Cover Rationale IN HARMONY WITH NATURE

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2 IN HARMONY WITH NATURE Cover Rationale In order to enrich lives and preserve it for generations to come, Equine Capital Berhad emphasises development in harmony with nature.

3 Contents 2 Our Vision and Mission 4 Corporate Information 5 The Group at A Glance 6 Board of Directors 8 Profile of Directors 14 Chairman s Statement 25 l Statement on Corporate Governance 32 l Audit Committee Report 35 l Statement on Internal Control 37 l Statement on Directors Responsibility 38 l Additional Disclosures 40 l Financial Statements 108 l Analysis of Ordinary Shareholdings 111 l Group Properties 114 l Notice of Annual General Meeting 115 l Statement Accompanying Notice of Annual General Meeting l Form Of Proxy

4 Vision Create space and value which fulfills the needs and exceeds the expectations of all stakeholders. The Rise 2

5 Mission To provide affordable, efficient, comfortable living and work space that enables users to achieve high living standards in an ecologically balanced environment. Just like the artisans of old, we are committed to excellence and are guided by the desire to be achievers, not merely accumulators. For to be the best in any given field and endeavour will definitely bring with it rewards. Our vision and commitment will lead us towards long term sustainable growth, returns and enhancement of value. 3

6 Corporate Information BOARD OF DIRECTORS YAM Datuk Seri Tengku Ahmad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah ( Independent Non-Executive Chairman ) Datuk Ahmad Zabri Bin Ibrahim ( Independent Non-Executive Director ) Dato Hamzah Bin Md Rus ( Independent Non-Executive Director ) Othman Bin Mohammad ( Executive Director ) Wong Kim Seng ( Independent Non-Executive Director ) Chin Kok Sang ( Independent Non-Executive Director ) AUDIT COMMITTEE Chin Kok Sang ( Chairman of the Committee ) Datuk Ahmad Zabri Bin Ibrahim ( Member of the Committee ) Dato Hamzah Bin Md Rus ( Member of the Committee ) NOMINATION COMMITTEE YAM Datuk Seri Tengku Ahmad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah ( Chairman of the Committee ) Datuk Ahmad Zabri Bin Ibrahim ( Member of the Committee ) Dato Hamzah Bin Md Rus ( Member of the Committee ) RISK MANAGEMENT COMMITTEE Chin Kok Sang ( Chairman of the Committee ) Dato Hamzah Bin Md Rus ( Member of the Committee ) Lau Yik Wai ( Member of the Committee ) Ranjeet Singh A/L Sarjit Singh ( Member of the Committee ) COMPANY SECRETARY Chin Pei Fung ( MAICSA ) AUDITORS Messrs. BDO Binder ( AF: 0206 ) 12 th Floor, Menara Uni Asia 1008, Jalan Sultan Ismail Kuala Lumpur Malaysia Tel : ( 603 ) Fax : ( 603 ) / 3191 SHARE REGISTRAR Symphony Share Registrars Sdn Bhd Level 26, Menara Multi Purpose Capital Square No. 8, Jalan Munshi Abdullah Kuala Lumpur Malaysia Tel : ( 603 ) Fax : ( 603 ) / 2531 REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS No. 1, Jalan Putra Permai 1A Taman Equine Seri Kembangan Selangor Darul Ehsan Malaysia Tel : ( 603 ) Fax : ( 603 ) equine@equine.com.my Web : STOCK EXCHANGE LISTING Main Board of Bursa Malaysia Securities Berhad ( Properties Sector, Stock Code : 1147 ) ( Listed since 28 October 2003 ) Cahaya Permai The Rise The Sovereign 4

7 The Group At a Glance 100 % Exceed Concept Sdn Bhd 100 % Equine Park Stud Sdn Bhd 100 % Kuala Lumpur Industries Bhd 100 % Kuala Lumpur Industries Holdings Bhd 100 % Kelab Taman Equine Sdn Bhd 100 % Penaga Pesona Sdn Bhd 100 % Syarikat Tenaga Sahabat Sdn Bhd 100 % Taman Equine Riding Sdn Bhd 100 % Taman Equine (M) Sdn Bhd 100% Akademi Ekuestrian Selangor Sdn Bhd 100% Equine Park Country Resort Sdn Bhd 100% Pertanian Taman Equine Sdn Bhd 100% Permai Construction Sdn Bhd (formerly known as Taman Equine Rekreasi Sdn Bhd) 100% Taman Equine Industrial Sdn Bhd 100% Tujuan Ehsan Sdn Bhd 51% Duta Security Sdn Bhd 5

8 Board of Directors

9 1 YAM Datuk Seri Tengku Ahmad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah ( Independent Non-Executive Chairman ) 2 Othman Bin Mohammad ( Executive Director ) 3 Datuk Ahmad Zabri Bin Ibrahim ( Independent Non-Executive Director ) 4 Wong Kim Seng ( Independent Non-Executive Director ) 5 Chin Kok Sang ( Independent Non-Executive Director ) 6 Dato Hamzah Bin Md Rus ( Independent Non-Executive Director ) 7

10 Profile of Directors YAM Datuk Seri Tengku Ahmad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Independent Non-Executive Chairman YAM Datuk Seri Tengku Ahmad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah, a Malaysian and aged 54, was appointed the Independent and Non-Executive Director of Equine Capital Berhad ( ECB ) on 26 August 2003 and was subsequently re-designated as the Independent and Non-Executive Chairman on 10 October He is also the Chairman of the Nomination Committee. He completed his Diploma in Business Administration from Universiti Teknologi MARA in He started his career in Charles Bradburne (1930) Sdn Bhd as a broker from 1974 to He was a Director of TTDI Development Sdn Bhd from 1978 to 2000 and a Director of Sime UEP Berhad from 1983 to In 1987, he was appointed as Chairman of Subang Jaya Medical Centre, a position which he still holds until now. Presently, he is a Director of Sumatec Resources Berhad, Melewar Industrial Group Berhad, Wawasan TKH Holdings Berhad and DutaLand Berhad. He is a member of the Supervisory Committee of Sime Darby Properties Division and also sits on the Board of Directors of several private limited companies involved in property development. Othman Bin Mohammad Executive Director Othman Bin Mohammad, a Malaysian and aged 53, was appointed the Executive Director of ECB on 10 October He is also a Member of the Nomination Committee. He obtained a Bachelor of Science (Hons.) in Civil Engineering from the University of Southampton, United Kingdom in He is a registered Professional Engineer of the Institute of Engineers, Malaysia as well as an Associate Member of the Institution of Civil Engineers, United Kingdom. He was involved in civil engineering, construction and property development for over 25 years in various companies. He is a substantial shareholder of ECB with indirect interest of 7.66%. He is the brother-in-law of Dato Hamzah Bin Md Rus, the Independent Non-Executive Director of ECB. Save as disclosed, he has no family relationship with any other directors or major shareholders of the Company. He has no conflict of interest with the Company and has not been convicted of any offences within the past ten years. He attended three of the six meetings of the Board of Directors held during the financial year as he was appointed to the Board on 10 October He has no family relationship with any other directors or major shareholders of the Company. He has no conflict of interest with the Company and has not been convicted of any offences within the past ten years. He attended all the meetings of the Board of Directors held during the financial year. 8

11 Profile of Directors Datuk Ahmad Zabri Bin Ibrahim Independent Non-Executive Director Datuk Ahmad Zabri Bin Ibrahim, a Malaysian and aged 66, was appointed the Non-Independent and Non-Executive Director of ECB on 26 August 2003 and was subsequently re-designated as Independent and Non-Executive Director on 10 October He is also a Member of the Audit Committee. He obtained a Bachelor of Arts (Hons.) in History from the University of Malaya, Kuala Lumpur in 1966, a Diploma in Development Administration from the University of Birmingham, United Kingdom in 1972 and a Masters in Public Administration from the University of Southern California, U.S.A. in He also obtained a Certificate in Advanced Management Programme from the Harvard Business School, Harvard University, U.S.A. in He started his career in the Malaysian Administrative and Diplomatic Service in 1966 and as an Assistant Secretary in the Ministry of Education until He served in the Public Service Department from 1972 to 1973 as the Principal Assistant Director (Establishment Division). In 1973, he joined the National Institute of Public Administration (INTAN), as the Head of Research Unit and became the Deputy Director (Academic) and later as the Deputy Director (Management) until In 1983, he was seconded to the Institute of Strategic and International Studies (ISIS) as Company Secretary/Deputy Director General (Management) until May He served in the Chief Minister s Department, Sabah as a Director of Development from 1987 to He was the Secretary General in the Ministry of Youth and Sports Malaysia from 1990 to 1991, the State Secretary of Selangor from 1991 to 1993 and the Secretary General, Ministry of Agriculture, Malaysia from 1993 until his retirement in He was the Chairman of Bank Pembangunan Malaysia from 1997 to 1999 and the Chairman of Oriental Bank Berhad from 1999 to 2000 and Independent Non-Executive Director of BERNAS from 1997 till September, Presently he sits on the Board of Directors of several other private limited companies. He has no family relationship with any other directors or major shareholders of the Company. He has no conflict of interest with the Company and has not been convicted of any offences within the past ten years. He attended all the meetings of the Board of Directors and Audit Committee held during the financial year. Permai Square 2 The Sovereign The Eminence 9

12 Profile of Directors Wong Kim Seng Independent Non-Executive Director Wong Kim Seng, a Malaysian and aged 48, was appointed the Independent and Non-Executive Director of ECB on 11 April He obtained his MBA and Bachelor of Arts, from Duke University, North Carolina, USA. He has more than 20 years of working experience in corporate management, corporate finance, strategy consulting and banking in Malaysia and Australia. Presently, he is heading the Hotel Division of a Malaysian group of companies which owns and manages several hotels and is responsible for the overall performance of the division. He has no family relationship with any other directors or major shareholders of the Company. He has no conflict of interest with the Company and has not been convicted of any offences within the past ten years. He attended five of the six meetings of Board of Directors held during the financial year. Chin Kok Sang Independent Non-Executive Director Chin Kok Sang, an Australian and aged 51, was appointed the Independent and Non-Executive Director of ECB on 28 August He is also the Chairman of the Audit Committee and Risk Management Committee of ECB. He is a Chartered Accountant and a member of the Institute of Chartered Accountants in Australia. He has extensive working experience in financial accounting and corporate finance. He started his career in Ernst & Young, Australia where he gained substantial audit working experience and subsequently held various senior management positions in companies in Malaysia and overseas. He is currently the Chief Executive Officer of TKC & Associates Sdn Bhd, a consulting firm which provides corporate advisory services on matters related to new capital/debt issues, debt restructuring, operational review and strategic planning, corporate restructuring, IPO planning, mergers and acquisitions, financial and general management. He has no family relationship with any other directors or major shareholders of the Company. He has no conflict of interest with the Company and has not been convicted of any offences within the past ten years. He attended three of the six meetings of Board of Directors and five of the eight meetings of Audit Committee held during the financial year as he was appointed to the Board and Audit Committee on 28 August

13 Profile of Directors Dato Hamzah Bin Md Rus Independent Non-Executive Director Dato Hamzah Bin Md Rus, a Malaysian and aged 59, was appointed the Independent and Non-Executive Director of ECB on 10 April He is also a Member of the Audit Committee and Risk Management Committee. He obtained his BA (Hons) Degree from the University of Malaya and a Professional Diploma in Purchasing and Supply Management from the University of North London. He has served the Government of Malaysia throughout his career ( ) in various Ministries. He has held various positions, headed many working groups and represented the Government of Malaysia on many international, regional and bilateral meetings and forums. His last position in the Government was the Deputy Secretary General, Ministry of Internal Security. For his dedication and commitment throughout his career, he was awarded several service excellence awards and was also conferred several Federal and State Awards. He is the brother-in-law of the Executive Director, Othman Bin Mohammad. Save as disclosed, he has no family relationship with any other directors or major shareholders of the Company. He has no conflict of interest with the Company and has not been convicted of any offences within the past ten years. He attended all the meetings of the Board of Directors and four of the eight meetings of Audit Committee held during the financial year as he was appointed a Member of the Audit Committee on 13 November

14 the perfect lifestyle 12

15 We are building townships with a sense of passion and inspiration. The unique concept of our properties speaks the indulgence of lifestyle amenities for a work-life balance. 13

16 Chairman s Statement Dear Shareholders, On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of Equine Capital Berhad Group for the financial year ended 31 March 2009 ( FY2009 ). 14

17 Chairman s Statement The year under review has been a challenging period for the Group s operations in view of the developments in the global economies which have caused adverse impacts to the Malaysian economy. Business activities in the local economy during this period were marred by surging fuel prices, runaway inflationary pressure on materials prices, employment losses and contracting consumer spending. The developments in 2008 have culminated in reports of negative growth in the economy in the first quarter of 2009, signalling the possibility of an economic recession. There remains uncertainty as to where the local economy will be heading. The economic climate which prevailed in 2008 presented unattractive operating conditions to the Group and this has discouraged the Group from embarking on any significant property development activity. The Group had emphasized the need to exercise extreme caution in the evolving business environment and that any plan on new project launches had to be carefully assessed, with due consideration of the project s chances of success and its critical timing in an unstable economic situation. On prudence, the Group launched only one new project during the financial year, in May 2008 in Cheras known as Palomino which comprised 54 units of two-storey link houses with an estimated GDV of RM25.2 million. While deferring its decision on new major project launches to future years, the Group had during the financial year 2009 focused on progressing works toward the completion of its existing projects in Seri Kembangan and Batu Kawan. These efforts culminated in the completion of several projects in Seri Kembangan during the financial year, namely the Eminence two and half storey link houses in July 2008, Permai Place shop offices in November 2008, Sovereign semi-detached houses in January 2009 and the Rise Bungalows in March FINANCIAL REVIEW In view of the delay in completion of several existing projects, the Group had focused on expediting works to complete these projects to stem compensation for delayed delivery. The tail-end of these projects, however, commanded the usual low percentages for progress billings, and coupled with the lack of new projects, the Group s revenue for the financial year ended 31 March 2009 declined by 20% from previous year s RM million to RM86.1 million. Of the Group s total revenue generated from property development division in FY2009 of RM85.5 million, RM57.8 million was generated from properties in Seri Kembangan (68%), RM22.7 million from Cheras (26%) and RM5.0 million from Batu Kawan (6%). The major contributors to revenue for the current financial year were : a. projects completed during the financial year : two and half storey link houses of the Eminence in July 2008, shop offices of Permai Place completed in November 2008, semi-detached houses of the Sovereign in January 2009 and the Rise bungalows in March 2009; and b. projects under construction: Cahaya Permai s medium cost apartments in Seri Kembangan and Mestika Square shop offices in Cheras, low cost houses in Crescentia Park in Batu Kawan. Profit margins in FY2009 fell significantly as a result of the weak revenue base in FY2009, compounded by write-off of development expenditure related to building structures on land sold, provisions for write back of previous years profits arising from potential sale cancellation and provision for foreseeable losses. Operating losses before tax deteriorated to RM46.6 million in FY2009 from RM34.9 million in FY2008, hence, representing a decline of 34%. 15

18 Chairman s Statement The pre-tax loss for FY2009 has included a fair value adjustment gain of RM3.3 million (nil in FY2008) following the reclassification of two properties from Land Held for Property Development to Investment Property at fair values of RM31.7 million. With the benefit of deferred tax credits, the Group s loss after taxation for the current financial year was registered at RM45.2 million, which exceeded preceding year s net loss of RM28.8 million by 57%. Consequently, net loss per share of the Group deteriorated to RM(0.21) in FY2009 compared against FY2008 s RM(0.17), while the net asset per share declined to RM0.96 in FY2009 from RM1.16 in FY2008. REVIEW OF OPERATIONS The Group s key area of focus for property development activities rests in the landbanks in Seri Kembangan. The development activities during the financial year had been centred on completing the Group s existing projects in this location as the construction progress of the majority of these projects had fell behind schedule. Some of these projects were incurring compensation for late delivery and hence, draws the urgency to complete these projects as soon as possible to stem losses, besides fulfilling the Group s obligations as a property developer. These efforts resulted in the completion of several projects during the financial year - Sovereign s semi-detached houses, Permai Place s shop offices and Rise bungalows, all located at Pusat Bandar Putra Permai, Seri Kembangan. The on-going construction on medium cost apartments of Cahaya Permai in Seri Kembangan progressed to 81% as at 31 March 2009 and will be completed in the next financial year. Meanwhile, construction work continue to progress well in projects in Cheras with progressive stages of work achieved in Taman Mestika. In Batu Kawan, the development progress on Phases 1, 2 and 3 of Crescentia Park comprising mainly low-cost housing, has progressed to 95/% as at 31 March 2009; the target completion of these phases is towards the end of Works on Phase 4 involving Callisia two storey terrace houses are progressing in their early stages. In summary, the projects completed during the financial year are as follows : Township Product Project Completion Date Pusat Bandar Putra Permai, The Eminence 216 units two and half storey terrace houses July 2008 Seri Kembangan Permai Place 150 units single and two storey shop offices November 2008 Sovereign 102 units semi-detached two-storey houses January 2009 The Rise 6 units bungalows March

19 Permai Place Completed Projects The Eminence Sovereign The Rise 17

20 Chairman s Statement The on-going projects of the Group are as follows : Township Product Project Pusat Bandar Putra Permai, Permai Square 113 units single to three storey shop offices Seri Kembangan Cahaya Permai 300 units medium cost apartment and 13 units of shops Taman Mestika, Mestika Square 48 units two and three storey shop offices Cheras Palomino 54 units two storey terrace houses Crescentia Park, Studio S 330 units low cost double storey terrace houses Batu Kawan Studio M 259 units medium cost double storey terrace houses Clover Plus Studio L Callisia 137 units two and half storey cluster link houses 72 units two storey cluster link houses 246 units two storey terrace houses On-going Projects Permai Square 18

21 Cahaya Permai Mestika Square Palomino Studio S

22 On-going Projects Studio M Clover Plus & Studio L Callisia

23 2 Storey & 3 Storey Shop Offices in Cheras 2 Storey Semi Detached Houses in Seri Kembangan Future Projects 2 Storey Terrace Houses in Batu Kawan 21

24 Chairman s Statement 22 Due to poor sales response and the uncertainty of developments in the local economy, the Group has decided to suspend the construction of Permai Central which was launched in the preceding financial year, FY2008. Permai Central was intended to be a commercial centre with a transportation hub in the Group s Pusat Bandar Putra Permai township development which features mixed development of retail outlets, shop offices and office space fronting a transport hub. With the Group s limited remaining land banks in Seri Kembangan, the development plans on these parcels of land have been re-evaluated and revised for a more up-market commercial development. This revision in development plan has resulted in the Group s decision for the sale of a parcel of land in Taman Equine, Seri Kembangan, originally intended for the Drive Thru Mall and Gourmet Deck properties, to Tesco Stores (Malaysia) Sdn. Bhd. It is the Group s expectation that the revised development plan for this area will enhance the overall commercial layout of the area which will generate better returns to the Group. With the aim of capitalising on market improvement in the area, the potential of property development has been assessed on the land banks in the vicinity and new projects involving commercial properties are being planned for launch in the near future. Meanwhile, in Batu Kawan, the Group is progressing discussions in advanced stages with state authorities to expedite the delivery of additional parcels of land for development committed under contracts previously made. Upon securing these additional parcels of land, the Group will shift its focus to higher end property development activities in medium to luxurious housing and commercial properties which will generate attractive yields and returns. The Group acknowledges that the availability of suitable and sizeable land banks is vital to the continued future of property development activities of the Group. One of these efforts resulted in the purchase of a parcel of land measuring 16 acres in Taman Equine, Seri Kembangan for a total consideration of RM47.4 million, which although is small in area, provides a strategic component in the commercial development of that area. At the date of this report, the signing of the sale and purchase agreement is pending. Conscious of the necessity of having a sizeable land bank, the Group will continue to identify and evaluate suitable and strategic land for opportunities to increase the land bank of the Group. CORPORATE HIGHLIGHTS On 26 August 2008, the then remaining Irredeemable Convertible Unsecured Loan Stocks 2003/2008 ( ICULS ) totalling 34,933,756 units were converted to new ordinary shares of the Company. These new shares rank pari passu with the then existing ordinary shares. As a result of this conversion, the Company s share capital was enlarged from 192,404,565 ordinary shares of RM1.00 each as at 31 March 2008, to 227,338,321 ordinary shares of RM1.00 each as at 26 August 2008 and 31 March The Group entered into a share sale agreement with a third party on 20 October 2008 to dispose of its 25% equity interest in an associated company, Abad Naluri Sdn. Bhd. for a cash consideration of RM2.0 million. The completion of this transaction is pending the fulfilment of the condition precedent relating to the approval of the relevant authorities for the transaction. On 29 October, 2008, the extension of time granted by the Securities Commission for the approved Proposed Private Placement exercise to issue up to 22,733,832 new ordinary shares of RM1.00 each representing up to ten percent (10%) of the enlarged issued and paid-up share capital of the Company, expired as the Company did not seek any further extension of time. Two of the Group s subsidiary companies entered in a sale and purchase agreement with Tesco Stores (Malaysia) Sdn. Bhd. on 2 April 2009 for the sale of a parcel of leasehold land in Seri Kembangan measuring approximately acres. PROSPECTS While the present economic situation is not encouraging, the Group took the opportunity to rationalise its businesses. The Group plans to : a. dispose of non-core assets to streamline the Group s operations as well as enhancing cash flows b. dispose of parcels of land which either contributes strategic catalytic impact to spur future development of existing land bank or those land with low development value or low returns c. reduction of Group s borrowings to reduce financing costs with overall impact of improving Group s profitability d. increasing existing land bank for business continuity e. strategise timing of new project launches and ensure good returns f. commit to completing projects on time

25 Chairman s Statement These measures are intended to sustain the operations of the Group during a difficult trading period while preparing for the anticipated recovery in the economy. With these measures, the Group hopes to strengthen its foundation for growth to yield better returns to its stakeholders. With the foregoing considerations, the Group is planning to launch a few projects in the next financial year. In Seri Kembangan, plans have been drawn up for new launches of 408 units of semi-detached houses with a total GDV of approximately RM260.0 million while the Mestika Jaya project in Cheras will see an additional 22 units of shop offices with estimated GDV of RM8.0m. The Group s project at Crescentia Park in Batu Kawan will find itself elevating to higher class housing development from its present low cost housing with the target launches of a total of 259 units of two storey terrace houses and 172 units of semi-detached houses with a combined GDV of RM150.0 million. Besides these new project launches, the Group will also be progressing works towards delivery of acres land which was sold in early These new project launches, together with the land development works, will be the forefronts to progress further development activities to bring better returns to the Group in the near future. ACKNOWLEDGEMENT The Group witnessed a major change in the Board of Directors during the year under review with the departure of the Executive Chairman, Datuk Patrick Lim Soo Kit in October Under Datuk Patrick Lim s leadership, the Group s businesses have flourished and expanded to their present day status from its humble beginnings as private business entities. The Group pays tribute to the Group s achievements under Datuk Patrick Lim s leadership and guidance, and on behalf of the Group, I wish to record the Group s appreciation for his contributions. On behalf of the Board, I wish to extend a warm welcome to Mr. Chin Kok Sang and Encik Othman bin Mohamad who were appointed to the Board in August 2008 and October 2008 respectively. While we expect the coming financial year to be difficult and full of challenges, I believe that our solid foundation built over the years will assist us in overcoming this difficult period. I am also confident with the Group s dedicated and committed staff, the Group will rise up to the challenges that will bring the Group to its next level of success. I would also like to thank all our customers, shareholders and business associates for their trust and confidence in us. To our dedicated employees, I look forward to your unwavering commitment in delivering value and quality products and services to our customers, and to continue with all your good work to take the Group to greater heights. YAM DATUK SERI TENGKU AHMAD SHAH IBNI ALMARHUM SULTAN SALAHUDDIN ABDUL AZIZ SHAH Chairman 16 July

26 the perfect home Cahaya Permai The Eminence

27 Statement on Corporate Governance The Board of Directors ( the Board ) of Equine Capital Berhad ( ECB or Company ) is fully committed to promote and achieve the highest standards of corporate governance and to ensure that the principles and best practices in corporate governance as detailed in the Malaysian Code of Corporate Governance ( the Code ) are practised and adopted in ECB and its subsidiaries ( the Group ). The Board continuously evaluates the Group s corporate governance practices and procedures with a view to adopt and implement the principles and best practices of the Code, wherever applicable, as a fundamental part of discharging its responsibilities to protect and enhance shareholders value. The Board believes that good corporate governance results in creation of long term value and benefits for all stakeholders. 1. THE BOARD OF DIRECTORS The Board takes full responsibility for the performance of the Group and guides the Group towards achieving its short and long term objectives, setting corporate strategies for growth and new business development while providing advice and direction to the Management to enable the Group to achieve its corporate goals. 1.1 Board Responsibilities Having recognised the importance of an effective and dynamic Board, the Board s members are guided by six (6) areas of responsibility as outlined below : Reviewing and adopting a strategic plan for the Group; Overseeing the conduct of the Group s business to evaluate whether the business is properly managed; Identifying principal risks of the Group and ensuring that appropriate systems are implemented and/or steps are taken to manage these risks; Succession planning, including appointing, training, fixing the compensation of and where appropriate, replacing senior management; Developing and implementing an investor relations programme or shareholder communications policy for the Group; and Reviewing the adequacy and the integrity of the Group s internal control systems and management information systems, including system for compliance with applicable laws, regulations, rules, directives and guidelines. Specifically and within the limits set by the Company s Articles of Association ( Articles ), the Board is charged with the development of corporate objectives and the review and approval of corporate plans, annual budgets, acquisitions and disposals of major assets, major investments and changes to the management and control structure within the Group including risk management, delegation of authority and financial and operational policies and procedures. 1.2 Composition of the Board and Board Balance The Board members are professionals from diverse disciplines, tapping on their respective qualifications and experiences in business, commercial and financial aspects. Together, they bring a wide range of experience and expertise which are vital towards the effective discharge of the Board s responsibilities for the successful direction and growth of the Group. A brief description of the background of each Director is presented on pages 8 to 11 of the Annual Report. 25

28 Statement on Corporate Governance The Board consists of six (6) members, comprising the Independent Non-Executive Chairman, an Executive Director and four (4) Independent Non Executive Directors. This is in compliance with the listing requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ), which requires one third (1/3) of or two members of the Board, whichever is higher, to be independent directors. No individual or group of individuals dominates the Board s decision making and the number of directors fairly reflects the investment of the shareholders. The Executive Director together with senior executives forms the Senior Management Team ( Management ) which is responsible for developing the Group s business strategies as well as making and implementing operational decisions. The Board is comfortable that there are sufficient experienced Non-Executive Directors on the Board who provide unbiased and independent views, advice and judgement to take into account the interests of all stakeholders. In addition, all major decisions and key issues involving the Group are referred to the Board for consideration and approval. The Independent Non-Executive Directors of the Company are independent of management and free from any business or other relationships, which could interfere with the exercise of independent judgement on the Board s deliberations and decision-making process. The role of these Independent Non-Executive Directors is therefore important as they provide unbiased and independent views, advice and directions and ensure that the strategies proposed by the Management are fully discussed and examined and take into account the long-term interests, not only of the Group and the shareholders, but also of employees, customers, suppliers and other stakeholders. The Board has also designated YAM Datuk Seri Tengku Ahmad Shah as the Independent Non-Executive Chairman, to whom concerns may be conveyed. All Directors have given their undertakings to comply with the listing requirements of Bursa Securities and the Independent Directors have confirmed their independence in writing. 1.3 Appointment of Directors The Nomination Committee is responsible for making recommendations to the Board on suitable candidates for appointment. In making these recommendations, due consideration is given to the required mix of skills, expertise, knowledge and experience that the proposed directors shall bring to complement the Board. 1.4 Re-Election of Directors In accordance with the Articles, all Directors who are appointed by the Board are subject to retire, and be eligible for re-election by shareholders of the Company, at the first Annual General Meeting following their appointment, and one-third, or the number nearest one-third, of the remaining Directors shall retire from office and be eligible for re-election. Notwithstanding the above, the Articles also provide that all the Directors of the Company shall retire from office once at least in every three years but shall be eligible for re-election. To aid shareholders in their decision, sufficient information such as personal profile, meetings attendance and the shareholdings in the Group, if any, of each Director standing for re-election are furnished in a separate statement accompanying the Notice of Annual General Meeting. 26

29 Statement on Corporate Governance 1.5 Directors Training The Group acknowledges that continuous education is vital for the Board members to keep abreast with, or gain insight into, the state of economy, technological advances, regulatory updates and management strategies. All the Directors have attended the Mandatory Accreditation Programme (MAP). During the financial year ended 31 March 2009, the Company had organised an in-house training programme on Mind Mapping for Quick Action for Directors and Management. Subsequent to 31 March 2009, the Directors and Management also attended another in-house training programme on Fish! Philosophy on 27 May The Board will continue to evaluate and determine the training needed by the Directors from time to time to enhance their skills and knowledge, where relevant and to keep abreast with the new regulatory development and listing requirements of Bursa Securities. 1.6 Supply of Information The Board has a formal schedule of matters for decision-making to ensure that the direction and control of the Group is firmly in its hands. Board papers, together with the agenda of the Board meeting and relevant reports, are circulated in advance of each Board meeting to enable the Directors to review and obtain further information, where necessary, on matters presented in the Board papers. During Board meetings, the Management provides further details on each matter or supplementary information, where necessary. In addition and in accordance with the Articles, the Board also ratifies matters previously approved through Directors circular resolution. Board proceedings, deliberations and conclusions of the Board at every Board meeting are duly recorded in the Board minutes and all minutes are signed by the Chairman of the meeting in compliance with Section 156 of the Companies Act, All Directors have the right and duty to make further enquiries where they consider this necessary. Each Director has unrestricted access to all information within the Group, the Management and the Company Secretary. The Directors, whether in capacity as the full Board or in their individual capacity, may in furtherance of their duties, take independent professional advice at the Company s expense, if required. 1.7 Board Meetings The Board schedules to meet at least four times a year, with additional meetings convened as and when necessary. Due notice is given for all scheduled meetings. During the financial year ended 31 March 2009, six (6) Board meetings were convened on 29 May 2008, 17 July 2008, 28 August 2008, 13 November 2008, 18 February 2009 and 23 March The meeting attendance of each individual Director is set out on the Profile of Board of Directors in this Annual Report. 27

30 Statement on Corporate Governance 1.8 Committees The Board has established the Audit Committee to assist the Board in discharging its duties and responsibilities. The Audit Committee comprises : Chin Kok Sang ( Chairman of the Committee ) Datuk Ahmad Zabri bin Ibrahim ( Member of the Committee ) Dato Hamzah bin Md Rus ( Member of the Committee ) The terms of reference of the Audit Committee have been approved by the Board and where applicable, comply with the recommendations of the Code. The details of the Audit Committee are set out on pages 32 to 34 of this Annual Report. In line with best practices in Corporate Governance, the Code recommends for the establishment of the following committees : 1) Nomination Committee The Board established the Nomination Committee on 16 April The Nomination Committee comprises : YAM Datuk Seri Tengku Ahmad Shah ( Chairman of the Committee ) Datuk Ahmad Zabri Bin Ibrahim ( Member of the Committee ) Dato Hamzah Bin Md Rus ( Member of the Committee ) The primary function of the Nomination Committee is to propose new nominees for the Board, assess Directors on an ongoing basis and review the required mix of skills, experience and other qualities of the Directors to ensure that the Board is functioning effectively and efficiently. 2) Remuneration Committee The primary function of the Remuneration Committee is to set the policy framework for the remuneration of the Directors to ensure that the policy on Directors remuneration are sufficient to attract and retain Directors of the calibre needed to manage the Group successfully. As the Company has only one Executive Director, the review of the Executive Director s remuneration will be a matter for the Board s consideration. 3) Risk Management Committee The Board established the Risk Management Committee on 18 February The Risk Management Committee comprises : Chin Kok Sang ( Chairman of the Committee ) Dato Hamzah bin Md Rus ( Member of the Committee ) Lau Yik Wai ( Member of the Committee ) Ranjeet Singh ( Member of the Committee ) The primary function of the Risk Management Committee is to assist the Board in fulfilling its duties and discharging ts responsibility relating to the risk management and compliance practices of the Group. 1.9 Company Secretary The removal and replacement of the Company Secretary is a matter for the Board s consideration. 28

31 Statement on Corporate Governance 2. DIRECTORS REMUNERATION The remuneration of Directors is formulated to be competitive and realistic, emphasis being placed on performance and calibre, with aims to attract, motivate and retain Directors with the relevant experience, expertise and quality needed to assist in managing the Group effectively. For the Executive Director, the remuneration package links rewards to corporate and individual performance whilst for the Non-Executive Directors, the level of remuneration is linked to their experience and level of responsibilities undertaken. The remuneration package for the directors of ECB comprises the following elements: a. Salary The salary ( inclusive of statutory employer s contributions to the Employees Provident Fund ) of the Executive Director is determined and approved by the Board annually. b. Fees The fees payable to the Non-Executive Directors is determined by the Board and approved by the shareholders of the Company at each Annual General Meeting. c. Allowances and benefits-in-kind The allowances and other customary benefits ( such as private medical insurance, company car, driver, fuel, etc ) to the Directors are determined and approved by the Board as appropriate. The details of Directors remuneration during the financial year ended 31 March 2009 are as follow : 2.1 Aggregate Remuneration Aggregate Remuneration Executive Director (RM) Non-Executive Directors (RM) Salaries 94,645 - Fees ,000 Allowances - 46,000 Benefits-in-kind* 1,800 - Total 96, ,000 * Based on estimated monetary value 29

32 Statement on Corporate Governance 2.2 Range of Remuneration No. of Directors Range of Remuneration Executive Non-Executive Less than RM50,000-4 RM 50,001 RM100, The Code recommends disclosure of details of remuneration of each Director. However, as the Company has only one Executive Director, the Board is of the view that the disclosure of the remuneration of the directors by bands of RM50,000 is sufficient to meet the objective of the Code. 3. SHAREHOLDERS 3.1 Shareholders and Investor Relations The Board recognises the importance of transparency and accountability to its shareholders and maintains an effective communication policy that enables both the Board and the management to communicate effectively with its shareholders and the public. An important aspect of an active and constructive communication policy is the timeliness in disseminating information to shareholders and investors. Accordingly, the Board communicates information on the operations, activities and performance of the Group on a timely manner through the following: The Annual Report which contains the financial and operational review of the Group s business, corporate information, financial statements and information on the Board and Audit Committee; Various announcements made to Bursa Securities which includes the announcement of quarterly results of the Group; The Company s website at and The Investor Relations Incentive Program at w w w.malaysiaplc.com. 3.2 Annual General Meeting ( AGM ) The AGM serves as an important means for shareholders communication. Notice of the AGM and the Annual Report are sent to shareholders twenty-one (21) days prior to the AGM. ECB will be convening its eighth AGM on 19 August The Board encourages its shareholders to raise questions regarding the resolutions being proposed at the AGM and also other matters pertaining to the business activities of the Group. The Directors and Management of the Company will be available at the AGM to respond to questions posed by the shareholders. Additionally, a press conference is held immediately following the AGM where the Directors and Management of ECB advise the press of the resolutions passed, and answer questions on the Group. Shareholders are welcomed to raise queries by contacting the Group at any time throughout the financial year and not just at the AGM. 30

33 Statement on Corporate Governance While the Group endeavours to provide as much information as possible to its shareholders and stakeholders, it is mindful of the legal and regulatory framework governing the release of material and price-sensitive information. Any information that may be deemed as undisclosed material information about the Group will not be imparted to any single shareholder or group of shareholders. 4. ACCOUNTABILITY AND AUDIT 4.1 Financial Reporting The Board aims to provide and present a clear, balanced and comprehensive assessment of the Group s financial performance and prospects through the quarterly announcement of results to shareholders via the Bursa Malaysia as well as the Chairman s statement, review of operations and annual financial statements in the Annual Report. The Board is assisted by the Audit Committee to oversee the Group s financial reporting process and the quality of its financial reporting. The Directors are responsible to ensure that the annual financial statements are prepared in accordance with the provisions of the Companies Act 1965 and applicable approved accounting standards in Malaysia. A statement of the Directors responsibilities in preparing the financial statements is set out separately on page 37 of this Annual Report. 4.2 Internal Control and Risk Management The Board acknowledges their responsibilities for the internal control system of the Group, covering not only financial controls but also controls relating to operations, compliance and risk management. Information of the Group s internal control and risk management is presented in the Statement on Internal Control set out on pages 35 and 36 of this Annual Report. 4.3 Relationship with the External Auditors The Board, via the Audit Committee, established formal and transparent arrangements for maintaining an appropriate relationship with the Group s external auditors, Messrs BDO Binders. A summary of the activities of the Audit Committee during the year as well as the role of the Audit Committee in relation to the external auditors is set out in the Audit Committee s Report on pages 32 to 34 of this Annual Report. This Statement of Corporate Governance is made in accordance with the resolution of the Board dated 16 July

34 Audit Commitee Report The Audit Committee ( the Committee ) was established on 26 August 2003 to act as a sub-committee of the Board of Directors. Presently, the members of the Committee are as follows : Chin Kok Sang Independent Non-Executive Director ( Chairman of the Committee ) Datuk Ahmad Zabri bin Ibrahim Independent Non-Executive Director ( Member of the Committee ) Dato Hamzah bin Md Rus Independent Non-Executive Director ( Member of the Committee ) Details of the members of the Committee are contained in the Profile of Directors as set out on pages 8 to 11 of this Annual Report. TERMS OF REFERENCE The Committee is governed by the following terms of reference : 1. Purpose The primary objective of the Audit Committee, in its role as a sub-committee of the Board, is to assist the Board in the effective discharge of its fiduciary responsibilities for corporate governance, effective internal controls system, and timely and accurate financial reporting. 2. Composition The Committee shall be appointed from amongst the members of the Board and shall comprise at least three (3) members. All the members must be non-executive directors, with a majority of them being independent directors. In the event of any vacancy with the result that the number of members is reduced to below three, the vacancy must be filled within three (3) months. 3. Chairman The Chairman, who shall be elected by the Committee, must be an independent director. 4. Secretary The Company Secretary shall be the Secretary of the Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it prior to each meeting. The Secretary shall also be responsible for keeping the minutes of meetings of the Committee and circulating them to the Committee Members. 5. Meetings The quorum for a meeting shall be two (2) members, provided that the majority of members present at the meeting shall be independent. The external auditors have the right to appear at any meeting of the Committee and shall appear before the Committee when required to do so by the Committee. The external auditors may also request a meeting if they consider it necessary. 32

35 Audit Commitee Report 6. Rights The Committee shall : (a) have explicit authority to investigate any matter within its terms of reference; (b) have the necessary resources which it needs to perform its duties; (c) have full and unrestricted access to any information which it requires in the course of performing its duties; (d) have unrestricted access to the Chief Executive Officer and the Chief Financial Officer; (e) have direct communication channels with the external auditors and internal auditors; and (f) be able to obtain independent professional or other advice in the performance of its duties at the Company s expense. 7. Duties The duties of the Committee shall include a review of : (a) the nomination of external auditors; (b) the adequacy of existing external audit arrangements, with particular emphasis on the scope and quality of the audit; (c) the adequacy and effectiveness of the internal controls and management information systems; (d) the financial statements of the Company with both the external auditors and management; (e) the external auditors audit report; (f) any management letter sent by the external auditors to the Company and the management s response to such letter; (g) any letter of resignation from the Company s external auditors; (h) the assistance given by the Company s officers to the external auditors; (i) all areas of significant financial and operational risks and the arrangements in place to contain those risks to acceptable levels; and ( j) all related-party transactions and potential conflict of interests situations. INTERNAL AUDIT FUNCTION In discharging its function, the Committee is supported by an internal audit function whose primary responsibility is to evaluate and report on the adequacy, integrity and effectiveness of the overall system of internal controls of Equine Capital Berhad and its subsidiaries ( the Group ). The internal audit function of the Group has been outsourced to an external party, who reports directly to the Committee. The internal audit function also adopts a risk-based audit methodology, which is aligned with the risks of the Group to ensure that relevant controls addressing those risks are reviewed on a regular basis. MEETINGS During the financial year ended 31 March 2009, the Committee convened a total of eight (8) meetings on 29 May 2008, 17 July 2008, 28 August 2008, 13 November 2008, 2 December 2008, 12 January 2009, 18 February 2009 and 5 March All meetings had full participation from all members. The Group s internal and external auditors and certain members of the Senior Management team attended the meetings upon the invitation of the Committee. Minutes of the meetings of the Committee are circulated to all members of the Board and significant issues are discussed at the Board Meetings. 33

36 Audit Commitee Report SUMMARY OF ACTIVITIES OF THE COMMITTEE During the financial year and up to the date of this Report, the Committee carried out the following activities in discharging its duties and responsibilities: Internal Controls - Evaluated the overall effectiveness of the system of internal controls through the review of the results of work performed by the internal and external auditors and discussions with Senior Management team. Financial Results - Reviewed the quarterly results of the Group and audited annual financial statements of the Group and Company before recommending to the Board for release to Bursa Malaysia Securities Berhad ( Bursa Securities ). The review had focused primarily on: a) major accounting areas involving exercise of judgement, significant and unusual events; b) significant adjustments resulting from audit; c) going concern assumptions; d) compliance with applicable approved accounting standards in Malaysia; and e) compliance with Listing Requirements of Bursa Securities and other relevant regulatory requirements. External Audit - Reviewed with the external auditors, their audit plan for the financial year ended 31 March 2009 to ensure that their scope of work adequately covered the activities of the Group; - Reviewed with the external auditors the quarterly results ended 31 December 2008 and 31 March 2009 prior to their release to Bursa Securities; - Reviewed the results and issues arising from their audit of the annual financial statements and their resolution of such issues as highlighted in their report to the Committee; and - Reviewed their performance and independence before recommending to the Board their re-appointment and remuneration. Internal Audit - Reviewed with the internal auditors, their audit plan for the financial year ended 31 March 2009 ensuring that principal risk areas were adequately identified and covered in the plan; - Reviewed the recommendations by internal auditors, representations made and corrective actions taken by management in addressing and resolving issues as well as ensuring that all issues were adequately addressed on a timely basis; - Reviewed the competencies of the internal auditors to execute the audit plan, the audit programs used in the execution of the internal audit work and the results of their work; and - Reviewed the adequacy of the terms of reference of internal audit. Related Party Transactions - Reviewed the procedures for identification of related party transactions for compliance with the Listing Requirements of Bursa Securities; and - Reviewed the procedures for identification of recurrent related party transactions and securing the shareholders mandate for such transactions. This Audit Committee Report is made in accordance with the resolution of the Board dated 16 July

37 Statement On Internal Control This statement on internal control by the Board of Directors ( the Board ) is made pursuant to paragraph 15.27(b) of the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) with respect to the compliance of Equine Capital Berhad and its subsidiaries ( the Group ) with the principles and best practices for internal controls as provided in the Malaysian Code of Corporate Governance. BOARD RESPONSIBILITIES The Board has the overall responsibility for the Group s system of internal control and for reviewing its effectiveness, adequacy and integrity. The internal control system covers financial, operational and compliance controls, and risk management. However, the system of internal control is designed to manage rather than to eliminate the risk of failure to achieve business objectives and can provide reasonable, and not absolute assurance, against material misstatement of management and financial information or against financial losses and fraud. It is the Board s view that in order to achieve a sound system of internal control, it is first necessary to provide a control environment and framework that is conducive to this objective. This requires that the Board, Management and all levels of employees must be aware of the Group s business objectives, the risks that could potentially impede the Group in achieving these objectives and the policies and control strategies that are required to manage these risks. RISK MANAGEMENT FRAMEWORK The Board is responsible for the ongoing identification, evaluation and management of significant risks. These ongoing processes are reviewed regularly by the Management, Audit Committee, Risk Management Committee and the internal auditors. The Risk Management Committee, reports directly to the Board and is responsible for coordination of the overall risk management activities within the Group. INTERNAL CONTROL SYSTEM The key elements of the Group s internal control system are as follows : Organisation structure with defined lines of responsibilities and delegation of authority; Appropriate authorisation of transactions, supported by policies and procedures; Monthly financial reporting framework for all companies within the Group whereby actual results monitored against forecasts/ budgets and variances are investigated accordingly; Quarterly reporting of the financial results of the Group to the Audit Committee and the Board; Management meetings and project department meetings held fortnightly to identify, discuss, evaluate and resolve operational and financial issues 35

38 Statement On Internal Control The internal audit function which has been outsourced to an independent external consultant, reports directly to the Audit Committee. The role of the internal auditors is to review the adequacy, integrity and effectiveness of the Group s system of internal controls to mitigate the risks of the Group including financial, operational and compliance risks. The internal audit plan is reviewed and approved annually by the Audit Committee. The internal auditors conduct various audit assignments regularly to evaluate the adequacy and effectiveness of the internal control systems and make recommendations for improvements to the system of internal controls. The Audit Committee reviews the internal audit reports on a regular basis and keeps the Board informed of key audit findings. CONCLUSION Based on the above, the Board is of the view that system of internal control being implemented within the Group is sound and effective. Notwithstanding this, reviews of all the control procedures will be continuously carried out to ensure the ongoing adequacy, integrity and effectiveness of the system of internal control, so as to safeguard the Group s assets and shareholders investments. This Statement of Internal Control is made in accordance with the resolution of the Board dated 16 July

39 Statement On Directors Responsibility The Directors are required by the Companies Act, 1965 ( the Act ) to lay before the Company ( Equine Capital Berhad ) at its Annual General Meeting, financial statements of Equine Capital Berhad and its subsidiaries ( the Group ) for each financial year, made out in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Act. The financial statements of the Group and the Company for the financial year ended 31 March 2009 are set out on pages 47 to 107 of this Annual Report. The Directors are responsible to take reasonable steps to ensure that the financial statements give a true and fair view of the state of affairs of the Group and of the Company, and of their financial performance and cash flows for the financial year then ended. In preparing the financial statements, the Directors have : adopted suitable accounting policies and applied them consistently; made judgements and estimates that are reasonable and prudent; ensured that all applicable approved accounting standards in Malaysia have been complied with; and prepared financial statements on a going concern basis as the Directors have a reasonable expectation, having made appropriate enquiries, that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. The Directors have the responsibility for ensuring that the Group and the Company maintains such accounting and other records that will 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 Act. This Statement on Directors Responsibility is made in accordance with the resolution of the Board dated 16 July

40 Additional Disclosures The following disclosures are made in compliance with Part A of Appendix 9C of the Listing Requirements of Bursa Malaysia Securities Bhd ( Bursa Securities ) : (a) Non-Audit Fees Paid The non-audit fees paid to the external auditors, Messrs BDO Binder, during the financial year ended 31 March 2009 amounted to RM 22,000. (b) Material Contracts There were no material contracts outside the ordinary course of business entered into by Equine Capital Bhd and its subsidiaries involving Directors and major shareholders interest which were still subsisting as at 31 March (c) Options, Warrant and Convertible Securities During the financial year, a total of RM34,933,756 nominal value of 2003/2008 Irredeemable Convertible Unsecured Loan Stocks ( ICULS ) have been automatically converted into fully paid ordinary shares of RM1.00 each on the maturity date on 26 August The new ordinary shares issued pursuant to the conversion of ICULS rank pari passu in all respects with the then existing ordinary shares of the Company. The Proposed Private Placement exercise to issue up to 22,733,832 new ordinary shares of RM1.00 each representing up to ten percent (10%) of the enlarged issued and paid-up share capital of the Company was approved by the Securities Commission ( SC ) and Bursa Malaysia Securities Berhad on 1 November 2007 and 14 November 2007 respectively. On 31 March, 2008, Hwang DBS Investment Bank, on behalf of the Company, submitted an application to the SC for an extension of time of six months to 29 October 2008 to implement the Proposed Private Placement which was earlier approved by the SC subject to certain terms and conditions. On 29 October 2008, the extension of time as approved by the SC expired and was not renewed by the Company. (d) Corporate Social Responsibility Equine Capital Berhad Group is conscious of the importance of fulfillment of corporate social responsibilities in the community. The Group reviews its product development and operational practices and procedures from time to time. All projects of the Group have budgeted for implementation of public amenities and other social obligations. The Group also recognises the importance of staff welfare and continual training to ensure development in human capital. (e) Imposition of Sanctions and/or Penalties Bursa Securities had on 4 December 2008 publicly reprimanded Equine Capital Berhad for breach of paragraph 9.16(1)(a) of the Listing Requirements of Bursa Securities in respect of the Company s announcement dated 29 May 2008 on its fourth quarterly report for the financial year ended 31 March 2008 ( 4th QR 2008 ) which failed to take into account the adjustments as stated in the Company s announcement dated 28 July The Company had reported an unaudited loss after taxation and minority interest of RM million in its 4th QR 2008 as compared to an audited loss after taxation and minority interest of RM million in its annual audited accounts for the financial year ended 31 March The increase in the loss after taxation and minority interest of RM4.437 million represents a variance of approximately 18.2%. As a result of the breach, Bursa Securities has also imposed the requirement that a limited review on the Company s quarterly report submission be carried out. The limited review must be performed by the Company s external auditors for four quarters commencing from the quarter ended 31 December However, no pecuniary penalty was imposed. 38

41

42 Directors Report The Directors hereby submit their report and the audited fi nancial statements of the Group and of the Company for the fi nancial year ended 31 March PRINCIPAL ACTIVITIES The Company is an investment holding company. The principal activities of the subsidiaries are set out in Note 9 to the fi nancial statements. There have been no signifi cant changes in the nature of these activities during the fi nancial year. RESULTS Group RM 000 Company RM 000 Loss for the fi nancial year (45,182) (574) DIVIDEND No dividend has been paid or declared by the Company since the end of the previous fi nancial year. The Directors do not recommend any fi nal dividend payment in respect of the fi nancial year ended 31 March RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the fi nancial year other than those disclosed in the fi nancial statements. ISSUE OF SHARES AND DEBENTURES During the fi nancial year, the issued and paid-up share capital of the Company was increased from RM192,404,565 to RM227,338,321 by way of conversion of 34,933,756 units of 3% Irredeemable Convertible Unsecured Loan Stocks 2003/2008 ( ICULS ) on the basis of RM1.00 nominal value of ICULS for one (1) new ordinary share of RM1.00 each. The new shares rank pari passu in all respects with the then existing shares of the Company. There were no other issues of new shares during the fi nancial year. There were no issues of debentures during the fi nancial year. 40

43 Directors Report ( cont d ) OPTIONS GRANTED OVER UNISSUED SHARES No options were granted to any person to take up unissued shares of the Company during the year. DIRECTORS The Directors who have held offi ce since the date of the last report are: Y.A.M. Datuk Seri Tengku Ahmad Shah ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Datuk Ahmad Zabri bin Ibrahim Dato Hamzah bin Md Rus Wong Kim Seng Chin Kok Sang ( Appointed on 28 August 2008 ) Othman bin Mohammad ( Appointed on 10 October 2008 ) Datuk Patrick Lim Soo Kit ( Resigned on 10 October 2008 ) In accordance with Article 77 of the Company s Articles of Association, Y.A.M Datuk Seri Tengku Ahmad Shah ibni Almarhum Sultan Salahuddin Abdul Aziz Shah retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election. In accordance with Article 84 of the Company s Articles of Association, Othman bin Mohammad and Chin Kok Sang retire at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election. DIRECTORS INTERESTS The Directors holding offi ce at the fi nancial year end and their benefi cial interests in the ordinary shares and loan stocks of the Company and its related corporations during the fi nancial year ended 31 March 2009 as recorded in the Register of Directors Shareholdings kept by the Company under Section 134 of the Companies Act, 1965 were as follows: Number of ordinary shares of RM1.00 each Balance as at Balance / as at Date of appointment Bought Sold Shares in the Company Indirect interest Othman bin Mohammad - 17,403,936-17,403,936 By virtue of his interest in shares through Duta Kembang Sdn. Bhd., Perharap Sdn. Bhd., and Temasya Permai Sdn. Bhd., Encik Othman bin Mohammad is deemed to be interested in the shares of the Company and its subsidiaries to the extent that the Company has an interest by virtue of Section 6A of the Companies Act, Other than as stated above, none of the other Directors who held offi ce at the end of the fi nancial year had any interest in the ordinary shares in the Company or its related corporations 41

44 Directors Report ( cont d ) DIRECTORS BENEFITS Since the end of the previous fi nancial year, none of the Directors have received or become entitled to receive any benefi t ( other than a benefi t included in the aggregate amount of emoluments received or due and receivable by the Directors as shown in Note 32 and Note 37(c) to the fi nancial statements ) by reason of a contract made by the Company or a related company with the Director or with a fi rm of which the Director is a member, or with a company in which the Director has a substantial fi nancial interest. There were no arrangements during and at the end of the fi nancial year, to which the Company is a party, which had the object of enabling the Directors to acquire benefi ts by means of the acquisition of shares in or debentures of the Company or any other body corporate. OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (I) AS AT THE END OF THE FINANCIAL YEAR (a) Before the income statements and balance sheets of the Group and of the Company were made out, the Directors took reasonable steps : (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and have satisfi ed themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and (ii) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values. (b) In the opinion of the Directors, the results of the operations of the Group and of the Company during the fi nancial year have not been substantially affected by any item, transaction or event of a material and unusual nature except for the following items which are disclosed in Note 32 to the fi nancial statements : (i) development expenditure written off amounted to RM12,647,468; (ii) provision for bumiputra quota penalties amounted to RM10,976,379; and (iii) provision for foreseeable losses on sale revocation amounted to RM4,200,000. (II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT (c) The Directors are not aware of any circumstances : (i) which would render the amount written off for bad debts or render the amount of provision for doubtful debts in the fi nancial statements of the Group and of the Company inadequate to any material extent; or (ii) which would render the values attributed to current assets in the fi nancial statements of the Group and of the Company misleading; and (iii) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. (d) In the opinion of the Directors : (i) there has not arisen any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the fi nancial year in which this report is made; and 42

45 Directors Report OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY ( cont d ) (II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT ( cont d ) (ii) no contingent or other liability has become enforceable, or is likely to become enforceable within the period of twelve (12) months after the end of the fi nancial year which will or may affect the abilities of the Group and of the Company to meet their obligations as and when they fall due. (III) AS AT THE DATE OF THIS REPORT (e) There are no charges on the assets of the Group and of the Company which have arisen since the end of the fi nancial year to secure the liabilities of any other person. (f) There are no contingent liabilities of the Group and of the Company which have arisen since the end of the fi nancial year. (g) The Directors are not aware of any circumstances not otherwise dealt with in the report or fi nancial statements which would render any amount stated in the fi nancial statements of the Group and of the Company misleading. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR Signifi cant events during the fi nancial year are disclosed in Note 40 to the fi nancial statements. SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE Signifi cant events subsequent to the balance sheet date are disclosed in Note 41 to the fi nancial statements. AUDITORS The auditors, BDO Binder, have expressed their willingness to continue in offi ce. Signed on behalf of the Board in accordance with a resolution of the Directors. Y.A.M Datuk Seri Tengku Ahmad Shah ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Director Othman bin Mohammad Director Selangor 16 July

46 Statement By Directors In the opinion of the Directors, the fi nancial statements set out on pages 47 to 107 have been drawn up in accordance with applicable approved Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2009 and of the results of the operations of the Group and of the Company and of the cash fl ows of the Group and of the Company for the fi nancial year then ended. On behalf of the Board, Y.A.M Datuk Seri Tengku Ahmad Shah ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Director Othman bin Mohammad Director Selangor 16 July 2009 Statutory Declaration I, Lee Tart Choong, being the offi cer primarily responsible for the fi nancial management of Equine Capital Berhad, do solemnly and sincerely declare that the fi nancial statements set out on pages 47 to 107 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly ) declared by the abovenamed at ) Kuala Lumpur this ) 16 July 2009 ) Before me : 44

47 Independent Auditors Report to the members of Equine Capital Berhad Report on the Financial Statements We have audited the fi nancial statements of Equine Capital Berhad, which comprise the balance sheets as at 31 March 2009 of the Group and of the Company, and the income statements, statements of changes in equity and cash fl ow statements of the Group and of the Company for the year then ended, and a summary of signifi cant accounting policies and other explanatory notes, as set out on pages 47 to 107. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation and fair presentation of these fi nancial statements in accordance with applicable approved Financial Reporting Standards in Malaysia and the provisions of the Companies Act, This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of fi nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the fi nancial statements have been properly drawn up in accordance with applicable approved Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2009 and of the results of the operations of the Group and of the Company and of the cash fl ows of the Group and of the Company for the fi nancial year then ended. 45

48 Independent Auditors Report to the members of Equine Capital Berhad ( cont d ) Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965, we also report the following : (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. (b) We have considered the fi nancial statements and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 9 to the fi nancial statements. (c) We are satisfi ed that the fi nancial statements of the subsidiaries that have been consolidated with the Company s fi nancial statements are in form and content appropriate and proper for the purposes of the preparation of the fi nancial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. (d) The audit reports on the fi nancial statements of the subsidiaries did not contain any qualifi cation or any adverse comment made under Section 174(3) of the Act. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report. BDO Binder AF : 0206 Chartered Accountants Hiew Kim Loong 2858/08/10 (J) Partner Kuala Lumpur 16 July

49 Balance Sheets as at 31 March 2009 ASSETS Non-current assets Group Company NOTE RM 000 RM 000 RM 000 RM 000 Property, plant and equipment 7 10,026 12, Investment properties 8 66,743 35, Investment in subsidiaries , ,232 Investment in an associate 10-1, Other investments Land held for property development , , Goodwill on consolidation Deferred tax assets 26 4, , , , ,232 Current assets Inventories 14 36,297 41, Property development costs 15 25,521 23, Accrued billings 10,787 14, Trade and other receivables 16 98,434 93, , ,333 Current tax assets Fixed deposits, cash and bank balances 17 8,031 21,906 3,166 17, , , , ,203 Asset classifi ed as held for sale 18 1, , , , ,203 TOTAL ASSETS 553, , , ,435 EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital , , , ,404 3% Irredeemable Convertible Unsecured Loan Stocks 2003/2008 ( ICULS ) 20-34,934-34,934 (Net accumulated losses)/reserves 21 ( 8,126 ) 37,165 38,183 38,866 TOTAL EQUITY 219, , , ,204 47

50 Balance Sheets as at 31 March 2009 ( cont d ) LIABILITIES Non-current liabilities Group Company NOTE RM 000 RM 000 RM 000 RM 000 Borrowings - secured 22 63,811 71,789 60,747 60,000 Deferred tax liabilities 26 37,051 40, Trade and other payables 27 36,055 36, Current liabilities 136, ,759 60,747 60,000 Progress billings 4,219 5, Trade and other payables 27 82,722 83,758 31,202 31,031 Provisions 28 26,053 11, Borrowings - secured 22 49,771 58,929 20,200 35,200 Current tax payable 34,773 34, , ,627 51,402 66,231 TOTAL LIABILITIES 334, , , ,231 TOTAL EQUITY AND LIABILITIES 553, , , ,435 The attached notes form an integral part of the fi nancial statements. 48

51 Income Statements for the financial year ended 31 March 2009 Group Company NOTE RM 000 RM 000 RM 000 RM 000 Revenue 29 86, ,974-20,614 Cost of sales 30 (102,390) (99,211) - - Gross (loss)/profi t (16,235) 9,763-20,614 Other operating income 10,459 5, Administration and marketing expenses (21,345) (27,518) (574) (684) Other operating expenses (13,433) (17,304) - - Finance costs 31 (5,917) (2,892) - - Share of loss of associate (94) (2,401) - - (Loss)/Profi t before tax 32 (46,565) (34,916) (574) 19,930 Tax income/(expense) 33 1,383 6,112 - (5,244) (Loss)/Profi t for the fi nancial year (45,182) (28,804) (574) 14,686 Attributable to : Equity holders of the Company (45,182) (28,804) Minority interest - - (45,182) (28,804) Loss per ordinary share attributable to equity holders of the Company (sen) : Basic 34(a) (21.18) (17.58) Diluted 34(b) (21.18) (17.58) The attached notes form an integral part of the fi nancial statements. 49

52 Statements Of Changes In Equity for the financial year ended 31 March Attributable to the equity holders of the Company Retained Ordinary Asset earnings/ share revaluation (Accumulated capital ICULS reserve losses) Total Group Note RM 000 RM 000 RM 000 RM 000 RM 000 At 31 March ,015 77,323-50, ,408 Conversion of ICULS into ordinary shares 20 42,389 (42,389) ,404 34,934-50, ,408 ICULS interest representing total (1,909) (1,909) expense recognised directly in equity Loss for the fi nancial year (28,804) (28,804) Total recognised income and expense for the fi nancial year (30,713) (30,713) Revaluation surplus on property, plant and equipment ,808-17,808 At 31 March ,404 34,934 17,808 19, ,503 Conversion of ICULS into ordinary shares 20 34,934 (34,934) ,338-17,808 19, ,503 ICULS interest representing total (109) (109) expense recognised directly in equity Loss for the fi nancial year (45,182) (45,182) Total recognised income and expense for the fi nancial year (45,291) (45,291) At 31 March ,338-17,808 (25,934) 219,212 50

53 Statements Of Changes In Equity for the financial year ended 31 March 2009 ( cont d ) Attributable to the equity holders of the Company Ordinary share Retained capital ICULS earnings Total Company Note RM 000 RM 000 RM 000 RM 000 At 31 March ,015 77,323 26, ,427 Conversion of ICULS into ordinary shares 20 42,389 (42,389) ,404 34,934 26, ,427 ICULS interest representing total - - (1,909) (1,909) expense recognised directly in equity Profi t for the fi nancial year ,686 14,686 Total recognised income and expense for the fi nancial year ,777 12,777 At 31 March ,404 34,934 38, ,204 Conversion of ICULS into ordinary shares 20 34,934 (34,934) ,338-38, ,204 ICULS interest representing total - - (109) (109) expense recognised directly in equity Loss for the fi nancial year - - (574) (574) Total recognised income and expense for the fi nancial year - - (683) (683) At 31 March ,338-38, ,521 The attached notes form an integral part of the fi nancial statements. 51

54 Cash Flow Statements for the financial year ended 31 March 2009 Group Company Note RM 000 RM 000 RM 000 RM 000 CASH FLOWS FROM OPERATING ACTIVITIES (Loss)/Profi t before tax (46,565) (34,916) (574) 19,930 Adjustments for : Allowance for doubtful debts 3,466 1, Provision for doubtful debt no longer required (1,137) Depreciation of property, plant and equipment 7 3,264 2, Dividend income - - (20,614) Gain on disposal of property, plant and equipment (402) (11) - - Property, plant and equipment written off Provision for liquidated and ascertained damages 28 4,811 9, Impairment of goodwill 13-6, Impairment of investment in subsidiary Provision for foreseeable losses on sale revocation 28 4, Provision for bumiputra quota penalties 28 10, Development expenditure written off 12, Gain in fair value adjustments of 8 investment properties (3,309) Interest expenses 5,917 2, Interest income (807) (2,774) - - Share of loss in an associate 94 2, Operating loss before working capital changes (5,886) (12,580) (574) (598) (Increase)/Decrease in land held for property development (4,970) 12,816 - Decrease/(Increase) in inventories 5,624 (2,954) - Decrease in property development costs 1,825 1, Decrease/(Increase) in accrued billings 4,122 (445) - - Decrease/(Increase) in trade and other receivables 15,513 13,163 1,398 (1,244) (Decrease)/Increase in progress billings (1,728) 3, (Decrease)/Increase in trade and other payables (920) 13, ,991 Cash generated from operations 13,580 29, ,149 52

55 Cash Flow Statements for the financial year ended 31 March 2009 ( cont d ) Group Company Note RM 000 RM 000 RM 000 RM 000 Interest received 3, Interest paid (7,999) (9,097) - - Liquidated and ascertained damages paid 28 (5,389) (478) - - Tax (paid)/refunded (7,452) (1,994) 54 - Bumiputra quota penalties paid 28 (150) - Dividend received ,254 (17,565) (10,906) 54 15,254 Net cash (used in)/from operating activities (3,985) 18, ,403 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of property, plant and equipment Additional investment in subsidiaries 9(b) (253) Repayment from/(advances to) a former associate 1,247 (2,431) - - Advances to subsidiaries - (133) (13,336) Net repayment from other receivables 7,886 2, Purchase of property, plant and equipment 7(a) (1,089) (659) - - Withdrawal/(Placement) of fi xed deposits pledged with banks 136 (1,676) (42) (1,859) Net cash from/(used in) investing activities 8,977 (2,625) (175) (15,448) CASH FLOWS FROM FINANCING ACTIVITIES Drawdown of bank borrowings 79,917 1,799 75,000 - Repayment of bank borrowings (95,015) (16,692) (89,253) (15,000) Repayment of hire-purchase and lease creditors (1,637) (1,149) - - ICULS interest paid (1,051) (2,320) (1,051) (2,320) Net cash used in fi nancing activities (17,786) (18,362) (15,304) (17,320) Net decrease in cash and cash equivalents (12,794) (2,718) (14,568) (1,365) Cash and cash equivalents at beginning of fi nancial year 10,607 13,325 14,856 16,221 Cash and cash equivalents at end of fi nancial year 35 (2,187) 10, ,856 The attached notes form an integral part of the financial statements. 53

56 Notes To The Financial Statements 31 March GENERAL INFORMATION The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of Bursa Malaysia Securities Berhad. The registered offi ce and principal place of business of the Company are both located at No. 1, Jalan Putra Permai 1A, Taman Equine, Seri Kembangan, Selangor Darul Ehsan. The fi nancial statements are presented in Ringgit Malaysia ( RM ), which is the Company s functional currency. All information presented in RM has been rounded to the nearest thousand, unless otherwise stated. The fi nancial statements were authorised for issue in accordance with a resolution by the Board of Directors on 16 July PRINCIPAL ACTIVITIES The Company is an investment holding company. The principal activities of the subsidiaries are set out in Note 9 to the fi nancial statements. There have been no signifi cant changes in the nature of these activities during the fi nancial year. 3. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The fi nancial statements of the Group and of the Company have been prepared in accordance with applicable approved Financial Reporting Standards ( FRS ) in Malaysia and the provisions of the Companies Act, SIGNIFICANT ACCOUNTING POLICIES 4.1 Basis of accounting The fi nancial statements of the Group and of the Company have been prepared under the historical cost convention except as otherwise stated in the fi nancial statements. The preparation of fi nancial statements requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the fi nancial statements and the reported amounts of revenues and expenses during the reporting period. In addition, the Directors are also required to exercise their judgement in the process of applying the Group s accounting policies. The areas involving such judgements, estimates and assumptions are disclosed in Note 6 to the fi nancial statements. Although these estimates and assumptions are based on the Directors best knowledge of events and actions, actual results could differ from those estimates. 4.2 Basis of consolidation The consolidated fi nancial statements incorporate the fi nancial statements of the Company and all its subsidiaries made up to the end of the year using the purchase method of accounting. Under the purchase method of accounting, the cost of business combination is measured at the aggregate of fair values at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued plus any costs directly attributable to the business combination. At the acquisition date, the cost of business combination is allocated to identifi able assets, liabilities and contingent liabilities in the business combination which are measured initially at their fair values at the acquisition date. The excess of the cost of business combination over the Group s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities is recognised as goodwill. (see Note 4.8 to the fi nancial statements on goodwill). If the cost of business combination is less than the interest in the net fair value of the identifi able assets, liabilities and contingent liabilities, the Group will : 54

57 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) 4.2 Basis of consolidation ( cont d ) (a) reassess the identifi cation and measurement of the acquiree s identifi able assets, liabilities and contingent liabilities and the measurement of the cost of the combination; and (b) recognise immediately in profi t or loss any excess remaining after that reassessment. Where more than one exchange transaction is involved, any adjustment to the fair values of the subsidiary s identifi able assets, liabilities and contingent liabilities relating to previously held interests of the Group is accounted for as a revaluation. Subsidiaries are consolidated from the acquisition date, which is the date on which the Group effectively obtains control, until the date on which the Group ceases to control the subsidiaries. Control exists when the Group has the power to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities. In assessing control, the existence and effect of potential voting rights that are currently convertible or exercisable are taken into consideration. Intragroup balances, transactions and unrealised gains and losses on intragroup transactions are eliminated in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated fi nancial statements. If a subsidiary uses accounting policies other than those adopted in the consolidated fi nancial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its fi nancial statements in preparing the consolidated fi nancial statements. The gain or loss on disposal of a subsidiary, which is the difference between the net disposal proceeds and the Group s share of its net assets as of the date of disposal including the carrying amount of goodwill and the cumulative amount of any exchange differences that relate to the subsidiary, is recognised in the consolidated income statement. Minority interest is that portion of the profi t or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the Group. It is measured at the minority s share of the fair value of the subsidiaries identifi able assets and liabilities at the acquisition date and the minority s share of changes in the subsidiaries equity since that date. Where losses applicable to the minority in a subsidiary exceed the minority interest in the equity of that subsidiary, the excess and any further losses applicable to the minority are allocated against the Group s interest except to the extent that the minority has a binding obligation and is able to make additional investment to cover the losses. If the subsidiary subsequently reports profi ts, such profi ts are allocated to the Group s interest until the minority s share of losses previously absorbed by the Group has been recovered. Minority interest is presented in the consolidated balance sheet within equity and is presented in the consolidated statement of changes in equity separately from equity attributable to equity holders of the Company. Minority interest in the results of the Group is presented in the consolidated income statement as an allocation of the total profi t or loss for the year between minority interest and equity holders of the Company. When the Group purchases a subsidiary s equity from minority interests for cash consideration and the purchase price is established at fair value, the accretion of the Group s interest in the subsidiary is treated as purchases of equity interest for which the acquisition method of accounting is applied. 55

58 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) 4.2 Basis of consolidation ( cont d ) However, the changes of the Group s interest in a subsidiary that does not satisfy the conditions of cash and fair value as described in the preceding paragraph are treated as equity transactions. Any difference between the Group s share of net assets before and after the change, and any consideration received or paid is adjusted to or against group reserves. 4.3 Property, plant and equipment and depreciation All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profi t or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the item and restoring the site on which it is located for which the Group is obligated to incur when the item is acquired. Each part of an item of property, plant and equipment with a cost that is signifi cant in relation to the total cost of the item and which have different useful lives, are depreciated separately. After initial recognition, property, plant and equipment are stated at cost less any accumulated depreciation and any accumulated impairment losses. Freehold land is not depreciated. Construction-in-progress represents machinery under installation and renovation-inprogress which are stated at cost. Construction-in-progress is not depreciated until such time when the assets are available for use. Depreciation on other property, plant and equipment is calculated to write off the cost of the assets to its residual values on a straight line basis over their estimated useful lives. The principal depreciation periods and rates are as follows : Buildings and condominium 50 years Computers and software 33 1 /3 % Furniture, fi ttings and equipment 10% Motor vehicles 20% Ponies and saddles 10% Renovation 15% Stables and horse fl oat 10% - 20% At each balance sheet date, the carrying amount of an item of property, plant and equipment is assessed for impairment when events or changes in circumstances indicate that its carrying amount may not be recoverable. A write down is made if the carrying amount exceeds the recoverable amount (see Note 4.9 to the fi nancial statements in impairment of assets). The residual values, useful lives and depreciation method are reviewed at each fi nancial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefi ts embodied in the items of property, plant and equipment. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate. 56

59 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) 4.3 Property, plant and equipment and depreciation ( cont d ) The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic benefi ts are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the carrying amount is included in profi t or loss and the revaluation surplus related to those assets, if any, is transferred directly to retained earnings. 4.4 Leases and hire-purchase (a) Finance lease and hire-purchase Assets acquired under fi nance leases and hire-purchase which transfer substantially all the risks and rewards of ownership to the Group are recognised initially at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the leases, if this is practicable to determine; if not, the Group s incremental borrowing rate is used. Any initial direct costs incurred by the Group are added to the amount recognised as an asset. The assets are capitalised as property, plant and equipment and the corresponding obligations are treated as liabilities. The property, plant and equipment capitalised are depreciated on the same basis as owned assets. The minimum lease payments are apportioned between the fi nance charge and the reduction of the outstanding liability. The fi nance charges are recognised in profi t or loss over the period of the lease term so as to produce a constant periodic rate of interest on the remaining lease and hire-purchase liabilities. (b) Operating leases A lease is classifi ed as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term. 4.5 Investment properties Investment properties are properties which are held to earn rentals or for capital appreciation or for both. Investment properties are initially measured at cost, which includes transaction costs. After initial recognition, investment properties are stated at fair value. The fair value of investment properties are the prices at which the properties could be exchanged between knowledgeable, willing parties in an arm s length transaction. The fair value of investment properties refl ect market conditions at the balance sheet date, without any deduction for transaction costs that may be incurred on sale or other disposal. Fair values of investment properties are arrived at by reference to market evidence of transaction prices for similar properties. It is performed by registered independent valuers with appropriate recognised professional qualifi cation and has recent experience in the location and category of the investment properties being valued. A gain or loss arising from a change in the fair value of investment properties is recognised in profi t or loss for the period in which it arises. Investment properties are derecognised when either they have been disposed of or when they are permanently withdrawn from use and no future economic benefi t is expected from their disposal. The gains or losses arising from the retirement or disposal of investment properties are determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset and is recognised in profi t or loss in the period of the retirement or disposal. 57

60 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) 4.6 Investments (a) Subsidiaries A subsidiary is an entity in which the Group and the Company has power to control the fi nancial and operating policies so as to obtain benefi ts from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity. An investment in subsidiary, which is eliminated on consolidation, is stated in the Company s separate fi nancial statements at cost less impairment losses, if any. On disposal of such an investment, the difference between the net disposal proceeds and its carrying amount is included in profi t or loss. (b) Associates An associate is an entity over which the Group and the Company has signifi cant infl uence and that is neither a subsidiary nor an interest in a joint venture. Signifi cant infl uence is the power to participate in the fi nancial and operating policy decisions of the investee but is not in control or joint control over those policies. In the Company s separate fi nancial statements, investment in associate is stated at cost less impairment losses, if any. An investment in associate is accounted for in the consolidated fi nancial statements using the equity method of accounting. The investment in associate in the consolidated balance sheet is initially recognised at cost and adjusted thereafter for the post acquisition change in the Group s share of net assets of the investment. The Group s share of the profi t or loss of the associate during the year is recognised in the consolidated income statement. Distributions received from the associate reduce the carrying amount of the investment. Adjustments to the carrying amount may also be necessary for changes in the Group s proportionate interest in the associate arising from changes in the associate s equity that have not been recognised in the associate s profi t or loss. Such changes include those arising from the revaluation of property, plant and equipment and from foreign exchange translation differences. The Group s share of those changes is recognised directly in equity of the Group. Goodwill arising on acquisition of the associates is the excess of cost of investment over the Group s share of the net fair value of net assets of the associate s identifi able assets, liability and contingent liabilities at the date of acquisition. Goodwill relating to the associate is included in the carrying amount of the investment and is not amortised. The excess of the Group s share of the net fair value of the associate s identifi able assets, liabilities and contingent liabilities over the cost of investment is included as income in the determination of the Group s share of the associate s profi t or loss in the period in which the investment is acquired. The associate is accounted for using the equity method from the date signifi cant infl uence commences until the date the Group ceases to have signifi cant infl uence over the associate. When the Group s share of losses in the associate equals or exceeds its interest in the associate, the Group does not recognise further losses unless it has incurred legal or constructive obligations or made payments on its behalf. The interest in the associate is the carrying amount of the investment in associate under the equity method together with any long-term interest that, in substance form part of the Group s net interest in the associate. 58

61 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) 4.6 Investments ( cont d ) (b) Associates ( cont d ) The most recent available fi nancial statements of the associate are used by the Group in applying the equity method. Where the dates of the fi nancial statements are not co-terminous, the share of results is arrived at using the latest audited fi nancial statements which difference in year end is no more than 3 months. Adjustments are made for the effects of any signifi cant transactions or events that occur between the intervening period. Uniform accounting policies are adopted for like transactions and events in similar circumstances. Upon disposal of such investments, the difference between net disposal proceeds and its carrying amount is included in profi t or loss. (c) Other investments Non-current investment other than investments in subsidiaries and associates such as investment in unquoted shares is stated at cost less any accumulated impairment losses. Upon disposal of such investment, the difference between the net disposal proceeds and its carrying amount is recognised in profi t or loss. 4.7 Property development activities (a) Land held for property development Land held for property development, stated at cost less accumulated impairment losses, if any, is classifi ed as non-current assets when no development work has been carried out or where development activities are not expected to be completed within the normal operating cycle. Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. Land held for property development is reclassifi ed as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle. (b) Property development costs Property development costs comprise all cost that are directly attributable to the development activities or that can be allocated on a reasonable basis to such activities. They comprise the cost of land under development, construction costs and other related development costs common to the whole project including administrative overheads and borrowing costs. Development properties on which development activities have commenced or where it can be demonstrated that the development activities can be completed within the normal operating cycle are classifi ed as current assets. Property development revenue is recognised in respect of all development units that have been sold. Revenue recognition commences when the sale of the development unit is effected, upon the commencement of development and construction activities and when the fi nancial outcome can be reliably estimated. The attributable portion of property development costs is recognised as an expense in the period in which the related revenue is recognised. The amount of such revenue and expenses recognised is determined by reference to the stage of completion of development activity at the balance sheet date. The stage of completion is measured by reference to the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. 59

62 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) 4.7 Property development activities ( cont d ) (b) Property development costs ( cont d ) When the fi nancial outcome of a development activity cannot be reliably estimated, the property development revenue is recognised only to the extent of property development costs incurred that is probable to be recoverable and the property development costs on the development units sold are recognised as an expense in the period in which they are incurred. Any expected loss on a development project is recognised as an expense immediately, including costs to be incurred over the defects liability period. Property development costs not recognised as an expense are recognised as an asset measured at the lower of cost and net realisable value. When revenue recognised in profi t or loss exceeds progress billings to purchasers, the balance is classifi ed as accrued billings under current assets. When progress billings exceed revenue recognised in profi t or loss, the balance is classifi ed as progress billings under current liabilities. 4.8 Goodwill Goodwill acquired in a business combination is recognised as an asset at the acquisition date and is initially measured at cost being the excess of the cost of business combination over the Group s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities. After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any. Goodwill is not amortised but instead tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. 4.9 Impairment of assets The carrying amount of assets, except for fi nancial assets (excluding investments in subsidiaries and an associate), deferred tax assets, property development costs, inventories, and investment properties measured at fair value and non-current assets held for sale, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated. Goodwill which has an indefi nite useful life is tested annually for impairment or more frequently if events or changes in circumstances indicate that the goodwill might be impaired. The recoverable amount of an asset is estimated for an individual asset. Where it is not possible to estimate the recoverable amount of the individual asset, the impairment test is carried out on the cash generating unit (CGU) to which the asset belongs. Goodwill acquired in a business combination is from the acquisition date, allocated to each of the Group s CGU or groups of CGU that are expected to benefi t from the synergies of the combination giving rise to the goodwill irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units. The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value in use. In estimating the value in use, the estimated future cash infl ows and outfl ows to be derived from continuing use of the asset and from its ultimate disposal are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset for which the future cash fl ow estimates have not been adjusted. An impairment loss is recognised in the profi t or loss when the carrying amount of the asset or the CGU, including the goodwill, exceeds the recoverable amount of the asset or the CGU. The total impairment loss is allocated, fi rst, to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU on a pro-rate basis of the carrying amount of each asset in the CGU. 60

63 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) 4.9 Impairment of assets ( cont d ) An impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for other assets is reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Such reversals are recognised as income immediately in the profi t or loss Inventories Inventories mainly consist of completed development properties which are stated at the lower of cost and net realisable value. The cost of completed development properties comprises cost of land and relevant development expenditure. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs to completion and the estimated costs necessary to make the sale Financial instruments A fi nancial instrument is any contract that gives rise to a fi nancial asset of one enterprise and a fi nancial liability or equity instrument of another enterprise. A fi nancial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right to receive cash or another fi nancial asset from another enterprise, or a contractual right to exchange fi nancial assets or fi nancial liabilities with another enterprise under conditions that are potentially favourable to the Group. A fi nancial liability is any liability that is a contractual obligation to deliver cash or another fi nancial asset to another enterprise, or a contractual obligation to exchange fi nancial assets or fi nancial liabilities with another enterprise under conditions that are potentially unfavourable to the Group Financial instruments recognised on the balance sheets Financial instruments are recognised on the balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classifi ed as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and losses and gains relating to a fi nancial instrument or a component that is a fi nancial liability shall be recognised as income or expense in profi t or loss. Distribution to holders of an equity instrument is debited directly to equity, net of any related tax effect. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. (a) Receivables Trade receivables and other receivables, including amounts owing by associates and related parties, are carried at anticipated realisable value. Known bad debts are written off and specifi c allowance is made for debts considered to be doubtful of collection. Receivables are not held for trading purposes. 61

64 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) Financial instruments recognised on the balance sheets ( cont d ) (b) Cash and cash equivalents Cash and cash equivalents include cash and bank balances, bank overdrafts, deposits with licensed banks and other short term, highly liquid investments which are readily convertible to cash and which are subject to insignifi cant risk of changes in value. For the purpose of the cash fl ow statements, cash and cash equivalents are presented net of bank overdrafts and pledged deposits, if any. (c) Payables Liabilities for trade and other amounts payable, including amounts owing to related parties, are recognised at fair value of the consideration to be paid in the future for goods and services received. (d) Interest bearing loans and borrowings All loans and borrowings are recognised at the fair value of the consideration received less directly attributable costs. (e) Equity instruments (i) Ordinary shares Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value of shares issued, if any, are accounted for as share premium. Both ordinary shares and share premium are classifi ed as equity. Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax benefi t. Otherwise, they are charged to profi t or loss. Dividends to shareholders are recognised in equity in the period in which they are declared. (ii) Loan stocks ICULS are irredeemable and give the holders the right to convert into ordinary shares of the Company at any time during the tenure. As such, ICULS are recognised in the fi nancial statements based on the nominal value of the loan stocks and are classifi ed as equity. Interests to ICULS holders are recognised in equity in the period in which they are accrued Financial instruments not recognised on the balance sheets There were no fi nancial instruments not recognised on the balance sheets Borrowing costs Borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying asset is capitalised as part of the cost of the asset until when substantially all the activities necessary to prepare the asset for its intended use or sale are complete, after which such expense is charged to profi t or loss. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Capitalisation of borrowing cost is suspended during extended periods in which active development is interrupted. The amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on the borrowing during the period less any investment income on the temporary investment of the borrowing. All other borrowing costs are recognised in profi t or loss in the period in which they are incurred. 62

65 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) 4.13 Income taxes Income taxes include all domestic taxes on taxable profi t. Taxes in the income statement comprises current tax and deferred tax. (a) Current tax Current tax is the amount of income taxes payable or receivable in respect of the taxable profi t or loss for a period. Current tax for the current and prior periods is measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that have been enacted or substantively enacted by the balance sheet date. (b) Deferred tax Deferred tax is recognised in full using the liability method on temporary differences arising between the carrying amount of an asset or liability in the balance sheet and its tax base. Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profi t nor taxable profi t. A deferred tax asset is recognised only to the extent that it is probable that taxable profi t will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amount of a deferred tax asset is reviewed at each balance sheet date. If it is no longer probable that suffi cient taxable profi t will be available to allow the benefi t of part or all of that deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that suffi cient taxable profi t will be available, such reductions will be reversed to the extent of the taxable profi t. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority. Deferred tax will be recognised as income or expense and included in profi t or loss for the period unless the tax relates to items that are credited or charged, in the same or a different period, directly to equity, in which case the deferred tax will be charged or credited directly to equity. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date Provisions Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money is material, the amount of a provision will be discounted to its present value at a pre-tax rate that refl ects current market assessments of the time value of money and the risks specifi c to the liability. Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. If it is no longer probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation, the provision will be reversed. 63

66 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) 4.14 Provisions ( cont d ) Provisions are not recognised for future operating losses. If the Group has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision. Provision for liquidated ascertained damages in respect of projects undertaken by certain subsidiaries is recognised based on the estimated claim in reference to the applicable sale and purchase agreements. Provision for bumiputra quota penalties on non-compliance of bumi quotas is recognised based on estimated penalties imposed by local authorities Employee benefits Short term employee benefits Wages, salaries, social security contributions, paid annual leave, paid sick leave, bonuses and non-monetary benefi ts are recognised as an expense in the year when employees have rendered their services to the Group. Short term accumulating compensated absences such as paid annual leave are recognised as an expense when employees render services that increase their entitlement to future compensated absences. Short term nonaccumulating compensated absences such as sick leave are recognised when the absences occur. Bonuses are recognised as an expense when there is a present, legal or constructive obligation to make such payments, as a result of past events and when a reliable estimate can be made of the amount of the obligation Defined contribution plans The Company and subsidiaries incorporated in Malaysia make contributions to a statutory provident fund and recognise the contribution payable: (a) after deducting contributions already paid as liability; and (b) as an expense in the year in which the employees render their services Revenue recognition Revenue is measured at the fair value of the consideration received or receivable net of discounts and rebates. Revenue is recognised to the extent that it is probable that the economic benefi ts associated with the transaction will fl ow to the Group and the amount of revenue and the cost incurred or to be incurred in respect of the transaction can be reliably measured and specifi c recognition criteria have been met for each of the Group s activities as follows: (a) Revenue from sale of property development projects and property sales Property development revenue is recognised in respect of all development units that have been sold. Revenue from sale of property development projects is recognised based on stage of completion. The stage of completion is based on the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. Revenue from property sales is recognised upon the signing of sale and purchase agreements, when the activity can be reliably measured and when it is probable that future economic benefi ts will fl ow to the entity. (b) Revenue from livery and fees from horse riding lessons Livery and horse riding revenue are recognised upon the performance of services. 64

67 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) 4.16 Revenue recognition ( cont d ) (c) Fees from performance of services Fees in respect of the rendering of management and security services are recognised upon performance of services. (d) Dividend income Dividend income is recognised when the Group s rights to receive payment is established. (e) Interest income Revenue is recognised as the interest accrues using the effective interest method unless collectibility is in doubt. (f) Rental income Rental income is accounted for on a straight line basis over the lease terms on ongoing leases. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straight line basis Non-current assets classified as held for sale Non-current assets are classifi ed as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable. The sale is expected to qualify for recognition as a completed sale within one (1) year from the date of classifi cation. However, an extension of the period required to complete the sale does not preclude the assets (or disposal groups) from being classifi ed as held for sale if the delay is caused by events or circumstances beyond the control of the Group and there is suffi cient evidence that the Group remains committed to its plan to sell the assets (or disposal groups). Immediately before the initial classifi cation as held for sale, the carrying amounts of the non-current assets (or all the assets and liabilities in a disposal group) are measured in accordance with applicable FRSs. On initial classifi cation as held for sale, non-current assets or disposal groups (other than investment properties, deferred tax assets, employee benefi ts assets, and fi nancial assets carried at fair value) are measured at the lower of carrying amount before the initial classifi cation as held for sale and fair value less costs to sell. The differences, if any, are recognised in profi t or loss as impairment loss. Non-current assets held for sale are classifi ed separately on the face of the balance sheet and are stated at the lower of carrying amount immediately before initial classifi cation and fair value less costs to sell and are not depreciated. Any cumulative income or expense recognised directly in equity relating to the non-current asset classifi ed as held for sale is presented separately. If the Group has classifi ed an asset as held for sale but subsequently the criteria for classifi cation is no longer met, the Group ceases to classify the asset as held for sale. The Group measures a non-current asset that ceases to be classifi ed as held for sale (or ceases to be included in a disposal group classifi ed as held for sale) at the lower of: (a) its carrying amount before the asset was classifi ed as held for sale, adjusted for any depreciation, amortisation or revaluations that would have been recognised had the asset not been classifi ed as held for sale; (b) its recoverable amount at the date of the subsequent decision not to sell. 65

68 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING POLICIES ( cont d ) 4.18 Functional currency Items included in the fi nancial statements of each of the Group s entities are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated fi nancial statements are presented in Ringgit Malaysia, which is the Company s functional and presentation currency Segmental reporting Segment reporting is presented for enhanced assessment of the Group s risk and returns. The primary reporting segment information is in respect of business segments as the Group s risks and returns are affected predominantly by differences in the products it produces. The activities of the Group are carried out in Malaysia and as such segment reporting by geographical location is not presented. Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and liabilities are determined before intragroup balances and intragroup transactions are eliminated as part of the consolidation process, except to the extent that such intragroup balances and transactions are between Group enterprises within a single element Contingent liabilities The Group does not recognise a contingent liability but discloses its existence in the fi nancial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confi rmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outfl ow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably. In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. 5. ADOPTION OF NEW FRSs AND AMENDMENT TO FRS 5.1 New FRS and amendment to FRS adopted (a) On 1 April 2008, the Group and the Company adopted the following new FRS which are mandatory for annual periods beginning on or after 1 July 2007: FRS 107 FRS 111 FRS 112 FRS 118 FRS 120 FRS 134 FRS 137 Cash Flow Statements Construction Contracts Income Taxes Revenue Accounting for Governance Grants and Disclosure of Government Assistance Interim Financial Reporting Provisions, Contingent Liabilities and Contingent Assets These FRSs align the Malaysian Accounting Standards Board ( MASB ) FRSs with the equivalent International Accounting Standards ( IASs ), both in terms of form and content. FRS 111 and FRS 120 are not relevant to the Group s operations. The adoption of these Standards will only impact the form and content of disclosures presented in the fi nancial statements. 66

69 Notes To The Financial Statements 31 March ADOPTION OF NEW FRSs AND AMENDMENT TO FRS ( cont d ) 5.1 New FRS and amendment to FRS adopted ( cont d ) (b) The following Amendment and IC Interpretations are mandatory for annual periods beginning on or after 1 July 2007: Amendment to FRS 121 IC Interpretation 1 IC Interpretation 2 IC Interpretation 5 The Effects of Changes in Foreign Exchange Rates Net Investment in a Foreign Operation Changes in Existing Decommissioning Restoration and Similar Liabilities Members Shares in Co-operative Entities and Similar Instruments Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IC Interpretation 6 Liabilities arising from Participating in a Specifi c Market Waste Electrical and Electronic Equipment IC Interpretation 7 Applying the Restatement Approach under FRS Financial Reporting in Hyperinfl ationary Economies IC Interpretation 8 Scope of FRS 2 The above Amendment and IC Interpretations are not relevant to the Group s operations. (c) Framework for the Preparation and Presentation of Financial Statements ( Framework ) is effective for annual periods beginning on or after 1 July The Framework sets out the concepts that underlie the preparation and presentation of fi nancial statements for external users. It is not a MASB approved FRS as defi ned in paragraph 11 of FRS 101 Presentation of Financial Statements and hence, does not defi ne standards for any particular measurement or disclosure issue. 5.2 New FRS not adopted (a) FRS 8 Operating Segments and the consequential amendments resulting from FRS 8 are mandatory for annual fi nancial periods beginning on or after 1 July FRS 8 sets out the requirements for disclosure of information on an entity s operating segments, products and services, the geographical areas in which it operates and its customers. The requirements of this Standard are based on the information about the components of the entity that management uses to make decisions about operating matters. The Standard requires identifi cation of operating segments on the basis of internal reports that are regularly reviewed by the entity s chief operating decision maker in order to allocate resources to the segment and assess its performance. This Standard also requires the amount reported for each operating segment item to be the measure reported to the chief operating decision maker for the purposes of allocating resources to the segment and assessing its performance. Segment information for prior years that is reported as comparative information for the initial year of application would be restated to conform to the requirements of this Standard. The adoption of this standard will only impact the form and content of disclosure presented in the fi nancial statements. 67

70 Notes To The Financial Statements 31 March ADOPTION OF NEW FRSs AND AMENDMENT TO FRS ( cont d ) 5.2 New FRS not adopted ( cont d ) (b) FRS 4 Insurance Contracts and the consequential amendments resulting from FRS 4 are mandatory for annual fi nancial periods beginning on or after 1 January FRS 4 replaces the existing FRS General Insurance Business and FRS Life Insurance Business. This Standard applies to all insurance contracts, including reinsurance contracts that an entity issues and to reinsurance contracts that it holds. This Standard prohibits provisions for potential claims under contracts that are not in existence at the reporting date, and requires a test for the adequacy of recognised insurance liabilities and an impairment test for reinsurance assets. This Standard also requires an insurer to keep insurance liabilities in its balance sheet until they are discharged or cancelled, or expire, and to present insurance liabilities without offsetting them against related reinsurance assets. FRS 4 is not relevant to the Group s operations (c) FRS 7 Financial Instruments: Disclosures and the consequential amendments resulting from FRS 7 are mandatory for annual fi nancial periods beginning on or after 1 January FRS 7 replaces the disclosure requirements of the existing FRS 132 Financial Instruments: Disclosure and Presentation. The standard applies to all risks arising from a wide array of fi nancial instruments and requires the disclosure of the signifi cance of fi nancial instruments for an entity s fi nancial position and performance. By virtue of the exemption provided under paragraph 44AB of FRS 7, the impact of applying FRS 7 on the Group s fi nancial statements upon fi rst adoption of the FRS as required by paragraph 30(b) of FRS 108 Accounting Policies, Change in Accounting Estimates and Errors is not disclosed. (d) FRS 123 Borrowing Costs and the consequential amendments resulting from FRS 123 are mandatory for annual periods beginning on or after 1 January This Standard removes the option of immediately recognising as an expense borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. However, capitalisation of borrowing costs is not required for assets measured at fair value, and inventories that are manufactured or produced in large quantities on a repetitive basis, even if they take a substantial period of time to get ready for use or sale. The Group does not expect any signifi cant impact on the consolidated fi nancial statements arising from the adoption of this Standard. (e) FRS 139 Financial Instruments: Recognition and Measurement and the consequential amendments resulting from FRS 139 are mandatory for annual fi nancial periods beginning on or after 1 January This standard establishes the principles for the recognition and measurement of fi nancial assets and fi nancial liabilities including circumstances under which hedge accounting is permitted. By virtue of the exemption provided under paragraph 103AB of FRS 139, the impact of applying FRS 139 on the consolidated fi nancial statements upon fi rst adoption of the FRS as required by paragraph 30(b) of FRS 108 Accounting Policies, Change in Accounting Estimates and Errors is not disclosed. (f) Amendments to FRS 2 Share-based Payment: Vesting Conditions and Cancellations are mandatory for annual fi nancial periods beginning on or after 1 January

71 Notes To The Financial Statements 31 March ADOPTION OF NEW FRSs AND AMENDMENT TO FRS ( cont d ) 5.2 New FRS not adopted ( cont d ) (f) These amendments clarify that vesting conditions comprise service conditions and performance conditions only. Cancellations by parties other than the Group are accounted for in the same manner as cancellations by the Group itself and features of a share-based payment that are non-vesting conditions are included in the grant date fair value of the share-based payment. These Amendments are not relevant to the Group s operations. (g) Amendments to FRS 1 First-time Adoption of Financial Reporting Standards and FRS 127 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate is mandatory for annual periods beginning on or after 1 January These amendments allow fi rst-time adopters to use a deemed cost of either fair value or the carrying amount under previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled entities and associates in the separate fi nancial statements. The cost method of accounting for an investment has also been removed pursuant to these amendments. The Group does not expect any signifi cant impact on the consolidated fi nancial statements arising from the adoption of these amendments. (h) IC Interpretation 9 Reassessment of Embedded Derivatives is mandatory for annual fi nancial periods beginning on or after 1 January This Interpretation prohibits the subsequent reassessment of embedded derivatives unless there is a change in the terms of the host contract that signifi cantly modifi es the cash fl ows that would otherwise be required by the host contract. The Group does not expect any impact on the Group fi nancial statements arising from the adoption of this Interpretation. (i) IC Interpretation 10 Interim Financial Reporting and Impairment is mandatory for annual fi nancial periods beginning on or after 1 January This Interpretation prohibits the reversal of an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument or a fi nancial asset carried at cost. The Group does not expect any signifi cant impact on the consolidated fi nancial statements arising from the adoption of this Interpretation. (j) IC Interpretation 11 FRS 2 - Group and Treasury Share Transactions is mandatory for annual periods beginning on or after 1 January This Interpretation requires share-based payment transactions in which the Group receives services from employees as consideration for its own equity instruments to be accounted for as equity-settled, regardless of the manner of satisfying the obligations to the employees. 69

72 Notes To The Financial Statements 31 March ADOPTION OF NEW FRSs AND AMENDMENT TO FRS ( cont d ) 5.2 New FRS not adopted ( cont d ) (j) If the Group grants rights to its equity instruments to the employees of its subsidiaries, this Interpretation requires the Group to recognise the equity reserve for the obligation to deliver the equity instruments when needed whilst the subsidiaries shall recognise the remuneration expense for the services received from employees. If the subsidiaries grant rights to equity instruments of the Group to its employees, this Interpretation requires the Group to account for the transaction as cash-settled, regardless of the manner the subsidiaries obtain the equity instruments to satisfy its obligations. This Interpretation is not relevant to the Group s operations. (k) IC Interpretation 13 Customer Loyalty Programmes is mandatory for annual periods beginning on or after 1 January This Interpretation requires the separation of award credits as a separately identifi able component of sales transactions involving the award of free or discounted goods or services in the future. The fair value of the consideration received or receivable from the initial sale shall be allocated between the award credits and the other components of the sale. If the Group supplies the awards itself, the consideration allocated to the award credits shall only be recognised as revenue when the award credits are redeemed. If a third party supplies the awards, the Group shall assess whether it is acting as a principal or agent in the transaction. If the Group is acting as the principal in the transaction, it shall measure its revenue as the gross consideration allocated to the award credits. If the Group is acting as an agent, it shall measure its revenue as the net amount retained on its own account, and recognise the net amount as revenue when the third party becomes obliged to supply the awards and entitled to receive the consideration for doing so. This Interpretation is not relevant to the Group s operations. (l) IC Interpretation 14 FRS The Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and their Interaction is mandatory for annual periods beginning on or after 1 January This Interpretation applies to all post-employment defi ned benefi ts and other long-term employee defi ned benefi ts. This Interpretation clarifi es that an economic benefi t is available if the Group can realise it at some point during the life of the plan or when the plan liabilities are settled, and that it does not depend on how the Group intends to use the surplus. A right to refund is available to the Group in stipulated circumstances and the economic benefi t available shall be measured as the amount of the surplus at the balance sheet date less any associated costs. If there are no minimum funding requirements, the economic benefi t available shall be determined as a reduction in future contributions as the lower of the surplus in the plan and the present value of the future service cost to the Group. If there is a minimum funding requirement for contributions relating to the future accrual of benefi ts, the economic benefi t available shall be determined as a reduction in future contributions at the present value of the estimated future service cost less the estimated minimum funding required in each fi nancial year. The Group does not expect any impact on the fi nancial statements arising from the adoption of this Interpretation. 70

73 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS 6.1 Changes in estimates FRS 116 Property, Plant and Equipment requires the review of the residual value and remaining useful life of an item of property, plant and equipment at least at each fi nancial year end. The Group revised the estimated useful life of certain computers and software from fi ve (5) years to three (3) years with effect from 1 April The revisions were accounted for prospectively as a change in accounting estimate and as a result, the effect of these revisions on depreciation expenses, in current and future periods will be as follows:- Year Increase/(Decrease) in depreciation expenses RM , , (348,325) 2012 (462,103) 2013 (115,526) 6.2 Critical judgements made in applying accounting policies The following are judgements made by management in the process of applying the Group s accounting policies that have the most signifi cant effect on the amounts recognised in the fi nancial statements. (a) Classifi cation between investment properties and land held for property development The classifi cation between investment properties and land held for property development are the judgements made by management in the process of applying the Group s accounting policies that have the most signifi cant effect on the amounts recognised in the fi nancial statements. The Group has developed certain criteria based on FRS 140 Investment Property in making judgement whether a property qualifi es as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both. Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a fi nance lease), the Group would account for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignifi cant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so signifi cant that a property does not qualify as investment property. During the fi nancial year, the Group has determined that certain properties previously classifi ed under land held for property development met the criteria based on FRS 140 to qualify as investment properties. These properties have been reclassifi ed accordingly. (b) Non-current asset held for sale An investment in an associate has been classifi ed as non-current asset held for sale as the management has committed to a plan to sell the investment as at the balance sheet date. Barring any unforeseen circumstances, the Group expects that the sale of investment in associate to be completed within the next twelve (12) months. (c) Contingent liabilities The determination of treatment of contingent liabilities is based on management s view of the expected outcome of the contingencies for matters in the ordinary course of the business. 71

74 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS ( cont d ) 6.3 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year are discussed below: (a) Impairment on land held for property development The Group determines whether land held for property development is impaired based on an estimation of the valuein-use of the subsidiaries to which land held for property development is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash fl ows from the existing and future projects of the subsidiaries and also to choose a suitable discount rate in order to calculate the present value of those cash fl ows. The discount rate used is 8% which is the Group s cost of fund. (b) Depreciation of property, plant and equipment The cost of property, plant and equipment is depreciated on a straight-line basis over the assets useful lives. Management estimates the useful lives of these assets as disclosed in Note 4.3 to the fi nancial statements. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. (c) Property development The Group recognises revenue and expenses from property development in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. Signifi cant judgement is exercised in determining the stage of completion, the extent of recovery of the property development costs incurred, the total estimated property development revenue and property development costs. The Group s judgement is based on past experience and by reference to work performed by specialists. (d) Deferred tax assets Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profi t will be available against which the losses and capital allowances can be utilised. Signifi cant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profi ts together with future tax planning strategies. (e) Income taxes Judgement is required in determining the capital allowances and deductibility of certain expenses when estimating the provision for income taxes. There were transactions during the ordinary course of business for which the ultimate tax determination of whether additional taxes will be due. Where the fi nal tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax in the period in which the outcome is known. (f) Allowance for doubtful debts The Group makes allowance for doubtful debts based on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. An analysis of historical bad debt, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms are performed when making a judgement to evaluate the adequacy of the allowance for doubtful debts of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables. (g) Valuation of investment properties Fair value for investment property is arrived at by reference to market evidence of transaction prices for similar properties, performed by registered independent valuers having an appropriate recognised professional qualifi cation and recent experience in the location and category of the properties being valued. 72

75 Notes To The Financial Statements 31 March SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS ( cont d ) 6.3 Key sources of estimation uncertainty ( cont d ) (h) Fair values of borrowings The fair values of borrowings are estimated by discounting future contractual cash fl ows at the current market interest rates available to the Group for similar fi nancial instruments. It is assumed that the effective interest rates approximate the current market interest rates available to the Group based on its size and its business risk. 7. PROPERTY, PLANT AND EQUIPMENT Balance Depreciation Balance as at Written charge for as at Group Additions Disposal off the year RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Carrying amount Buildings and condominium 4, (114) 4,550 Computers and software 4, (513) (2,073) 2,185 Furniture, fi ttings and equipment 1, (333) (286) 1,010 Motor vehicles (339) - (449) 805 Ponies and saddles (56) (96) (76) 341 Renovation (17) (167) 270 Stables and horse fl oat (99) ,448 2,196 (395) (959) (3,264) 10, At Accumulated Carrying Cost depreciation amount RM 000 RM 000 RM 000 Buildings and condominium 5,175 (625) 4,550 Computers and software 5,167 (2,982) 2,185 Furniture, fi ttings and equipment 1,680 (670) 1,010 Motor vehicles 2,477 (1,672) 805 Ponies and saddles 621 (280) 341 Renovation 1,564 (1,294) 270 Stables and horse fl oat 1,018 (153) ,702 (7,676) 10,026 73

76 Notes To The Financial Statements 31 March PROPERTY, PLANT AND EQUIPMENT ( cont d ) Revaluation Reclassified surplus on as Balance property, investment Written Depreciation Balance as at plant and property off/ Reclassifi- charge for as at Group Additions equipment (Note 8) Disposal cation the year RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Carrying amount Freehold land 10,160-17,808 (27,968) Buildings and condominium 11, (7,014) - - (267) 4,527 Computers and software 1,848 3, (4) - (1,251) 4,083 Furniture, fi ttings and equipment 1, (212) 1,210 Motor vehicles 1, (492) 848 Ponies and saddles (42) - (101) 569 Renovation (18) - - (174) 247 Stables and horse fl oat (25) 964 Construction-in-progress (989) ,479 3,729 17,808 (35,000) (46) - (2,522) 12, At Accumulated Carrying Cost depreciation amount RM 000 RM 000 RM 000 Buildings and condominium 5,259 (732) 4,527 Computers and software 7,611 (3,528) 4,083 Furniture, fi ttings and equipment 2,789 (1,579) 1,210 Motor vehicles 4,474 (3,626) 848 Ponies and saddles 1,014 (445) 569 Renovation 1,707 (1,460) 247 Stables and horse fl oat 1,018 (54) ,872 (11,424) 12,448 74

77 Notes To The Financial Statements 31 March PROPERTY, PLANT AND EQUIPMENT ( cont d ) (a) During the fi nancial year, the Group made the following cash payments to purchase property, plant and equipment : Group RM 000 RM 000 Purchase of property, plant and equipment 2,196 3,729 Financed by hire-purchase arrangements (544) (3,070) Set-off with other receivables (563) - Cash payments on purchase of property, plant and equipment 1, (b) Included in the carrying amount of property, plant and equipment of the Group are assets charged for credit facilities granted to the Group as disclosed in Note 23 as follows : Group RM 000 RM 000 Buildings and condominium (c) Included in the carrying amount of property, plant and equipment of the Group are assets acquired under hire-purchase and fi nance lease as follows : Group RM 000 RM 000 Computers and software 1,521 3,111 Furniture, fi ttings and equipment - 26 Motor vehicles ,215 3,923 (d) Building of a subsidiary amounted to RM 324,253 (2008: RM331,553) was erected on a long term leasehold land that belongs to a third party. 75

78 Notes To The Financial Statements 31 March INVESTMENT PROPERTIES Reclassified from land held Balance for property as at development Fair value Balance as (Note 12) adjustments at Group RM 000 RM 000 RM 000 RM 000 Carrying amount Leasehold land - 27,073 3,309 30,382 Freehold land 27, ,968 Buildings 7,032 1,361-8,393 35,000 28,434 3,309 66,743 Reclassified from property, Balance plant and as at equipment Fair value Balance as (Note 7) adjustments at Group RM 000 RM 000 RM 000 RM 000 Carrying amount Freehold land - 27,968-27,968 Building - 7,032-7,032-35,000-35,000 Fair value for investment properties are arrived at by reference to market evidence of transaction prices for similar properties, performed by registered independent valuers having an appropriate recognised professional qualifi cation and recent experience in the location and category of the properties being valued. The investment properties of the subsidiaries with carrying amount of RM65,381,557 (2008: RM35,000,000) have been pledged as securities for credit facilities granted to the Company (Note 23). Direct operating expenses arising from investment properties generating rental income during the fi nancial year are as follows: Group RM 000 RM 000 Repairs and maintenance Quit rent and assessment

79 Notes To The Financial Statements 31 March INVESTMENT IN SUBSIDIARIES Company RM 000 RM 000 Unquoted equity shares, at cost 190, ,318 Less: Impairment losses (86) (86) 190, ,232 The details of the subsidiaries are as follows : Effective equity interest Country of Name of company incorporation % % Principal activities Kuala Lumpur Industries Malaysia Investment holding Holdings Berhad Kuala Lumpur Industries Malaysia Investment holding and Berhad rental of properties Syarikat Tenaga Sahabat Malaysia Property development Sdn. Bhd. Taman Equine (M) Sdn. Bhd. Malaysia Investment holding ( TESB ) and property development Exceed Concept Sdn. Bhd. Malaysia Project developer ( ECSB )* Penaga Pesona Sdn. Bhd. Malaysia Property development ( PPSB )* 77

80 Notes To The Financial Statements 31 March INVESTMENT IN SUBSIDIARIES ( cont d ) Effective equity interest Country of Name of company incorporation % % Principal activities Taman Equine Riding Malaysia Property development Sdn. Bhd. Kelab Taman Equine Malaysia Property development Sdn. Bhd. Equine Park Stud Sdn. Bhd. Malaysia Property development Akademi Ekuestrian Malaysia Recreational and Selangor Sdn. Bhd. ( AES ) equestrian activities Equine Park Country Resort Malaysia Dormant Sdn. Bhd. ( EPCR ) Pertanian Taman Equine Malaysia Property development Sdn. Bhd. Taman Equine Industrial Malaysia Property development Sdn. Bhd. Permai Construction Sdn. Bhd. Malaysia Construction (formerly known as Taman Equine Rekreasi Sdn. Bhd.) ( PCSB ) Tujuan Ehsan Sdn. Bhd. Malaysia Property development ( Tujuan Ehsan ) Duta Security Sdn. Bhd. Malaysia Providing security ( DSSB )* services * Subsidiaries not audited by BDO Binder. 78

81 Notes To The Financial Statements 31 March INVESTMENT IN SUBSIDIARIES ( cont d ) (a) During the fi nancial year, PCSB increased its issued and paid up capital from RM80,000 to RM800,000 by the allotment of 720,000 new ordinary shares of RM1.00 each at par which were fully subscribed by TESB by way of cash. The above acquisition has no effect on the fi nancial position and results of the Group. (b) In the previous fi nancial year, the Company undertook a reorganisation exercise which involves the acquisition of certain subsidiaries of a wholly-owned subsidiary, TESB, as follows: (i) acquisition of 100,000 ordinary shares of RM1.00 each, representing the entire equity interest in Equine Park Stud Sdn. Bhd. for a cash consideration of RM100,000; (ii) acquisition of 153,947 ordinary shares of RM1.00 each, representing the entire equity interest in Kelab Taman Equine Sdn. Bhd. for a cash consideration of RM153,947; and (iii) acquisition of 3 ordinary shares of RM1.00 each, representing the entire equity of Taman Equine Riding Sdn. Bhd. for a cash consideration of RM INVESTMENT IN AN ASSOCIATE Group RM 000 RM 000 Unquoted equity shares, at cost 3,971 3,971 Share of post-acquisition reserves (2,495) (2,401) Reclassifi ed to asset held for sale (Note 18) (1,476) - Investment in associate - 1,570 79

82 Notes To The Financial Statements 31 March INVESTMENT IN AN ASSOCIATE ( cont d ) The details of the associate are as follows : Effective equity interest Country of Name of company incorporation % % Principal activities Associate of TESB Abad Naluri Sdn. Bhd. ( ANSB ) Malaysia Property development On 20 October 2008, TESB entered into a share sale agreement with at third party to dispose of its entire 25% equity interest in its associated company for a cash consideration of RM2.0 million. Consequently, the investment in this associate has been reclassifi ed as asset held for sale. The sale transaction is pending completion of the condition precedent relating to approval from the relevant authority. 11. OTHER INVESTMENTS Group RM 000 RM 000 Unquoted equity shares in Malaysia, at cost LAND HELD FOR PROPERTY DEVELOPMENT Group RM 000 RM 000 Balance as at 1 April 362, ,802 Additions during the fi nancial year 8,745 17,890 Charged out to income statement (12,647) - Amounts recovered from a project manager (11,255) - Reclassifi ed to other receivables (23,745) - Transferred from inventories 1,202 - Transferred to investment properties (Note 8) (28,434) - Transferred to property development costs (Note 15) (4,977) (28,381) Balance as at 31 March 291, ,311 At cost Long term prepaid lease payments for land 192, ,655 Development costs 99, , , ,311 80

83 Notes To The Financial Statements 31 March LAND HELD FOR PROPERTY DEVELOPMENT ( cont d ) (a) The development expenditure within land held for property development in subsidiaries comprises the cost of development and construction of the Penang International Equestrian Centre ( PIEC ). This is in respect of a design and build agreement signed between the Group through its wholly owned subsidiary, Exceed Concept Sdn. Bhd. ( ECSB ), and Abad Naluri Sdn. Bhd. ( ANSB or the Employer ) on 3 July 2006 for the construction of PIEC. On 1 April 2008, the Employer signed a supplementary agreement with Penang Turf Club ( PTC ). Under the supplementary agreement, the Employer shall at its cost and expense undertake and complete or cause to be taken and completed the construction of PIEC to the reasonable satisfaction of PTC within 36 months. However, at the date of this report, the Employer has not secured the land for the intended development of PIEC. During the year under review, no work was carried out on the above project. Under the terms of the agreement between ECSB and the Employer, the Employer shall make advance payment to meet the mobilisation costs of the project works and the balance of the contract sum is to be paid progressively by the Employer to ECSB within fourteen (14) days from the date of the relevant architect s certifi cate. ECSB had extended RM35 million advances to the project manager to carry out the design, planning, preliminary and mobilisation work during the pre-construction stage. In the agreement, the project manager has an obligation to refund in full the advances for the pre-construction expenses to ECSB in the event the agreement is terminated. During the fi nancial year, due to the delay in the Employer in securing the land for the intended development of PIEC as mentioned above, the project manager has mutually agreed with ECSB to suspend the execution of works specifi ed under the agreement. As the result of the suspension, the project manager had agreed to refund all advances and had refunded RM11,255,265 to ECSB during the year. The balance of RM23,744,735 has been reclassifi ed to other receivable as disclosed in Note 16(d) (ii) to the fi nancial statements. (b) Interest amounting to RM507,734 (2008: RM4,047,383) is capitalised in the development costs of the Group at rate of 7.14% (2008: 8.05%) per annum. (c) Land held for property development of the Group amounted to RM274,833,177 (2008: RM320,568,737) has been charged to banks for credit facilities granted to the Group as disclosed in Notes 23 and 25 to the fi nancial statements. 13. GOODWILL ON CONSOLIDATION Group RM 000 RM 000 Balance as at 1 April - 6,258 Less: Impairment - (6,258) Balance as at 31 March INVENTORIES Group RM 000 RM 000 Completed development properties: At cost 34,696 41,921 At net realisable value 1,601-36,297 41,921 Completed development properties of the Group amounted to RM13,584,421 (2008: RM37,797,429) have been charged to banks for credit facilities granted to the Group as disclosed in Notes 23 and 25 to the fi nancial statements. 81

84 Notes To The Financial Statements 31 March PROPERTY DEVELOPMENT COSTS Group RM 000 RM 000 Balance as at 1 April 130, ,878 Costs incurred during the fi nancial year : - transferred from land held for property development (Note 12) 4,977 28,381 - development costs 70,976 64, , ,420 Transferred to completed development properties (113,132) (138,477) 92, ,943 Costs charged to income statements: - previous years (106,171) (160,917) - current year (70,836) (83,731) Transferred to completed development properties 113, ,477 (63,875) (106,171) Transferred to inventories (3,582) (6,786) Balance as at 31 March 25,521 23,986 Included in the gross amounts of property development costs are as follow : - long term prepaid lease payments for land 32,337 37,802 - development costs 60,641 99,141 92, ,943 Interest amounting to RM2,402,349 (2008: RM2,091,105) is capitalised in the development costs of the Group at rate of 7.14% (2008: 8.05%) per annum. Property development cost of the Group amounted to RM25,520,285 (2008: RM23,986,070) has been charged to banks for credit facilities granted to the Group as disclosed in Note 23 to the fi nancial statements. 82

85 Notes To The Financial Statements 31 March TRADE AND OTHER RECEIVABLES Group Company RM 000 RM 000 RM 000 RM 000 Trade receivables Third parties 48,690 58, Less : Allowance for doubtful debts (749) (1,596) - - Other receivables 47,491 57, Amounts owing by subsidiaries , ,922 Amount owing by former associate 643 2, Other receivables 41,661 31, Deposits 11,354 2, Prepayments 11 1, ,411 53,669 38, , ,333 Less : Allowance for doubtful debts, net of bad debts written off of (3,176)* (1,776) - - RM1,776,000 (2008: nil) 50,493 36, , ,333 98,434 93, , ,333 * Included in the allowance for doubtful debts is RM3,173,704 provided for agreed debt waiver as per a settlement arrangement with a receivable. (a) The credit terms offered by the Group in respect of trade receivables (other than development land buyers) range from 14 to 30 days from the date of invoice and progress billing. The credit terms offered by the Group to development land buyers varies according to their respective sale and purchase agreements. Included in the trade receivables of the Group are stakeholders sum amounting to RM2,802,374 (2008: RM1,510,691). (b) Amounts owing by subsidiaries represent advances and payments made on behalf which are unsecured, interest-free and repayable on demand. (c) Amount owing by a former associate represents advances and payments made on behalf which are unsecured, interest-free and repayable on demand. (d) Included in the carrying amount of other receivables of the Group are: (i) advances amounted to RM11,327,449 (2008: RM23,785,617) that bear interest at 11.67% (2008: 11.75%) per annum of which RM11,263,671 (2008: RM16,372,473) is repayable on demand within 5 years from September 2005 pursuant to a project management agreement. (ii) advances amounted to RM23,744,735 extended to a project manager as stated in Note 12(a) to the fi nancial statements. Subsequent to the fi nancial year, the Group has received RM9,465,707 from the project manager. The Board of Directors are of the view the remaining balance is fully recoverable. (e) Included in the deposits is an amount of RM9,400,000 paid for the proposed acquisition of a parcel of land for a total consideration of RM47,393,280 as disclosed in Note 43 to the fi nancial statements, which was pending the signing of the sales and purchase agreement as at year end. (f) Information on fi nancial risks of trade and other receivables are disclosed in Note 39 to the fi nancial statements. (g) The trade and other receivables are denominated in Ringgit Malaysia. 83

86 Notes To The Financial Statements 31 March FIXED DEPOSITS, CASH AND BANK BALANCES Group Company RM 000 RM 000 RM 000 RM 000 Deposits with licensed banks 3,163 4,482 2,878 4,019 Cash in hand and at banks 2,859 15, ,673 Housing Development Accounts 2,009 1, ,031 21,906 3,166 17,692 (a) The deposits with licensed banks have maturity periods ranging from 6 to 12 months (2008: ranging from 1 to 12 months). (b) Included in deposits with licensed banks are deposits pledged for bank guarantee and borrowings granted to the Group and the Company as disclosed in Note 23 as follows : Group Company RM 000 RM 000 RM 000 RM 000 Deposits pledged with licensed banks (Note 23) 3,163 3,299 2,878 2,836 (c) Bank balances held under Housing Development Accounts which are maintained in designated Housing Development Accounts pursuant to the Housing Developers (Control and Licensing) Act, 1966 and Housing Development (Housing Development Account) Regulations, 1991 in connection with the Group s property development projects. The utilisation of these balances are restricted, before completion of the housing development and fulfi lling all relevant obligations to the purchasers, the cash could only be withdrawn from such accounts for the purpose of completing the particular projects concerned. (d) Information on fi nancial risks of fi xed deposits, cash and bank balances are disclosed in Note 39 to the fi nancial statements. (e) The fi xed deposits, cash and bank balances are denominated in Ringgit Malaysia. 18. ASSET CLASSIFIED AS HELD FOR SALE Group On 20 October 2008, TESB entered into a share sale agreement with a third party to dispose of its entire 25% equity interest in its associate, ANSB, for a cash consideration of RM2.0 million. Consequently, the investment in this associate (Note 10) has been reclassifi ed as asset held for sale. The sale transaction is pending completion of the condition precedent relating to approval from the relevant authority. 84

87 Notes To The Financial Statements 31 March SHARE CAPITAL Group and Company Number Number of shares of shares 000 RM RM 000 Ordinary shares of RM1.00 each : Authorised 500, , , ,000 Issued and fully paid Balance as at 1 April 192, , , ,015 ICULS converted during the year (Note 20) 34,934 34,934 42,389 42,389 Balance as at 31 March 227, , , ,404 During the fi nancial year, the issued and paid-up share capital of the Company was increased from RM192,404,565 to RM227,338,321 by way of conversion of 34,933,756 units of 3% Irredeemable Convertible Unsecured Loan Stocks 2003/2008 of RM1.00 each (Note 20) % IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS 2003/2008 ( ICULS ) Group and Company Number of Number of loan stocks loan stocks 000 RM RM 000 ICULS Balance as at 1 April 34,934 34,934 77,323 77,323 Converted as ordinary shares during the year (Note 19) (34,934) (34,934) (42,389) (42,389) Balance as at 31 March ,934 34,934 The principal terms of the ICULS are as follows : The ICULS are issued at a nominal value of RM1.00 each. The ICULS bear interest at 3% (gross) per annum payable annually in arrears. The ICULS are convertible into new ordinary shares of the Company at anytime during the tenure by tendering RM1.00 nominal value of ICULS for one (1) new ordinary share of RM1.00 each. The ICULS have a tenure of 5 years from and including date of issue, 26 August The ICULS will not be redeemable for cash. All outstanding ICULS shall be converted into new ordinary shares of the Company on the maturity date. 85

88 Notes To The Financial Statements 31 March % IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS 2003/2008 ( ICULS ) ( cont d ) The ICULS and new ordinary shares to be issued pursuant to the conversion of ICULS will be listed on the Main Board of Bursa Malaysia Securities Berhad. The new ordinary shares issued pursuant to the conversion of ICULS shall rank pari passu in all respects with the then existing ordinary shares of the Company except that the new ordinary shares issued shall not rank for any dividends, rights, allotments or other distributions if the new ordinary shares are issued and allotted after the entitlement date for such dividends, rights, allotments or other distributions. The ICULS are constituted by a trust deed executed by the Company and a duly authorised trustee, who is acting on behalf of the holders of the ICULS. Upon its maturity on 26 August 2008, ICULS were converted into new ordinary shares at RM1.00 each on the basis at RM1.00 nominal value of ICULS for one (1) new ordinary share. 21. (NET ACCUMULATED LOSSES)/RESERVES Group Company RM 000 RM 000 RM 000 RM 000 Non-distributable : Asset revaluation reserve 17,808 17, Distributable : (Accumulated losses)/retained earnings (25,934) 19,357 38,183 38,866 (8,126) 37,165 38,183 38,866 (a) Asset revaluation reserve The asset revaluation reserve represents the increase in the fair value of freehold land and building prior to reclassifi cation as investment properties. (b) Retained earnings Effective 1 January 2008, the Company is given the option to make an irrevocable election to move to a single tier system or continue to use its tax credit under Section 108 of the Income Tax Act, 1967 for the purpose of dividend distribution until the tax credit is fully utilised or latest by 31 December The Company has decided not to make this election. However, there will not be any Section 108 credit restrictions on the Company to frank the payment of net dividends out of its entire retained earnings as at 31 March

89 Notes To The Financial Statements 31 March BORROWINGS - SECURED Current liabilities Group Company RM 000 RM 000 RM 000 RM 000 Bank loans 41,468 49,609 20,200 35,200 Hire-purchase and lease creditors 1,248 1, Bank overdrafts 7,055 8, Non-current liabilities 49,771 58,929 20,200 35,200 Bank loans 62,900 69,857 60,747 60,000 Hire-purchase and lease creditors 911 1, ,811 71,789 60,747 60,000 Total borrowings 113, ,718 80,947 95,200 Bank loans (Note 23) 104, ,466 80,947 95,200 Hire-purchase and lease creditors (Note 24) 2,159 3, Bank overdrafts (Note 25) 7,055 8, , ,718 80,947 95,200 Information on fi nancial risks of bank borrowings are disclosed in Note 39 to the fi nancial statements. The borrowings are denominated in Ringgit Malaysia. 23. BANK LOANS Group Company RM 000 RM 000 RM 000 RM 000 Secured Bridging loan I 3,674 1, Bridging loan II 1, Bridging loan III 9,218 8, Term loan I Term loan II 8,874 13, Term loan III 60,747-60,747 - Commercial Papers/Medium Term Notes ( CP/MTN ) - 75,000-75,000 Revolving Murabahah Short Term Financing Facility ( MSTF ) 20,200 20,200 20,200 20, , ,466 80,947 95,200 87

90 Notes To The Financial Statements 31 March BANK LOANS ( cont d ) The bank loans are secured as follows : (a) a charge over property, plant and equipment of the Group amounted to RM606,668 (2008: RM623,102) and investment properties of the Group amounted to RM65,381,557 (2008: RM35,000,000) as disclosed in Notes 7 and 8 to the fi nancial statements respectively; (b) a charge over land held for property development of the Group amounted to RM271,647,307 (2008: RM317,464,886) as disclosed in Note 12 to the fi nancial statements; (c) a charge over inventories of the Group amounted to RM575,910 (2008: RM20,976,859) as disclosed in Note 14 to the fi nancial statements; (d) a charge over property development costs of the Group amounted to RM25,520,285 (2008: RM23,986,070) as disclosed in Note 15 to the fi nancial statements; (e) a specifi c debenture over the Group s development projects which are to be subdivided, upon receipt of subdivided titles and a fi rst legal charge to be created; (f) assignment of all proceeds and/or sale derived or arising from the proposed projects of certain subsidiaries, both present and future including all moneys standing in credit in the Housing Development Accounts opened and maintained or to be opened and maintained by the subsidiaries subject however to the provisions of the relevant regulations; (g) assignment over project control account, redemption control account and operating account and a fi rst fi xed charge over such permitted investment procured from the proceeds; (h) assignment over debt service accounts and a fi rst charge over permitted investments procured from the proceeds; (i) assignment over debt service reserve account and a fi rst charge over permitted investments procured from the proceeds; (j) assignment over the rental proceeds from investment properties of the Group as disclosed in Note 8 to the fi nancial statements; (k) the execution of the agreement, the Power of Attorney and the Deed of Assignment by the subsidiary; the execution of the Charge and the Debenture by the Chargor; and the execution of the Letter of Guarantee and the Undertaking by a former Director; (l) pledge of certain fi xed deposits of the Group and of the Company as disclosed in Note 17 to the fi nancial statements; and (m) jointly and severally guaranteed by former Directors. The bank loans are repayable as follows : (a) Bridging loan I : by way of 8 equal quarterly principal instalments of RM687,500 each, the fi rst instalment to commence on the fi rst day of the 16 th month following the date of the fi rst drawdown of the facility or by way of redemption. (b) Bridging loan II : by way of 8 equal quarterly principal instalments of RM937,500 each, the fi rst instalment to commence on the fi rst day of the 16 th month following the date of the fi rst drawdown of the facility or by way of redemption. (c) Bridging loan III : by 8 equal quarterly principal instalments of RM1,875,000 each, the fi rst instalment to commence on 1 July 2009 or by way of redemption of units in the project and/or future development land of a subsidiary. (d) Term loan I : by 216 equal monthly instalments of RM6,559 each commencing on September

91 Notes To The Financial Statements 31 March BANK LOANS ( cont d ) The bank loans are repayable as follows : ( cont d ) (e) Term loan II : by 7 equal quarterly principal instalments of RM3,000,000 each and 1 fi nal instalment of RM2,946,118. The fi rst instalment to commence on the fi rst day of the 28th month following the date of the fi rst drawdown of the term loan or by way of redemption of units in the project and/or future development land of a subsidiary. (f) Term loan III : by 4 lump sum repayments of RM10 million in the fi rst anniversary, RM20 million in the second anniversary, RM30 million in the third anniversary and RM35 million in the fourth anniversary of the date of fi rst drawdown, 30 April (g) CP : the commercial papers have issued under a 5-year underwriting programme and shall be reduced on a yearly basis from the date of the programme. (h) MTN : by lump sum repayment of RM10 million and RM15 million in the 4th and 5th anniversary year respectively from the date of drawdown. (i) MSTF : to be mutually agreed between the Company and the Financier by way of the issuance of an Asset Sale Contract Note by the Company and the acceptance by the Financier in an Asset Resale Contract Note which should be either in 1, 2 or 3 month(s) or such other period as may be mutually agreed. On 19 March 2008, the Company executed a facility agreement with a licensed bank for a term loan facility of RM95 million. The Facility was utilised on 30 April 2008 to refi nance the nominal amounts of the 2005/2010 RM50 million CP and RM25 million MTN issued by the Company, and the balance of RM20 million will be utilised for development of its new projects in Taman Equine and Pusat Bandar Putra Permai. 24. HIRE-PURCHASE AND LEASE CREDITORS Group RM 000 RM 000 Minimum hire-purchase and lease payments : - not later than 1 year 1,353 1,503 - later than 1 year and not later than 5 years 911 2,031 - later than 5 years ,322 3,542 Less : Future interest charges (163) (290) Present value of hire-purchase and lease liabilities 2,159 3,252 89

92 Notes To The Financial Statements 31 March HIRE-PURCHASE AND LEASE CREDITORS ( cont d ) Repayable as follows : Group RM 000 RM 000 Current liabilities : - not later than 1 year 1,248 1,320 Non-current liabilities: - later than 1 year and not later than 5 years 853 1,924 - later than 5 years ,932 2,159 3, BANK OVERDRAFTS Group The bank overdrafts are secured by land held for property development amounted to RM3,185,870 (2008: RM3,103,851) and inventories amounted to RM13,008,511 (2008: RM16,820,570) as disclosed in Notes 12 and 14 and are jointly and severally guaranteed by a former Director. 26. DEFERRED TAX LIABILITIES (a) The deferred tax assets and liabilities during the fi nancial year are made up of the followings : Group RM 000 RM 000 Balance as at 1 April 40,915 49,167 Recognised in the income statement (Note 33) : - crystallisation of surplus on revaluation of long term leasehold land in subsidiaries that is refl ected as cost to the Group (4,023) (1,792) - excess of capital allowances over depreciation 655 (305) - over provision in prior year (496) (4,435) - reduction in tax rate - (1,720) - provisions (2,338) - - unutilised tax losses (2,622) - (8,824) (8,252) Balance as at 31 March 32,091 40,915 Group RM 000 RM 000 Presented after appropriate offsetting : Deferred tax assets, net (4,960) - Deferred tax liabilities, net 37,051 40,915 32,091 40,915 90

93 Notes To The Financial Statements 31 March DEFERRED TAX LIABILITIES ( cont d ) (b) The components and movements of deferred tax liabilities at end of the fi nancial year are as follows : Surplus on Excess of revaluation of long capital term leasehold land allowances in subsidiaries that is over reflected as cost to Group depreciation the Group Total 2009 RM 000 RM 000 RM 000 Balance as at 1 April (305) 41,220 40,915 Recognised in the income statement 629 (4,493) (3,864) Balance as at 31 March ,727 37, Balance as at 1 April - 49,167 49,167 Recognised in the income statement (305) (7,947) (8,252) Balance as at 31 March (305) 41,220 40,915 (c) The components and movements of deferred tax assets at end of the fi nancial year are as follows : Unutilised Group Provisions tax losses Total 2009 RM 000 RM 000 RM 000 Balance as at 1 April/ 31 March Recognised in the income statement 2,338 2,622 4,960 Balance as at 31 March 2,338 2,622 4,960 (d) The amounts of temporary differences for which no deferred tax assets have been recognised in the fi nancial statements are as follows: Group RM 000 RM 000 Provisions 6,407 1,596 Unutilised tax losses 11,560 9,158 Unabsorbed capital allowances 1,313 4,023 19,280 14,777 Deferred tax assets have not been recognised in respect of these items as it is not probable that taxable profi ts of certain subsidiaries will be available against which the deductible temporary differences can be utilised. 91

94 Notes To The Financial Statements 31 March TRADE AND OTHER PAYABLES Group Company RM 000 RM 000 RM 000 RM 000 Non-current : Trade payables 36,055 36, Current : Trade payables 36,608 48, Other payables Amounts owing to subsidiaries ,005 29,925 Amounts owing to former Directors Other payables 15,448 11, Accruals : - property development costs 16,579 12, ICULS interest others 13,221 9, ,114 35,574 31,202 31,031 82,722 83,758 31,202 31,031 (a) Non-current trade payable is unsecured, interest-free and not repayable within the next twelve months. (b) The credit terms available to the Group in respect of current trade payables range from 30 to 60 days from the date of invoice and progress claim. (c) Amounts owing to subsidiaries represent advances and payments made on behalf which are unsecured, interest-free and repayable on demand. (d) Amounts owing to former Directors represent advances and payments made on behalf of the Group which are unsecured, interest-free and repayable on demand. (e) Included in other accrual is the provision for tax penalty of RM10,846,901 (2008: RM8,478,270). 92

95 Notes To The Financial Statements 31 March PROVISIONS Provision Provision Provision for liquidated for bumiputra for foreseeable ascertained quota losses on sale Group damages penalties revocation Total 2009 RM 000 RM 000 RM 000 RM 000 Balance as at 1 April 11, ,155 Provisions made during the fi nancial year 4,811 11,426 4,200 20,437 Payments made during the fi nancial year (5,389) (150) - (5,539) Balance as at 31 March 10,577 11,276 4,200 26, Balance as at 1 April 1, ,774 Provisions made during the fi nancial year 9, ,859 Payments made during the fi nancial year (478) - - (478) Balance as at 31 March 11, ,155 Provision for bumiputra quota penalties of the Group amounting to RM449,621 has been capitalised in property development cost. 29. REVENUE Group Company RM 000 RM 000 RM 000 RM 000 Property development 84, , Rental of properties 689 1, Riding and livery Dividend income ,614 86, ,974-20, COST OF SALES Group RM 000 RM 000 Property development 101,838 98,693 Riding and livery ,390 99, FINANCE COSTS The fi nance costs of the Group are made up of the following : Group RM 000 RM 000 Interest expenses on : - bank overdrafts term loans 3, bridging loan and MSTF 1,484 1,516 - CP/MTN 273 1,043 - hire-purchase and fi nance lease ,917 2,892 93

96 Notes To The Financial Statements 31 March (LOSS) / PROFIT BEFORE TAX Group Company Note RM 000 RM 000 RM 000 RM 000 (Loss)/Profi t before tax is arrived at after charging : Auditors remuneration : - current year under provision in prior year Allowance for doubtful debts 3,466 1, Depreciation of property, plant and equipment 7 3,264 2, Directors remuneration : Fees : - payable by the Company Other emoluments : - payable by the Company payable by the subsidiaries Interest expenses on : - hire-purchase and lease bank loans 5,738 2, Development expenditure written off 12, Provision for liquidated and ascertained damages 28 4,811 9, Provision for bumiputra quota penalties 28 10, Provision for foreseeable losses on sale revocation 28 4, Impairment of goodwill 13-6, Impairment on investment in subsidiaries Rental of premises Property, plant and equipment written off

97 Notes To The Financial Statements 31 March (LOSS) / PROFIT BEFORE TAX ( cont d ) And crediting : Group Company Note RM 000 RM 000 RM 000 RM 000 Gross dividend income from subsidiaries ,614 Gain on disposal of property, plant and equipment Interest income from : - other receivables 73 2, fi xed deposits others Provision for doubtful debts - no longer required 1, Rental income 1,848 1, Forfeiture of deposits 2, Gain in fair value adjustments for investment properties 8 3, TAX INCOME / (EXPENSE) Group Company RM 000 RM 000 RM 000 RM 000 Current tax expense based on profi ts for the fi nancial year : - current year 6,618 7,217-5,298 - under/(over) provision in prior years 823 (5,077) - (54) 7,441 2,140-5,244 Deferred tax (Note 26) : - relating to reversal of temporary differences (8,328) (3,817) over provision in prior years (496) (4,435) - - (8,824) (8,252) - - (1,383) (6,112) - 5,244 The Malaysian income tax is calculated at the statutory tax rate of 25% (2008: 26%) of the estimated taxable profi t for the fi scal year. The Malaysian statutory tax rate has been reduced to 25% from the previous fi nancial year s rate of 26% for the fi scal year of assessment The computation of deferred tax as at 31 March 2009 has taken these changes into account. 95

98 Notes To The Financial Statements 31 March TAX INCOME / (EXPENSE) ( cont d ) The numerical reconciliations between the effective tax expense and the applicable tax expense of the Group and of the Company are as follows : Group Company RM 000 RM 000 RM 000 RM 000 Applicable tax expense (11,641) (9,078) (143) 5,182 Tax effect in respect of : - non-allowable expenses 8,806 11, income not subject to tax - (269) tax losses of certain subsidiaries which are not allowable for set-off against the taxable profi ts of other subsidiaries owing to nonavailability of group tax relief reduction in statutory tax rate on chargeable income up to RM500,000 for certain subsidiaries - (39) deferred tax assets not recognised 1,479 1, utilisation of previously unrecognised tax losses - (366) utilisation of previously unrecognised capital allowances (354) (48) - - Under/(over) provision in prior years 327 (9,512) - (54) Effective tax expense (1,383) (6,112) - 5,244 96

99 Notes To The Financial Statements 31 March LOSS PER ORDINARY SHARE (a) Basic Basic loss per ordinary share for the fi nancial year is calculated by dividing the loss attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the fi nancial year as follows : Group Loss for the fi nancial year attributable to ordinary equity holders of the Company (RM 000) (45,182) (28,804) Weighted average number of ordinary shares in issue/ Number of ordinary shares in issue ( 000) 213, ,832 Basic loss per ordinary share (sen) (21.18) (17.58) (b) Diluted Diluted loss per ordinary share for the fi nancial year is calculated by dividing the loss for the fi nancial year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue after adjusting for the conversion of all dilutive potential ordinary shares into ordinary shares, calculated as follows: Group Loss for the fi nancial year attributable to ordinary equity holders of the Company (RM 000) (45,182) (28,804) Weighted average number of ordinary shares in issue/ Number of ordinary shares in issue ( 000) 213, ,832 Assumed conversion of all ICULS -* -* Adjusted weighted average number of ordinary shares applicable to diluted earnings per share 213, ,832 Diluted loss per ordinary share (sen) (21.18) (17.58) * The ICULS that could potentially diluted the loss per ordinary share were not included in the calculation of diluted loss per ordinary share because they were antidilutive for the previous fi nancial year. 97

100 Notes To The Financial Statements 31 March CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the cash fl ow statements comprise the following balance sheet amounts : Group Company RM 000 RM 000 RM 000 RM 000 Fixed deposits, cash and bank balances (Note 17) 8,031 21,906 3,166 17,692 Bank overdrafts (Note 22) (7,055) (8,000) ,906 3,166 17,692 Less : Fixed deposits pledged (Note 17(b)) (3,163) (3,299) (2,878) (2,836) (2,187) 10, , STAFF COSTS The total staff costs incurred during the fi nancial year is as follows : Group Company RM 000 RM 000 RM 000 RM 000 Salaries and wages 6,677 7, EPF and SOCSO Others ,334 8, RELATED PARTY TRANSACTIONS (a) Identities of related parties Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise signifi cant infl uence over the party in making fi nancial and operating decisions, or vice-versa, or where the Group and the party are subject to common control or common signifi cant infl uence. Related parties may be individuals or other entities. The Company has controlling related party relationship with its direct and indirect subsidiaries. 98

101 Notes To The Financial Statements 31 March RELATED PARTY TRANSACTIONS ( cont d ) (b) In addition to the transactions detailed elsewhere in the fi nancial statements, the Group and the Company had the following transactions with related parties during the fi nancial year : Group Company RM 000 RM 000 RM 000 RM 000 Dividend income from subsidiaries ,614 (c) Compensation of key management personnel The remuneration of key management personnel for the fi nancial year was as follows : Group RM 000 RM 000 Short term employee benefi ts 1,505 1,610 Contributions to defi ned contribution plans ,575 1,870 The estimated monetary value of benefi t-in-kind received by Directors otherwise than in cash from the Group were RM50,613 (2008: RM27,691). 38. SEGMENT REPORTING (a) Reporting format The primary segment reporting format is determined to be business segments as the Group s risks and returns are affected predominantly by differences in the products and services it produces. Secondary information is reported geographically. (b) Business segments The Group comprises the following main business segments : Property development : Development of residential and commercial properties, and sale of development land Property letting : Rental of properties Investment holding : Investment holding (c) Geographical segments The Group operates predominantly in Malaysia and accordingly, no geographical segment is presented. 99

102 Notes To The Financial Statements 31 March SEGMENT REPORTING ( cont d ) (d) Allocation basis and inter-segment pricing Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and expenses. Inter-segment prices between business segments are on an arm s length basis in a manner similar to transactions with third parties. Segment revenue, expenses and results include transfer between business segments. These inter-segment transactions are eliminated on consolidation. The following table provides an analysis of the Group s revenue, results, assets, liabilities and other information by business segment : Property Property Investment Group development letting holding Elimination Total 2009 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue External sales 85, ,155 Inter-segment sales , ,155 Results Segment results (39,974) 28 (608) - (40,554) Unallocated expenses : - fi nance costs (5,917) Share of loss in an associate (94) Loss before tax (46,565) Tax income 1,383 Loss for the fi nancial year (45,182) Other information Segment assets 507,600 36,260 3, ,040 Asset classifi ed as held for sale 1,476 Unallocated corporate assets 5,151 Total assets 553,667 Segment liabilities 148, ,049 Unallocated corporate liabilities 185,406 Total liabilities 334,455 Capital expenditure (Note 7) 2, ,196 Depreciation of property, plant and equipment (Note 7) 3, ,264 Non-cash expenses other than depreciation 37, ,

103 Notes To The Financial Statements 31 March SEGMENT REPORTING ( cont d ) Property Property Investment Group development letting holding Elimination Total 2008 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue External sales 107,681 1, ,974 Inter-segment sales ,614 (20,614) - 107,681 1,293 20,614 (20,614) 108,974 Results Segment results (30,137) (29,580) Unallocated expenses: - fi nance costs (2,935) Share of loss in an associate (2,401) Loss before tax (34,916) Tax expense 6,112 Loss for the fi nancial year (28,804) Other information Segment assets 549,904 37,066 19, ,074 Investment in an associate 1,570 Unallocated corporate assets 245 Total assets 607,889 Segment liabilities 135, , ,915 Unallocated corporate liabilities 206,471 Total liabilities 343,386 Capital expenditure (Note 7) 3, ,729 Depreciation of property, plant and equipment (Note 7) 2, ,522 Non-cash expenses other than depreciation 16, ,

104 Notes To The Financial Statements 31 March FINANCIAL INSTRUMENTS (a) Financial risk management objectives and policies The operations of the Group are subject to a variety of fi nancial risks, including liquidity and cash fl ow risks, credit risk and interest rate risk. Various risk management policies are in place to control and manage risks associated with fi nancial instruments. It is, and has been throughout the year under review, the Group s policy that no trading in fi nancial instruments shall be undertaken. The Board reviews and agrees policies for managing each of these risks and they are summarised below : (i) Liquidity and cash fl ow risks The Group is actively managing its operating cash fl ow to suit the debt maturity profi le so as to ensure all commitments and funding needs are met. As part of the overall liquidity management, it is the Group s policy to ensure continuity in servicing its cash obligations in the future by way of measures and forecasts of its cash commitments and to maintain suffi cient level of cash or cash equivalents to meet its working capital requirements. In addition, the Group also maintains suffi cient credit facilities for contingent funding requirements of working capital. (ii) Credit risk Cash deposits and receivables may give rise to credit risk which requires the loss to be recognised if a counter party fails to perform as contracted. The Group is exposed to credit risk mainly from trade receivables. The Group seeks to maintain strict control over its outstanding receivables via credit control procedures to minimise credit risk. The Group extends credit to its customers based upon careful evaluation of the customer s fi nancial condition. Overdue balances are reviewed regularly by senior management. The Group has no major concentration of credit risk as at 31 March 2009 except for advances made to a receivable and amount recoverable from a project manager of RM11,263,671 and RM23,744,735 respectively (Note 16 (d)(i) and (ii)). In respect of the deposits, cash and bank balances placed with major fi nancial institutions in Malaysia, the Directors believe that the possibility of non-performance by these fi nancial institutions is remote on the basis of their fi nancial strength. (iii) Interest rate risk Interest rate exposure arises from the Group s borrowings and deposits is managed through the use of fi xed and fl oating rate debts for the purpose of reducing net interest costs and to achieve interest rates within predictable and desired ranges. The Group does not use derivative fi nancial instruments to hedge its risk. The following table set out the carrying amounts, the weighted average effective interest rate as at the balance sheet date and the remaining maturities of the Group s and the Company s fi nancial instruments that are exposed to interest rate risk : 102

105 Notes To The Financial Statements 31 March FINANCIAL INSTRUMENTS ( cont d ) (a) Financial risk management objectives and policies ( cont d ) (iii) Interest rate risk ( cont d ) Group At 31 March 2009 Weighted average effective interest Within More than rate 1 year years years years years 5 years Total Note % RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Fixed rates Fixed deposits with licensed banks , ,163 Hire-purchase and lease creditors , ,159 Floating rates MSTF , ,200 Term loan and bridging loan ,268 21,981 30,048 10, ,168 Bank overdrafts , ,055 At 31 March 2008 Fixed rates Fixed deposits with licensed banks , ,482 Hire-purchase and lease creditors ,320 1, ,252 Floating rates MSTF , ,200 Term loan, CP/MTN and bridging loan ,409 34,657 35, ,266 Bank overdrafts , ,

106 Notes To The Financial Statements 31 March FINANCIAL INSTRUMENTS ( cont d ) (a) Financial risk management objectives and policies ( cont d ) (iii) Interest rate risk ( cont d ) Company At 31 March 2009 Weighted average effective interest Within More than rate 1 year years years years years 5 years Total Note % RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Fixed rates Fixed deposits with licensed banks , ,878 Floating rates MSTF , ,200 Term loan ,000 30,000 10, ,747 At 31 March 2008 Fixed rates Fixed deposits with licensed banks , ,019 Floating rates MSTF , ,200 CP/MTN ,000 25,000 35, ,

107 Notes To The Financial Statements 31 March FINANCIAL INSTRUMENTS ( cont d ) (b) Fair values The carrying amounts of the fi nancial instruments of the Group and of the Company as at the balance sheet date approximate their fair values due to relatively short term maturity of the fi nancial instruments except as set out below : At 31 March 2009 Group Company Carrying Fair Carrying Fair amount value amount value Note RM 000 RM 000 RM 000 RM 000 Recognised Unquoted investments in subsidiaries ,232 * Trade payables 27 36,055 # - - Bank loans , ,863 80,947 78,299 Hire-purchase creditors 24 2,159 2, At 31 March 2008 Recognised Unquoted investments in subsidiaries ,232 * Investments in an associate 10 1,570 * - - Trade payables 27 36,055 # - - Bank loans , ,117 95,200 93,851 Hire-purchase creditors 24 3,252 3, * It is not practical to estimate the fair value of the investments in subsidiaries and an associate. This is principally due to lack of quoted market prices and the inability to estimate fair values without incurring excessive costs. The Directors believe that the carrying amounts represent the recoverable values. # It is also not practical to estimate the fair value of the non-current trade payables due to the lack of fi xed repayment terms and the inability to estimate fair value without incurring excessive cost. The Directors believe that the carrying amounts represent the values that would be eventually settled. Fair value of these bank loans and hire-purchase creditors have been determined using discounted cash fl ows technique. The discount rates used are based on the market rates for the similar borrowings of the same remaining maturities. 105

108 Notes To The Financial Statements 31 March SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (a) The Company s proposed private placement exercise to issue up to 22,733,832 new ordinary shares of RM1.00 each representing up to ten percent (10%) of the enlarged issued and paid-up share capital of the Company ( Proposed Private Placement ) was approved by the Securities Commission ( SC ) and Bursa Malaysia Securities Berhad on 1 November 2007 and 14 November 2007 respectively. On 7 April 2008, the SC vide its letter approved the application made on 31 March 2008 by Hwang DBS Investment Bank on behalf of the Company for the extension of time of six months until 29 October 2008 to complete the implementation of the Proposed Private Placement. On 29 October 2008, the extension of time as approved by the SC for the Proposed Private Placement expired and was not renewed by the Company. Up to its expiry date, the Company did not issue any shares in relation to the Proposed Private Placement. (b) On 20 October 2008, the Group entered into a share sale agreement to dispose of its entire 25% equity interest in its associated company, Abad Naluri Sdn. Bhd. ( ANSB ) for a cash consideration of RM2.0 million. The disposal has no material effect on the earnings of the Group and the transaction is pending completion. (c) On 22 December 2008, its wholly owned subsidiary, Taman Equine (M) Sdn. Bhd. ( TESB ) subscribed for 720,000 new ordinary shares of RM1.00 each at par in Permai Construction Sdn. Bhd.(formerly known as Taman Equine Rekreasi Sdn. Bhd.) for a cash consideration of RM720, SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE (a) On 2 April 2009, the Goup s wholly owned subsidiaries, TESB and Taman Equine Industrial Sdn. Bhd. entered into a Sale and Purchase Agreement with Tesco Stores (Malaysia) Sdn. Bhd. for the disposal of a parcel of land for a cash consideration of RM29.8 million. (b) On 14 May 2009, the Company announced that it had on 21 April 2009 received from ANSB a copy of a letter from a fi rm of lawyers acting on behalf of Penang Development Corporation ( PDC ). This letter was dated 14 April 2009 and was addressed to ANSB, alleging non-fulfi llment of obligations by ANSB under the terms and conditions of the Sale and Purchase Agreement ( SPA ) between ANSB and PDC entered into on 16 January 2004 in relation to the sale of acres of land at Batu Kawan, Seberang Perai Selatan, Penang (referred to as Parcel 2A). The alleged non-fulfi llment of obligations by ANSB under the SPA pertains to the condition for the completion of development in Parcel 2A within four (4) years from the date of issuance of the document of title by PDC i.e. before the deadline of 7 June Should the alleged non-fulfi llment of obligations by ANSB be admissible, PDC is entitled to rescind the SPA and all rights and obligations under the SPA will be revoked as provided under the SPA. The rights of ANSB under the SPA, has been novated to its then subsidiary, Penaga Pesona Sdn. Bhd. ( PPSB ). PPSB became a wholly-owned subsidiary of the Group when the Group entered into a share sale and purchase agreement with ANSB on 12 February 2007 to acquire the entire shareholdings of PPSB. 106

109 Notes To The Financial Statements 31 March SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE ( cont d ) ANSB has advised the Group that the matter is in the midst of being clarifi ed for resolution amongst the parties. As the issues are still being negotiated between the principal parties to the SPA; namely ANSB and PDC, the Group was not able to assess the likely outcome of the negotiation at this time. Should the revocation of the SPA be effected, the principal effect upon such revocation on PPSB, and hence the Group, is the relinquishment of all the rights to property development activities on Parcel 2A with immediate cessation of such activities. The overall fi nancial losses and implications to PPSB and the Group arising under such circumstances is not quantifi able at this stage. Subsequently on 8 June 2009, the Group received from ANSB a copy of another letter from the PDC dated 5 June 2009 which was addressed to ANSB. This letter advised that upon ANSB s request of 3 June 2009, PDC has agreed to keep in abeyance all legal proceedings in respect of Parcel 2A, pending a discussion to resolve issues pertaining to the completion of the development in the said parcel and the submission of a proposed time frame for the completion of the said development. The Board is of the view that there would not be any immediate material fi nancial impact to the Group arising from this matter. 42. CONTINGENT LIABILITIES - UNSECURED Group Company RM 000 RM 000 RM 000 RM 000 Corporate guarantee given to fi nancial institutions for credit facilities granted to a subsidiary - - 7,055 8, CAPITAL COMMITMENTS Group Company RM 000 RM 000 RM 000 RM 000 Capital expenditure in respect of acquisition of land - Approved but not contracted for 47, COMPARATIVE FIGURES Certain comparative fi gures of the Group have been reclassifi ed to conform to the current year s presentation. As previously As reported Reclassification restated RM 000 RM 000 RM 000 Income Statement Cost of sales (97,192) (2,019) (99,211) Administration and marketing expenses (29,494) 1,976 (27,518) Finance cost (2,935) 43 (2,892) 107

110 Analysis Of Ordinary Shareholdings as at 30 June 2009 Authorised Share Capital : RM500,000,000 of 500,000,000 ordinary shares of RM1.00 each Issued and Paid-Up Share Capital : RM227,338,321 comprising of 227,338,321 ordinary shares of RM1.00 each Class of Shares Voting Rights : Ordinary shares of RM1.00 each : Every member of the Company, present in person or by proxy, shall have on a show of hands, one (1) vote or on a poll, one (1) vote for each share held Number of shareholders : 27,783 Distribution of Ordinary Shareholders Holdings No. of holders Total holdings Percentage (%) Less than , , ,000 4,533 2,486, ,001-10,000 5,713 29,146, , ,000 2,408 73,202, ,001 11,366, ,316, ,366,916 2 and above 1 14,866, Notes: 1 Less than 5% of issued shares 2 5% and above of issued shares Substantial Shareholdings (Holding 5% or More of the Share Capital) Shareholders Direct Indirect No. of shares % No. of shares % Indera Muhibbah Sdn Bhd 28,087, Insan Mayang Sdn Bhd 20,000, Duta Kembang Sdn Bhd 14,866, Datuk Patrick Lim Soo Kit - - (1) 48,279, Datin Wong Mun Yee 192, (2) 48,087, Lim Ah Yee - - (2) 48,087, Lim Ah Chai - - (2) 48,087, Othman Bin Mohammad - - (3) 17,403, Lee Kwee Siong - - (3) 17,403, Ali Bin Shuib - - (3) 17,403, Notes: 1 Deemed interested through Datin Wong Mun Yee, Indera Muhibbah Sdn Bhd and Insan Mayang Sdn Bhd by virtue of Section 6A of the Companies Act, Deemed interested through Indera Muhibbah Sdn Bhd and Insan Mayang Sdn Bhd by virtue of Section 6A of the Companies Act, Deemed interested through Perharap Sdn Bhd, Temasya Permai Sdn Bhd and Duta Kembang Sdn Bhd by virtue of Section 6A of the Companies Act,

111 Analysis Of Ordinary Shareholdings as at 30 June 2009 List of Directors Interest Shareholders Direct Indirect No. of shares % No. of shares % YAM Datuk Seri Tengku Ahmad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Othman bin Mohammad - - (1) 17,403, Datuk Ahmad Zabri Bin Ibrahim Dato Hamzah Bin Md Rus Wong Kim Seng Chin Kok Sang Notes: 1 Deemed interested through Perharap Sdn Bhd, Temasya Permai Sdn Bhd and Duta Kembang Sdn Bhd by virtue of Section 6A of the Companies Act, 1965 List of Thirty (30) Largest Registered Ordinary Shareholders No. of Name shares held Percentage (%) 1 Duta Kembang Sdn Bhd 14,866, ABB Nominee (Tempatan) Sdn Bhd Pledged Securities Account for Insan Mayang Sdn Bhd 10,000, ABB Nominee (Tempatan) Sdn Bhd Pledged Securities Account for Indera Muhibbah Sdn Bhd 10,000, Indera Muhibbah Sdn Bhd 10,000, Insan Mayang Sdn Bhd 10,000, Indera Muhibbah Sdn Bhd 8,087, Istima Permata Sdn Bhd 3,801, UOBM Nominees (Asing) Sdn Bhd UOB-IOD for United Overseas Bank Limited (ACU) 1,888, Liew Sze Fook 1,887, Temasya Permai Sdn Bhd 1,500, TA Nominees (Tempatan) Sdn Bhd Pledged Securities Account for How Wee Teck 1,300, TCL Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ng Chai Hock 1,242,

112 Analysis Of Ordinary Shareholdings List of Thirty (30) Largest Registered Ordinary Shareholders ( cont d ) No. of Name shares held Percentage (%) 13 HDM Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Pang Jee Heon 1,065, Perharap Sdn Bhd 1,037, DB (Malaysia) Nominee (Asing) Sdn Bhd BNP Paribas Nominees Singapore Pte Ltd for Silverbell Group Limited 1,000, Yap Ah Fatt 900, HDM Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Kalepa A/L P. Marathamuthu 800, TA Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Shahrin bin Osman 750, HLG Nominee (Tempatan) Sdn Bhd Pledged Securities Account for Quek Mooi Kheng 750, CIMSEC Nominees (Asing) Sdn Bhd Exempt AN for CIMB-GK Securities Pte Ltd 722, HDM Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Lee Kim Hooi 705, HSBC Nominees (Asing) Sdn Bhd Exempt AN for Credit Suisse (SG BR-TST-ASING) 700, Raymond Wahab 700, Teo Chiang Hong 679, Lim Seng Chee 647, Citigroup Nominees (Asing) Sdn Bhd Exempt AN for OCBC Securities Private Limited 577, JF APEX Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Low Hock See 509, Ooi Tian Su 503, Leok Mui Ling 500, Heng Aik Koon 498, Total 87,619,

113 Group Properties A. Development Properties Registered / Location Tenure Remaining Usage Net Book Year of Beneficial Land Area Value Acquisition Owner (acres) / 31-Mar-09 Units RM 000 TESB Pajakan Negeri 7397, Lot 53383, Leasehold 57.0 Mixed 10, Pajakan Negeri 7399, Lot and expiring commercial HS(D) , PT 74867, Mukim Petaling, on 2093 and residential District of Petaling, Selangor Darul Ehsan. development and natural reserve EPS HS(D) , PT 69504, HS(D) , Leasehold 0.4 Townhouse PT 69558, HS(D) , PT 69559, expiring on development Mukim Petaling, District of Petaling, 2093 Selangor Darul Ehsan. EPS Various subdivided lots on Pajakan Negeri Leasehold 15.1 Bungalow plots 13, , Lot 53388, Mukim Petaling, expiring on Selangor Darul Ehsan KTE HS(D) , PT 51429, Mukim Petaling, Leasehold 3.4 Offi ce Building 16, District of Petaling, Selangor Darul Ehsan. expiring on 2093 KTE Pajakan Negeri 20583, Lot 66216, Leasehold 25 units Apartments and 1, Pajakan Negeri 20585, Lot 66223, expiring on shop offi ces HS(D) , PT 51407, Mukim Petaling, 2093 District of Petaling, Selangor Darul Ehsan. PTE Pajakan Negeri 7402, Lot and Leasehold 88.6 Mixed 49, HS(D) , PT 56718, expiring on commercial PT , Mukim Petaling, 2093 and residential District of Petaling, Selangor Darul Ehsan. development PTE HS(D) , PT 56467, Mukim Petaling, Leasehold storey terrace District of Petaling, Selangor Darul Ehsan. expiring on house 2093 TE Riding Pajakan Negeri 11291, Lot and Leasehold 58.3 Bungalow plots 50, Pajakan Negeri 11292, Lot 64487, expiring on Mukim Petaling, District of Petaling, on 2093 Selangor Darul Ehsan. TE Industrial HS(D) , PT , Leasehold 20.5 Mixed 38, HS(D) , PT and part of expiring on commercial and HS(D) , PT residential Mukim Petaling, District of Petaling, development Selangor Darul Ehsan. 111

114 Group Properties Registered / Location Tenure Remaining Usage Net Book Year of Beneficial Land Area Value Acquisition Owner (acres) / 31-Mar-09 Units RM 000 Tujuan Part of Pajakan Negeri 10321, Lot 64491, Leasehold 41.5 Mixed 29, Ehsan Pajakan Negeri 10325, Lot 64498, expiring on commercial Pajakan Negeri 10329, Lot 64488, 2098 and residential Pajakan Negeri 10330, Lot 64489, development HS(D) , PT 69701, Mukim Petaling, District of Petaling, Selangor Darul Ehsan. Tujuan Part of Pajakan Negeri 10321, Lot 64491, Leasehold 41 units Apartments and 2, Ehsan HS(D) PT 54956, expiring on shop offi ces Mukim Petaling, District of Petaling, 2098 Selangor Darul Ehsan. STS HS(M) 8124, PT 16771; Leasehold 5.1 Mixed 1, HS(M) 8215, PT 16867; HS(M) 8349, expiring commercial PT 17002; HS(M) 8362, PT 17015; between and residential Pajakan Negeri to 20104, 2080 to development Lot 48395, 48396, 48399, 2103 Mukim Ampang, District of Ulu Langat, Selangor Darul Ehsan. STS Pajakan Negeri 20105, Lot 48400, Leasehold 7 units Apartments and Mukim Ampang, District of Ulu Langat, expiring on shop offi ces Selangor Darul Ehsan STS HS(D) , PT , Leasehold 1.8 Commercial 4, Mukim Ampang, District of Ulu Langat, expiring on development Selangor Darul Ehsan PPSB HS(D) 34097, PT 1384, HS(D) 34098, Leasehold Mixed 126, PT 1385 and part of Lot 282 expiring in commercial and (formerly Lot 274), Mukim 13, 2014 residential Daerah Seberang Perai Selatan, development Pulau Pinang. 112

115 Group Properties B. Other Properties Registered / Location Tenure Net Usage Net Value Approximate Beneficial Lettable Book Age of Owner Area 31-Mar-08 Building (sq m) RM 000 KLIB Wisma KLIH Freehold 5, storey 35,000* 34 years - 126, Jalan Bukit Bintang, Kuala Lumpur. offi ce building TE Industrial Part of HS(D) PT 78864, Leasehold 465 Single storey 2,934* 1 year Mukim Petaling, District of Petaling, commercial Selangor Darul Ehsan. building TESB HS(D) PT 74866, Mukim Petaling, Leasehold 47,793 Commercial 28,809* N/A District of Petaling, Selangor Darul Ehsan. land TESB Sri Penaga Condominium Freehold 230 Apartment years , Sri Penaga Condominium, Jalan Medang Serai, Bukit Bandaraya, Kuala Lumpur. TESB No.1, Jalan Putra Permai 1A, Leasehold storey 1,380 7 years Taman Equine, shop offi ce Seri Kembangan, Selangor. TESB No.50, Jalan Putra Permai 1B, Leasehold storey years Taman Equine, shop offi ce Seri Kembangan, Selangor. * Investment property stated at fair value. 113

116 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the EIGHTH ANNUAL GENERAL MEETING of Equine Capital Berhad will be held at Equine Home Gallery, Persiaran Equine Perdana, Taman Equine, Seri Kembangan, Selangor Darul Ehsan on Wednesday, 19 August 2009 at 9.00 a.m. AGENDA 1. To receive and adopt the Audited Financial Statements for the fi nancial year ended 31 March 2009 and the Reports of the Directors and Auditors thereon. ( Ordinary Resolution No. 1 ) 2. To re-elect YAM Datuk Seri Tengku Ahmad Shah ibni Almarhum Sultan Salahuddin Abdul Aziz Shah who retires by rotation in accordance with Article 77 of the Company s Articles of Association. ( Ordinary Resolution No. 2 ) 3. To re-elect the following Directors who retire by rotation in accordance with Article 84 of the Company s Articles of Association: (i) Othman bin Mohammad ( Ordinary Resolution No. 3 ) (ii) Chin Kok Sang ( Ordinary Resolution No. 4 ) 4. To approve directors fees of RM148,000 for the fi nancial year ended 31 March ( Ordinary Resolution No. 5 ) 5. To appoint Auditors and to authorise the Directors to fi x their remuneration. Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965, a copy of which is annexed in the Annual Report as Appendix A has been received by the Company for the nomination of Messrs Deloitte KassimChan who have given their consent to act, for appointment as Auditors and of the intention to propose the following Ordinary Resolution : THAT Messrs Deloitte KassimChan be and are hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs BDO Binder, to hold offi ce until the conclusion of the next Annual General Meeting at a remuneration to be determined by the Directors. ( Ordinary Resolution No. 6 ) *Special business To consider and if thought fi t, to pass the following Ordinary Resolution: 6. AUTHORITY TO ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby empowered to allot and issue shares in the capital of the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fi t provided that the aggregate number of shares to be issued does not exceed ten per centum (10%) of the issued share capital of the Company for the time being, subject to the Articles of Association of the Company and approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad and other relevant bodies where such approval is necessary. ( Ordinary Resolution No. 7 ) By Order of the Board CHIN PEI FUNG ( MAICSA ) Company Secretary 28 July 2009 Selangor Darul Ehsan 114

117 Notice of Annual General Meeting Notes : 1. A member entitled to attend and vote is entitled to appoint more than one proxy (subject always to a maximum of two (2) proxies at each meeting) to attend and vote at the same meeting. Where a member appoints more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting) the appointment shall be invalid unless he specifi es the proportions of his holdings to be represented by each proxy. 2. A proxy may but need not to be a member of the Company and if the proxy is not a member of the Company, the proxy need not be an advocate or an approved company auditor or a person approved by the Registrar of Companies. 3. If the member is a corporation, the Proxy Form must be executed under its Seal or under the hand of its attorney. 4. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certifi ed copy of that power or authority shall be deposited at the registered offi ce of the Company situated at No. 1, Jalan Putra Permai 1A, Taman Equine, Seri Kembangan, Selangor Darul Ehsan, not less than forty eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote. 5. *Explanatory Note on the Special Business (i) Ordinary Resolution 7 Authority to Allot Shares pursuant to Section 132D of the Companies Act, 1965 The proposed Ordinary Resolution 7, if passed, will empower the Directors of the Company, from the date of the Eighth General Meeting, to issue shares (other than bonus or rights issue) of the Company up to and not exceeding in total ten per centum (10%) of the issued share capital of the Company for the time being for such purpose as they considered would be in the best interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company. Statement Accompanying Notice of Annual General Meeting ( Pursuant to Paragraph 8.28(2) of the Bursa Malaysia Securities Berhad Listing Requirements ) Further details of Directors who are standing for election as Directors : The details of the Directors who are standing for election at the Eighth Annual General Meeting are set out on pages 8 and 10 of this Annual Report. 115

118 Appendix A 116

119 Number of Shares Held *I/We ( FULL NAME IN CAPITAL LETTER ) NRIC No./Company No. of ( FULL ADDRESS ) being a member/members of EQUINE CAPITAL BERHAD ( T ), hereby appoint, ( FULL NAME IN CAPITAL LETTER ) NRIC No. of ( FULL ADDRESS ) or failing *him/her,, ( FULL NAME IN CAPITAL LETTER ) NRIC No. of ( FULL ADDRESS ) or failing *him / her, *the Chairman of The Meeting as *my/our proxy to attend and vote on *my/our behalf at the Eighth Annual General Meeting of the Company to be held at Equine Home Gallery, Persiaran Equine Perdana, Taman Equine, Seri Kembangan, Selangor Darul Ehsan on Wednesday, 19 August 2009 at 9.00 a.m. and at any adjournment thereof. ( Please indicate with an X in the appropriate boxes on how you wish your vote to be cast. Unless voting instructions are indicated in the space above, the proxy will vote as he / she thinks fi t. ) FOR AGAINST Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 Ordinary Resolution 5 Ordinary Resolution 6 Ordinary Resolution 7 Signed this day of 2009 Signature / Common Seal of Member Notes : - 1. A member entitled to attend and vote is entitled to appoint more than one proxy (subject always to a maximum of two (2) proxies at each meeting) to attend and vote at the same meeting. Where a member appoints more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting) the appointment shall be invalid unless he specifi es the proportions of his holdings to be represented by each proxy. 2. A proxy may but need not to be a member of the Company and if the proxy is not a member of the Company, the proxy need not be an advocate or an approved company auditor or a person approved by the Registrar of Companies. 3. If the member is a corporation, the Proxy Form must be executed under its Seal or under the hand of its attorney. 4. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certifi ed copy of that power or authority shall be deposited at the registered offi ce of the Company situated at No. 1, Jalan Putra Permai 1A, Taman Equine, Seri Kembangan, Selangor Darul Ehsan, not less than forty eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote. * Delete where applicable

120 Fold this flap for sealing Then fold here The Company Secretary Affi x Stamp Equine Capital Berhad ( Company No T ) No. 1, Jalan Putra Permai 1A, Taman Equine, Seri Kembangan, Selangor Darul Ehsan, Malaysia. 1st fold here

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