved and contracted for property development: - Joint Venture Agreements 544,888,648 385,360,338 - Sale and Purchase Agreements 50,444,984 146,108,200 Approved and contracted for plant, property and equipment: - Sale and Purchase Agreements 528,000 -

595,861,632 531,468,538

289


(CONT’D)

49. CONTINGENT LIABILITIES


Unsecured : Corporate guarantees given to : - licensed banks to secure banking facilities granted to subsidiary companies - - 520,958,548 486,038,423 - the suppliers of goods for credit terms/ facilities granted to subsidiary companies - - 4,000,000 906,572 - venture partners for undertaking due performance in relation to joint venture agreements - - 143,585,306 118,293,970 Secured : Bank guarantees for: - property development 41,381,066 15,047,932 - - - construction contracts 6,644,090 - - -

The Company participated in the Regularisation Plan of MGB and guaranteed that in the event that MGB fails to

achieve audited operational profit after taxation of Ringgit Malaysia Six Million (“Guaranteed Profit”) for each of the two (2) consecutive financial years following the successful implementation of the Regularisation Plan, the Company shall be liable to one half (50%) of the difference between the Guaranteed Profit and audited operational profit after taxation (“Differential Sum”).

For the current financial year, the Company has made a provision of RM1,021,006 (2015: RM365,606) based on the audited results of MGB for the financial year ended 31 December 2016, being one half (50%) of the Differential Sum.


ANNUAL REPORT 2016


50. LIST OF SUBSIDIARY COMPANIES

Country of Effective Name of company incorporation interest Principal activities 2016 2015 % %

Direct holding Intellplace Holdings Limited British Virgin 100 100 Investment holding Islands LBS Bina Holdings Sdn. Bhd. Malaysia 100 100 Property development and investment holding LBS Landscape Sdn. Bhd. Malaysia 100 100 Turfing and landscape contracting Linkway Property Co., Ltd British Virgin 100 100 Dormant Islands Maju Kepunyaan Sdn. Bhd. Malaysia 100 100 Dormant ML Global Berhad Malaysia 56.43 - Investment holding and provision of management services to its subsidiary companies Saga Serata Sdn. Bhd. Malaysia 100 100 Insurance agent and investment holding SPJ Construction Sdn. Bhd. Malaysia 60 60 Dormant Indirect holding Subsidiary companies of LBS Bina Holdings Sdn. Bhd.: Adil Restu Sdn. Bhd. Malaysia 100 100 Property development Alunan Prestasi Sdn. Bhd. Malaysia 70 70 Property development Angsana Abadi Sdn. Bhd. Malaysia 100 100 Property development Astana Modal (M) Sdn. Bhd. Malaysia 100 100 Property development Azam Perspektif Sdn. Bhd. Malaysia 100 100 Property development Casa Inspirasi Sdn. Bhd. Malaysia 68 58 Property development Cergas Asal (M) Sdn. Bhd. Malaysia 100 100 Property development Dataran Enigma Sdn. Bhd. Malaysia 61 61 Property development Equal Alliance Sdn. Bhd. Malaysia 100 100 Property development Equal Sign Sdn. Bhd. Malaysia 100 100 Property development Focal Remedy Sdn. Bhd. Malaysia 100 100 Property development Fokus Awana Sdn. Bhd. Malaysia 100 100 Property development Galeri Cekap Sdn. Bhd. Malaysia 100 100 Dormant Generasi Nostalgia Sdn. Bhd. Malaysia 100 100 Property development Generasi Simbolik Sdn. Bhd. Malaysia 71 71 Property development Getstyle Sdn. Bhd. Malaysia 100 100 Property development Inderaloka Impian Sdn. Bhd. Malaysia 100 100 Property development Induk Pelita Sdn. Bhd. Malaysia 51 - Dormant Intellview Sdn. Bhd. Malaysia 100 100 Property development Iringan Kejora Sdn. Bhd. Malaysia 80 80 Property development Jatidiri Gigih Sdn. Bhd. Malaysia 100 100 Property development

291


(CONT’D)

50. LIST OF SUBSIDIARY COMPANIES (CONT’D)


Indirect holding Subsidiary companies of LBS Bina Holdings Sdn. Bhd.: Jauhari Unggul Sdn. Bhd. Malaysia 100 100 Property development Johan Anggun Sdn. Bhd. Malaysia 85 85 Property development Kalimah Jaya Sdn. Bhd. Malaysia 100 100 Investment holding Kilatlima Sdn. Bhd. Malaysia 100 100 Property development, operation and maintenance of carpark Kemudi Ehsan Sdn. Bhd. Malaysia 51 - Property development Koleksi Sigma Sdn. Bhd. Malaysia 75 75 Property development LBS Capital Sdn. Bhd. Malaysia 100 100 Provision of finance through money lending LBS Maju Sdn. Bhd. Malaysia 70 70 Dormant LBS Properties Sdn. Bhd. Malaysia 100 100 Property investment holding Maju Kamabisa Sdn. Bhd. Malaysia 100 100 Provision of project management services Mayang Jelatek Sdn. Bhd. Malaysia 51 51 Property development Megah Solaris Sdn. Bhd. Malaysia 55 55 Dormant Misi Aktif Sdn. Bhd. Malaysia 100 100 Property development MITC Sdn. Bhd. Malaysia 100 100 Property development and investment holding Nuevo Attraction & Malaysia 60 - Tourism development and Destination Destination investment holding Sdn. Bhd. Nuevoprima Development Malaysia 100 - Dormant Sdn. Bhd. Pelangi Homes Sdn. Bhd. Malaysia 100 100 Property development and investment holding Pembangunan Primer Sdn. Bhd. Malaysia 80 80 Property development Prima Utuh Sdn. Bhd. Malaysia 80 80 Dormant Puncak Gama Sdn. Bhd. Malaysia 80 51 Property development Saga Megah Sdn. Bhd. Malaysia 100 100 Trading of building materials and general construction Seloka Sinaran Sdn. Bhd. Malaysia 51 - Property development Sepadan Maju Sdn. Bhd. Malaysia 90 90 Property development Seribu Baiduri Sdn. Bhd. Malaysia 100 100 Property development Sinaran Restu Sdn. Bhd. Malaysia 100 100 Property development and investment holding Taman Sempurna Sdn. Bhd. Malaysia 51 51 Dormant Utuh Aspirasi Sdn. Bhd. Malaysia 100 100 Property development Wirama Era Baru Sdn. Bhd. Malaysia 51 51 Property development


ANNUAL REPORT 2016




Indirect holding Subsidiary companies of Sinaran Restu Sdn. Bhd.: Juaraplex Sdn. Bhd. Malaysia 100 100 Property development Kenderong Sdn. Bhd. Malaysia 100 100 Property development Keranji Bina Sdn. Bhd. Malaysia 100 100 Property development Lingkaran Semangat Sdn. Bhd. Malaysia 100 100 Property development Nilam Mewah Sdn. Bhd. Malaysia 55 55 Dormant Pacific Grant Sdn. Bhd. Malaysia 100 100 Property development Silibin Jaya Sdn. Bhd. Malaysia 100 100 Property development

Subsidiary companies of MITC Sdn. Bhd.: MITC Engineering Sdn. Bhd. Malaysia - 75 Civil engineering, design and build, property development, trading activities and investment holding Subsidiary company of Saga Serata Sdn. Bhd.: Healthguard Medicare Malaysia 60 60 Selling of membership cards Sdn. Bhd. covering personal insurance Subsidiary company of Kalimah Jaya Sdn. Bhd.: Utuh Sejagat Sdn. Bhd. Malaysia 100 100 Property development Subsidiary company of Pelangi Homes Sdn. Bhd.: Restu Bidara Sdn. Bhd. Malaysia 100 - Property development Subsidiary companies of MITC Engineering Sdn. Bhd.: Nuevo Attraction & Malaysia - 45 Tourism development and Destination Sdn. Bhd. investment holding Prisma Craft Sdn. Bhd. Malaysia 56.43 75 Dormant Prisma Kasturi Sdn. Bhd. Malaysia 56.43 75 Investment holding Restu Bidara Sdn. Bhd. Malaysia - 75 Property development Top Ace Solutions Sdn. Bhd. Malaysia 56.43 75 Trading of building materials and general construction

293


(CONT’D)



Indirect holding Subsidiary company of Nuevo Attraction & Destination Sdn. Bhd.: Nuevoprima Development Malaysia - 45 Dormant Sdn. Bhd. Subsidiary companies of ML Global Berhad: MITC Engineering Sdn. Bhd. Malaysia 56.43 - Civil engineering, design and build, property development, trading activities and investment holding Vintage Tiles Industries Malaysia 56.43 - Manufacturing and trading of roof Sdn. Bhd. tiles and general construction Vintage Tiles Industries (EM) Malaysia 56.43 - Dormant Sdn. Bhd. Vintage Roofing & Malaysia 56.43 - Supply and laying of roof tiles, Construction Sdn. Bhd. installation of roofing on a consignment basis, general construction and investment holding Newsteel Building Systems Malaysia 45.14 - Dormant Sdn. Bhd. Vintage Tiles Holdings Malaysia 56.43 - Dormant Sdn . Bhd. Subsidiary companies of Vintage Roofing & Construction Sdn. Bhd.: Tirai Impresif Sdn. Bhd. Malaysia 56.43 - Dormant VTI Consortium Sdn. Bhd. Malaysia 56.43 - Dormant

Subsidiary company of Intellplace Holdings Limited: * Dragon Hill Corporation Hong Kong 100 100 Investment holding Limited Subsidiary company of Dragon Hill Corporation Limited: * Lamdeal Investments Limited Hong Kong 100 100 Project investment through a subsidiary company in The People’s Republic of China (“PRC”)


ANNUAL REPORT 2016




Indirect holding Subsidiary company of Lamdeal Investments Limited: * Zhuhai International PRC 60 60 Racing circuit development and Circuit Limited management Subsidiary company of Zhuhai Internationa Circuit Limited: * Zhuhai International Circuit Hong Kong 60 60 Provision of handling services for Promotion (HK) Limited its holding company

* Subsidiary companies not audited by UHY.

51. LIST OF ASSOCIATED COMPANIES


Direct holding # ML Global Berhad Malaysia - 24.13 Investment holding and provision of management services to its subsidiary companies Indirect holding Associated companies of LBS Bina Holdings Sdn. Bhd.: Bayu Cergas Sdn. Bhd. Malaysia 40 40 Dormant Bimbingan Sumber Sdn. Bhd. Malaysia 30 30 Dormant Pristine Sunrise (M) Sdn. Bhd. Malaysia 30 30 Dormant Sambungan Aktif Sdn. Bhd. Malaysia 30 30 Dormant Setara Armada Sdn. Bhd. Malaysia 30 30 Dormant Tarikan Puncak Sdn. Bhd. Malaysia 20 20 Dormant * Usaha Semarak Sdn. Bhd. Malaysia 35 35 Dormant Warnasari Idaman Sdn. Bhd. Malaysia 30 30 Dormant

Associated company of Pelangi Homes Sdn. Bhd.: Biz Bena Development Sdn. Bhd. Malaysia 50 50 Dormant

295


(CONT’D)

51. LIST OF ASSOCIATED COMPANIES (CONT’D)


Indirect holding Associated company of MITC Engineering Sdn. Bhd.: * YLT Consultancy Sdn. Bhd. Malaysia 16.93 22.50 Dormant

* Subsidiary companies not audited by UHY. # became subsidiary company during the financial year.

52. COMPARATIVE FIGURES

Certain comparatives figures were restated to conform with current financial year’s presentation. There was no significant impact to the financial performance in relation to the financial year ended 31 December 2015.

As previously stated Reclassification As restated RM RM RM

Group Statements of Financial Position Non-Current Assets Deferred tax assets 13,182,690 (13,182,690) - Non-Current Liabilities Deferred tax liabilities 45,454,291 (13,182,690) 32,271,601

Statements of Profit or Loss and Other Comprehensive Income Share of profits in associated companies 1,618,371 747,267 2,365,638 Profit before taxation 108,087,653 747,267 108,834,920 Taxation (37,591,668) (747,267) (38,338,935)

53. DATE OF AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS

The financial statements of the Group and of the Company for the financial year ended 31 December 2016 were authorised for issue in accordance with a resolution of the board of directors on 25 April 2017.


ANNUAL REPORT 2016


54. DISCLOSURE OF REALISED AND UNREALISED RETAINED PROFITS

The following analysis of realised and unrealised retained earnings/(accumulated losses) of the Group and of the Company as at the reporting date is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

The retained profits/(accumulated losses) of the Group and of the Company as at 31 December 2016 is analysed as follows:

Group Company 2016 2015 2016 2015 RM RM RM RM Total retained profits/(accumulated losses) of the Company and its subsidiary companies: - Realised 900,531,925 684,492,577 (64,583,604) (87,268,425) - Unrealised 28,935,489 9,362,499 (2,479,286) (8,445,225)

929,467,414 693,855,076 (67,062,890) (95,713,650) Total share of retained profits/(accumulated losses) from associated companies: - Realised (561,826) 3,324,719 - -

928,905,588 697,179,795 (67,062,890) (95,713,650) Less: Consolidation adjustments 425,443,927 232,014,250 - -

503,461,661 465,165,545 (67,062,890) (95,713,650)

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 Securities Berhad and should not be applied for any other purposes.

297

LIST OFMAJOR PROPERTIESHELD AS AT 31 DECEMBER 2016

Location Description Tenure Net Book Value RM’000

Land Area (acres)

Date of Acquisition

Jinding, Zhuhai,The People’s Republicof China

Leasehold land, buildings (Age: 17 years) and racing circuit

Land use right term (expiring on 23.10.2043)

193,050 263.34 02.10.2013

Lot 20952, 24962 & 24963, District of Johor Bahru,Johor Darul Takzim

Land held for development

Freehold and Leasehold (expiring on 01.11.2099)

129,366 5.47

30.04.2015 / 27.10.2015

Lot 62606, 62608, 62609, 72516 & 62614,Mukim Tanjung Duabelas, Daerah Kuala Langat, Selangor Darul Ehsan

Land under development and held for development

Leasehold (expiring on 05.02.2094 & 24.11.2114)

111,651 181.25 31.10.2012 / 08.03.2013 / 06.11.2015

Mukim Linau,Daerah Batu Pahat,Negeri Johor Darul Takzim


Freehold 107,573 446.42 27.07.2007

Lot 13961, Mukim Dengkil, Daerah Sepang,Selangor Darul Ehsan


Leasehold (expiring on 06.10.2108)

96,270 123.04 09.10.2009

PT 147901, Mukim Klang, HSD155027, Selangor Darul Ehsan



76,334 47.13 31.10.2016

PT 3273-3279 & PT 3290, Mukim Tanah Rata, Cameron Highlands, Pahang Darul Makmur



62,104 84.86 30.11.2016

Seksyen U10,Mukim Bukit Raja, Selangor Darul Ehsan



50,872 120

21.03.2016

PT 14809, Mukim Dengkil, Daerah Sepang,Selangor Darul Ehsan

Land under development


33,856 100 24.03.2015

H.S.(D) 6283, 6284 & 6285, Mukim Kampar,Perak Darul Ridzuan

Land held fordevelopment


27,690 84.83 31.07.2015


ANNUAL REPORT 2016

AS PER RECORD OF DEPOSITORY AS AT 29 MARCH 2017

ANALYSIS OFSHAREHOLDINGS

SHARE CAPITAL

Types of Shares : Ordinary SharesIssued shares capital : 655,836,248 ordinary shares (excluding treasury shares of 60,000)No. of Shareholders : 5,363Voting Rights : One (1) vote per shareholder on a show of hands One (1) vote per ordinary share on a poll, in the meeting of shareholders

DISTRIBUTION OF SHAREHOLDINGS

Percentage Percentage No. of (%) of No. of (%) ofSize of Shareholdings Shareholders Shareholders Shares Held Shareholdings

1 - 99 134 2.498 4,821 0.000 100 - 1,000 1,871 34.887 734,350 0.111 1,001 - 10,000 2,228 41.543 11,243,157 1.714 10,001 - 100,000 840 15.662 28,780,806 4.388 100,001 - 32,791,811* 286 5.332 433,768,646 66.139 32,791,812 AND ABOVE ** 4 0.074 181,304,468 27.644

5,363 100.000 655,836,248 100.000

Remark: * less than 5% of Issued Shares** 5% and above of Issued Shares

SUBSTANTIAL SHAREHOLDERS Shareholdings Direct IndirectName of Shareholders No. of Share % No. of Share %

Gaterich Sdn Bhd 294,958,106 44.97 - -Tan Sri Lim Hock San 3,808,200 0.58 294,958,106 (1) 44.97Datuk Wira Lim Hock Guan 7,868,360 1.20 294,958,106 (1) 44.97Kumpulan Wang Persaraan (Diperbadankan) 44,607,500 6.80 21,982,300 (4) 3.35

299

DIRECTORS’ INTEREST IN SHARES

Shareholdings Direct Indirect Name of Directors No. of Share % No. of Share %

Dato’ Seri Lim Bock Seng 1,040,000 0.16 2,004,000 (2) 0.31Tan Sri Lim Hock San 3,808,200 0.58 296,543,106 (3) 45.22Datuk Wira Lim Hock Guan 7,868,360 1.20 295,818,106 (3) 45.11Maj (Hon) Dato’ Sri Lim Hock Sing 25,000 0.00 194,000 (2) 0.03Datuk Lim Hock Seong 109,500 0.02 110,000 (2) 0.02Dato’ Chia Lok Yuen 1,030,000 0.16 - -Dato’ Lim Mooi Pang 1,059,900 0.16 - -Datuk Lim Si Cheng 119,000 0.02 - -

Notes:(1) Deemed interested by virtue of their substantial shareholdings in Gaterich Sdn Bhd pursuant to Section 8 of the

Companies Act, 2016 (“the Act”).(2) Shares held by virtue of Section 59(11)(c) of the Act.(3) Deemed interested by virtue of his shareholdings in Gaterich Sdn Bhd pursuant to Section 8 of the Act and by virtue of

Section 59(11)(c) of the Act.(4) Deemed interested by virtue of shares held by Fund Managers of Kumpulan Wang Persaraan (Diperbadankan).


AS PER RECORD OF DEPOSITORY AS AT 29 MARCH 2017(CONT’D)


ANNUAL REPORT 2016

ANALYSIS OFSHAREHOLDINGSAS PER RECORD OF DEPOSITORY AS AT 29 MARCH 2017(CONT’D)

LIST OF THE THIRTY (30) LARGEST SHAREHOLDERS(WITHOUT AGGREGATING SECURITIES FROM DIFFERENT SECURITIES ACCOUNTS BELONGING TO THE SAME REGISTERED HOLDER)

HOLDER NAME SHARES HELD PERCENTAGE (%)

1 RHB NOMINEES (TEMPATAN) SDN BHD 55,600,000 8.477 PLEDGED SECURITIES ACCOUNT FOR GATERICH SDN BHD 2 GATERICH SDN BHD 46,096,968 7.028 3 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) 44,607,500 6.801 4 MAYBANK NOMINEES (TEMPATAN) SDN BHD 35,000,000 5.336 KUWAIT FINANCE HOUSE (MALAYSIA) BERHAD FOR GATERICH SDN BHD (377214) 5 AMSEC NOMINEES (TEMPATAN) SDN BHD 28,700,000 4.376 PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR GATERICH SDN BHD 6 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 26,000,000 3.964 PLEDGED SECURITIES ACCOUNT FOR GATERICH SDN BHD 7 CITIGROUP NOMINEES (ASING) SDN BHD 18,000,000 2.744 EXEMPT AN FOR CITIBANK NEW YORK (NORGES BANK 14) 8 RHB NOMINEES (TEMPATAN) SDN BHD 17,000,000 2.592 INDUSTRIAL AND COMMERCIAL BANK OF CHINA (MALAYSIA) BERHAD PLEDGED SECURITIES ACCOUNT FOR GATERICH SDN BHD 9 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 16,262,700 2.479 EMPLOYEES PROVIDENT FUND BOARD (CIMB PRIN) 10 KENANGA NOMINEES (TEMPATAN) SDN BHD 13,331,385 2.032 PLEDGED SECURITIES ACCOUNT FOR GATERICH SDN BHD 11 MAYBANK NOMINEES (TEMPATAN) SDN BHD 13,170,000 2.008 PLEDGED SECURITIES ACCOUNT FOR GATERICH SDN BHD (51401138104A) 12 CIMB GROUP NOMINEES (TEMPATAN) SDN BHD 13,031,300 1.986 CIMB COMMERCE TRUSTEE BERHAD - KENANGA GROWTH FUND 13 AMSEC NOMINEES (TEMPATAN) SDN BHD 12,929,900 1.971 MTRUSTEE BERHAD FOR CIMB ISLAMIC DALI EQUITY GROWTH FUND (UT-CIMB-DALI) 14 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 12,657,200 1.929 EXEMPT AN FOR AIA BHD 15 MAYBANK NOMINEES (TEMPATAN) SDN BHD 11,258,572 1.716 PLEDGED SECURITIES ACCOUNT FOR GATERICH SDN BHD (51401138105A)

301



LIST OF THE THIRTY (30) LARGEST SHAREHOLDERS(WITHOUT AGGREGATING SECURITIES FROM DIFFERENT SECURITIES ACCOUNTS BELONGING TO THE SAME REGISTERED HOLDER) (CONT’D)

HOLDER NAME SHARES HELD PERCENTAGE (%)

16 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 10,740,200 1.637 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) (KENANGA)

17 CIMSEC NOMINEES (TEMPATAN) SDN BHD 10,000,000 1.524 CIMB BANK FOR GATERICH SDN BHD (PBCL-0G0342)

18 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 8,096,400 1.234 PLEDGED SECURITIES ACCOUNT FOR GATERICH SDN BHD (MARGIN)

19 MIDF AMANAH INVESTMENT NOMINEES (TEMPATAN) SDN BHD 7,886,881 1.202 PLEDGED SECURITIES ACCOUNT FOR GATERICH SDN BHD (MGN-ISB0002M)

20 LIM HOCK GUAN 7,868,360 1.199

21 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 7,860,100 1.198 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) (CIMB EQUITIES)

22 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 5,978,800 0.911 PLEDGED SECURITIES ACCOUNT FOR GATERICH SDN BHD (8120976)

23 CIMSEC NOMINEES (TEMPATAN) SDN BHD 5,500,000 0.838 CIMB FOR GATERICH SDN BHD (PB)

24 M & A NOMINEE (TEMPATAN) SDN BHD 5,389,100 0.821 PLEDGED SECURITIES ACCOUNT FOR GATERICH SDN BHD (PNG)

25 MAYBANK NOMINEES (TEMPATAN) SDN BHD 5,000,000 0.762 ETIQA INSURANCE BERHAD (LIFE NON-PAR FD)

26 TMF TRUSTEES MALAYSIA BERHAD 4,910,885 0.748 LBS BINA GROUP BERHAD

27 HSBC NOMINEES (TEMPATAN) SDN BHD 4,821,300 0.735 HSBC (M) TRUSTEE BHD FOR ALLIANZ LIFE INSURANCE MALAYSIA BERHAD (P)

28 MAYBANK NOMINEES (TEMPATAN) SDN BHD 4,015,500 0.612 ETIQA TAKAFUL BERHAD (SHAREHOLDERS FD)

29 HSBC NOMINEES (TEMPATAN) SDN BHD 3,998,900 0.609 HSBC (M) TRUSTEE BHD FOR PERTUBUHAN KESELAMATAN SOSIAL (CIMB-P 6939-404)

30 HSBC NOMINEES (TEMPATAN) SDN BHD 3,800,000 0.579 HSBC (M) TRUSTEE BHD FOR ALLIANZ LIFE INSURANCE MALAYSIA BERHAD (MEF)

459,511,951 70.065


ANNUAL REPORT 2016


ANALYSIS OF WARRANT A HOLDINGS

WARRANT A

Type of Securities : Warrant A 2008/2018No. of Warrant A Issued : 15,417,512No. of Warrant A Holders : 603Voting Rights : One (1) vote per Warrant A holder on a show of hands. : One (1) vote per Warrant A on poll, in the meeting of Warrant A holders.

DISTRIBUTION OF WARRANT A HOLDINGS

Percentage Percentage No. of (%) of No. of (%) of Warrant A Warrant A Warrant A Warrant ASize of Warrant A Holdings Holders Holders Held Holdings

1 - 99 16 2.653 535 0.003 100 - 1,000 82 13.598 59,096 0.383 1,001 - 10,000 303 50.248 1,778,932 11.538 10,001 - 100,000 167 27.694 5,343,449 34.658 100,001 - 770,874 * 33 5.472 6,544,300 42.447 770,875 AND ABOVE ** 2 0.331 1,691,200 10.969

603 100.000 15,417,512 100.000

Remark: * less than 5% of Issued Warrants A** 5% and above of Issued Warrans A

SUBSTANTIAL WARRANT A HOLDERS

Warrant A Holdings Direct IndirectName of Warrant A Holders No. of Warrant A % No. of Warrant A %

Tan Sri Lim Hock San 831,200 5.39 - -

DIRECTORS’ INTEREST IN WARRANT A

Warrant A Holdings Direct IndirectName of Directors No. of Warrant A % No. of Warrant A %

Dato’ Seri Lim Bock Seng 140,000 0.91 404,000 (1) 2.62Tan Sri Lim Hock San 831,200 5.39 - -Maj (Hon) Dato’ Sri Lim Hock Sing - - 68,800 (1) 0.45Dato’ Chia Lok Yuen 500,000 3.24 - - Dato’ Lim Mooi Pang 120,000 0.78 - -

Notes:(1) Warrant A held by virtue of Section 59(11)(c) of the Companies Act, 2016.

303

ANALYSIS OF WARRANT A HOLDINGS


LIST OF THE THIRTY (30) LARGEST WARRANT A HOLDERS(WITHOUT AGGREGATING SECURITIES FROM DIFFERENT SECURITIES ACCOUNTS BELONGING TO THE SAME REGISTERED HOLDER)

HOLDER NAME WARRANT A HELD PERCENTAGE (%)

1 CHUA ENG KIAT 880,000 5.707

2 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 811,200 5.261 PLEDGED SECURITIES ACCOUNT FOR LIM HOCK SAN (8071190)

3 TAN HONG LAI 550,000 3.567

4 KONG CHOU KEH 500,000 3.243

5 KEE KU HUAK 380,000 2.464

6 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 360,000 2.335 PLEDGED SECURITIES ACCOUNT FOR CHIA LOK YUEN (8069361)

7 LIM KHUAN ENG 242,700 1.574

8 CHIM KIAN CHAI 233,000 1.511

9 LOW HUI FIN 220,000 1.426

10 KHO SOON FAN 200,000 1.297

11 LOW BOON ANN 190,800 1.237

12 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 190,000 1.232 PLEDGED SECURITIES ACCOUNT FOR CHIM KIAN CHAI (REM 822)

13 PANG CHIN HIN 187,000 1.212

14 CHEW POH LING 185,000 1.199

15 PACIFIC FOOD PRODUCTS SENDIRIAN BERHAD 180,000 1.167

16 WONG WAI KEUNG RAYMOND 179,000 1.161

17 LIM THIAM CHYE 170,000 1.102

18 MAYBANK NOMINEES (TEMPATAN) SDN BHD 170,000 1.102 PLEDGED SECURITIES ACCOUNT FOR CHOO BU YAN

19 KHOO CHOON YEONG 167,000 1.083


ANNUAL REPORT 2016

ANALYSIS OF WARRANT A HOLDINGSAS PER RECORD OF DEPOSITORY AS AT 29 MARCH 2017(CONT’D)

LIST OF THE THIRTY (30) LARGEST WARRANT A HOLDERS(WITHOUT AGGREGATING SECURITIES FROM DIFFERENT SECURITIES ACCOUNTS BELONGING TO THE SAME REGISTERED HOLDER) (CONT’D)

HOLDER NAME WARRANT A HELD PERCENTAGE (%)

20 KANG SAM HOCK 160,000 1.037

21 RHB NOMINEES (TEMPATAN) SDN BHD 160,000 1.037 PLEDGED SECURITIES ACCOUNT FOR KEE KU HUAK

22 GOH LEE HIAN 159,800 1.036

23 CHONG SENG SUN 159,000 1.031

24 HLIB NOMINEES (TEMPATAN) SDN BHD 151,800 0.984 PLEDGED SECURITIES ACCOUNT FOR YONG FOY WON (CCTS)

25 LIM MIOW LEONG 150,000 0.972

26 LEE CHING CHING 145,500 0.943

27 LIM KAI SIEN 144,000 0.934

28 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 140,000 0.908 PLEDGED SECURITIES ACCOUNT FOR FOONG POH MEI (REM 609 - MARGIN)

29 MA PIN LING 137,800 0.893

30 GANESON A/L P.SUBRAMANIAM 131,000 0.849

7,634,600 49.519

305


ANALYSIS OFWARRANT B HOLDINGS

WARRANT B

Type of Securities : Warrant B 2015/2020No. of Warrant B Issued : 67,910,372No. of Warrant B Holders : 4,867Voting Rights : One (1) vote per Warrant B holder on a show of hands. : One (1) vote per Warrant B on poll, in the meeting of Warrant B holders.

DISTRIBUTION OF WARRANT B HOLDINGS

Percentage Percentage No. of (%) of No. of (%) of Warrant B Warrant B Warrant B Warrant BSize of Warrant B Holdings Holders Holders Held Holdings

1 - 99 1,546 31.764 52,384 0.077 100 - 1,000 1,462 30.039 695,369 1.023 1,001 - 10,000 1,407 28.908 4,518,401 6.653 10,001 - 100,000 364 7.478 11,641,755 17.142 100,001 - 3,395,517 * 86 1.767 31,438,174 46.293 3,395,518 AND ABOVE ** 2 0.041 19,564,289 28.808

4,867 100.000 67,910,372 100.000

Remark: * less than 5% of Issued Shares** 5% and above of Issued Shares

SUBSTANTIAL WARRANT B HOLDERS Warrant B Holdings Direct IndirectName of Warrant B Holders No. of Warrant B % No. of Warrant B %

Gaterich Sdn Bhd 16,144,789 23.77 - -Tan Sri Lim Hock San 4,985,625 7.34 16,144,789 (2) 23.77Datuk Wira Lim Hock Guan 1,967,090 2.90 16,144,789 (2) 23.77


ANNUAL REPORT 2016

DIRECTORS’ INTEREST IN WARRANT B

Warrant B Holdings Direct IndirectName of Directors No. of Warrant B % No. of Warrant B %

Dato’ Seri Lim Bock Seng 385,000 0.57 656,500 (1) 0.97Tan Sri Lim Hock San 4,985,625 7.34 16,236,964 (3) 23.91Datuk Wira Lim Hock Guan 1,967,090 2.90 16,359,789 (3) 24.09Maj (Hon) Dato’ Sri Lim Hock Sing 206,250 0.30 48,500 (1) 0.07Datuk Lim Hock Seong 152,375 0.22 - -Dato’ Chia Lok Yuen 420,000 0.62 - - Dato’ Lim Mooi Pang 239,975 0.35 - -

Notes:(1) Warrant B held by virtue of Section 59(11)(c) of the Companies Act, 2016 (“the Act”).(2) Deemed interested by virtue of their substantial interests in Gaterich Sdn Bhd pursuant to Section 8 of the Act.(3) Deemed interested by virtue of his substantial interests in Gaterich Sdn Bhd pursuant to Section 8 of the Act and by

virtue of Section 59(11)(c) of the Act.

ANALYSIS OFWARRANT B HOLDINGSAS PER RECORD OF DEPOSITORY AS AT 29 MARCH 2017(CONT’D)

307

ANALYSIS OFWARRANT B HOLDINGS


LIST OF THE THIRTY (30) LARGEST WARRANT B HOLDERS(WITHOUT AGGREGATING SECURITIES FROM DIFFERENT SECURITIES ACCOUNTS BELONGING TO THE SAME REGISTERED HOLDER)

HOLDER NAME WARRANT B HELD PERCENTAGE (%)

1 GATERICH SDN BHD 16,144,789 23.773

2 MAYBANK NOMINEES (TEMPATAN) SDN BHD 3,419,500 5.035 ETIQA INSURANCE BERHAD (GROWTH FUND)

3 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 2,178,225 3.207 PLEDGED SECURITIES ACCOUNT FOR LIM HOCK SAN (8071190)

4 LIM HOCK GUAN 1,967,090 2.896

5 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 1,921,250 2.829 EXEMPT AN FOR AIA BHD

6 DATO’ LIM HOCK SAN 1,433,025 2.110

7 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 1,374,375 2.023 PLEDGED SECURITIES ACCOUNT FOR DATO’ LIM HOCK SAN (474173)

8 TMF TRUSTEES MALAYSIA BERHAD 1,227,721 1.807 LBS BINA GROUP BERHAD

9 LOW MUN TENG 920,000 1.354

10 TAN SHIEW CHIANG @ TAN SEO CHIANG 750,000 1.104

11 MAYBANK NOMINEES (TEMPATAN) SDN BHD 731,700 1.077 PLEDGED SECURITIES ACCOUNT FOR YEOH KOK KEAT

12 LIEW BOON 619,750 0.912

13 MAYBANK NOMINEES (TEMPATAN) SDN BHD 600,000 0.883 ETIQA TAKAFUL BERHAD - DANA SYARIAH SEIMBANG (826966)

14 MAYBANK NOMINEES (TEMPATAN) SDN BHD 600,000 0.883 ETIQA TAKAFUL BERHAD - DANA EKUITI PRIMA TAKAFUL (709226)

15 MAYBANK NOMINEES (TEMPATAN) SDN BHD 591,200 0.870 PLEDGED SECURITIES ACCOUNT FOR KOH LAY KOON

16 BALASUBRAMANIAM A/L SANGGAMA REDDI 568,200 0.836


ANNUAL REPORT 2016

LIST OF THE THIRTY (30) LARGEST WARRANT B HOLDERS(WITHOUT AGGREGATING SECURITIES FROM DIFFERENT SECURITIES ACCOUNTS BELONGING TO THE SAME REGISTERED HOLDER) (CONT’D)

HOLDER NAME WARRANT B HELD PERCENTAGE (%)

17 MAYBANK NOMINEES (TEMPATAN) SDN BHD 544,700 0.802 PLEDGED SECURITIES ACCOUNT FOR BEH HANG KONG

18 MEH KOK CHAU 500,000 0.736

19 TAN YAN CHING 500,000 0.736

20 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 468,400 0.689 PLEDGED SECURITIES ACCOUNT FOR LIM MIOW LEONG (7000851)

21 LING SING TIONG 458,000 0.674

22 MAYBANK NOMINEES (TEMPATAN) SDN BHD 430,000 0.633 PLEDGED SECURITIES ACCOUNT FOR ONG SIEW TIONG @ ONG TSU YEE

23 CHUA ENG KIAT 429,300 0.632

24 JF APEX NOMINEES (TEMPATAN) SDN BHD 390,900 0.575 PLEDGED SECURITIES ACCOUNT FOR TEE HAN HO (STA 2)

25 DATO’ SERI LIM BOCK SENG 385,000 0.566

26 KUMPULAN WANG SIMPANAN GURU-GURU 375,000 0.552

27 KONG CHOU KEH 350,000 0.515

28 HLIB NOMINEES (TEMPATAN) SDN BHD 344,700 0.507 HONG LEONG BANK BHD FOR LIM KAI SIEN

29 TAN WEI ENG 334,750 0.492

30 PUBLIC INVEST NOMINEES (TEMPATAN) SDN BHD 332,500 0.489 EXEMPT AN FOR PHILLIP SECURITIES PTE LTD (CLIENTS)

40,890,075 60.211

ANALYSIS OFWARRANT B HOLDINGSAS PER RECORD OF DEPOSITORY AS AT 29 MARCH 2017(CONT’D)

309

NOTICE OF SEVENTEENTHANNUAL GENERAL MEETING

AGENDA

1. To receive and adopt the Audited Financial Statements for the financial year ended 31 December 2016 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of a Single Tier Final Dividend of 2 sen per ordinary share for the financial year ended 31 December 2016.

3. To approve the payment of Directors’ Fees of RM150,000.00 for the financial year ended 31 December 2016.

4. To approve the payment of Directors’ Fees, allowances and benefits-in-kind to the Directors of the Company up to an amount of RM3.75 million, for the period from 1 February 2017 to the next Annual General Meeting of the Company.

5. To re-elect the following Directors who retire in accordance with Article 100 of the Company’s Articles of Association:-

i) Dato’ Chia Lok Yuen ii) Datuk Dr Haji Baharum bin Haji Mohamed iii) Datuk Lim Si Cheng 6. To re-appoint Messrs. UHY as Auditors and to authorise the Directors to fix their remuneration.

7. As Special Business: To consider and, if thought fit, to pass with or without any modifications, the following Resolutions:-

(a) ORDINARY RESOLUTION AUTHORITY TO ISSUE SHARES PURSUANT TO SECTIONS 75 & 76 OF THE COMPANIES ACT, 2016

“THAT, subject always to the Companies Act, 2016 and the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered, pursuant to Sections 75 & 76 of the Companies Act, 2016, to issue shares in the Company from time to time at such price, upon such terms and conditions, for such purposes and to such person or persons whomsoever as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this Resolution does not exceed 10% of the issued share capital of the Company for the time being AND THAT the Directors be also empowered to obtain the approval for the listing and quotation of the additional shares so issued on the Bursa Malaysia Securities Berhad (“Bursa Securities”) AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

NOTICE IS HEREBY GIVEN THAT the Seventeenth Annual General Meeting of the Company will be held at Ballroom III, Jalan Kelab Tropicana, Tropicana Golf & Country Resort, 47410 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 31 May 2017 at 10.00 a.m. for the following purposes:-

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5Resolution 6Resolution 7

Resolution 8

Resolution 9


ANNUAL REPORT 2016

(b) ORDINARY RESOLUTION PROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING LBS BINA GROUP BERHAD (“LBGB”) AND ITS SUBSIDIARIES (“LBGB GROUP” OR “GROUP”) AND SYARIKAT JATI PEMBORONG AM SDN BHD

“THAT approval be and is hereby given pursuant to Chapter 10.09 of the Main Market Listing Requirements of Bursa Securities for the Company, its subsidiaries or any one of them to enter into the specified recurrent transactions of a revenue or trading nature with the related parties specified as stated in Section 2.3 of the Circular to Shareholders dated 28 April 2017 (the “Circular”) which is necessary for its day-to-day operations, in its ordinary course of business, made on an arm’s length basis and on normal commercial terms of the Group and on such terms which are no more favourable to the related party than those generally available to the public and which are not detrimental to the minority shareholders of the Company;

AND THAT the approval given in the aforesaid paragraph, unless revoked or varied by the shareholders of the Company in its general meeting, shall continue to be in force until the conclusion of the next Annual General Meeting of the Company, following this general meeting at which this mandate is passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed or the expiration of the period within which the next Annual General Meeting after the date it is required to be held pursuant to Section 340 (2) of the Companies Act 2016 (“Act”) (but shall not extend to such extension as may be allowed pursuant to Section 340 (4) of the Act), whichever is earlier;

AND THAT the aggregate value of the transactions conducted pursuant to the Proposed Shareholders’ Mandate during the financial year of the Company be disclosed in the annual report by providing a breakdown of the aggregate value of the transaction, amongst others, based on the following information:-

(a) the type of transactions made; and (b) the names of the related parties involved in each type of transactions made and their

relationship with the Company and its subsidiaries.

AND 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 or approved or permitted by the relevant authorities) as they may consider expedient or necessary or in the interests of the Company to give effect to the Proposed Shareholders’ Mandate described in the Circular and/or this Resolution.”

NOTICE OF SEVENTEENTHANNUAL GENERAL MEETING(CONT’D)

Resolution 10

311


(CONT’D)

Resolution 11

(c) ORDINARY RESOLUTIONPROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING LBGB GROUP AND DIRECTORS AND MAJOR SHAREHOLDERS OF LBGB GROUP AND PERSONS CONNECTED WITH THEM

“THAT approval be and is hereby given pursuant to Chapter 10.09 of the Main Market Listing Requirements of Bursa Securities for the Company, its subsidiaries or any one of them to enter into the specified recurrent transactions of a revenue or trading nature with the related parties stated in Section 2.3 of the Circular which is necessary for its day-to-day operations, in its ordinary course of business, made on an arm’s length basis and on normal commercial terms of the Group and on such terms which are no more favourable to the related party than those generally available to the public and which are not detrimental to the minority shareholders of the Company;

AND THAT the approval given in the aforesaid paragraph, unless revoked or varied by the shareholders of the Company in its general meeting, shall continue to be in force until the conclusion of the next Annual General Meeting of the Company, following this general meeting at which this mandate is passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed or the expiration of the period within which the next Annual General Meeting after the date it is required to be held pursuant to Section 340 (2) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340 (4) of the Act), whichever is earlier;

AND THAT the aggregate value of the transactions conducted pursuant to the Proposed Shareholders’ Mandate during the financial year of the Company be disclosed in the annual report by providing a breakdown of the aggregate value of the transaction, amongst others, based on the following information:-

(a) the type of transactions made; and (b) the names of the related parties involved in each type of transactions made and their

relationship with the Company and its subsidiaries.

AND 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 or approved or permitted by the relevant authorities) as they may consider expedient or necessary or in the interests of the Company to give effect to the Proposed Shareholders’ Mandate described in the Circular and/or this Resolution.”


ANNUAL REPORT 2016

(d) ORDINARY RESOLUTION PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

“THAT, subject always to the provisions under the Act, the Memorandum and Articles of Association of the Company, the Main Market Listing Requirements of Bursa Securities and the approvals of all relevant authorities (if any), the Company be and is hereby authorised to purchase such number of ordinary shares in the Company (“LBGB Shares”) as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that the aggregate number of shares purchased pursuant to this resolution shall not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company as at the point of purchase (“Proposed Renewal of Shares Buy-Back Authority”).

THAT the maximum amount of funds to be utilized for the purpose of the Proposed Renewal of Share Buy-Back Authority shall not exceed the retained profits of the Company.

THAT authority be and is hereby given to the Directors of the Company to decide at their discretion as may be permitted and prescribed by the Act and/or any prevailing laws, rules, regulations, orders, guidelines and requirements issued by the relevant authorities for the time being in force to deal with any LBGB Shares so purchased (“Purchased Shares”) by the Company in the following manners:-

i) to cancel the Purchased Shares; or ii) to retain the Purchased Shares as treasury shares held by the Company; or iii) to distribute the treasury shares as dividend to shareholders; or iv) to resell the treasury shares on Bursa Securities in accordance with the relevant rules of Bursa

Securities; or v) to transfer the treasury shares for the purposes of or under an employees’ share scheme and/

or as purchase consideration; or vi) any combination of the above.

THAT the authority conferred by this resolution will be effective immediately from the passing of this ordinary resolution until:-

i) the conclusion of the next AGM of the Company, at which time the said authority will lapse unless by an ordinary resolution passed at a general meeting of the Company, the authority is renewed, either unconditionally or subject to conditions; or

ii) the expiration of the period within which the next AGM after that date is required to be held; or

iii) revoked or varied by ordinary resolution passed by the shareholders in a general meeting,

whichever occurs first.

AND THAT the Directors of the Company be and are hereby authorised to take such steps to give full effect to the Proposed Renewal of Shares Buy-Back Authority with full power to assent to any conditions, modifications, variations and/or amendments as may be imposed by the relevant authorities and/or to do all such acts and things as the Directors may deem fit and expedient in the best interest of the Company.” Resolution 12


313

8. To consider any other business of which due notice shall have been given.

NOTICE OF DIVIDEND ENTITLEMENT

NOTICE IS HEREBY GIVEN that, subject to the approval of the shareholders at the Seventeenth Annual General Meeting, a Single Tier Final Dividend of 2 sen per ordinary share in respect of the financial year ended 31 December 2016 will be paid on 30 August 2017 to depositors registered in the Record of Depositors on 15 August 2017.

A Depositor shall qualify for entitlement to the dividend only in respect of:-

(a) shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 15 August 2017 in respect of transfers; and

(b) shares bought on Bursa Securities on a cum entitlement basis according to the Rules of Bursa Securities.

By Order of the Board,

LEE CHING CHING Company Secretary

Petaling Jaya, Selangor28 April 2017

Notes:

(1) A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company.

(2) In the case of a corporate member, the instrument appointing a proxy shall be under its Common Seal or under the hand of a duly authorised officer or attorney.

(3) Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy.

(4) Any alteration to the instrument appointing a proxy must be initialled. The instrument appointing a proxy must be deposited at the Company’s Registered Office at Plaza Seri Setia, Level 1-4, No. 1, Jalan SS9/2, 47300 Petaling Jaya, Selangor Darul Ehsan not less than 48 hours before the time fixed for the meeting.

(5) Shareholders’ attention is hereby drawn to the Main Market Listing Requirements of Bursa Securities, which allow a member of the Company which is an exempt authorised nominee, as defined under the Securities Industry (Central Depositories) Act, 1991, who holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“Omnibus Account”) to appoint multiple proxies in respect of each Omnibus Account it holds.

(6) The date of Record of Depository for the purpose of determining members’ entitlement to attend, vote and speak at the meeting is Thursday, 25 May 2017.

(7) Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all resolutions set out in this Notice of Seventeenth Annual General Meeting will be put to vote by way of poll.


(CONT’D)


ANNUAL REPORT 2016

Explanatory Notes on Special Business

(8) Ordinary Resolution 4

The Proposed Directors’ Remuneration (excluding Directors’ Fees for independent non-executive directors of the Company) comprises the allowances and other emoluments payable to Directors of the Company including monthly fixed allowance given Chairman of the Company in recognition of the significant roles in leadership and oversight, and the wide-ranging scope of responsibilities expected of him; Board and Board Committee Meeting allowance; allowance in certain subsidiary companies; and other benefits in kind.

In determining the estimated total amount of remuneration (excluding Directors’ Fees for independent non-executive directors of the Company) for the Directors, the Board considered various factors including the Directors’ involvement and responsibilities in the Group. Payment of the Directors’ remuneration (excluding Directors’ Fees for independent non-executive directors of the Company) will be made on a monthly basis and/or as and when incurred, if the Ordinary Resolution 4 has been passed. The Board is of the view that it is just and equitable for the Directors to be paid remuneration (excluding Directors’ Fees for independent non-executive directors of the Company) on a monthly basis and/or as and when incurred, particularly after they have discharged their responsibility and rendered their services to the Group throughout the period from 31 January 2017 to the next Annual General Meeting in 2018.


The Ordinary Resolution proposed under Resolution 9 above for the renewal of general mandate in relation to the authorisation for issuance of shares by the Directors, if passed, will enable the Directors to issue up to 10% of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company. This authority unless revoked or varied at a general meeting will expire at the next Annual General Meeting.

As at the date of this Notice, no new share of the Company was issued pursuant to the mandate granted to the Directors at the Sixteenth Annual General Meeting held on 9 June 2016.

The renewed 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 future investment, working capital and/or acquisition.

(10) Ordinary Resolutions 10 & 11

Ordinary Resolutions 10 & 11, if passed, will allow the Group to enter into the Recurrent Related Party Transactions in its ordinary course of business and the necessity to convene separate general meetings from time to time to seek shareholders’ approval as and when such Recurrent Related Party Transactions occur would not arise. This will reduce substantial administrative time, inconvenience and expenses associated with the convening of such meetings, without compromising the corporate objectives of the Group or adversely affecting the business opportunities available to the Group. The shareholders’ mandate is subject to renewal on an annual basis.

Further information on the Recurrent Related Party Transactions is set out in the Circular to Shareholders dated 28 April 2017 which is despatched together with the 2016 Annual Report of the Company.


Ordinary Resolution 12, if passed, will give authority to the Company to purchase its own shares up to ten per centum (10%) of the issued and paid-up share capital of the Company as at the point of purchase. This authority, unless revoked or varied by the shareholders of the Company in general meeting, will expire at the conclusion of the next Annual General Meeting. Further information on the Proposed Renewal of Share Buy Back Authority is set out in the Circular to Shareholders dated 28 April 2017 which is despatched together with the 2016 Annual Report of the Company.


FORM OF PROXY

Notes:

(1) A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company.

(2) In the case of a corporate member, the instrument appointing a proxy shall be under its Common Seal or under the hand of a duly authorised officer or attorney.

(3) Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy.

(4) Any alteration to the instrument appointing a proxy must be initialled. The instrument appointing a proxy must be deposited at the Company’s Registered Office at Plaza Seri Setia, Level 1-4, No. 1, Jalan SS9/2, 47300 Petaling Jaya, Selangor Darul Ehsan not less than 48 hours before the time fixed for the meeting.

(5) Shareholders’ attention is hereby drawn to the Main Market Listing Requirements of Bursa Securities, which allow a member of the Company which is an exempt authorised nominee, as defined under the Securities Industry (Central Depositories) Act, 1991, who holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“Omnibus Account”) to appoint multiple proxies in respect of each Omnibus Account it holds.

(6) The date of Record of Depository for the purpose of determining members’ entitlement to attend, vote and speak at the meeting is Thursday, 25 May 2017.

(7) Pursuant to Paragarph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all resolutions set out in this Notice of Seventeenth Annual General Meeting will be put to vote by way of poll.

I/We NRIC No. / Company No.

of

being a member/members of LBS BINA GROUP BERHAD, hereby appoint:-

Full Name NRIC/ Passport No. Proportion of Shareholdings

No. of Shares %

Address

Full Name NRIC/ Passport No. Proportion of Shareholdings

No. of Shares %

Address

and/or

or failing him/her, the Chairman of the Meeting, as my/our proxy to vote for me/us and on my/our behalf at the Seventeenth Annual General Meeting of the Company to be held at Ballroom III, Jalan Kelab Tropicana, Tropicana Golf & Country Resort, 47410 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 31 May 2017 at 10.00 a.m. or at any adjournment thereof.

RESOLUTIONS For Against

Ordinary Resolution 1












Please indicate with (X) how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his/her discretion.

Dated this day of 2017 No. of Shares Held CDS Account No.

Signature/ Common Seal of Shareholder(s)

Fold here

Fold here

The Company Secretary

LBS BINA GROUP BERHAD (518482-H)

Plaza Seri Setia Level 1-4 No. 1 Jalan SS9/247300 Petaling JayaSelangor Darul EhsanMalaysia

STAMP

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