TALAM CORPORATION BERHAD 1120-H Laporan Tahunan 2008 Annual Report

Transcription

1 TALAM CORPORATION BERHAD 1120-H Laporan Tahunan Annual Report

2 contents 2 Corporate Structure 4 Corporate Information 5 Financial Highlights 6 Profile of Board of Directors 10 Chairman s Statement 12 Review of Operations 16 Statement on Corporate Governance 21 Additional Compliance Information 24 Statement on Internal Control 25 Audit Committee Report 29 Financial Statements 112 List of Properties 119 Statement on Directors Interests 120 Analysis of Ordinary Shareholdings 123 Analysis of Irredeemable Convertible Preference Shareholdings 125 Notice of 83rd Annual General Meeting 130 Statement Accompanying Notice of Annual General Meeting Form of Proxy Laporan Tahunan Annual Report

3 corporate structure 2 TALAM CORPORATION BERHAD (1120-H)

4 ANNUAL REPORT 3 corporate structure

5 corporate information BOARD OF DIRECTORS Tan Sri Dato (Dr) Ir Chan Ah Chan Chong Yoon Executive Chairman Y.A.M. Tengku Sulaiman Shah Al-Haj Ibni Al-Marhum Sultan Salahuddin Abdul Aziz Shah Al-Haj Deputy Chairman Independent Non Executive Director Datuk Ab Rauf Bin Yusoh Non Independent Executive Director Chua Kim Lan Non Independent Executive Director Dato Kamaruddin Bin Mat Desa Independent Non Executive Director Tsen Keng Yam Independent Non Executive Director Loy Boon Chen Non Independent Non Executive Director Lee Swee Seng Non Independent Non Executive Director AUDIT COMMITTEE Tsen Keng Yam Chairman Y.A.M. Tengku Sulaiman Shah Al-Haj Ibni Al-Marhum Sultan Salahuddin Abdul Aziz Shah Al-Haj Member Dato Kamaruddin Bin Mat Desa Member NOMINATION & REMUNERATION COMMITTEE Tsen Keng Yam Chairman Y.A.M. Tengku Sulaiman Shah Al-Haj Ibni Al-Marhum Sultan Salahuddin Abdul Aziz Shah Al-Haj Member COMPANY SECRETARY Ting Kok Keong (MAICSA ) PRINCIPAL BANKERS RHB Investment Bank Berhad EON Bank Berhad REGISTERED OFFICE Suite 2.05, Level 2 Menara Maxisegar Jalan Pandan Indah 4/2 Pandan Indah Kuala Lumpur Tel no.: Fax no.: Website: Customer Service Action Centre Tel no.: Fax no.: SHARE REGISTRAR Securities Services (Holdings) Sdn Bhd Level 7, Menara Milenium Jalan Damanlela Pusat Bandar Damansara Damansara Heights Kuala Lumpur Tel no.: Fax no.: / AUDITORS Deloitte KassimChan STOCK EXCHANGE LISTING Listed on Main Board of Bursa Malaysia Securities Berhad Lee Swee Seng Member 4 TALAM CORPORATION BERHAD (1120-H)

6 Financial highlights Restated Restated GROUP Property, plant and equipment Shareholders fund Revenue Profit/(Loss) before taxation Earnings/(Loss) per share (sen) 191, , ,349 5, , , ,723 (6,936) , , ,814 (772,644) (124.50) 252,852 1,081,574 1,006, , ,225 1,006, ,985 71, COMPANY Property, plant and equipment Shareholders fund Revenue Profit/(Loss) before taxation 1, ,195 3,496 (23,142) 1, ,081 1,646 5,744 2, ,407 2,199 (466,782) 2, ,104 12,626 12,033 2, ,857 66,384 35,609 Earnings/(Loss)Per Share (sen) Revenue () Property, Plant and Equipment () Profit/(Loss) before Taxation () ANNUAL REPORT 5

7 profile of board of directors Tan Sri Dato (Dr) Ir Chan Ah Chan Chong Yoon Executive Chairman Malaysian, aged 62, Executive Chairman since 27 March 2002 joined the Board of Talam Corporation Berhad ( Talam ) on 6 November He is also currently an Executive Director (President/Chief Executive) of Kumpulan Europlus Berhad. He graduated with a Bachelors Degree in Civil Engineering from the University of Malaya in 1970 and is a member of the Institution of Engineers, Malaysia since 1974 and was subsequently made a Fellow in He has over 37 years of experience in the property and construction industry since he started his career with Messrs Binnie & Partners (M) Sdn Bhd and later joined Perbadanan Kemajuan Negeri Selangor in 1971 as a Project Manager handling project designs, management and property development. Tan Sri was awarded the prestigious Property Man of the Year 1998 by Federation Internationale Des Professions Immobilieres ( FIABCI ) in recognition of his achievements in property development. Tan Sri was conferred the Honorary Doctorate of Science (Engineering) by the University Malaya on 11 August Tan Sri is the spouse of Puan Sri Datin Thong Nyok Choo, a major shareholder of Talam. He has direct and deemed interest in Kumpulan Europlus Berhad, a major shareholder of Talam. There is no conflict of interest with the Company except for those transactions disclosed in item 2, page 21 of the Additional Compliance Information and Note 46 to the Financial Statements of this Annual Report. Within the last 10 years, he has no convictions for offences. He has attended all the ten (10) Board of Directors meetings held during the financial year ended 31 January. Y.A.M. Tengku Sulaiman Shah Al-Haj Ibni Al-Marhum Sultan Salahuddin Abdul Aziz Shah Al-Haj Deputy Chairman Malaysian, aged 58, Independent Non Executive Director joined the Board of Talam as Deputy Chairman on 22 December He is a member of the Audit Committee and was redesignated as a member of the Nomination & Remuneration Committee on 1 October. He is currently a director of Cosway Corporation Berhad and Baneng Holdings Berhad. Since 1970, Y.A.M. Tengku Sulaiman Shah became actively involved in business particularly in building construction and housing development. Y.A.M. Tengku Sulaiman Shah with his other partners formed Syarikat Pembinaan Setia Sdn Bhd (now known as SP Setia Berhad) and in 1997, he relinquished his position and sold off all his shares in SP Setia Berhad. In 1970 Y.A.M. Tengku Sulaiman Shah was appointed as the State Palace s Officer which carries the title Tengku Panglima Besar of Selangor by His Royal Highness, the Sultan of Selangor Sultan Salahuddin Abdul Aziz Shah. In 1978 Y.A.M. Tengku Sulaiman Shah was then promoted as the Chief of Ceremony for the State of Selangor which carries the title Tengku Panglima DiRaja Selangor until today. Y.A.M. Tengku Sulaiman Shah is also a member of The Council of Royal Court of Selangor (Ahli Dewan DiRaja Selangor). He has no family relationship with any other directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has no convictions for offences. He has attended six (6) out of ten (10) Board of Directors meetings held during the financial year ended 31 January. 6 TALAM CORPORATION BERHAD (1120-H)

8 profile of board of directors Datuk Ab Rauf Bin Yusoh Non Independent Executive Director Malaysian, aged 46, Non Independent Executive Director, joined the Board of Talam on 28 February 2002 as a Non Independent Non Executive Director and was redesignated as an Executive Director on 1 October. He was formerly a Director of Europlus Berhad ( Europlus ) from October 1998 until 28 February 2002 and Senior Vice President of Europlus until 1 January He was appointed as a Senior Vice President of Kumpulan Europlus Berhad on 1 January He was a founder Director of Asia Lab Sdn Bhd. He has no family relationship with any other directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has no convictions for offences. He has attended nine (9) out of ten (10) Board of Directors meetings held during the financial year ended 31 January. Dato Kamaruddin Bin Mat Desa Independent Non Executive Director Malaysian, aged 57, Independent Non Executive Director, joined the Board of Talam on 1 October. He is also a member of the Audit Committee. He holds a Bachelor of Laws (Hons) from International Islamic University, Petaling Jaya, Selangor (1993) and currently an Advocate and Solicitor, High Court of Malaya. Dato Kamaruddin had extensive experience in the Royal Malaysian Police Force. During his distinguished career, he held positions such as General Duty/Traffic, Platoon Commander, Police Field Force, Office in-charge of Police Sub-District, Area Inspector, State Traffic Chief Selangor, Deputy OCPD, Staff Officer (Prosecution) Session Court (Selangor), Staff Officer (Admin) CID Selangor, Police Secretary/Special Officer to IGP, Officer in-charge Criminal Investigation Department, Deputy Chief Police Officer and Deputy Director, Commercial Crime Investigation Department. He is currently a Partner in a law firm, Faridzah & Co. He has no family relationship with any other directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has no convictions for offences. He has attended all the three (3) Board of Directors meetings held during his tenure in office for the financial year ended 31 January. ANNUAL REPORT 7

9 profile of board of directors Tsen Keng Yam Independent Non Executive Director Malaysian, aged 58, Independent Non Executive Director, joined the Board of Talam on 30 April He was redesignated as the Chairman of the Audit Committee and appointed as the Chairman of the Nomination & Remuneration Committee on 1 October. He is also currently a Director of Riverview Rubber Estates Berhad and Narlborough Plantations Plc. He is a Fellow of the Institute of Chartered Accountants (England and Wales) and a member of Malaysian Institute of Accountants and Malaysian Institute of Certified Public Accountants. In 1978, he joined Hanafiah Raslan & Mohamed as a consultant and was subsequently promoted to Senior Consultant in He was a principal of Hanafiah Raslan & Mohamed from 1984 to 1987 and was a partner of Arthur Andersen & Co. for more than 14 years from 1988 to He has no family relationship with any other directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has no convictions for offences. He has attended seven (7) out of ten (10) Board of Directors meetings held during the financial year ended 31 January. Loy Boon Chen Non Independent Non Executive Director Malaysian, aged 56, Non Independent Non Executive Director, joined the Board of Talam on 1 October. Mr Loy Boon Chen holds a Master Degree in Business Administration from Golden Gate University, San Francisco, USA and is a Certified Public Accountant, Malaysia. Mr Loy served an international accounting firm for seven (7) years prior to joining Chong Kok Lin & Sons Berhad in 1980 as Accountant cum Secretary for a year. In 1981, he joined Mudajaya Construction Sdn Bhd as Chief Accountant before being appointed Group Financial Controller of IJM Corporation Berhad in Mr Loy was appointed the Financial Director of IJM Corporation Berhad from 1998, and was the Head of the Finance & Accounts Department and Chairman of IJM Group Risk Management Committee up till the end of Thereafter, he was assigned to be in charge of special projects. Mr Loy was a member of the Accounting Standards Sub-Committee of the Federation of Public Listed Companies Berhad ( ). He is presently an Independent and Non Executive Director of Guandong Provincial Expressway Development Co. Limited, a Company listed on the Shenzhen Stock Exchange, China. He has no family relationship with any other directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has no convictions for offences. He has attended all the three (3) Board of Directors meetings held during his tenure in office for the financial year ended 31 January. 8 TALAM CORPORATION BERHAD (1120-H)

10 profile of board of directors Chua Kim Lan Non Independent Executive Director, Malaysian, aged 44, Non Independent Executive Director, joined the Board of Talam on 1 October. Ms Chua Kim Lan graduated from College Tunku Abdul Rahman in Building Technology in 1984 and holds a Master of Business Administration from Honolulu University, Hawaii in She was previously attached to Brisdale (M) Sdn Bhd for 5 years from 1984 to 1989 and Talam for 1 year prior to joining Europlus Berhad as a Quantity Surveyor in She was transferred back to Talam subsequent to the merger exercise in 2003 and was formerly the Deputy President of Talam. She has no family relationship with any other directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, she has no convictions for offences. She has attended all the three (3) Board of Directors meetings held during her tenure in office for the financial year ended 31 January. Lee Swee Seng Non Independent Non Executive Director Malaysian, aged 47, Non Independent Non Executive Director, joined the Board of Talam on 1 October. He is also a member of the Nomination & Remuneration Committee. Mr Lee Swee Seng holds a Bachelor of Laws (Hons) from University of Malaya, Master of Laws from University of Malaya and Master of Business Administration from Southern Cross University, Australia. Mr Lee was called to the Malaysian Bar in 1985 and has been in active law practice since then. He is currently the Managing Partner of Lee Swee Seng & Co. He is also a Certified National Trainer of Junior Chamber International and a Past National President of Junior Chamber Malaysia in Mr Lee is a Member of the Malaysian Institute of Arbitrators and an associate member of the Malaysian Institute of Management ( MIM ) as well as the President of the MIM KL Toastmasters Club 2005/2006 and Distinguished Toastmaster of Toastmasters International. He was a Division Governor for Toastmasters International 2006/. He is a Certified Mediator of the Malaysian Mediation Centre. He is also a Trade Marks and Industrial Designs Agent as well as Patent Agent. He is a member of the Malaysian Institute of Corporate Governance as well as a Chartered Audit Committee Director. He is also a Notary Public. Mr Lee believes in continuing education and is often invited to speak to directors of public listed companies in their Continuing Education Programme and also by other professional bodies like MAICSA and Lexis-Nexis in their professional development programmes. He is presently an Independent Non Executive Director of OpenSys (M) Berhad and also a Director of TCM Development Berhad and MAP Partners Berhad. He has no family relationship with any other directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has no convictions for offences. He has attended all the three (3) Board of Directors meetings held during his tenure in office for the financial year ended 31 January. ANNUAL REPORT 9

11 chairman s statement On behalf of the Board of directors of Talam Corporation Berhad ( Talam ), I hereby present the Annual Report and Financial Statements of the Group and the Company for the financial year ended 31 January. Financial Highlights For the financial year ended 31 January, the Group achieved a revenue of RM million compared with the previous financial year of RM million, mainly due to the revival of certain development projects. The Group, despite a lower gross profit, was able to record a pretax profit of RM5.82 million against a pretax loss of RM6.94 million of the previous financial year. This was achieved mainly through gains arising from disposal of investment properties and subsidiaries, and reversal of provisions no longer required of certain doubtful receivables and liquidated ascertained damages. Talam Proposed Regularisation Plan On 1 September 2006, the Board announced that based on the audited consolidated financial statements of Talam for the financial year ended 31 January 2006, the auditors were unable to express their opinion on Talam s audited consolidated financial statements and the Group had defaulted on payments pursuant to Practice Note No. 1/2001 of the Listing Requirements of Bursa Malaysia Securities Berhad ( Listing Requirements ). As such, Talam announced that it was an affected listed issuer pursuant to Practice Note No. 17/2005 ( PN17 ) of the Listing Requirements. Pursuant to the provisions of PN17, Talam was required to submit its regularisation plan to the relevant authorities within 8 months of the first announcement, i.e. by 30 April. In this respect, RHB Investment Bank Berhad was appointed by the Board as the Financial Adviser for its Proposed Regularisation Plan ( PRP ) and to procure the necessary approvals to implement the PRP. Talam submitted its PRP to the Securities Commission ( SC ) on 30 April, which involved, inter alia, the restructuring of the Group s defaulted debts amounting to approximately RM833.0 million into redeemable and convertible instruments and/or Al- Bai Bithaman Ajil Islamic Debt Securities to be issued by Talam. Subsequent to SC s rejection on 25 September, Talam, on 25 October, re-submitted its revised PRP of the Group to the SC. The Board is glad to report that approval has since been obtained from the SC vide SC s letter dated 29 April, subject to certain terms and conditions imposed by SC. Major Corporate Developments On March, a subsidiary, Mutual Prosperous Sdn Bhd ( MPSB ), entered into a Joint Venture/Shareholders Agreement with IJM Properties Sdn Bhd ( IJMP ) for IJMP and MPSB to use Cekap Tropikal Sdn Bhd ( CTSB ) as the 50:50 joint venture company to takeover the development of 204 acres of land located in Mukim Batu, Daerah Gombak, 10 TALAM CORPORATION BERHAD (1120-H)

12 chairman s statement Selangor ( Land ) known as Sierra Selayang. The Land for development was previously owned and/or beneficially owned by three subsidiaries, namely Zhinmun Sdn Bhd, Untung Utama Sdn Bhd and Seaview Plantations Sdn Bhd. The development has an estimated gross development value of RM1.0 billion and comprises mainly bungalows and semidetached houses and will be developed over 6 years. On 28 June, Larut Overseas Ventures Sdn Bhd entered into a Share Sale Agreement with IJMP to dispose of 1,515,000 ordinary shares of HK$1 each representing 50% equity interest in Larut Leisure Enterprise (Hong Kong) Limited ( LLE ) for HK$1 and IJMP will also assume a loan of RM25.63 million from the Talam Group to LLE. The entry of IJMP would enable LLE to complete the proposed 35-storey commercial complex in the central business district of Changchun, capital of Jilin Province, People s Republic of China. The development has an estimated gross development value of RM450 million and will take 3 years to be completed. Besides the above, during the financial year, the Group continues to improve its financial position by disposing of its non-core assets such as the leasehold land and building known as Hospital Pantai Indah for RM63.50 million, and a 25- acre freehold industrial land in Bukit Beruntung for RM18.60 million. For the financial year, IJM Construction Sdn Bhd ( IJMC ) commenced work as the principal contractor for the construction work in relation to the various property development projects, namely Taman Puncak Jalil, Ukay Perdana, Kinrara Section 3, Bukit Beruntung and Putra Perdana for a total contract sum of approximately RM700 million. The appointment of IJMC has helped to improve the billings of the Group and would ensure early completion of the said projects. With the resumption of construction works, Talam would be able to sell the remaining unsold units of the re-launched phases on a build-and-sell basis. Towards the end of financial year ending 31 January 2009, upon the implementation and completion of the revised PRP as approved by the SC, the Group will be able to significantly improved its capital structure and gearing position. Prospect The Group will also continue to find buyers or joint venture partners for its land and properties. Non-core assets will be disposed of at the right price so as to further strengthen its financial position. The Board of Directors is of the opinion that considering the recent developments in the Group, there will be a better prospect for the future years, despite present bearish market sentiment. Appreciation On behalf of the Board of Directors, I wish to thank our valued customers, shareholders, creditors and lenders for their continued support. I would also like to express my heartfelt appreciation to the management team and dedicated employees of the Group for their unrelenting commitment and hard work during the financial year. I wish to express on behalf of the Board, my sincere appreciation to Mr. Lai Moo Chan and Encik Sulaiman Hew Bin Abdullah, who have both resigned from the Board, for their immense contribution and valuable counsel to the Group during their tenure as Independent Non-Executive Directors with the Company. My deepest gratitude and appreciation also goes to Puan Sri Datin Thong Nyok Choo, our President/ Chief Executive who has retired from the Company on 1 October. On another note, I wish to warmly welcome on Board, IJM Corporation Berhad ( IJM ) s nominees, Mr. Loy Boon Chen, former IJM Group Finance Director and Mr. Lee Swee Seng as Non-Independent Non-Executive Directors, Ms Chua Kim Lan as Executive Director and Dato Kamaruddin Bin Mat Desa as Independent Non-Executive Director. The Board of Directors would also like to record its deepest appreciation and gratitude to all our business partners, in particular IJM, and all regulatory authorities for their cooperation and assistance rendered throughout the year. TAN SRI DATO (DR) IR. CHAN AH CHAN CHONG YOON Executive Chairman ANNUAL REPORT 11

13 review of operations Property Development Property development is the core business of Talam Corporation Berhad ( Talam ) which has contributed 92.5% of its turnover. Talam and its subsidiaries have a total balance land bank of approximately 5,792 acres comprising a mixed portfolio of commercial, residential and industrial properties at various strategic locations in Ampang, Sepang, Puchong, Bukit Jalil and Rawang. Information of the housing development projects currently being undertaken and to be undertaken by the Talam Group of Companies are detailed as follows:- (1) Existing Projects a. Taman Puncak Jalil Taman Puncak Jalil, a 801 acres leasehold land, is located next to Technology Park along Sungai Besi, Puchong road. Adjacent developments are Lestari Perdana on the southest, Taman Equine on the south, Bandar Kinrara on the northwest and Bukit Jalil Sports Complex on the north. The development, which is undertaken by Maxisegar Sdn Bhd, a wholly-owned subsidiary of Talam, is an integrated and self-contained township comprising 8,102 units of residential and commercial properties. This strategically located project has attracted strong interest from the public. The Gross Development Value of Taman Puncak Jalil estimated to be about RM2.13 billion with an expected development period of twelve (12) years. The project was first launched in June 2001 and as at 31 January, the project has recorded sales of 7,358 units valued at RM1.59 billion. b. Ukay Perdana Ukay Perdana is a mixed development project located at 7th mile off Jalan Ulu Klang in the vicinity of Bukit Antarabangsa and Taman Ukay which is undertaken by Ukay Land Sdn Bhd. It is approximately 14.4 km north-east of Kuala Lumpur City Centre, which is about 15 minutes drive north-east of Kuala Lumpur City Centre via elevated highway. The project is situated on 345 acres of converted leasehold land which is being developed by Ukay Land Sdn Bhd, a %- owned subsidiary of Talam. The development consists of 6,200 units of residential and commercial properties with an expected Gross Development Value of RM million. As at 31 January, a total of 6,053 units of properties valued at RM million were sold. c. Lestari Puchong Lestari Puchong is a project undertaken by Lestari Puchong Sdn Bhd, a %-owned subsidiary of Talam. The proposed site is located off Jalan Akademi Putra, approximately 1.2 kilometers from Persimpangan Serdang Exit No. 1123, in the vicinity of Seri Kembangan, Selangor. The site is easily accessible from Kuala Lumpur-Seremban Highway via Jalan Sungai Besi and strategically located to the north of University Putra Malaysia research centre. Lestari Puchong is a mixed development comprising 8,256 units of residential properties, and 327 units of commercial properties. With an estimated Gross Development Value of RM1.10 billion, Lestari Puchong is expected to span over a development period of twelve (12) years. Launched in March 2001, Lestari Puchong has achieved sales of 4,793 units valued at RM million as at 31 January. d. Kinrara Section 3 Kinrara Section 3 is a project undertaken by Sentosa Restu (M) Sdn Bhd, a %-owned subsidiary of Talam. The project is located on 43 acres of land in the Daerah of Petaling, opposite of the Kinrara Army Camp. The proposed development, consists of 3,296 units of residential and commercial properties. It was first launched in 1999 with an estimated Gross Development Value of RM426.55million. As at 31 January, Kinrara Section 3 has achieved sales of RM million representing 3,213 units sold. e. Jalil Heights Jalil Heights is located on a 31.4 acres leasehold land in Mukim of Petaling, Petaling District within the development known as Lestari Perdana. It is earmarked for the development of 284 units of semi-detached houses undertaken by Abra 12 TALAM CORPORATION BERHAD (1120-H)

14 review of operations Development Sdn Bhd, a wholly-owned subsidiary of Talam. The project will generate a Gross Development Value of RM101.0 million. Since its first launch in September 2001, Jalil Heights has recorded sales of RM96.3 million (representing 268 units sold) as at 31 January. f. Saujana Puchong Saujana Puchong is a development undertaken by Expand Factor Sdn Bhd, a wholly-owned subsidiary of Talam, on approximately 423 acres of 99 years leasehold land in the Petaling District. The project site is located in the growth area of Puchong and is easily accessible via Lebuhraya Damansara Puchong and the Kuala Lumpur- Seremban Highway through the Serdang-Puchong dual carriageway that links Jalan Puchong to Serdang. The entire development comprises 4,933 units of terrace houses, apartments and shop lots, which upon completion, are expected to generate a Gross Development Value of RM million. As at 31 January, the project has recorded sales of 4, 546 units valued at RM million. Cyberjaya and adjacent to the Multimedia Super Corridor, 5 km west of Putrajaya and 13 km north of the Kuala Lumpur International Airport. With an expected Gross Development Value of RM1.92 billion, Putra Perdana will consist of residential houses, apartments, shop offices, commercial complex, exhibition center, theme garden, hotel and service apartments. As at 31 January, the project has recorded sales of 7,816 units valued at RM million. i. Saujana Putra Saujana Putra is a project undertaken by Galian Juta Sdn Bhd, a wholly-owned subsidiary of Talam measuring about 200 acres in size, is located opposite Putra Heights in Mukim Tanjung Duabelas, Kuala Langat District. With a proposed development comprising low to medium cost apartments and medium cost terrace house, it will generate a Gross Development Value of RM million over a development life span of eleven (11) years. Launched in March 2003, Saujana Putra has achieved sales of 527 units valued at RM74.6 million as at 31 January. g. Danau Putra Danau Putra is a mixed development undertaken by Cekap Mesra Development Sdn Bhd, a subsidiary of Talam, on approximately acres of 99 years leasehold land in the Mukim of Dengkil, District of Sepang, within the Multimedia Super Corridor. Danau Putra is planned for mixed development of medium low cost apartment, cluster bungalows and shop/apartments with a Gross Development Value of RM630.0 million. Launched in August 1998, Danau Putra has achieved sales 3,878 units at RM361.0 million as at 31 January. h. Putra Perdana j. Lestari Permai Lestari Permai is situated on approximately acres of 99 years leasehold land and located opposite the Putrajaya Gate 2 entrance which is undertaken by Europlus Construction Sdn Bhd, a %-owned subsidiary of Talam. The project will be accessible via Lebuhraya Damansara Puchong, Puchong-Serdang bypass, and Jalan Puchong. The proposed development comprises 1,004 units of residential houses and 24 units of double storey shop and 7 units of low cost shop. With Gross Development Value of RM million, Lestari Permai was launched in March 2003 and has achieved sales of 566 units valued at RM80.37 million as at 31 January. Putra Perdana is a project undertaken by Kenshine Corporation Sdn Bhd, a %- owned subsidiary of Talam, situated on 600 acres of converted leasehold land, the project is located on the southern side of Puchong-Kajang trunk road, 5 km from Batu 14 Puchong, within ANNUAL REPORT 13

15 review of operations k. Bukit Sentosa Bukit Sentosa I & III form an integrated township covering approximately 1,898 acres of freehold land in the Mukim of Serendah, approximately 47 km north of Kuala Lumpur. It is easily accessible through the North-South Expressway and exit at Bukit Beruntung Interchange. The comprehensive new township comprises a mixed development of residential, commercial and industrial properties. Bukit Sentosa I, which is being developed by Talam Industries Sdn Bhd, is planned for mixed development comprising 9,573 units of terrace house, apartments and shoplots. Launched in September 1999, the project has generated total sales of RM712.6 million as at 31 January. Bukit Sentosa III, covering 1,010 acres of freehold land, is developed by Maxisegar Sdn Bhd. It is planned for a mixed development of 14,790 units of terrace houses, apartments and shoplots, with a Gross Development Value of RM1.3 billion. Launched in March 1997, Bukit Sentosa III has achieved a total sales of RM577.8 million (or 7,191 units sold) as at 31 January. l. Bandar Bukit Beruntung Bandar Bukit Beruntung, a converted 5,500 acres of freehold land is located north-west of Rawang, approximately 40 km from Kuala Lumpur. It is undertaken by Europlus Corporation Sdn Bhd, a %-owned subsidiary of Talam. The mega township which is marketed as the 2nd Petaling Jaya has a golf resort, country homes, campus, industrial, commercial and housing units with an expected Gross Development Value of RM3.36 billion. The development of the entire township is expected to span another 12 years to the year Launched in late 1991, this project has achieved a total sales value of RM1.52 billion representing 13,353 units as at 31 January. m. Prima Beruntung (2) Future Projects Prima Beruntung is a converted 250 acres of freehold land planned for with mixed development. A project launched by Europlus Berhad since 1996, Prima Beruntung is seen as an extension of the Bandar Bukit Beruntung project due to its proximity to Bandar Bukit Beruntung. With an estimated Gross Development Value of RM257.8 million, Prima Beruntung has achieved a total sales value of RM182.7 million (representing 1,896 units sold) as at 31 January. Shah Alam 2 (Berjuntai Bistari Land) The proposed Shah Alam 2 covering 1,284 acres is located adjacent to the Universiti Industri Selangor ( UNISEL ) campus about 44 km from the towns of Batang Kali and Kuala Selangor, 30 km from Rawang and 20 km from Bukit Beruntung. While the current access to the site is by the coastal road passing by Kuala Selangor or the trunk road from Rawang, Shah Alam 2 will eventually be reached by a 10 km proposed road from the Bukit Beruntung Interchange off the North-South Highway, to be constructed by Maxisegar Sdn Bhd. Berjuntai Bistari is to be developed over 15 years and will comprise approximately 15,500 units of residential and commercial properties with an estimated Gross Development Value of RM1.5 billion. (3) Joint-Venture Project a. 252 Units 2½ Storey Terrace House at Ukay Perdana This parcel of development is a 50 : 50 jointventure undertaken by Good Debut Sdn Bhd. The development is part of Ukay Perdana project and is located at 7th mile off Jalan Ulu Klang in the vicinity of Bukit Antarabangsa. The Gross Sales Value is estimated to be RM96.55 million. As at 31 January, a total of 150 units of sales value of RM million were achieved. 14 TALAM CORPORATION BERHAD (1120-H)

16 review of operations b. Sierra Ukay Sierra Ukay is a 50 : 50 joint-venture project undertaken by Sierra Ukay Sdn Bhd. The project measures 90 acres and is located in Mukim Ulu Kelang adjacent to the existing Ukay Perdana. The Gross Development Value of Sierra Ukay is estimated to be RM403 million and is expected to implement over a period of 5 years. Launched in October, the project has achieved sales of 108 units valued at RM31.28 million as at 31 January. c. Sierra Selayang Sierra Selayang is a 50 : 50 joint-venture project undertaken by Cekap Tropikal Sdn Bhd. The project measures 204 acres and is located at Ulu Gombak Forest Reserve, Mukim of Batu, District of Gombak, State of Selangor. The Gross Development Value of Sierra Selayang is estimated to be RM1 billion and is expected to implement over a period of 8 years. d. Yin Hai Complex in Changchun, Jilin Province, People s Republic of China Yin Hai Complex is a project undertaken by Jilin Dingtai Enterprise Development Company Limited, a wholly-owned subsidiary of Larut Leisure Enterprise (Hong Kong) Limited, a 50 : 50 equity interest company held by Larut Overseas Ventures Sdn Bhd, a %-owned subsidiary of Talam and IJM Properties Sdn Bhd. The proposed Yin Hai Complex is a 35-storey building comprising 28 office-cum-residential levels, 7 shopping podium levels and 2 basement levels. The Gross Sales Value of Yin Hai Complex is estimated to be RM450 million. Other Businesses The Group s other businesses in complexes and hotel contributed approximately 7.5% of its turnover in financial year. ANNUAL REPORT 15

17 statement on corporate governance INTRODUCTION The Board of Directors ( Board ) of Talam Corporation Berhad ( Talam or the Company ) recognizes the importance of achieving best practices in its standards of business integrity and corporate accountability and is committed to subscribing to the recommendations of the Malaysian Code on Corporate Governance ( Code ). The Board has considered the manner in which it has applied the Principles of the Code and to the best of its ability complied with the Best Practices of the Code as required under the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ). It also enhances shareholders participation and value as well as safeguards the interest of other stakeholders. THE BOARD OF DIRECTORS Talam is led by a Board comprising members with extensive experience in the property, construction and various business sectors supported by a wide range of other professionals in the legal and financial sectors. This wide spectrum of skills and experience provides the strength that is needed to lead the Company in meeting its objectives and enables the Company to rest in the firm control of an accountable and competent Board of Directors. Board Composition The Board of Talam currently has eight (8) members comprising an Executive Chairman, two (2) Executive Directors and five (5) Non-Executive Directors, of whom three (3) are independent and two (2) are non independent. The Company considers that its complement of Non-Executive Directors provides an effective Board with a mix of industry-specific knowledge and broad business and commercial experience. They ensure that all proposals by management are fully deliberated and examined, taking into account the interest of shareholders and stakeholders. The role of the Independent Non-Executive Directors is particularly important as they provide unbiased and independent views, advice and judgment to the Board to safeguard the interest of minority shareholders. The profiles of the Directors are set out on pages 6 to 9 of this Annual Report. Tan Sri Dato (Dr) Ir Chan Ah Chan Chong Yoon is the Executive Chairman of the Board while Datuk Ab Rauf Bin Yusoh and Ms Chua Kim Lan are the Executive Directors. The roles of the Chairman and the Executive Directors are segregated to ensure that there is a balance of power and authority. The Chairman is responsible for the orderly conduct and working of the Board and ensures that all Directors receive sufficient relevant information on financial and non-financial matters to enable them to participate actively in Board decisions whilst the Executive Directors are responsible for the day-to-day management of the business and implementation of Board decisions. The Board has identified Mr Tsen Keng Yam, the Chairman of Audit and Nomination & Remuneration Committee as Senior Independent Non-Executive Director to whom concerns may be conveyed, and to deal with issues regarding the Company where it would be inappropriate for these to be dealt with by the Executive Chairman or Executive Directors. Board Meetings The Board meets quarterly to review its quarterly performances and discuss new policies and strategies. Additional meetings will be called as and when necessary. During the financial year ended 31 January, ten (10) Board Meetings were held and the attendance of the Board members are as follows:- Directors Number of meetings attended by Directors Tan Sri Dato (Dr) Ir Chan Ah Chan Chong Yoon 10 out of 10 Y.A.M. Tengku Sulaiman Shah Al-Haj Ibni Al-Marhum Sultan Salahuddin Abdul Aziz Shah Al-Haj 6 out of 10 Datuk Ab Rauf Bin Yusoh 9 out of 10 Chua Kim Lan (appointed on 1 October ) 3 out of 3 Dato Kamaruddin Bin Mat Desa (appointed on 1 October ) 3 out of 3 Tsen Keng Yam 7 out of 10 Loy Boon Chen (appointed on 1 October ) 3 out of 3 Lee Swee Seng (appointed on 1 October ) 3 out of 3 Lai Moo Chan (resigned on 1 October ) 6 out of 7 Sulaiman Hew Bin Abdullah (resigned on 1 October ) 4 out of 7 16 TALAM CORPORATION BERHAD (1120-H)

18 statement on corporate governance THE BOARD OF DIRECTORS (CONT D) Appointment to the Board The Nomination & Remuneration Committee recommends to the Board, suitable candidates for appointment as Director and to fill vacant seats on committees of the Board after which the Company Secretary ensures that all appointments are properly made and all legal and regulatory compliance are met. However, the main decision lies with the Board after taking into consideration the nomination by the Committee. The Nomination & Remuneration Committee also assesses the effectiveness of the Board and Board Committees. The Board, through the Nomination & Remuneration Committee, reviews annually the required mix of skills, expertise, attributes and core competencies of its Directors as well as the Board structure, size and composition. Supply of Information to the Board All the Directors are notified about the Board meetings scheduled by the Company Secretary before the meetings. The Board papers together with the agenda are circulated to all the Directors prior to the scheduled meetings to enable the Directors to review and consider the agenda items to be discussed at the meeting and where necessary, to obtain further explanations so they can be fully briefed before the meeting. The Board is kept updated on the Company s financial activities and operations on a regular basis. In exercising their duties, the Directors have access to all information within the Company and to the advice and services of the Company Secretary. If necessary, the Directors are entitled to seek independent professional advice from external consultants. Any such request is presented to the Board for approval. Senior management staff as well as advisers and professionals are appointed to advise on corporate proposals, may be invited to attend Board meetings to provide the Board with their views and explanations on certain agenda items tabled to the Board, and to state their clarification on issues that may be raised by the Directors. Directors Training All the Directors have attended the Mandatory Accreditation Programme prescribed by Bursa Securities. The Directors have also attended various training programmes pursuant to the requirements of Bursa Securities to keep abreast with developments in the market place and relevant new regulatory requirements on a continuous basis. Re-election of Directors In accordance with the Articles of Association of the Company ( Articles ), all Directors shall retire from office at least once in three years but shall be eligible for re-election. The Articles also provide that one-third of the Board shall retire from office and be eligible for re-election at every Annual General Meeting. The Directors who are appointed by the Board are subject to re-election by shareholders at the next Annual General Meeting following their appointment. The Directors standing for re-election at the 83rd Annual General Meeting of the Company to be held are Tan Sri Dato (Dr) Ir Chan Ah Chan Chong Yoon, Dato Kamaruddin Bin Mat Desa, Ms Chua Kim Lan, Mr Loy Boon Chen and Mr Lee Swee Seng. BOARD COMMITTEES The Board has delegated certain responsibilities to several Board Committees which operate within clearly defined terms of reference. The Chairman of the various Committees will report to the Board the outcome of the Committee meetings and such reports are incorporated in the minutes of the Board meetings. The various Committees are:- ANNUAL REPORT 17

19 statement on corporate governance BOARD COMMITTEES (CONT D) A. Executive Committee The Executive Committee was established on 27 September and its membership consists of the Directors and senior management personnel of the Group. The Executive Committee meets monthly to review the performance of the Group s operating decisions. The members are as follows:- Member Chua Kim Lan (Chairwoman) Chew Kok Hing Tan Bak Hai Leow Chi Lih Loy Boon Chen Designation Executive Director Consultant Senior Vice President I Senior Vice President I By Invitation The main Terms of Reference of the Executive Committee include the following:- 1. approving and reviewing the budget and cashflow projections prepared by the Group s strategic business units; 2. reviewing the performance of the Group s strategic business units; 3. deciding on all transactions and matters relating to the Group s core business/investments within the restricted limits of authority determined by the Board; 4. deciding on all matters relating to banking facilities as may be required for the conduct of the Group s operations; 5. reviewing and recommending new investments/land bank acquisitions before tabling to the internal audit committee and recommending to the Board for approval; 6. assisting the Board in ensuring the effectiveness of the Group s core businesses in accordance to the corporate objective, strategies, policies and business direction approved by the Board; and 7. formulating strategies on an on-going basis and addressing issues arising from changes in both external business environment and internal operating conditions of the strategic business units. During the financial year, three (3) Executive Committee meetings were held. B. Audit Committee The Audit Committee was established on 24 February 1994 and is currently chaired by Mr Tsen Keng Yam. Other members of the Audit Committee are Y.A.M. Tengku Sulaiman Shah Al-Haj Ibni Al-Marhum Sultan Salahuddin Abdul Aziz Shah Al-Haj and Dato Kamaruddin Bin Mat Desa. The Terms of Reference and activities of the Audit Committee during the financial year of the Audit Committee are set out under the Audit Committee Report on pages 25 to 28 of this Annual Report. C. Nomination & Remuneration Committee The Nomination Committee and Remuneration Committee were established on 27 September 2001 and 22 December 2000 respectively and were renamed Nomination & Remuneration Committee on 27 September. The Nomination & Remuneration Committee currently comprises three members as follows:- Member Tsen Keng Yam (Chairman) Y.A.M. Tengku Sulaiman Shah Al-Haj Ibni Al-Marhum Sultan Salahuddin Abdul Aziz Shah Al-Haj Lee Swee Seng Designation Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director 18 TALAM CORPORATION BERHAD (1120-H)

20 statement on corporate governance BOARD COMMITTEES (CONT D) C. Nomination & Remuneration Committee (Cont d) The Terms of Reference of the Nomination & Remuneration Committee include the following :- (i) (ii) (iii) (iv) (v) to make recommendations on the candidate for directorships directly to the Board or recommendations to the Board as proposed by the Chairman. to make recommendations to the Board on candidates for Board Committees which includes the Audit Committee. to review the mix of skills, experience and competence of the Board on an annual basis. to make recommendations to the Board on the remuneration framework for all Executive Directors and determining the remuneration arrangements for the Executive Directors. to ensure that the remuneration framework recommended is applicable to the Group and reflective of the performance of the Group both in the short and long term. Before the Nomination Committee and Remuneration Committee were combined, the Remuneration Committee had a meeting during the financial year, while, the Nomination Committee had three (3) meetings during the financial year. DIRECTORS REMUNERATION The Executive Chairman s remuneration comprises director s fees and allowance while the remuneration of the Executive Directors comprises salary. Other customary benefits are made available as appropriate. Any salary review will take into account market rates and the performance of the individual and the Group. The determination of remuneration of Non-Executive Directors is a matter for the Board as a whole. The Non-Executive Directors will abstain from discussion on their respective remuneration. The details of the remuneration of Directors during the financial year for the Company is disclosed in Note 10 to the Financial Statements of this Annual Report. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS The Group recognises the need to inform shareholders of all major developments concerning the Group on a timely basis. In accordance with the Listing Requirements of Bursa Securities, various announcements were made during the year such as quarterly reports, related party transactions and corporate proposals, if any, which provide shareholders and the investing public with an overview of the Group s performance and operations. In addition, the Company has been using the Annual General Meetings ( AGM ) and Extraordinary General Meetings ( EGM ) to communicate with shareholders and opportunities are given to them to raise questions or seek clarifications pertaining to the operation and financial performance of the Group. The external auditors are also present to provide their professional and independent clarification on issues and concerns raised by shareholders. Status of all resolutions proposed at the AGM or EGM are submitted to Bursa Securities at the end of the meeting day. ACCOUNTABILITY AND AUDIT Financial Reporting The Board is responsible for ensuring that the quarterly and annual financial statements of the Group present a fair and balanced view and assessment of the Group s financial position, performance and prospects. Such financial statements are announced quarterly whilst the final annual audited financial statements are submitted to Bursa Securities after they are approved by the Board and will be received by shareholders at the Company s Annual General Meeting. The Audit Committee assists the Board in reviewing and scrutinizing the information for disclosure to ensure accuracy and completeness with particular emphasis on the application of accounting standards and policies and the making of reasonable and prudent estimates and assumptions. ANNUAL REPORT 19

21 statement on corporate governance ACCOUNTABILITY AND AUDIT (CONT D) Statement of Directors Responsibility in relation to the Financial Statements The Board is required by the Companies Act, 1965 ( the Act ) to prepare the financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and the Group as at the end of each financial year and of their results for the financial year. As required by the Act and the Listing Requirements of Bursa Securities, the financial statements have been prepared in accordance with the approved accounting standards in Malaysia and comply with the provisions of the Act. In preparing the financial statements for the financial year ended 31 January, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The Directors have responsibility for ensuring that the Company and the Group maintain accounting records, which disclose, with reasonable accuracy, the financial position of the Company and the Group and which enable them to ensure that the financial statements comply with the Act. The Directors have general responsibilities for taking such steps as are reasonably available to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. Internal Control The Board acknowledges that it is responsible for maintaining a system of internal controls which provides reasonable assessment of effective and efficient operations, internal financial controls, and compliance with laws and regulations as well as with internal procedures and guidelines. The internal control system also aims at identifying and managing any risks that the Company may encounter in pursuit of its business objectives. The Group s Statement on Internal Control is set out on page 24 of this Annual Report. Relationship with the External Auditors The external auditors, Messrs Deloitte KassimChan has continued to report to members of the Company on its findings which are included as part of the Company s statutory financial statements. The Company has thus established a transparent arrangement with the auditors to meet the auditors professional requirements. From time to time, the auditors will highlight to the Audit Committee and Board of Directors matters that require the Board s attention through the issuance of management letters. CORPORATE SOCIAL RESPONSIBILITY (CSR) As a responsible corporate citizen, the Group will continuously ensure that all pertinent activities relating to corporate social responsibility are considered and supported in its operations for the well being of stakeholders, community and environment. Our employees are the heart of the Group and the key to the competitive success in the marketplace. As a policy, we do not discriminate against any race, gender, age and minorities. The employees are also provided adequate medical benefits as well as hospitalisation and personal accident insurance coverage. We believe that employees involvement is vital to the success of the Group. As part of efforts towards the preservation of environment, the Group would ensure there are sufficient measures at all construction sites to prevent any adverse impact on the environment. Apart from the above, Talam, on 27 Feb had donated 3.34 acres of land at Taman Puncak Jalil for the construction of the SMJK Confucian to be relocated from Jalan Hang Jebat. This Statement is made in accordance with the resolution approved by the Board of Directors on 27 May. 20 TALAM CORPORATION BERHAD (1120-H)