TRC SYNERGY BERHAD ( D)

Transcription

1 TRC SYNERGY BERHAD ( D) annual report 2014

2 Our Vision To become a large and diversified conglomerate with core business in construction, property development, privatization of government projects and oil and gas.

3 Contents Chairman s Statement 02 Corporate Information 05 Profile of Directors 06 Corporate Structure 08 Statement on Corporate Governance 09 Statement on Risk Management and Internal Control 18 Audit Committee Report 21 Financial Statements 25 List of Properties 122 Analysis of Shareholdings 123 Analysis of Warrant A Holdings 126 Analysis of Warrant B Holdings 128 Notice of Sixteenth Annual General Meeting 130 Statement Accompanying Notice of Annual General Meeting 134 Proxy Form

4 Chairman s Statement General (R) Tan Sri Dato Seri Mohd Shahrom Bin Dato Hj Nordin Chairman Dear Shareholders, On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statement of TRC Synergy Berhad for the financial year ended. 02

5 Chairman s Statement (cont d) REVENUE (RM 000) PROFIT/(LOSS) BEFORE TAXATION (RM 000) SHAREHOLDERS S FUND (RM 000) NET TANGIBLE ASSETS PER SHARE (RM) 376, , ,102 23,040 16,558 22,844 13,848 11, , , , , , , , Overview NOMINAL VALUE (RM) year RM 1.00 year RM 0.50 The year under review continued to be challenging for the construction industry. Entering the year, we faced a number of headwinds that have adversely effected the operating conditions and also cost structure of some of our projects. However, despite the setback we remain confident of the long term growth and prospect of the construction industry and are optimistic that with our core competency and dedicated workforce, we would be able to wheather the storms and emerge stronger in 2015 and beyond. Group Performance The year 2014 has been a busy year for the Group. The Group registered a turnover of RM814.9 million for the year under review, representing a marginal decrease of 0.7% over the turnover of RM820.7 million in the preceding year. The profit before tax however saw a higher reduction of 18.5% from RM13.8 million in 2013 to RM11.3 million in This is largely due to the tougher operating conditions. Construction remains the major revenue contributor for the period under review. This division managed to secure RM665.6 million worth of new projects in Going forward for 2015, we expect the construction industry to remain challenging and competitive. We are however, confident of better years ahead as we have a strong balance of skills, knowledgeable and experience staff which is critical to the success of our business. The performance of the property development division was satisfactory. The project on Lot 196, Taman Ukay Tropika, Ulu Klang, Selangor comprising of 83 units of 3 storey houses and a club house was successfully delivered to the purchasers 6 months ahead of schedule, in August Meanwhile, the development Impian Senibong (Phase 2) in Permas Jaya, Johor, comprising of 243 units of apartments is progressing well and is expected to be completed by the third quarter of As for the Transit Oriented Development (TOD) at Station 2 LRT Ara Damansara, a joint land development with Syarikat Prasarana Malaysia Bhd (SPMB), the initial related infrastructure work on the 2 levels of basement Park and Ride facility has commenced, the work to secure development approvals for the proposed mixed development comprising, hotels, service apartment, offices and retail outlets shall commence once the land is registered under SPMB. The development is expected to generate a GDV of RM687 million. 03

6 Chairman s Statement (cont d) Going forward, the division is expected to commence preliminary works for its 27 acres land in Bandar Seri Alam, Johor soon. Besides that, the division will also be looking for new land banks and JV partners to jointly develop lands. The division will also register its interest in participating in government property development initiatives like Perumahan Rakyat 1 Malaysia, PPAIM etc. In the near future we expected this division to contribute significantly to the Group s earnings. Economic Outlook In accordance with the economics report , the construction sector is projected to increase 10.7% in 2015 (2014 : 12.7%) supported by commencement of some O & G related projects such as RAPID as well as ongoing transportation related infrastructure projects. Meanwhile, the residential subsector is expected to remain strong in view of the increased demand for housing, particularly from the middle income group. The non-residential subsector is also expected to remain stable supported by encouraging demand for industrial and commercial buildings. Major commercial building projects such as the 118-storey Menara Warisan and Bukit Bintang City Centre are expected to contribute to the growth of the sector. Dividend The Board of Directors have recommended the payment of a first and final single tier dividend of 0.18 sen per share, for the year ended, amounting to RM864, Acknowledgement and Appreciation On behalf of the Board, I would like to record our deepest appreciation to the Board of Directors particularly to our respected Group Managing Director for his vast experience and wisdom that proved fundamental in steering the Company s towards success. We are also fortunate to be supported by a large pool of dedicated senior management and employees of the Group. Their continuous support and commitment are really commendable. The Board also would like to thank our valued shareholders, business associates, clients and bankers for their support, trust and confidence in the Group. Thank you. General (R) Tan Sri Dato Seri Mohd Shahrom Bin Dato Hj Nordin Chairman 30 April

7 Corporate Information Board of Directors General (R) Tan Sri Dato Seri Mohd Shahrom Bin Dato Hj Nordin Chairman (Senior Independent, Non-Executive Director) Dato Sri Sufri bin Hj Mohd Zin (Managing Director) Noor Zilan bin Mohamed Noor (Independent Non-Executive Director) Dato Abdul Aziz bin Mohamad (Executive Director) Abdul Rahman bin Ali (Independent Non-Executive Director) Company Secretary Abdul Aziz bin Mohamed (LS ) Registered Office / Principal Place of Business TRC Business Centre Jalan Andaman Utama Ampang, Selangor Tel No. : Fax No. : info@trc.com.my Branch Office Lot 3626, Block 16, KCLD Taman Timberland, Lorong Rock Kuching, Sarawak Tel No. : Fax No. : Website Auditors AljeffriDean (AF-1366) , 5th Floor, Menara KLH No. 2, Jalan Kasipillay Kuala Lumpur Share Registrar Mega Corporate Services Sdn Bhd Level 15-2, Sheraton Imperial Court Jalan Sultan Ismail, Kuala Lumpur Tel : Fax : & Principal Bankers Hong Leong Bank Berhad Alliance Bank Malaysia Berhad HSBC Bank Malaysia Berhad Affin Bank Berhad AmBank (M) Berhad Malayan Banking Berhad United Overseas Bank Berhad RHB Bank Berhad CIMB Bank Berhad Standard Chartered Bank Malaysia Berhad Solicitors Messrs Noorzilan & Partners Messrs C.C. Choo, Hazila & Teong Messrs Zain Megat & Murad Messrs Adam Bachek & Associates Stock Exchange Listing Bursa Malaysia Securities Berhad Main Market (Construction) Stock No.s : WA 5054 WB 05

8 Profile of Directors General (R) Tan Sri Dato Seri Mohd Shahrom Bin Dato Hj Nordin Chairman, Senior Independent, Non-Executive Director, 67 years of age Malaysian General (R) Tan Sri Dato Seri Mohd Shahrom Bin Dato Hj Nordin was appointed as a Director on 25 March He then was re-designated as Chairman of the Company on 1 st April After his secondary education, he was selected for Officer Cadet training at the Royal Military College, Sungai Besi in 1966 and was commissioned as a Second Lieutenant into the Royal Malay Regiment in General (R) Tan Sri Mohd Shahrom has served in various appointments at command, staff, training and the diplomatic services levels and he was the Chief of the Malaysia Army from 1st January 2003 to 15 September Prior to that appointment he was the Chief of Staff at the Armed Forces Headquarters. Currently he is the Executive Director (Defence and Business Development) of the National Aerospace & Defence Industries Sdn Bhd (NADI). He is also a Director of SME Ordnance Sdn Bhd (SMEO) a subsidiary company of the NADI Group of Companies. General (R) Tan Sri Dato Seri Mohd Shahrom is also the Chairman to the Audit Committee and the Senior Independent Non Executive Director of the Company. He is also the Chairman of Yayasan TRC. During the financial year ended he attended all four Board of Directors Meetings held. Note:- Save as disclosed, 1. none of the Directors have:- i. any family relationship with any director and/or substantial shareholders of the Company; ii. any conflict of interest with the Company; and iii. any conviction for offences (other than traffic offences) within the past ten (10) years. 2. none of the Directors holds directorship in other public companies. Dato Sri Sufri Bin Hj Mohd Zin Managing Director, 59 years of age Malaysian Dato Sri Sufri Bin Hj Mohd Zin is the founder of TRC Group. He was appointed as the Director of TRC Synergy Berhad ( TRC or the Company ) on 29 March He was the Executive Chairman of the Company on 1 st April 2015 before being re-designated as Managing Director. He is also the Managing Director of the Group s subsidiary Companies. Dato Sri Sufri graduated from MARA Institute of Technology in 1982, with a Diploma in Business Studies. He began his career as a banker with Bank Bumiputera Malaysia Berhad in He later pursued a Bachelor Degree in Jurisprudence from Universiti Malaya and he also holds an MBA, which he obtained in In August 2009, Dato Sri Sufri was selected as one of the winners of the Outstanding Entrepreneurship Award organized by Enterprise Asia. Dato Sri Sufri achieved a personal milestone when he was honored as the CEO of the Year by the Construction Industry Development Board (CIDB) in He is also a member of the Jawatankuasa Pemandu established by the Works Minister in the implementation of the MOU between the Government of Malaysia and the Government of India on co-operation relating to the provision of Technical Assistance Services on Highway Management and Development. Dato Sri is the Vice President and Council Member of Master Builder Association Malaysia ( ), a member of the Road Engineering Association of Asia and Australia (REAAA) and the Corporate Advisor to Persatuan Kontraktor-Kontraktor Melayu Malaysia (Cawangan Wilayah Persekutuan). He is also a Board Member to Tun Hussein Onn University, Malaysia and a Trustee of Yayasan TRC. During the Financial year ended he attended three out of four Board of Directors Meetings. 06

9 Profile of Directors (cont d) Dato Abdul Aziz Bin Mohamad Executive Director, 56 years of age Malaysian Noor Zilan Bin Mohamed Noor Independent, Non Executive Director, 55 years of age Malaysian Dato Abdul Aziz Bin Mohamad was appointed as an Executive Director of the Company on 29 March He joined TRC Group s, Trans Resources Corporation Sdn Bhd as a Senior Contract Executive in 1994 and now holds the post of Chief Executive Officer (CEO) of that subsidiary company. He had his early education in the Malay College Kuala Kangsar (MCKK) and graduated from Trent Polytechnic in Nottingham, England in He is a Quantity Surveyor by profession and a member of the Royal Institution of Surveyors, Malaysia. He started his career as an Assistant Quantity Surveyor in England with Rider Hunt and Partners in 1982 and later joined Jabatan Kerja Raya (JKR) in 1983 as a Quantity Surveyor until subsequently joining TRC. Dato Abdul Aziz is a Board Member to Universiti Malaysia Terengganu and a Trustee of Yayasan TRC. YBhg Dato Abdul Aziz attended all four Board of Directors Meetings held during the financial year ended 31 December He does not have any personal interest in any business arrangement involving the Company. Noor Zilan Bin Mohamed Noor was appointed as a Director of the Company on 13 May He graduated from ITM in 1983 with a Diploma in Law. He then joined United Malayan Banking Corporation as a Trainee Executive Officer before pursuing for further studies in the United Kingdom in 1984 and graduated from City of London Polytechnics with LLB (Hons) majoring in Business Law in Subsequently, he went on to read Law at Lincoln s Inn and was called to the English Bar in 1988 and upon returning to Malaysia he was then called and admitted to the Malaysian Bar in 1989 as an Advocate & Solicitor. He then worked as a Legal Assistant before starting his own law firm in 1991 and is now a Senior Practitioner with an established law firm in Kuala Lumpur specializing in the area of Corporate Law, Banking, Building and Construction Law apart from civil & criminal litigation. Noor Zilan is a member of the Audit Committee and the Chairman to the Nomination Committee and Remuneration Committee. He attended all four Board of Directors Meetings held during the financial year ended. Abdul Rahman Bin Ali Independent, Non Executive Director, 58 years of age Malaysian Abdul Rahman Bin Ali was appointed as a Director of the Company on 13 May He graduated from University of Malaya in 1982 with a Degree in Accounting. He is currently a Chartered Accountant of the Malaysian Institute of Accountants. Upon graduated, he started his training with financial institution for a number of years before joining public accountancy practice. In 1994, he set up his own accounting firm by the name A. Rahman & Associates and later become a partner of AKN Arif in Abdul Rahman is a member of the Audit Committee, Nomination Committee and Remuneration Committee. He attended all four Board of Directors Meetings held during the financial year ended. 07

10 Corporate Structure 100% 100% 100% TRC International Pte Ltd (LL04510) Trans Resource s Corporation Sdn Bhd ( P) ADS PROJEK SDN BHD ( M) 100% 100% 100% 90% TRC (Sarawak) Sdn Bhd ( W) TRC Concrete Industries Sdn Bhd ( V) Liputan Sutera Sdn Bhd ( H) TRC (B) Sdn Bhd (RC/ ) 60% Petrobru Build Sdn Bhd (RC/ ) 100% 100% TRC Infra Sdn Bhd ( P) TRC Land Sdn Bhd ( W) 100% 100% TRC Land (Cambodia) Limited (6234/09E) TRC Development Sdn Bhd ( U) 34% Delta Garden Limited (11524/08P) 100% TRC (Aust) Pty Ltd ( ) 100% 33.33% Swan Synergy Developments Pty Ltd (ACN ) Pretty Sally Holdings Pty Ltd ( ) 100% TRC Energy Sdn Bhd ( K) 26% PetroBru (B) Sdn Bhd (AGO / RC / 6613 / 06) 08

11 Statement on Corporate Governance The Board of Directors of TRC Synergy Berhad ( the Board ) recognizes the importance of upholding and maintaining a high standard of corporate governance and committed to ensure the same are practiced throughout the Company and its subsidiaries ( TRC Group or the Group ). This has been accepted by the Board as the Group s key responsibilities in order to protect and enhance long term shareholder value and the financial performance of TRC Group. The Board will continuously evaluate the Group s corporate governance practices and procedures, and where appropriate will adopt and implement all the Principles as enshrined in the Malaysian Code on Corporate Governance 2012 ( The Code ). The Board is pleased to present the report on how the Group has applied the Principles and the extent to which it has complied with the recommendations set out in the Code. DIRECTORS The Board of Directors ( the Board ) The Company is led and governed by the Board of Directors headed by the Managing Director who has detailed knowledge and vast experience in the construction industry. The rest of the Board members possess a wide range of skill and experiences ranging from construction, finance, legal and general management discipline suitable for managing the Group businesses. A brief profile of each Director is presented in this Annual Report on pages 6 and 7. The Board has overall responsibility in the stewardship of the Group s direction and its performance inclusive of corporate governance, strategic planning and maintaining effective control over financial and operational matters. The Board is also primarily responsible for determining the Company s strategic objective and policies and to monitor the progress toward achieving the objectives and policies. To ensure the effectiveness in discharging its duties and responsibilities, the Board has also delegated certain responsibilities to the Management and the committees appointed by the Board. The delegation of authority includes responsibility for developing business plans, budgets and company strategies; identifying and managing operational risks and formulating strategies for managing these risks and managing the company's financial and operational mechanisms. In this regard the Board is guided by a Board Charter which outline the roles and responsibilities of Directors and other functions as recommended by the Code. The Board Charter shall be periodically reviewed in line with the needs of the Company and any new regulations and recommendations that may have impact on the discharge of the Board responsibilities. The Charter which was endorsed in May 2013 is available at the Company s website for public viewing. The Board has also recognized its role in establishing a sound corporate culture amongst the Board. To facilitate the observation and application of the desired culture, the Board had formalized a Code of Conduct in May 2013 which engenders ethical conduct that permeates throughout the Group. Board Composition and Balance The Board currently consists of five (5) members comprising two (2) Executive Directors and three (3) Independent Non-Executive Directors. The Company fulfills the prescribed requirement of having at least one-third (1/3) of the Board Members as Independent Non-Executive Directors as stated in Paragraph of the Listing Requirements of Bursa Malaysia. The Independent Non-Executive Directors provide broad, unbiased and balanced assessment on proposals initiated by the Executive Directors and the senior management of the Group. They also contribute by the exercise of independent judgment and objective participation in the proceeding and decision making process of the Board. Their differing backgrounds collectively bring with them extensive experience augur well with this process. In compliance with the Code, the Company had in 1 st April 2015 re-designate General (R) Tan Sri Dato Seri Mohd Shahrom Bin Dato Hj Nordin, one of the Independent Non-Executive Directors as Chairman of the Company and therefore the role of the Chairman and the CEO are separated. 09

12 Statement on Corporate Governance (cont d) DIRECTORS (cont d) Board Composition and Balance (cont d) The Board is fully aware and appreciate the Code s recommendation to limit the tenure of independent directors to a cumulative term of nine (9) years and in the event the Board intends to retain those directors as independent directors, they must justify and seek shareholders approval thereon. The Company does not have term limits for the independent directors as the Board believes that the independent judgment and ability to act in the best interest of the Company will not be compromised and impaired with their long tenure with the Company. Their understanding and adequate knowledge with the Group affairs coupled with their personal continuous training augur well with the effective direction and planning intended by the Company. Further to the above, the Board has assessed the independence of General (R) Tan Sri Dato Seri Mohd Shahrom bin Dato Hj Nordin, Noor Zilan bin Mohamed Noor and Abdul Rahman bin Ali and recommended them to continue to act as Independent Non-Executive Directors of the Company based on the following justifications:- i. They are independent of management and free from any business or other kind of relationship which could interfere with the exercise of independent judgment or the ability to act in the best interest of the Company; ii. iii. iv. They do not have direct or indirect interest in the Company and its subsidiaries; They are fully complied with the criteria as independent directors as prescribed under Main Market Listing Requirements (MMLR); and They have exercise due care during their tenure as Independent Directors of the Company and carried out their duties in the interest of the Company and shareholders. Besides, the Company will also seek its shareholders approval at its Eighteenth (18th) AGM to retain them as independent directors beyond the nine years tenure. As recommended by the Nominating Committee, the Board of the view that the present members of the Board are considered sufficient in addressing the issues affecting the Group. The Board however will continuously evaluate its size and may increase it to a suitable number for the effective discharge of its roles and responsibilities. Board Meeting Board meetings are scheduled in advance and the Board agreed to meet at least four (4) times in a year and additional meetings are convened as and when necessary. During the financial year ended, the Board met four (4) times and the attendance record for each Director is as follows:- Name No. of Meeting Attended % of Attendance General (R) Tan Sri Dato Seri Mohd Shahrom bin Dato Hj Nordin 4/4 100 Dato Sri Sufri bin Hj Mohd Zin 3/4 75 Dato Abdul Aziz bin Mohamad 4/4 100 Noor Zilan Bin Mohamed Noor 4/4 100 Abdul Rahman bin Ali 4/4 100 In the meetings, the Board deliberated and considered matters relating to the financial performance, key business and operational issues and business plans of the Group. In the intervals between Board meetings, any matters requiring urgent Board decisions will be sought via circular resolutions which are supported with all the relevant information and explanations for an informed decision to be made. All Directors have complied with the minimum 50% attendance requirement in respect of Board meeting as stipulated by MMLR. 10

13 Statement on Corporate Governance (cont d) DIRECTORS (cont d) Board Composition and Balance (cont d) Prior to the Board meetings, the agenda for each meeting together with detailed Board papers as well as minutes of previous meetings are circulated to all Board members for their prior review in advance of the meeting dates. The Directors will have sufficient time to deliberate on the issues to be raised at the Board Meetings. The meetings are chaired by the Chairman while the Executive Directors lead the presentation on the Board papers and reports. Senior management staffs as well as External and Internal Auditors and independent advisors may be invited to attend the meetings and brief the Board members on relevant agenda that are tabled to the Board to enable them to make fair and well-informed decisions. The Company Secretary attends all Board meetings and the meetings of the committees appointed by the Board. He will advise the Board and the committee members on procedures of the meeting and other relevant rules and regulations. All proceedings of the Board are minuted and signed by the Chairman of the meetings in accordance with the provision of Section 156 of the Companies Act Besides attending Board meetings, the Directors also would have special sessions with the Group s operation unit whereby the necessary briefing and updates on issues and progress of the projects undertaken by the Group will be discussed and disseminated. Supply of Information to the Board. In performing their duties, all Directors have unrestricted and timely access to all information pertaining the Group s business and affairs whether as a full Board or in their individual capacity in carrying out their duties and responsibilities effectively. The Chairman undertakes primary responsibility for organizing information to be distributed to the Board. They also have direct access to the advice and services of the Company Secretary, senior management, internal and external auditors and other independent professional at all times and at the Company s expense. On quarterly basis, the Company Secretary notify the Directors and Principal Officers of the Company of the close period for trading the Company s shares pursuant to Chapter 14 of the MMLR. The Company Secretary also circulate relevant guidelines and updates on statutory and regulatory requirements from time to time to the Board and if necessary table it to the Board meetings. Appointment and Re-election of the Board The Company has a formal and transparent procedure for the appointment of new Directors and re-election of Directors. These aspects are spelt out clearly in the Company s Articles of Association. Besides, The Nomination Committee reviews and recommends any proposed appointments before the same are approved by the Board. All the newly appointed Directors are subject to election by shareholders at the Annual General Meeting subsequent to their appointment. As for the re-election of Directors, the Articles of Association of the Company provides at least one-third (1/3) of the Directors are required to retire by rotation at each financial year and are eligible to offer themselves for re-election at the Annual General Meeting. All Directors shall retire from office once at least in each three (3) years. At the last Annual General Meeting held on 26 June 2014, Noor Zilan bin Mohamed Noor and Abdul Rahman bin Ali retired and were elected to the Board. At this AGM, Dato Sri Sufri bin Hj Mohd Zin shall retire from office and be eligible for reelection pursuant to Article 84 of the Company s Article of Association. 11

14 Statement on Corporate Governance (cont d) DIRECTORS (cont d) Directors Training All Directors have successfully attended the Mandatory Accreditation Programme prescribed by Bursa Malaysia. The Board believes that continuous training is essential to the Board members to ensure that they are updated with appropriate skills and knowledge to enable them to discharge their duties effectively. Therefore, they are encouraged to attend training programmes to supplement their knowledge in various fields relevant to them. During the financial year ended, the Directors have attended among others the following training programmes and seminars:- Directors Training Programme General (R) Tan Sri Dato Seri Mohd Shahrom i) Round Table on Financial Reporting by Securities Commission Bin Dato Hj Nordin ii) Seminar on Goods and Services Tax (GST) Dato Sri Sufri Bin Hj Mohd Zin i) 6th Malaysian Construction Summit (CIDB) ii) International Federation of Asian and Western Pacific Contractors Association Convention iii) Seminar on Goods and Services Tax (GST) Dato Abdul Aziz Bin Mohamad i) Advocacy Session on Corporate Disclosure for Directors (Bursa Malaysia) ii) Seminar on Goods and Services Tax (GST) Noor Zilan Bin Mohamed Noor Seminar on Goods and Services Tax (GST) Abdul Rahman Bin Ali i) Persidangan Cukai Malaysia 2014 ii) MIA International Accountant Conference 2014 iii) Public Practitioners Forum 2014 iv) Kursus Khas Cukai Barang dan Perkhidmatan (GST) untuk ejen cukai v) Seminar on Goods and Services Tax (GST) Apart from that, frequent visit to the operational projects sites and occasional trips to meet overseas suppliers and consultants and active participation on the relevant association have equipped the Executive Directors with the latest information and technologies in the industry. Board Committees The Board has set up the following four (4) committees as recommended by the Code to assist the Board in the execution of its roles and functions effectivelly:- i) Audit Committee The details of the Audit Committee are mentioned in the Audit Committee Report on page 21 of this Annual Report. ii) Nominating Committee The Company has established its Nominating Committee in May 2002 which currently comprises of two (2) members all of whom are Independent Non-Executive Directors. The members of the Nominating Committee are as follows:- a) Noor Zilan Bin Mohamed Noor b) Abdul Rahman Bin Ali During the year 2014, the Committee has convened one (1) meeting to review the performance of the Board for the year

15 Statement on Corporate Governance (cont d) DIRECTORS (cont d) Board Committees (cont d) ii) Nominating Committee (cont d) The Nominating Committee which has been appointed by the Board, is primarily empowered by its terms of reference in carrying out the function amongst others, to review annually the required mixed of skills, experience and other qualities of the Directors and to recommend new appointments, if any, to the Board. The Committee is also set for assessing the effectiveness and continually seek ways to upgrade the effectiveness of the Board as a whole, the committees of the Board and the contribution of each existing individual Director. iii) Remuneration Committee The Company has also established the Remuneration Committee in May 2002 which currently comprises of two (2) members, all of whom are Independent Non-Executive Directors. The members of the Remuneration Committee are as follows:- a) Noor Zilan Bin Mohamed Noor b) Abdul Rahman Bin Ali The Committee is primarily responsible in the development, review and recommendation of fair remuneration package for Executive Directors in all its forms, drawing from outside advice as necessary. The duties of the Remuneration Committee are among others, to review the remuneration package of each individual Executive Directors in order to attract and retain competent executives who can add value to the Company. The determination of remuneration packages of non-executive directors, should be a matter of the Board. The individuals concerned should abstain from discussion of their own remuneration. iv) Employees and Directors Share Option Scheme (ESOS) Committee The Company has established ESOS Committee pursuant to ESOS By-Laws approved by the Shareholders at the Extraordinary General Meeting in April The Committee which comprises of the following members shall administer the ESOS Scheme in such manner as it shall in its discretion deem fit and within such powers and duties as are conferred upon it by the Board pursuant to the provisions of Bye-Laws:- a) Dato Sri Sufri bin Hj Mohd Zin b) Dato Abdul Aziz bin Mohamad c) Dato Richard Khoo Teng San d) Mr Yeoh Sook Keng The Employees and Directors Share Option Scheme (ESOS) Committee was dissolved in 20 June 2014 upon the expiry of the Scheme. DIRECTORS REMUNERATION The Board acknowledges that the level or remuneration of the Directors and senior management should reflect the level of responsibility and contributions toward the successful and efficient running of the Group s activities. To assist the Board in the discharge of its duties, the Board has established a Remuneration Committee. The affairs of the Committee inclusive of its duties and responsibilities are spelt out on page 13 if this Annual Report. 13

16 Statement on Corporate Governance (cont d) DIRECTORS REMUNERATION (cont d) Disclosure The aggregate remuneration of the Directors received and receivable from the Company and its subsidiaries during the financial year ended are as follows:- Category Fees (RM) Salaries (RM) EPF & SOCSO (RM) Bonus Executive Directors - 2,139, , ,000 Non-Executive Director 84, Total 84,000 2,139, , ,000 The remuneration paid to the Directors, analysed into the following bands, is as follows:- Range of remuneration Number of Executive Directors Number of Non-Executive Directors Less than RM 50,000-3 RM50,001 RM1,050,000* - - RM1,050,001 RM1,100, RM1,150,001 - RM1,850,000* - - RM1,850,001 RM1,900, * No Directors within this range of remuneration. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS COMMUNICATION Effective Communication The Board is fully aware that the key element of good corporate governance is the effective communication and proper dissemination of all important issues and major development concerning the Company to all shareholders and investors. Effective communication channels with the Company s shareholders, investors and the public are maintained through the dissemination of press releases, timely announcements and disclosures made to Bursa Malaysia. During the financial year ended, the Company organized a number of meetings and briefings with financial analysts to establish better understanding of the Company s objective and performance and to convey other information that may affect shareholders interest. The Company also has a cordial relationship with reporters who have been playing a very effective role in conveying the Group s information to the public, shareholders and investors. Press releases are also occasionally organized to clarify on certain matters related to the Company and its operating unit. The Board has also appointed General (R) Tan Sri Dato Seri Mohd Shahrom Bin Dato Hj Nordin as the Senior Independent Non-Executive Director whom investors and shareholders may direct their concern on any matters pertaining to the Group activities. Besides the above, shareholders, investors and members of the public may also obtain updated information on the Group by accessing to the Company s website at General Meeting The Company s Annual general Meeting ( AGM ) remains the primary channel of communication with the Company s shareholders in particular private investors. At each AGM and Extraordinary General Meeting shareholders are encouraged and given sufficient time and opportunity to participate in the proceedings, to raise questions and participate in discussions pertaining the operation and financial aspects of the Group. They may seek clarifications on the Group s performance, major development as well as on the resolutions being proposed. All Board members, senior management as well as the Company s external auditors are available to respond to shareholders relevant questions raised at the meeting. 14

17 Statement on Corporate Governance (cont d) RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS COMMUNICATION (cont d) Annual Report A key channel of communication used to provide the Company s shareholders and investors with information which include its business, financials and other key activities is the Annual Report. The Company s Annual Report, the content of which are prescribed by the MMLR surely will provide its shareholders and investors with the overview of the Company s performance and will be the basis of further communication and dialogue between the Company and the shareholders during the AGM. ACCOUNTABILITY AND AUDIT Financial Reporting In presenting the Company s financial statements and quarterly results to shareholders and other interested parties, the Board aims to present a balanced and understandable assessment of the Group s financial position and prospects. The Board is responsible for ensuring that the financial statements give a true and fair view of the financial position of the Group and of the Company as at the accounting period. In preparing the financial statements, the Directors have ensured that financial statements have been drawn up in accordance with Financial Reporting Standard and the Companies Act The Audit Committee assists the Board by reviewing the Group s annual financial statements and quarterly results to ensure completeness, accuracy and adequacy prior to release to Bursa Malaysia and Securities Commission. The Committee also reviews the suitability and independence of the external auditors and recommends their re-appointment to the Board. In this regard, the Board is guided by the policies and procedures for the selection and appointment of external auditors which was approved by the Board in May The Statement explaining the Directors responsibilities for preparing the annual audited financial statements pursuant to paragraph 15.27(a) of the Listing Requirements is set out on page 17 of the Annual Report. Internal Control The Board acknowledges and placed strong emphasis in maintaining a sound system of internal control which provides reasonable assurance of effective and efficient operations and compliance with regulations as well as with internal procedures and guidelines. Details of the Group s internal control system is presented in the Statement on Internal Control and Audit Committee Report set out on pages 18 to 20 and pages 21 to 24 respectively. Relationship with External Auditors Through the Audit Committee, the Board has established a transparent and appropriate relationship with the Group s internal and external auditors in seeking their advice and towards ensuring compliance with the applicable Approved Accounting Standards. The external auditors are invited to attend the Audit Committee meeting and to the Board meeting on a need basis as and when deemed appropriate. Corporate Social Responsibility ( CSR ) The Board recognizes the importance of the CSR the framework of which has been launched by the Bursa Malaysia in The move by Bursa Malaysia is seems to be in line with the decent intention of the Government to inculcate the culture of corporate social responsibility among the public listed companies. Therefore, the Board has agreed to beef up the Company s social activities with an intention to share the company s profitability with the public in forms of contribution on social responsibility activities. 15

18 Statement on Corporate Governance (cont d) ACCOUNTABILITY AND AUDIT (cont d) Corporate Social Responsibility ( CSR ) (cont d) During the financial year ended, the Group continued to support worthy causes which involve the society, welfare and charitable organization as well the Group s staffs by donating various amounts to various parties and bodies within the country. These include a number of contributions to Master Builder Association Malaysia (MBAM) for its activities such as MBAM Drive Flood Donation, Surau Renovation, Annual Golf Tournament and its 60th Anniversary Dinner. The Company also contributed to Tentera Laut Diraja Malaysia (TLDM) for activities in conjunction with TLDM 80th Anniversary and also contributed to repair works at SMK(P) Methodist Jalan Cenderawasih Kuala Lumpur. As a continuous effort to strive for better, convenient and conducive working environment for the staffs, the Company provided free daily meals for its headquarter staffs. This practice has been ongoing since September Recently the Company established a Center of Excellence at its Head Quarters which will provide a conducive well-equipped in-house training center for all staffs. During the year under review, the Group had also organized Safety Day programme at Kelana Jaya LRT Line Extension Project site. Among the objectives of the programme was to enhance safety awareness and to promote safety culture among the workers. In addition to that, the Company also offered opportunity to undergraduate and diploma students of various public and private university and colleges especially those who are from construction related courses to undergo practical training at the Group headquarters and site offices with the prospect of employment with the Group upon completion of their studies. During 2014, 65 practical trainees had been attached to the Group and RM74,747 had been paid to them in form of allowances. Besides all the above, Yayasan TRC which was established by the Company in 2011 undertook the following activities pursuant to its rules of establishment:- i) Staff education aid to two eligible TRC staffs in pursuing their out campus studies in Master in Business Administration and Bachelor Degree in Human Resource Management. ii) Excellent Education Achievement Awards were given to five students who excel with straight A in their Sijil Pelajaran Malaysia, Peniliaian Menengah Rendah and Ujian Peniliaian Sekolah Rendah. iii) Financial assistance to TRC staff who suffer for health problem and to the heirs of a deceased staff. ADDITIONAL COMPLIANCE INFORMATION In compliance with the Listing Requirements, the following information is provided:- Utilization of proceeds For the financial year ended, there was no proceed raised from any exercise. Share buybacks The Company has not undertaken any share buyback exercise during the financial year ended. Option, Warrants or Convertible Securities. During the financial year ended, the Company issued 3,421,620 ordinary shares of RM0.50 each pursuant to the exercise of options under the Employees Share Option Scheme which was implemented in June The Scheme was expired on 20 June

19 Statement on Corporate Governance (cont d) ADDITIONAL COMPLIANCE INFORMATION (cont d) American Depository Receipt (ADR) / Global Depository Receipt (GDR). The Company has not sponsored any ADR or GDR Programme. Sanctions and / or penalties There were no sanction and/or penalty imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year ended. Non-Audit Fees The non-audit fees paid to external auditors amounting to RM7, for the financial year ended. Variation of Results There was no material variation between the audited results for the financial year ended with the unaudited results announced. Profit Guarantee There was no profit guarantee given by the Company during the financial year ended. Material Contracts There was no material contracts between the Company and its subsidiaries involving Directors and major shareholders interests during the financial year ended. Recurrent Related Party Transaction The Company did not enter into any recurrent related party transaction which requires the shareholders mandate during the financial year ended. STATEMENT OF DIRECTORS RESPONSIBILITY IN RELATION TO THE FINANCIAL STATEMENTS The Board is responsible to ensure that the financial statements are prepared in accordance with the provision of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to ensure a true and fair view of the state of affairs of the Group and the Company as at the end of each financial year and of their results and their cash flows for that financial year then ended. The Board is also responsible to maintain accounting records that disclose with reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Companies Act, The Directors have general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities. The Directors are satisfied that in preparing the financial statements of the Group for the financial year ended 31 December 2014, the Group has adopted appropriate accounting policies and applied them prudently and consistently. They are also satisfied that reasonable and prudent judgments and estimates were made and all applicable Approved Accounting Standards in Malaysia have been followed accordingly. 17

20 Statement on Risk Management and Internal Control The Board of Directors of the Company ( the Board ) is pleased to provide the following statement, which outline the nature and scope of risk management and system of internal control of the Company s Group ( the Group ) during the financial year BOARD RESPONSIBILITY The Board is responsible for maintaining the effectiveness and adequacy of the Group s system of Internal Control and risk management which involved reviewing and monitoring the adequacy and integrity of these systems. The internal control system involves the core business and its key management, including the Board, and is designed to safeguard the Group s business objectives and to manage the risk to which it is exposed. The system of Internal Control aims to :- i) safeguard shareholders interest and the assets of the Group; ii) ensure that proper documentation and accounting records are maintained; and iii) ensure that the documentation and financial information generated by the system is reliable. The Board is fully aware that this system, by its nature, can only provide reasonable and not absolute assurance against the risk of material misstatement of financial information and records or against financial losses due to fraud and error. These systems are designed to manage and mitigate, rather than eliminate, the risk of failure to achieve business objectives of the Group. The Board s responsibility for internal control does not cover those of the associated companies which are separately managed. RISK MANAGEMENT The Board views risk management as an important process in the pursuit of the group s corporate governance agenda. It is an ongoing process which involves different levels of management to identify, evaluate, monitor, manage and mitigate the risks that may affect the achievement of its business and corporate objectives. The Group has in place an on-going process for identifying, evaluating, monitoring and managing the significant risks affecting the achievement of its business objectives. This is an on-going process, subject to regular review by the Board, and accords with the Statement on Internal Control: Guidance for Directors of Public Listed Companies. The Group adopts a decentralised approach to risk management by encouraging participation of all employees in such a manner that the employees take ownership and responsibility for risks at their respective levels. The process of risk management and policy implementation is overseen by the senior management and report to the Board through the Audit Committee. The risk management framework is also embodied in the Quality Policy in accordance with ISO 9001 : 2008 practised by a wholly-owned subsidiary of the Company which is the major revenue contributor to the Group. INTERNAL CONTROL The key elements of the Group s internal control system are described below:- Internal Audit Function The Board is fully aware of the importance of the internal audit function and has established the Internal Audit Department for the Group in The main objective of this department is to review the key business processes and controls and to assists the Audit Committee in the discharge of its duties and responsibilities. Its role is to provide independent and objective reports on the organization, management, accounting and other records, accounting policies and internal controls to the Audit Committee and the Board. As required by the Listing Requirements, the Internal Auditors report directly to the Audit Committee and is independent of the activities its audits. They provide periodic reports to the Audit Committee on the outcome of the audit works conducted by them which would be reviewed and evaluated by the Audit Committee. 18

21 Statement on Risk Management and Internal Control (cont d) Internal Audit Function (cont d) Internal Audit Function (cont d) Internal audit works are carried out pursuant to the annual audit plan approved by the Audit Committee as well as the Board. The internal audit process provides an assessment of the adequacy, efficiency and effectiveness of the Group s existing internal control system and recommends improvements in control. The results of the audit reviews are reported periodically to the Audit Committee. In addition, the internal auditors also carried out follow-up visits to ensure recommendations for improving control systems are implemented. The presence of the internal audit function has provided the necessary level of assurance as to the effectiveness and credibility of the Group s system of internal control. Throughout the financial year ended, the Internal Audit Department has undertaken several independent audit assignments pursuant the approved audit plan. The details of the internal audit activities are reported on page 24 of this Annual report. None of the weaknesses or issues identified during the review for the financial year ended has resulted in non-compliance with any relevant policies or procedures, listing requirements and other recommended industry practices that require disclosure in the Company s Annual Report. Quality Policy The main revenue contributor of the Group has a clear and well documented Quality Policy in accordance with ISO 9001 : This policy and the related procedures are communicated to the respective staff members. Amongst the salient features of the Quality Policy are as follows:- i) Internal Quality Audits are conducted at planned intervals to determine whether the Quality Management System is effectively implemented and maintained and conforms to the established system requirements of Internal Standard, ISO 9001:2008. ii) On an annual basis, an overall Internal Quality Audit Plan is devised encompassing every departments and projects, taking into consideration the status and importance of relevant process, areas to be audited as well as results of previous audits. iii) Qualified Internal Quality Auditors will be assigned with audit works in accordance with the Internal Quality Audit Plan where the reports shall be examined and analyzed and reported to the management during Management Review Board Meeting. iv) As part of the Quality Management System, the management shall meet on monthly basis to discuss and deliberate all issues relating to the business of the Group. v) The Audit Committee is accessible to the relevant reports produced in relation to the Quality Management and if the need arise, the matter shall be further discussed in the Board Meeting. Line of Reporting Clear definition to the terms of reference including functions, authorities and responsibilities of the committees established by the Board for all aspects of the business have been established within the Group. This also includes detailed job description and specification provided to each employee of the Group which is further reiterated through a well-defined organizational structure. Dissemination of Information within the Group Regular and comprehensive information is provided to management covering financial performance and key business indicators, key operating statistics/ indicators, key business risks, legal, environmental and regulatory matters. Key matters affecting the Group are brought to the attention of the Audit Committee and are reported to the Board on a regular basis. Detail Budgeting Process A detailed budgeting process has been implemented where operating units prepare budgets for their project which will be deliberated in the management meeting. A monthly monitoring of results against budget, with major variances being explained and deliberated. If necessary, management action and follow up would be initiated. 19

22 Statement on Risk Management and Internal Control (cont d) Internal Audit Function (cont d) Audit Committee The Audit Committee, on behalf of the Board, regularly reviews and holds discussions with the management and external auditors on the matters relating to internal control and corporate governance of the Group. The Report on the Audit Committee set out on pages 21 to 24 of this Annual Report contains further details on the activities undertaken by the Audit Committee in Board The Board holds regular discussions with the Audit Committee, management and external auditors and reads their reports on matters relating to internal controls and deliberates on their recommendations for implementation. The Directors have taken the necessary steps, as are reasonably open to them, to ensure that adequate systems of internal controls are in place to adequately safeguard the assets of the Group through the prevention and detection of fraud and other irregularities and material misstatements in the financial statements. The Directors believe that the system of internal control is operating effectively and considered adequate to safeguard the Group business operations, and that the risks taken are at an acceptable level within the context of the business environment of the Group. The Board is not aware of significant weaknesses in the internal control system that will substantially affect the business operations which could result in material losses to the Group. Managing Director and Chief Financial Officer Assurance The Managing Director and the Chief Financial Officer of the Group had provided assurance to the Board that the Group s risk management and internal control system in all material aspects are operating adequately and effectively. Compliance Pursuant to paragraph of the Listing Requirements the external auditors have reviewed this statement for inclusion in the Annual Report. This statement is made in accordance with the Malaysian Code on Corporate Governance 2012, Paragraph 15.26(b) of the Main Market Listing Requirements and Practice Note 9 issued by Bursa Malaysia Securities Berhad. It is also made in accordance with the resolution given by the Board of Directors on 15 April

23 Audit Committee Report TRC SYNERGY BERHAD Annual Report 2014 The Board of Directors of TRC Synergy Berhad is pleased to present the report of the Audit Committee for the financial year ended. 1. Members of the Audit Committee The Audit Committee of the Company comprises of the following members. All of them are Independent Non Executive Directors. Chairman: General (R) Tan Sri Dato Seri Mohd Shahrom Bin Dato Hj Nordin (Senior Independent Non-Executive Director) Member: i) Noor Zilan bin Mohamed Noor (Independent Non-Executive Director) ii) Abdul Rahman Bin Ali (Independent Non-Executive Director) (Member of the Malaysian Institute of Accountants) Secretary : Abdul Aziz Bin Mohamed (Company Secretary) 2. Terms of Reference i. Composition The Board of Directors shall elect an Audit Committee from amongst themselves (pursuant to a resolution of the Board of Directors) and must be comprised of not less than three (3) members all of them must be Non- Executive Directors with a majority of them being Independent Directors. An alternate Director (if any) shall not be appointed as a member of the Audit Committee. The members of the Audit Committee shall elect a Chairman from amongst themselves. All members of the Audit Committee, including the Chairman, will hold office only so long as they serve as Directors of the Company. Should any member of the Audit Committee cease to be a Director of the Company, his membership in the Audit Committee would cease forthwith. If the members of the Audit Committee for any reason be reduced to below three (3), the Board of Directors shall within three (3) months of that event, appoint such number of the new members as may be required to make up the minimum number of three (3) members. All members of the Audit Committee are Independent Non-Executive Directors and one of them namely Abdul Rahman Ali is a member of the Malaysian Institute of Accountants (MIA). ii. Objectives The primary objectives of the Audit Committee are: a. To provide assistance to the Board in fulfilling its fiduciary responsibilities particularly relating to business ethics, policies and practices and financial management and control. b. To provide greater emphasis on the audit functions by increasing the objectivity and independence of external and internal auditors and providing a forum for discussion that is independent of the management. c. To maintain through regularly scheduled meetings a direct line of communication between the Board and the external auditors, internal auditors and financial management. 21

24 Audit Committee Report (cont d) 2. Terms of Reference (cont d) iii. Duties and responsibilities The duties and responsibilities of the Audit Committee shall be: a. To consider the appointment of the external auditors, audit fee and any questions of resignation or dismissal. b. To discuss with the external auditor before the audit commences the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved. c. To review the quarterly results and year end financial statements before submission to the board, focusing particularly on: i. any changes in accounting policies and practices ii. major judgmental areas iii. significant adjustments resulting from the audit iv. the going concern assumption v. compliance with accounting standards vi. compliance with the stock exchange and legal requirements d. To discuss problems and reservations arising from the interim and final audits, and any matters the auditor may wish to discuss (in the absence of management where necessary). e. To review the internal audit programme, consider the major findings of internal audit investigations and management s response, and ensure co-ordination between the internal and external auditors. f. To keep under review the effectiveness of the internal control systems and in particular review the external auditor s management letter and management s response. g. to review any related party transactions and conflict of interest situations that may arise within the Group including any transactions, procedure or course of conduct that raises questions of management integrity. h. To carry out such other functions as stipulated in the Bursa Securities Listing Requirements and other functions as may be agreed to by the Audit Committee and the Board of Directors. iv. Authority The Committee is authorised by the Board to investigate any activity within the terms of reference. It is authorized to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee. The Committee is empowered by the Board to retain persons having special competence as necessary to assist the Committee in fulfilling its responsibilities. v. Meeting and Minutes The Audit Committee shall not hold less than three (3) meetings a year and the quorum for each meeting shall be two (2) members. Minutes of each meeting shall be kept and distributed to each member of the Committee and also to the other members of the Board. The Committee Chairman shall report on each meeting to the Board. 22

25 Audit Committee Report (cont d) 2. Terms of Reference (cont d) v. Meeting and Minutes (cont d) The Company Secretary acted as the secretary for the Committee at all the meetings held. Other Directors and senior management of the Group were also present at the meeting upon invitation. The Committee also invited the representative of the External Auditors to attend the meeting whenever necessary so that private session independent of the management could be held. 3. Summary of Activities of the Audit Committee. During the financial year ended, the Audit Committee met four times. The details of the attendance of the members of the Audit Committee are as follows:- No. Audit Committee Attendance 1 General (R) Tan Sri Dato Seri Mohd Shahrom Bin Dato Hj Nordin (Chairman) 4/4 2 Abdul Rahman Bin Ali 4/4 3 Noor Zilan bin Mohamed Noor 4/4 During the financial year, the Audit Committee carried out the following review :- - The quarterly unaudited financial results and the annual audited financial statements of the Company and Group and make recommendation to the Board of Directors for approval prior to the release of the results and audited financial statements to Bursa Malaysia. The review was to ensure compliance with statutory reporting requirements and appropriate resolution of all accounting and audit matters requiring significant judgment. - The external auditors fees and to recommend their reappointment to the Board. - Measures implemented by management with regard to risk management and internal control. - The statement of Corporate Governance and Statement on Internal Controls which area prepared in accordance with the provisions set out under the Malaysian Code on Corporate Governance, the extent of compliance with the said Code and its recommendation to the Board of Directors for inclusion in the Annual Report. - The Audit Committee Report and its recommendation to the Board of Directors for inclusion in the Annual Report. - The annual internal audit plan to ensure adequate scope and comprehensiveness of the activities and coverage on auditable entities with significant high risk. - The internal audit reports issued by internal auditors and thereafter discuss the management s actions taken to improve the system of internal control and any outstanding matters. - Reviewed with the external auditors their audit plan and scope of works for the year and the results of the annual audit, their audit reports and Management Letter together with Management s responses for the findings of the external auditors. 4. Internal Audit Function The Group s internal audit function is performed by its in house Internal Audit Department which is guided by its Audit Charter and reports directly to the Audit Committee. The principal function of the Department is to assist Management to evaluate the effectiveness and efficiency of the internal control system and according to the Malaysia Code of Corporate Governance within the business units and projects of the Group. It also ascertains that adequate internal control is maintained to safeguard the assets of the Group and the shareholders interest. 23

26 Audit Committee Report (cont d) 4. Internal Audit Function (cont d) Throughout the financial year, the Internal Audit Department has undertaken several independent audit assignments in accordance with the approved annual audit plan. Details of the activities performed by the Department during the financial year are as follow:- Prepared and developed a comprehensive annual audit plan taking into account the Group s business expansion plan for consideration and approval by Audit Committee. Examined and reviewed the existing control over all significant Group operations and systems to ascertain reasonable assurance that the Group s objective and goals are met efficiently and economically. Conducted operational audit and recommended appropriate control measures for improvement on weaknesses or deficiencies identified. Reviewed the adequacy of scope, functions, aptitudes and resources of Internal Audit deemed necessary to carry out the audit. Reviewed the effectiveness of control for procurement and handling of material at all project sites including management and utilization of fixed assets within the Group. To complement with the Quality Management System in accordance with ISO 9001:2008. Continuous follow up of reviews on recommendation and outstanding issues to ensure both are implemented and resolved accordingly. From the audit conducted, Internal Audit Department will prepare reports with independent opinion accordingly to the Audit Committee on risks area, weaknesses identified and the relevant recommendations. All recommendations shall be reviewed, discussed and communicated accordingly to the Management on rectifying weaknesses identified. The Department also established follow up reviews to monitor and ensure that the recommendations agreed by the Audit Committee have been effectively implemented. Going forward the Internal Audit Department will strengthen its capacity and efficiency for the better contribution to the Group pursuant to the Audit Charter and Internal Audit Plan which had been approved by the Audit Committee. Total cost incurred for the Internal Audit Department for the financial year ended was RM 194, Statement in relation to the allocation of Share Option Scheme The Audit Committee noted that the Company had established Share Option Scheme for Employees and Directors ( The Scheme ) pursuant to the By-Laws which were approved by the shareholders at the Extraordinary General Meeting held on 30 April The Scheme shall remain in force for a duration of five (5) years commencing from 22 June 2004 and could be extended for another five (5) years at the discretion of the ESOS Committee. On 27 August 2008, the ESOS Committee had approved the extension of the Scheme for another five (5) years commencing from its expiry date of 21 June The Scheme was expired on 20 June The option under the Scheme was initially offered to the eligible employees and Directors at an offer price of RM1.70 per option share. Subsequently, consequent to the Rights Issue exercise which was completed on 31 January 2007, the exercise price of the Scheme was adjusted to RM1.47 per option share. The exercise price was further adjusted in 2008 to RM1.23 per option share in consequence to the Bonus Issue Exercise undertaken by the Company which was completed on 11 April In 2011, the exercise price was further adjusted to RM0.52 due to share split and Bonus Issue exercise undertaken by the Company. The staff s entitlements had also been adjusted due to the earliermentioned exercises. 24

27 Financial Statements Directors Report 26 Statement by Directors 32 Statutory Declaration 32 Independent Auditors Report 33 Statements of Comprehensive Income 35 Consolidated Statement of Financial Position 36 Company Statement of Financial Position 37 Statement of Changes in Equity - Group 38 Statement of Changes in Equity - Company 39 Statements of Cash Flows 40 Notes to the Financial Statements 42 Supplementary Financial Information on the Breakdown of Realised and Unrealised Profits or Losses 121