CONTENTS. Form of Proxy. Notice of Annual General Meeting. Audit Committee Report. Statement Accompanying Notice of Annual General Meeting

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3 CONTENTS Notice of Annual General Meeting 2 12 Audit Committee Report Statement Accompanying Notice of Annual General Meeting 4 16 Statement on Corporate Governance Corporate Information 5 28 Statement on Risk Management and Internal Controls Corporate Structure 6 30 Additional Compliance Information Profile of Directors 7 31 Financial Statements Profile of Key Senior Management Properties held by the Group Management Discussion & Analysis Disclosure Shareholders Information Form of Proxy

4 2 GRAND HOOVER BERHAD NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Forty-sixth Annual General Meeting of Grand Hoover Berhad will be held at Danau Room, Kota Permai Golf & Country Club, No. 1, Jalan 31/100A, Kota Kemuning, Section 31, Shah Alam, Selangor Darul Ehsan on Wednesday, 27 th December 2017 at 9.30 a.m. to transact the following business : - AGENDA As Ordinary Business 1. To receive and adopt the Directors Report and the Audited Financial Statements for the financial year ended together with the Auditors Report thereon. Ordinary Resolution 1 2. To approve the following payment to Directors : - a. Fees totalling 76,000 for the financial year ended. b. Benefits of up to 20,000 from 1 st February 2017 until the next annual general meeting of the Company. Ordinary Resolution 2 Ordinary Resolution 3 3. To re-elect the following Directors retiring by rotation pursuant to Article 92 of the Articles of Association (Constitution) of the Company : - a. Mr. Sim Cheng Young b. Mr. Tan Teck Khong 4. To re-appoint Messrs Kreston John & Gan as Auditors of the Company and to authorise the Directors to fix their remuneration. Ordinary Resolution 4 Ordinary Resolution 5 Ordinary Resolution 6 As Special Business, to consider and if thought fit, to pass the following resolutions : - 5. AUTHORITY TO DIRECTORS TO ALLOT AND ISSUE SHARES THAT subject always to the Companies Act, 2016, the Articles of Association (Constitution) of the Company and the approval from the Bursa Malaysia Securities Berhad and other governmental/regulatory bodies, where such approval shall be necessary, the Directors be and are hereby authorised pursuant to Section 76 of the Companies Act, 2016, to allot and issue shares in the Company, at any time and upon such terms and conditions and for such purposes as they may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per cent (10%) of the total number of issued shares of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company. 6. RETENTION OF INDEPENDENT NON-EXECUTIVE DIRECTOR THAT Tuan Hj. Basar Bin Juraimi, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than 9 years, be retained as an Independent Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance RETENTION OF INDEPENDENT NON-EXECUTIVE DIRECTOR THAT Mr. Yap Chi Keong, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than 9 years, be retained as an Independent Non- Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance Ordinary Resolution 7 Ordinary Resolution 8 Ordinary Resolution 9 8. To consider any other business for which due notice shall have been given. By Order of the Board CHONG FOOK SIN KAN CHEE JING Company Secretaries Kota Kemuning, Shah Alam 30 th October 2017

5 ANNUAL REPORT Notice of Annual General Meeting NOTES : i. A member whose name appears in the Record of Depositors as at 20 th December 2017 shall be regarded as a member entitled to attend, speak and vote at the meeting. ii. A member entitled to attend and vote at the meeting is entitled to appoint any person as his proxy to attend, speak and vote instead of him. iii. The instrument appointing a proxy must be deposited at the Registered Office of the Company at No. 63-G, Jalan Anggerik Vanilla T31/T, Kota Kemuning, Section 31, Shah Alam, Selangor Darul Ehsan, not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof. iv. A member shall be entitled to appoint more than one (1) 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 specifies the proportions of his holdings to be represented by each proxy. v. If the appointer is a corporation, the proxy form must be executed under its seal or under the hand of its attorney duly authorised. vi. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. vii. Explanatory notes Ordinary Resolution 3 The Directors benefits comprise the following : - a. Meeting allowance of 350 per meeting day; and b. Training benefits. Ordinary Resolution 7 This resolution, if passed, will give the Directors authority to issue and allot new shares up to an amount not exceeding ten per cent (10%) of the total number of issued shares of the Company for such purposes as the Directors in their absolute discretion consider to be in the best interest of the Company. This authority will commence from the date of this Annual General Meeting and unless revoked or varied by the Company at a general meeting, expire at the next Annual General Meeting. The approval is a renewed general mandate and is sought to provide flexibilty and to avoid delay and cost in convening a general meeting for such issuance of shares. As at the date of this Notice, no new shares in the Company were issued pursuant to the authority granted to the Directors at the last Annual General Meeting held on 27 th December 2016 and which will lapse at the conclusion of the Forty-sixth Annual General Meeting. Should there be a decision to issue new shares after the authority is sought, the Company will make an announcement of the actual purpose and utilization of proceeds arising from such issuance of shares. Ordinary Resolutions 8 & 9 Both the Nominating Committee and the Board have assessed the independence of Tuan Hj. Basar Bin Juraimi and Mr. Yap Chi Keong, who have served as Independent Non-Executive Directors of the Company for a cumulative term of more than 9 years, and recommended them to be retained as Independent Non- Executive Directors of the Company based on the following justifications a. They have fulfilled the criteria under the definition of an Independent Director as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, and thus, they would be able to provide independent judgement, objectivity and check and balance to the Board. b. They perform their duties and responsibilities diligently and in the best interest of the Company without being subject to influence of the management. c. Their in-depth knowledge of the Group s businesses and their extensive knowledge, commitment and expertise continue to provide invaluable contribution to the Board. d. They having been with the Company for more than 9 years, are familiar with the Group s business operations and have devoted sufficient time and attention to their professional obligations and attended the Board and Committee meetings for an informed and balanced decision making. e. They are independent as they have shown great integrity and have not entered into any related party transaction with the Group. f. They are currently not sitting on the board of any other public and/or private companies having the same nature of business as that of the Group.

6 4 GRAND HOOVER BERHAD STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad 1. The following Directors are standing for re-election pursuant to Article 92 of the Articles of Association (Constitution) of the Company at the Forty-sixth Annual General Meeting : a. Mr. Sim Cheng Young b. Mr. Tan Teck Khong The profile of Directors standing for re-election as mentioned in paragraph above at the Forty-sixth Annual General Meeting are set out on page 7 of the Annual Report. 2. The statement relating to the general mandate for authority under Section 76 of the Companies Act, 2016 for the Directors to allot and issue shares is set out in the Notes to the Notice of Forty-sixth Annual General Meeting on page 3 of the Annual Report.

7 ANNUAL REPORT CORPORATE INFOATION BOARD OF DIRECTORS Hj Basar Bin Juraimi Sim Cheng Young Tan Teck Khong Allan Ngu Kea Ping Yap Chi Keong Chai Moi Kim (Independent Non-Executive Chairman) (Managing Director) (Executive Director) (Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) COMPANY SECRETARIES Chong Fook Sin (MACS 00681) Kan Chee Jing (MAICSA ) AUDIT COMMITTEE Yap Chi Keong (Chairman) Hj Basar Bin Juraimi Chai Moi Kim REGISTERED OFFICE No. 63-G, Jalan Anggerik Vanilla T31/T Kota Kemuning, Section Shah Alam Selangor Darul Ehsan Tel : Fax : Website : corporate@hoover.com.my BUSINESS ADDRESS No. 63-G, Jalan Anggerik Vanilla T31/T Kota Kemuning, Section Shah Alam Selangor Darul Ehsan Tel : Fax : Website : corporate@hoover.com.my SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR Hj Basar Bin Juraimi AUDITORS Kreston John & Gan Chartered Accountants (Firm No. AF 0113) , Kompleks Maluri Business Centre, Jalan Jejaka Kuala Lumpur Tel : Fax : SHARE REGISTRAR Tacs Corporate Services Sdn. Bhd. (Co. No U) Unit No. 203, 2nd Floor, Block C Damansara Intan No. 1, Jalan SS 20/ Petaling Jaya Selangor Darul Ehsan Tel : Fax : PRINCIPAL BANKERS Malayan Banking Berhad Ambank (Malaysia) Berhad Public Bank Berhad RHB Bank Berhad United Overseas Bank (Malaysia) Berhad STOCK EXCHANGE LISTING Main Market of the Bursa Malaysia Securities Berhad Stock Name : Hoover Stock Code : 7010

8 6 GRAND hoover berhad CORPORATE STRUCTURE 100% HOOVER BUILDERS SDN BHD Property development, building and civil contractors 100% GRAND HOOVER PROPERTY SDN BHD Property investment and property development 100% HOOVER PROPERTY DEVELOPMENT SDN BHD Property development, building and civil contractors 100% HOOVER TILING TRADING SDN BHD Trading & distribution of ceramic tiles, marble & parquet flooring materials & sanitary wares 100% HOOVER MANAGEMENT SDN BHD Provision of management consultancy services 70% HEAP WAH ENTERPRISE SDN BHD Trading & distribution of pipes, sanitary wares, fitting for pipes & sanitary wares & subsoil irrigation system

9 ANNUAL REPORT PROFILE OF DIRECTORS HJ BASAR BIN JURAIMI Malaysian Male, Aged 68 Independent Non-Executive Chairman Hj Basar Bin Juraimi was appointed to the Board as Independent Non-Executive Director on 31 st January He was re-designated as Independent Non- Executive Chairman of Grand Hoover Berhad on 31 st May He holds a B.Sc. in Building Economics from South Bank University, UK and a M. Sc. in Maintenance Management from University of Reading, UK. He was an Assistant Quantity Surveyor for Gordon, Harris & Barton, London from 1973 to He returned to Malaysia and became a lecturer in the School of Architecture, Institute Teknologi MARA from 1975 to 1982 and subsequently started his own business Basar and Harun Sdn Bhd, a Chartered Quantity Surveying company of which he is a director until todate. He was the President of the Institution of Surveyors Malaysia from 1994 to He does not hold any shares, direct and indirect, in the Company or any subsidiaries of the Company. He is the Chairman of the Nominating Committee, a member of the Audit Committee and the Remuneration Committee. He does not hold any other directorship in other public companies. He has attended five out of six Board Meetings held during the financial year He has no family relationship with any Director and/or major shareholder of the Company. He has no conflict of interest with the Company. He has no conviction for any offences within the past 5 years and has no public sanction or penalty imposed on him by the relevant regulatory bodies during the financial year SIM CHENG YOUNG Malaysian Male, Aged 50 Managing Director Sim Cheng Young was appointed to the Board as Non- Executive Director on 25 th November He was re-designated as Executive Director of Grand Hoover Berhad on 10 October On 13 November 2009, he was appointed as the Managing Director of Grand Hoover Berhad. He holds a Bachelor of Commerce (major in Economic & Marketing) from Deakin University, Australia. After his graduation, he involved himself with the family business and assisted his father, Dato Sim Chong Sim Tan Beg, with the group s projects. He is well versed with all aspects of supervision and implementation of various electrical infrastructure works as well as specialises in underground cabling works. He has direct shareholdings of 11,823,100 ordinary shares and indirect shareholdings of 4,151,970 ordinary shares in the Company. By virtue of his interests in the shares of the Company, he is deemed to have an interest in the susidiaries of the Company. He is a member of the Remuneration Committee. He does not hold any other directorship in other public companies. He has attended all the six Board Meetings held during the financial year He has no family relationship with any directors and/or major shareholder of the Company. He holds 100% shareholding in Dynamic Merchant Limited which is a substantial shareholder of the Company. He has no conflict of interest with the Company. He has no conviction for any offences within the past 5 years and has no public sanction or penalty imposed on him by the relevant regulatory bodies during the financial year TAN TECK KHONG Malaysian Male, Aged 46 Executive Director Tan Teck Khong is an Executive Director and was appointed to the Board on 3 rd January He is a Chartered Accountant of Malaysian Institute of Accountants, a fellow member of Chartered Institute of Management Accountants and a member of Chartered Global Management Accountant. He obtained his Master of Business Administration from University of Southern Queensland, Australia. He joined Grand Hoover Berhad in 2001 Group Accounts Manager and responsible for overseeing the accounts, finance and operations of the Group. He has direct shareholdings of 21,500 ordinary shares and indirect shareholdings of 2,400,00 ordinary shares in the Company. He does not hold any shares in any subsidiaries of the Company. He is a member of the Remuneration Committee. He does not hold any other directorship in other public companies. He has attended all the six Board Meetings held during the financial year He has no family relationship with any Director and/or major shareholder of the Company. He has no conflict of interest with the Company. He has no conviction for any offences within the past 5 years and has no public sanction or penalty imposed on him by the relevant regulatory bodies during the financial year 2017.

10 8 GRAND HOOVER BERHAD Profile of Directors ALLAN NGU KEA PING Malaysian Male, Aged 38 Executive Director Allan Ngu Kea Ping is an Executive Director and was appointed to the Board on 31 st May He hold a Bachelor of Commerce (Finance) from Curtin University, Perth, Australia. He has 16 years of working experience in corporate finance and equity investments, covering mainly mergers and acquisitions, initial public offerings, corporate and debt restructuring, debt and equity fund raising including rights issues, private placements, issuance of bonds and commercial papers and other corporate exercises. He started his career as Executive, Corporate Finance with Southern Investment Bank Berhad in He then joined Kuwait Finance House (M) Berhad as Assistant Manager, Investment Banking in He then left Kuwait Finance House (M) Berhad to join RHB Investment Bank Berhad as Manager, Equities Dealing in Prior to joining Grand Hoover Berhad in 2013, he was the General Manager, Group Corporate & Investment of Dijaya Corporation Berhad, a listed property development company which he joined in He has direct shareholdings of 880,133 ordinary shares in the Company. He does not hold any shares in any subsidiaries of the Company. He does not hold any other directorship in other public companies. He has attended all the six Board Meetings held during the financial year He has no family relationship with any Director and/or major shareholder of the Company. He has no conflict of interest with the Company. He has no conviction for any offences within the past 5 years and has no public sanction or penalty imposed on him by the relevant regulatory bodies during the financial year YAP CHI KEONG Malaysian Male, Aged 65 Independent Non-Executive Director Yap Chi Keong is an Independent Non-Executive Director from 28 th March 2002 to 13 th October 2003 and was appointed again to the Board on 20 th October He is a Chartered Accountant of Malaysian Institute of Accountants and an Associate Member of The Chartered Institute of Management Accountants. He started his career as a management accountant with The News Group, United Kingdom. He later moved into industries where he held several senior accounting positions in public listed companies in Malaysia. He is currently in private practice as a management consultant specialising in corporate restructuring. He has several years experience in construction and property development. He does not hold any shares, direct or indirect, in the Company or any subsidiaries of the Company. He is the Chairman of the Audit Committee and the Remuneration Committee and a member the Nominating Committee. He does not hold any other directorship in other public companies. He has attended all the six Board Meetings held during the financial year He has no family relationship with any Director and/or major shareholder of the Company. He has no conflict of interest with the Company. He was publicly reprimanded and fined by Bursa Malaysia Securities Berhad arising from his directorship in Austral Supreme Berhad in December CHAI MOI KIM Malaysian Male, Aged 64 Independent Non-Executive Director Chai Moi Kim is an Independent Non-Executive Director and was appointed to the Board on 4 th February He is a member of the Malaysia Institute of Certified Public Accountants, The Malaysia Institute of Accountants and Chartered Tax Institute of Malaysia. He started his career in 1980 as an article clerk with an established local audit firm, and subsequently worked with several other established audit firms including an international audit firm until He left for FACB Group of Companies as the Group Accountant in In 1992, he joined MBF Holdings Berhad as a Senior Manager of the corporate department where he served until In 1995, he set up his own audit practice, Kim & Co. He does not hold any shares, direct or indirect, in the Company or any subsidiaries of the Company. He is a member of the Audit Committee, the Nominating Committee and the Remuneration Committee. His other directorship in public company is CAM Resources Berhad. He has attended all the six Board Meetings held during the financial year He has no family relationship with any Director and/or major shareholder of the Company. He has no conflict of interest with the Company. He has no conviction for any offences within the past 5 years and has no public sanction or penalty imposed on him by the relevant regulatory bodies during the financial year 2017.

11 ANNUAL REPORT 2017 PROFILE OF KEY SENIOR MANAGEMENT 9 LUM PEK YOKE Malaysian Female, Aged 53 Managing Director of Heap Wah Enterprise Sdn Bhd Lum Pek Yoke was appointed as a director of Heap Wah Enterprise Sdn Bhd on 1 st October She was appointed as the managing director of Heap Wah Entreprise Sdn Bhd on 1 st September She has completed STPM education. She is responsible for the sales, operations and administration of the company. She has more than 30 years of experience in trading of construction materials. She has direct shareholdings of 1,333 ordinary shares in the Company. She holds 136,500 ordinary shares in Heap Wah Enterprise Sdn Bhd, a 70% owned subsidiary of the Company. She does not hold any directorship in other public companies. She has no family relationship with any Director and/or major shareholder of the Company. She has no conflict of interest with the Company. She has no conviction for any offences within the past 5 years and has no public sanction or penalty imposed on her by the relevant regulatory bodies during the financial year STEVEN LEE CHAI TIONG Malaysian Male, Aged 55 Director of Hoover Builders Sdn Bhd, Grand Hoover Property Sdn Bhd and Hoover Property Development Sdn Bhd Steven Lee Chai Tiong was appointed as a directors of Hoover Builders Sdn Bhd on 7 th August On 25 th November 2013, he was also appointed as directors of Grand Hoover Property Sdn Bhd and Hoover Property Development Sdn Bhd. He holds a Bachelor of Technology with Diploma in Industrial Studies in Civil Engineering from University of Ulster, Northern Ireland, United Kingdom (UK). He is a member of Institute of Civil Engineers, United Kingdom. Mr Steven Lee began his career in UK and gained vast experience while working with Charles Brand in 1988, William J. McDowell & Partners in 1990 to He came back to Malaysia in 1996 and worked as Resident Engineer for Semerak Joint Venture Sdn Bhd and Jurutera Perunding Kemajuan Sdn Bhd. He joined Grand Hoover Group in 2004 as Maintenance & Technical Manager and subsequently promoted to Project Manager before assumed the position as Project Director. He does not hold any shares, direct or indirect, in the Company or any subsidiaries of the Company. He does not hold any directorship in other public companies. He has no family relationship with any Director and/or major shareholder of the Company. He has no conflict of interest with the Company. He has no conviction for any offences within the past 5 years and has no public sanction or penalty imposed on him by the relevant regulatory bodies during the financial year 2017.

12 10 GRAND hoover berhad MANAGEMENT DISCUSSION & ANALYSIS DISCLOSURE OVERVIEW OF THE GROUP S BUSINESS AND OPERATIONS Grand Hoover Berhad is principally involved in property development and trading in building materials such as ceramic tiles, marble, sanitary wares, piping and fittings. Property Development Our latest property development project, known as Taman Mutiara Rinching, is located in Semenyih, Selangor and was completed in November The development comprises 14 shop houses, 48 double-storey terrace houses and 24 town houses. Our Group also has landbanks in Beranang, Selangor; Mantin, Negeri Sembilan and Kulim, Kedah. We are currently monitoring the market sentiment in the property sector. The Group plans to launch new property development projects when the property market is more encouraging. Trading in Building Materials Our building materials trading division is mainly carried out by our subsidiary, Heap Wah Enterprise Sdn Bhd, which has been involved in this business for more than 30 years. We mainly supply our products to local contractors which are involved in the construction of various types of properties that are being developed by property developers in our country. We are expanding our customer base and over the years, we had acquired new customers for our trading division in a move to expand our business in this sector. We also plan to introduce more products to our customers in the near future upon successful collaboration negotiations with our suppliers and finalization of product planning by our team. REVIEW OF THE FINANCIAL RESULTS AND FINANCIAL CONDITION Our Group registered revenue and profit before taxation of million and 2.25 million respectively for the financial year ended 30 th June 2017, as compared to million and 0.72 million respectively in the preceding financial year. The lower revenue registered for current financial year compared to previous corresponding financial year was mainly due to less billings for properties sold as our development project was completed in November 2016 and the deferment on launching of new property development projects in view of the softening of the property market. The slowdown had also marginally affected the demand of our products in our trading division. REVIEW OF OPERATING ACTIVITIES Despite the challenging market condition faced by our Group in the current financial year due to various cooling measures for the property market introduced by the government in the past, our Group still managed to register a turnover of million for the current financial year and marginal increase in profit before taxation compared to the previous financial year. Our Group continues to remain focused in property development and trading of building materials sectors despite the challenges in the property market. We foresee that our building materials trading division will continue to maintain its current performance despite the ever challenging and highly intensified competition in its industry. The trading division had also successfully opened two retail outlets in Klang Valley to capture more retail customers and contractors. We are also expanding our sanitary ware and piping businesses through e-commerce and it is currently in the initial implementation stage.

13 ANNUAL REPORT Management Discussion & Analysis Disclosure ANTICIPATED OR KNOWN RISKS Property Development Currently, the main risk of the property division is to continue to identify strategic lands for acquisitions or to explore potential joint ventures with landowners for our landbank expansion in order to increase the shareholders value and to sustain our Group s involvement in the property industry. In mitigating the potential risk, our Group has embarked on a series of discussions with potential landowners for the development of affordable housing to cater for the ever-growing demand of the house-buyers in this particular sector. Our Group also anticipated that the year ahead will continue to be challenging for the local property market due to the continued softening of the economic momentum, cautious bank lending practices and intensified competition among the property developers. Trading in Building Materials The primary risk for our trading division is credit risk where credit term is being granted to some of our customers. In mitigating the risk, the Group has implemented a stringent policy in granting credit to our customers. Our Group anticipated that the soft property market and stiff competition among the building material players will indirectly affect our trading division s business. Hence, our Group has embarked on a series of plans including collaboration with suppliers as well as increasing our cash business via our retail channels and e-commerce. FORWARD LOOKING STATEMENT Our Group foresees that our building materials trading division will continue to contribute positively to the performance of the Group for the next financial year. However, there will be less contribution from our property development division as our latest project in Taman Mutiara Rinching has been completed. We shall expect positive contribution from our property development division upon successful launching of new projects in the future. Our Group will continue to identify strategic lands for acquisitions and/or joint ventures with landowners for our landbank expansion going forward. Despite the softening of the property market and intensified competition faced by both our business divisions, our Group pledges to move forward with a formidable force but in a prudent manner. DIVIDEND The Board of Directors did not recommend any dividend for the financial year ended. APPRECIATION On behalf of the Board and Management Team, I would like to thank the employees for their continued dedication, support and commitment to the Group. To our valued, customers, suppliers, shareholders and business associates, I thank them for their continued support and confidence in us. Sim Cheng Young Managing Director 9 th October 2017

14 12 GRAND HOOVER BERHAD AUDIT COMMITTEE REPORT A. COMPOSITION The Audit Committee presently consists of three members, all of whom are Independent Non-Executive Directors : - Yap Chi Keong Chairman (Independent Non-Executive Director) Hj. Basar Bin Juraimi Member (Independent Non-Executive Chairman) Chai Moi Kim Member (Independent Non-Executive Director) B. TES OF REFERENCE OF THE AUDIT COMMITTEE 1. OBJECTIVE The objective of the Audit Committee is to assist the Board of Directors in meeting its responsibilities relating to accounting and reporting practices of the Company and its subsidiary companies. In addition, the Audit Committee shall :- a. Oversee and appraise the quality of the audits conducted both by the Company s internal and external auditors; b. Maintain open lines of communication between the Board of Directors, the internal auditors and the external auditors for the exchange of views and information, as well as to confirm their respective authority and responsibilities; and c. Determine the adequacy of the Group s administrative, operating and accounting controls. 2. COMPOSITION The Audit Committee shall be appointed by the Directors from among their members (pursuant to a resolution of the Board of Directors) which fulfils the following requirements : - a. the audit committee members must be composed of no fewer than 3 members; b. all the audit committee members must be non-executive directors, with a majority of them are independent directors; and c. at least one member of the audit committee : - i. must be a member of the Malaysian Institute of Accountants; or ii. if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years working experience and : - he must have passed the examinations specified in Part 1 of the 1 st Schedule of the Accountants Act 1967; or he must be a member of one of the associations of accountants specified in Part II of the 1 st Schedule of the Accountants Act 1967; or iii. must fulfill such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad from time to time. The members of the Audit Committee shall elect a Chairman from among their members who shall be an independent director. If a member of the Audit Committee resigns, dies or for any other reason ceases to be a member resulting in the non-compliance of item 2 (a) to (c) above, the Board of Directors shall, within three months of that event, appoint new member(s) as may be required to comply with the above requirements.

15 ANNUAL REPORT Audit Committee Report B. TES OF REFERENCE OF THE AUDIT COMMITTEE (CONT D.) 3. FUNCTION The functions of the Audit Committee are as follows : - a. Review with the external auditors, the audit plan; b. Review with the external auditors, the evaluation of the system of internal controls; c. Review with the external auditors, the audit report; d. Review the assistance given by the Company s employees to the external auditors; e. Review the adequacy of scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; f. Review the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; g. Review the quarterly results and year end financial statements, prior to the approval by the Board of Directors, focusing particularly on : - i. changes in or implementation of major accounting policy changes; ii. significant matters highlighted including financial reporting issues, significant judgments made by management, significant and unusual events or transactions, and how these matters are addressed; and iii. compliance with accounting standards and other legal requirements; h. Review any related party transaction and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity; i. Consider the appointment of a person or persons as external auditors, the audit fees and any questions of nomination, resignation or dismissal; j. Review whether there is reason (supported by grounds) to believe that the Company s external auditor is not suitable for reappointment; k. Consider the appointment of the internal auditors, the fees, and any questions of nomination, resignation or dismissal; l. Assess the adequacy and integrity of the risk management and internal control system through independent reviews conducted and reports it received from the internal auditors, the external auditors and the management; and m. Consider other topics as defined by the Board. 4. RIGHTS OF THE AUDIT COMMITTEE The Audit Committee shall, whenever necessary and reasonable for the Company to perform of its duties, in accordance with a procedure to be determined by the Board of Directors and at the cost of the Company : - a. have authority to investigate any matter within its terms of reference; b. have the resources which are required to perform its duties; c. have full and unrestricted access to any information pertaining to the Company; d. have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity; e. be able to obtain independent professional or other advice; and f. be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the company, whenever deemed necessary.

16 14 GRAND HOOVER BERHAD Audit Committee Report B. TES OF REFERENCE OF THE AUDIT COMMITTEE (CONT D.) 5. MEETING The Audit Committee shall meet at least four times a year and such additional meetings as the Chairman shall decide in order to fulfill its duties. In addition, the Chairman may call a meeting of the Audit Committee if a request is made by any committee member, the Company s Chief Executive, or the internal or external auditors. The Company Secretary or other appropriate senior officer shall act as secretary of the Audit Committee and shall be responsible, in conjunction with the Chairman for drawing up the agenda and circulating it, supported by explanatory documentation to committee members prior to each meeting. The Secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee, and circulating them to Committee members and to the other members of the Board of Directors. The quorum shall be two members, a majority of whom shall be independent directors. By invitation of the Audit Committee, the Company must ensure that other directors and employees attend any particular audit committee meeting specific to the relevant meeting. C. DETAILS OF AUDIT COMMITTEE MEETING A total of six (6) Audit Committee meetings were held during the financial year under review. Attendance of Audit Committee Meeting for the Financial Year Ended 30 June 2017 Audit Committee Members 24 Aug Oct Nov Feb Mar May 2017 Total Yap Chi Keong 6/6 Hj Basar Bin Juraimi χ 5/6 Chai Moi Kim 6/6 Note : - Present D. SUMMARY OF AUDIT COMMITTEE WORKS The Audit Committee has carried out the following works during the financial year ended in discharging its functions and duties in accordance with the Terms of Reference before recommending to the Board of Directors for approval : - 1. The Audit Committee conducted an assessment on the suitability and independence of the external auditors for the year under review and recommended to Board for reappointment of M/s. Kreston John & Gan; 2. Reviewed the audit plan memorandum and reporting requirements with the external auditors prior to commencement of audit works; 3 Reviewed the audited annual financial statements with the external auditors which includes : - a. significant accounting and audit issues; b. significant audit differences; and c. compliance with accounting standards.

17 ANNUAL REPORT Audit Committee Report D. SUMMARY OF AUDIT COMMITTEE WORKS (CONT D.) 4. Reviewed the quarterly financial results announcements for recommendation for the Board s approval; 5. Reviewed the following related party transaction for recommendation for the Board s approval : - Disposal of a unit of 2-storey shop office to Mr. Sim Cheng Young, a Director and a major shareholder of the Company for 1,000,000 and the announcement was made to Bursa Securities Malaysia Berhad on 20 th March Reviewed the Group s debtors and creditors listing and updates in relation thereto; 7. Reviewed the status of Group s litigation cases and updates in relation thereto; 8. Reviewed the internal audit plan memorandum and internal audit reports with internal auditors; and 9. Reviewed the Audit Committee Report. E. INTERNAL AUDIT WORKS The Audit Committee has engaged an external professional firm, M/s. Sam & Co., Chartered Accountants, to carry out the internal audit works. During the year under review, the audits have been carried out according to the internal audit plan which has been approved by the Audit Committee. The Internal Auditor has reviewed and evaluated the system of internal controls of two (2) subsidiaries that consists of the following : - Heap Wah Enterprise Sdn Bhd During the financial year ended, the internal audit has carried out a full audit review on human resource management. Follow-up review has also been carried in the year under review by the internal auditor on sales and marketing, accounts receivable and credit control, procurement and accounts payable process and safety, health and environment. Hoover Builders Sdn Bhd The internal audit has carried out full review on human resource management and follow up review on project management process. The Internal Auditor has made appropriate recommendations to the Audit Committee on the audit works carried out. The Board and the Management ensure that all recommendations for improvement to the internal control system are satisfactorily implemented within the appropriate interval. This Report is made in accordance with a resolution of the Board dated 9 th October 2017.

18 16 GRAND HOOVER BERHAD STATEMENT ON CORPORATE GOVERNANCE INTRODUCTION The Board of Directors of Grand Hoover Berhad remains firmly committed towards ensuring the highest standard of corporate governance is maintained throughout the Company and its subsidiaries ( the Group ). Hence, the Board is fully dedicated to continuously evaluating the Group s corporate governance practices and procedures with a view to ensure the principles and recommendations in corporate governance as promulgated by the Malaysian Code on Corporate Governance 2012 ( the Code ) are applied and adhered to in the best interests of the stakeholders. This disclosure statement sets out the manner in which the Group has applied and complied with the principles and recommendations of the Code and the extent of compliance in respect of the financial year ended 30 th June, PRINCIPLE 1 ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT Roles and Responsibilities of Board The Group is led and controlled by an effective Board that currently consists of six (6) members comprising one (1) Independent Non-Executive Chairman, two (2) Independent Non-Executive Directors, one (1) Managing Director and two (2) Executive Directors. The Board complies with Paragraph of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) which requires at least two Directors or one-third of the Board of the Company, whichever is the higher, are Independent Directors. The Board is satisfied that the current Board composition fairly reflects the investment of minority shareholders in the Company and represents the needed mix of skills and experience required to discharge the Board s duties and responsibilities effectively. No individual Director or group of Directors can dominate the Board s decision making process. The composition and size of the Board are to be reviewed from time to time. There is a clear division of responsibility between the Independent Non-Executive Chairman and the Managing Director to ensure that there is a balance of power and authority in decision making. The Board is led by the Independent Non-Executive Chairman and the Executive Management is led by the Managing Director. Together, the Directors bring a broad range of competencies, capabilities, technical skills, experiences and knowledge relevant to the business to ensure that the Group continues to be a competitive leader in the industry with a strong reputation for technical and professional competence. All of the Board members serve as directors in not more than five boards of listed companies, to ensure they devote sufficient time to carry out their responsibilities. The profiles of the members of the Board are set out in the Annual Report under the section named Profile of Directors. Clear functions reserved for the Board and those delegated to Management The Board recognizes its key role in charting the strategic direction, development and control of the Group and has adopted the specific responsibilities that are listed in the Code, which facilitates the discharge of the Board s stewardship responsibilities. In order to deliver both fiduciary and leadership functions, the Board, amongst others, assumes the following key responsibilities as per recommendations of the Code : Setting the objectives, goals and strategic plan for the Company with a view to maximizing shareholder value and promoting sustainability; Adopting and monitoring progress of the Company s strategy, budgets, plans and policies; Overseeing the conduct of the Company s business to evaluate whether the business is being properly managed; To consider and approve reserved matters covering corporate policies, material investment and acquisition/ disposal of assets;

19 ANNUAL REPORT Statement on Corporate Governance PRINCIPLE 1 ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT (CONT D.) Clear functions reserved for the Board and those delegated to Management (Cont d.) Identifying principal risks and ensure implementation of appropriate systems 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 Company; and Reviewing the adequacy and the integrity of the Company s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines. The Executive Directors are responsible for making and implementing operational and corporate decisions as well as developing, coordinating and implementing business and corporate strategies. The Non-Executive Directors play the key roles in contributing knowledge and experience towards the formulation of policies and in the decision-making process. They could provide the relevant checks and balances, focusing on shareholders and other stakeholders interests and ensuring that high standards of corporate governance are applied. Where a potential conflict of interest may arise, it is mandatory practice for Director concerned to declare his interest and abstain from decision-making process. The Board is aware of the need to clearly demarcate the duties and responsibilities of the Board. Along with good governance practices and to enhance transparency, accountability and timely disclosure of material information, the Board has formalized and adopted the following policies and procedures which provide guidance to the Board in fulfillment of its roles, functions duties and responsibilities and they are made available at the Company s website at Board Charter; Code of Ethics and Conduct; Whistle Blowing Policy; Corporate Disclosure Policy; Criteria to assess independence of Independent Directors; Procedure of recruitment / selection for directorship; Remuneration Policy for Executive Directors; and Remuneration Policy for Non-Executive Directors. Access to and supply of information The Managing Director and the Executive Directors have the primary responsibility for organizing information necessary for the Board to deal with the agenda and ensuring all Directors have full and timely access to the information relevant to matters that will be deliberated at the Board meeting. In exercising their duties, all Directors have the same right to access to all information within the Group and authorized whenever necessary to obtain independent professional advice in the furtherance of their duties at the Group s expense. The Directors also have access to the advice and services of the Company Secretary appointed by the Board whether as a full Board or in individual capacity to assist them in discharging their duties and decision making. All Directors are provided with papers which include the agenda and reports relevant to the issues of the meetings covering areas of strategic, financial, operational and regulatory compliance matters prior to each Board meeting. These Board meeting papers are issued and circulate with minimum of seven (7) working days or earlier in advance to enable the Directors to obtain any further information and/or explanations when necessary. The Board papers prepared for the quarterly scheduled meetings include, among others, the following : - Minutes of previous Board meeting; Minutes of the Board Committee s meeting; Reports on matters arising; Quarterly financial results; and Report on operational matters. The Senior Independent Non-Executive Director provides an additional communication channel between the directors and the shareholders. The Board has identified Tuan Hj Basar Bin Juraimi to act as the Senior Independent Non-Executive Director to whom any concerns relating to the Group may be conveyed by shareholders.

20 18 GRAND HOOVER BERHAD Statement on Corporate Governance PRINCIPLE 1 ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT (CONT D.) Independent Professional Advice The Directors, where acting as a full Board member or in their individual capacity, in the furtherance of their duties, may obtain independent professional advice at the Company s expense, in the event that circumstances warrant the same. Company Secretaries The Company Secretaries are qualified officers and meet the provisions of the Companies Act. The Directors have unrestricted access to the advice and services of the Company Secretaries. The Company Secretaries ensure that all Board meetings are properly convened and are entrusted to record the Board s deliberations, in terms of issues discussed and the conclusions. The Board is regularly updated by the Company Secretaries on new changes to the legislations and the Listing Requirements and the resultant implications to the Company and the Board in discharging their duties and responsibilities. PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD In order to assist in the execution of the Board s responsibilities, the Board had delegated certain its responsibilities to the Board Committees. Clearly defined terms of reference have been given to these Committees to enable them to operate effectively. The Board periodically reviews the Committees terms of reference. i. Audit Committee The objective of the Audit Committee is to assist the Board in meeting the responsibilities relating to financial accounting, reporting and control. The Committee will serve as a communicating mechanism among the Directors, External Auditors, Internal Auditors and Senior Management. The Committee has full access to the External Auditors and Internal Auditors, who in turn, have full access at all times to the Chairman of the Audit Committee. The terms of reference of the Audit Committee together with the Report of the Audit Committee are disclosed on pages 12 to 15 of this Annual Report. The Audit Committee activities during the financial year are also set out in the Report of Audit Committee. ii. Nominating Committee The Nominating Committee (NC) is empowered by the Board through clearly defined terms of reference to ensure that there are appropriate procedures in place for the nomination, selection and evaluation of Directors. Prior to appointment of a director, the NC is fully entrusted to evaluate, propose and then recommend suitable candidates to be approved and appointed by the Board. The NC takes into the account of the qualification, character, skills, expertise, background, experience, integrity, competence, time commitment and diversity in evaluating the potential candidates. The potential candidates must disclose their existing directorships as well as any other commitments so as to determine whether they have adequate time to perform their duties. The Company Secretary will ensure that all appointments are properly made and all information necessary are obtained as well as all legal and regulatory obligations are met. In accordance with Article 92 of the Company s Articles of Association (Constitution), one third of the Directors shall retire by rotation from office and be eligible for re-election at the annual general meeting. The Article also provides that all Directors shall retire from office at least once in every three years, but shall be eligible for re-election. In accordance with Article 99, any new Director appointed by the Board is subject to re-election by shareholders at the first opportunity after his appointment. Directors who are of or over the age of seventy years shall also retire from office and be eligible for reappointment at the annual general meeting pursuant to Section 129(6) of the Companies Act, Under the Companies Act, 2016, the restriction of the maximum age of the directors to retire annually has been abolished.

21 ANNUAL REPORT Statement on Corporate Governance PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD (CONT D.) ii. Nominating Committee (Cont d.) The assessment of the effectiveness of the Board, the board committees and the contribution of each director were conducted with the objective to improve the Board and its committees effectiveness and to enhance the director s awareness on the key areas that need to be addressed. The evaluation results were tabled for the consideration of the NC and its recommendation to the Board for improvement. During the financial year ended, the NC had held one (1) meeting. The attendance of the members of the NC at the meeting is as follows : - Name of members No. of meetings attended Hj. Basar Bin Juraimi (Chairman) 1 Yap Chi Keong 1 Chai Moi Kim 1 The NC consists entirely of Independent Non-Executive Directors. The terms of reference of the NC are as follows : - 1. Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist exclusively of Non-executive Directors, minimum three (3), a majority of whom are Independent Directors. The members of the Committee shall elect the Chairman from amongst their members who shall be an Independent Director. The quorum shall be two members, a majority of whom shall be Independent Directors. The Company Secretary shall be the Secretary of the Committee. 2. Frequency of Meetings Meeting shall be held not less than once a year. 3. Authority The Committee is to recommend new nominees for the Board and the Board Committees and to assess Directors on an ongoing basis. The actual decision as to who shall be nominated should be the responsibility of the full Board after considering the recommendations of the Committee. 4. Duty The duties of the Committee shall be : i. To nominate and recommend to the Board, appropriate candidates to be appointed as Director of the Company taking into consideration the candidates qualification, character, skills, knowledge, expertise, experience, professionalism, integrity, competence and time commitment; ii. To consider in making its recommendations, candidates for directorship proposed by the Managing Director or by any other senior executive or any director or shareholder; iii. To recommend to the Board, directors to fill the vacancies on various Board committees; iv. To assist the Board in its annual review of its required mix of skills and experience and other qualities, including core competencies which non-executive directors should bring to the Board, independence and diversity (including gender diversity) required to meet the needs of the Company; v. To assist the Board in implementing an assessment programme to assess the effectiveness of the Board as a whole, the committees of the Board and the individual director on an annual basis; vi. To establish a formal and transparent procedures for appointment of new Directors to the Board and make recommendations which include establishing selection criteria, short listing, assessing and evaluating suitable candidate against selection criteria and Board s requirements; and vii. To review the term of office and performance of an audit committee and each of its members annually to determine whether such audit committee and members have carried out their duties in accordance with their terms of reference.

22 20 GRAND HOOVER BERHAD Statement on Corporate Governance PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD (CONT D.) ii. Nominating Committee (Cont d.) 5. Reporting Procedures The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. The criteria to assess independence of independent directors and the procedure of recruitment/ selection for directorship are made available at the Company s website at The main activities undertaken by the NC during the financial year under review were as follows : - i. Reviewed the re-election of the Directors retiring at the forthcoming annual general meeting under Article 92 of the Articles of Association (Constitution) of the Company; ii. Assessment of independence of independent directors; iii. Reviewed the required mix of skills, experience and other qualities of the Board and gender diversity; iv. Reviewed the effectiveness of the Board and the Board Committees and the performance of each of the Board members and the Audit Committee members; and v. Reviewed and recommended retention of independent directors who have served a cumulative period of nine years. iii. Remuneration Committee The Remuneration Committee (RC) is delegated with responsibilities to evaluate and recommend to the Board of all element of the remuneration package of the Executive Directors. The remuneration packages is based on the philosophy to enable the Company to attract and retain Directors of caliber, relevant experience and expertise to manage the Group effectively and successfully. The Board as a whole would determine the remuneration packages of the Independent Non-Executive Directors. During the financial year ended, the RC has held one (1) meeting. The attendance of the members of the RC at the meeting is as follows : - Name of members No. of meetings attended Yap Chi Keong (Chairman) 1 Sim Cheng Young 1 Haji Basar Bin Juraimi - Tan Teck Khong 1 Chai Moi Kim 1 The RC consists of three (3) Independent Non-Executive Directors, a Managing Director and an Executive Director. The terms of reference of the RC are as follows : - 1. Membership The Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of at least three (3) Directors, wholly or a majority of whom are Non-executive Directors. The members of the Committee shall elect the Chairman from amongst their members who shall be a Non-executive Director. The quorum shall be 2 members, a majority of whom shall be Non-executive Directors. The Company Secretary shall be the Secretary of the Committee.

23 ANNUAL REPORT Statement on Corporate Governance PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD (CONT D.) iii Remuneration Committee (Cont d.) 2. Frequency of Meetings Meeting shall be held not less than once a year. 3. Authority The Committee is authorised to draw advice from outside as and when necessary in forming its recommendation to the Board on the remuneration of the Executive Directors in all its forms. Executive Directors should play no part in deciding their own remuneration and should abstain from discussion of their own remuneration. The determination of the remuneration packages of the Non-executive Directors, including Nonexecutive Chairman, should be a matter for the Board as a whole. The individuals concerned should abstain from discussion of their own remuneration. 4. Duty The duties of the Committee shall be : i. To recommend to the Board, the remuneration packages of all executive directors in all forms inclusive of cash and non-cash benefits, options and privileges granted by the Company. The remuneration packages should be sufficient to attract and retain the director needed to run the Company successfully; ii. To review and recommend on an annual basis, all benefits and entitlements of all executive directors; and iii. To establish a formal and transparent procedure for developing policy on executive remuneration for fixing the remuneration packages of individual directors. 5. Reporting Procedures The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. The remuneration policies for Executive Directors and Non-Executive Directors are made available at the Company s website at The main activity undertaken by the RC during the financial year under review was reviewed the structure of remuneration packages for each of the Executive Directors. Directors Remuneration The remunerations of the Executive Directors are to be structured so as to link rewards to Group and individual performance and for Non-Executive Directors, the level of fees shall reflect the experience, expertise and level of responsibilities undertaken. All Non-Executive Directors are paid director s fees for serving as Directors on the Board and members of its Committees. The Company also reimburses expenses incurred by these Directors in the course of their duties. They are paid a meeting allowance of per meeting day for attendance of each Board and its Committees meetings. The Directors fees are approved at the annual general meeting by shareholders. Currently, the Executive Directors remuneration comprising basic salary and bonus which are reflective of the experience, expertise, level of responsibilities, accountability and performance. Benefits in kind such as company car are made available as appropriate.

24 22 GRAND HOOVER BERHAD Statement on Corporate Governance PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD (CONT D.) Directors Remuneration (Cont d.) The details of the remuneration of the Directors of the Company and the Group for the financial year ended including proposed Directors fees are as follows : - Executive Directors () Non-Executive Directors () Company Group Company Group Fees ,000 76,000 Salary 594, , Bonus 44,550 44, Allowance - - 4,900 4,900 EPF 81,666 81, Benefit-in-kind - 57, Total 720, ,716 80,900 80,900 The number of Directors whose remunerations falls within the following bands are as follows : - Successive band of 50,000 Executive Directors () Non-Executive Directors () Company Group Company Group 0 50, , , , , , , , , Board Diversity The Board is aware of the gender diversity policy and target as set out in Recommendation 2.2 of the Code. When appointing a Director, the Nominating Committee and the Board will always evaluate and match the criteria of the candidate to the Board based on experience, skill, competency, knowledge and potential contribution, while the Recommendation 2.2 of the Code will also be given due consideration for boardroom diversity. The Company does not set any specific target for boardroom diversity. Female representation in the Board will be considered when suitable candidates are identified. Currently, the Group has one female senior management appointed as managing director on its subsidiary. Diversity The Board is committed to provide fair and equal opportunity within the Group and acknowledges the importance of boardroom and workplace diversity as well as the employment of employees who possess the necessary skills and right personal attributes. The Group is committed to workplace diversity and that the workplace is fair, accessible, flexible and free from all kinds of discrimination. PRINCIPLE 3 REINFORCE INDEPENDENCE OF THE BOARD There are clear roles of the Independent Non-Executive Chairman and the Managing Director. The Independent Non-Executive Chairman is primarily responsible for the orderly conduct and working of the Board whilst the Managing Director is responsible for the day-to-day running of the business and implementation of Board policies and decisions adopted by the Board.

25 ANNUAL REPORT Statement on Corporate Governance PRINCIPLE 3 REINFORCE INDEPENDENCE OF THE BOARD The presence of the Independent Non-Executive Directors provides a pivotal role in corporate accountabilities. The roles of the Independent Non-Executive Directors, among other compliances, are with the purpose to provide an independent and objective view, advice and fairness in judgment by ensuring the long term interest of stakeholders are considered. The Independent Non-Executive Directors do not participate in the operations of the Group in order to uphold their objectivity and fulfill their responsibilities to provide check and balance to the Group. The Board is satisfied with the level of independence demonstrated by all the Independent Non-Executive Directors and their ability to act in the best interest of the stakeholders. Tenure of Independent Directors The Board noted Recommendation 3.2 of the Code that the tenure of an Independent Non-Executive Director should not exceed a cumulative term of nine (9) years. Currently, there are two Independent Non-Executive Directors exceeded the cumulative nine (9) years, that are Tuan Hj. Basar Bin Juraimi and Mr Yap Chi Keong. The Nominating Committee has assessed and satisfied that they demonstrate complete independence in character and judgement as Board members and is of the opinion that they continue to bring independent view to the Board notwithstanding their length of service. As such, the Board recommends Tuan Hj. Basar Bin Juraimi and Mr Yap Chi Keong to be retained as Independent Non-Executive Directors and would be seeking shareholders approval for the same at the forthcoming annual general meeting based on the following justifications : - They have fulfilled the criteria under the definition of an Independent Director as stated in the Listing Requirements of Bursa Securities, and thus, they would be able to provide independent judgement, objectivity and check and balance to the Board. They perform their duties and responsibilities diligently and in the best interest of the Company without being subject to influence of the management. Their in-depth knowledge of the Group s business and their extensive knowledge, commitment and expertise continue to provide invaluable contribution to the Board. They having been with the Company for more than 9 years, are familiar with the Group s business operations and have devoted sufficient time and attention to their professional obligations and attended the Board and Committee meetings for an informed and balanced decision making. They are independent as they have shown great integrity and have not entered into any related party transaction with the Group. They are currently not sitting on the board of any other public and/or private companies having the same nature of business as that of the Group. The Board believes that their in-depth knowledge of the Group s business and their experience and expertise continue to provide invaluable contribution to the Board. According to Recommendation 3.5 of the Code, the board must comprise a majority of independent directors where the chairman of the board is not an independent director. In this regard, the Board wishes to highlight that the present Chairman of the Board is an Independent Director and the Board complies with Paragraph of the Main Market Listing Requirements of Bursa Securities which requires at least two Directors or one-third of the Board of the Company, whichever is the higher, are Independent Directors. PRINCIPLE 4 - FOSTER COMMITMENT OF DIRECTORS The underlying factors of Directors commitment to the Group are devoting time and continuously improving of knowledge and skills with the objective to efficiently govern and contribute to the Group. Time Commitment The time commitment by Directors is dealt with during the nomination process when the potential appointee needs to devote himself or herself to serve the needs of the Company. During the financial under review, the Directors are required to attend all the Board Meetings and at least one Directors training programme. The exact time and duration to be served was not furnished in view of the uncertainty of circumstances which may arise during the financial year. During the financial year ended, all except one member of the Board attended all the Board Meetings. The Board meets minimum of four (4) times a year and on other occasion when necessary, to approve quarterly financial results, statutory financial statements and any business development plans.

26 24 GRAND HOOVER BERHAD Statement on Corporate Governance PRINCIPLE 4 - FOSTER COMMITMENT OF DIRECTORS (CONT D.) Board Meeting During the financial year ended, the Board met on six (6) occasions. Informal meetings and consultations were frequently and freely held to share expertise and experiences. Details of the attendance of the Directors at various meetings are set out below : - Name of Director Designation Attendance of Board Meeting Hj. Basar Bin Juraimi Independent Non-Executive Chairman 5/6 Sim Cheng Young Managing Director 6/6 Tan Teck Khong Executive Director 6/6 Allan Ngu Kea Ping Executive Director 6/6 Yap Chi Keong Independent Non-Executive Director 6/6 Chai Moi Kim Independent Non-Executive Director 6/6 Directors Training All members of the Board had attended the Mandatory Accreditation Programme as required by Bursa Securities. Pursuant to Paragraph of the Bursa Securities Listing Requirements, the Board is responsible to identify the training needs of its Directors which will aid them in the discharge of their duties on a continuous basis. During the financial year under review, the Board has discussed training programme proposed for the Directors attendance. The Board noted that the Nominating Committee is satisfied that the Board comprises qualified people with professional background, expertise and practical experience. Nevertheless, the Board encourages its Directors to go for training on their own initiative from time to time in order to keep them abreast of the latest developments in the market-place as well as the current changes in the laws, regulations and accounting standards. As an integral element of the process of appointing new directors, the Board will ensure there is an induction programme for new directors. During the financial year ended, the Board satisfied with the followings training programme attended by the Directors. The Board acknowledged that the training attended by the Directors would able to enhance their knowledge and enable them to discharge their duties effectively. Name Training Course Course Organizer Sim Cheng Young The Cybersecurity Threat and How Board Should Mitigate the Risks Bursa Malaysia Tan Teck Khong Communication A Key to Ensuring Business Success What does Brexit mean to the Accounting & Finance profession and how does it affect the movement of professional global Strategic Accountant Risk Management Programme Fraud Risk Management Workshop GST Audit File: Hands-on Training The Cybersecurity Threat and How Board Should Mitigate the Risks Understanding and Applying the MFRS A Practical Approach Implementation of IFRS9 for the Entities Other Than Financial Services CIMA MIA CIMA Bursa Malaysia Bursa Malaysia CIMA Bursa Malaysia MIA MIA Allan Ngu Kea Ping Hj Basar Bin Juraimi Yap Chi Keong Chai Moi Kim A Director s guide to fraud & corruption risks Fraud Risk Management Workshop Workshop on Enterprise Risk Management for Senior Management The Velocity of Global Change & Sustainability Integrated Reporting Training 7 th SBY Tax & Corporate Review 2017 Budget Seminar Mastering MPERS Fully Illustrated Translation of the Standard into Practical Examples, and Impact of 2017 Updates National GST Conference 2017 MIA International Accountants Conference 2016 National Tax Conference 2016 Bursa Malaysia Bursa Malaysia Axcelasia Bursa Malaysia CIMA SBY Group CTIM MIA CTIM MIA CTIM

27 ANNUAL REPORT Statement on Corporate Governance PRINCIPLE 5 - UPHOLD INTEGRITY IN FINANCIAL REPORTING The Board is responsible for ensuring that the Company and the Group maintain accounting records that disclose with reasonable accuracy the financial position of the Company and the Group and which enables them to ensure that the financial statements comply with the provision of the Companies Act, The Board is assisted by the Audit Committee to ensure the Group s financial statements comply with applicable financial reporting standards. The Audit Committee is also tasked in assisting the Board in maintaining sound internal control system across the Group. Financial Reporting In presenting and reporting the annual audited financial statements and reports and the quarterly financial announcements to shareholders, the Board aims to present a balanced and understandable assessment of the Group s position and prospects. Directors Responsibility Statement in relation to the financial statements The Board is required to prepare financial statements in accordance with applicable approved accounting standards and the provisions of the Companies Act, 2016 so as to give a true and fair view of the state of affairs of the Group and the Company as at the end of each financial year and of their results and cash flows for the financial year. In preparing the financial statements, the Board has : - adopted suitable accounting policies and applied them accordingly; made judgements and estimates that are reasonable and prudent; and prepared financial statements on the going concern basis as the Board has a reasonable expectation, having made enquiries, that the Group and the Company have adequate resources to continue in operational existence in the foreseeable future. The Board is responsible for ensuring proper accounting records are kept which disclose with reasonable accuracy at any time the financial position of the Group and the Company and are kept in accordance with the Companies Act, The Board also has an overall responsibility to take reasonable steps to safeguard the assets of the Group and the Company and to prevent and detect fraud and other irregularities. Internal Control The Board acknowledges its responsibility for maintaining a sound internal controls system, which provides reasonable assurance in ensuring the effectiveness and efficiency of operations and the safeguard of assets and interest in compliance with laws and regulations as well as with internal financial administration procedures and guidelines. The Statement on Risk Management and Internal Control is shown on pages 28 to 29 of this Annual Report. Assessment of Independence of External Auditors The financial year under review, the Audit Committee conducted an assessment on the suitability and independence of the External Auditors. In the assessment of appointment, the Audit Committee had considered several factors including the independence, quality of audit review and adequacy of the firm s expertise and resources, M/s. Kreston John & Gan, Chartered Accountants. The Audit Committee has obtained written assurance from the External Auditors confirming that they are and have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements. The Audit Committee was satisfied with the External Auditors and has established a good working relationship with the External Auditors and recommended for reappointment to the Board. The Board approved the reappointment of External Auditors and sought shareholders approval on the re-appointment at the annual general meeting. The Group also maintains a transparent relationship with the External Auditors in seeking their professional advice towards ensuring compliance with the accounting standards through the Audit Committee. In the course of audit of the Group s operations, the External Auditors have highlighted all important matters to the Audit Committee. The Audit Committee will then bring up the matters for the Board s attention if it is necessary. Key features underlying the relationship of the Audit Committee and the External Auditors are included in the terms of reference of the Audit Committee which are stated on pages 12 to 14 under the Audit Committee Report. Details of the amount paid to the External Auditors for audit and non-audit services performed during the financial year are set out on page 30 under Additional Compliance Information section of this Annual Report.

28 26 GRAND HOOVER BERHAD Statement on Corporate Governance PRINCIPLE 6 - RECOGNISE AND MANAGE RISKS Risk Management The Board recognizes that risk management is an integral part of the Group s business operations and that risks are inherited in all business activities and is committed to manage the risks involved in the Group business activities. The Company has a Risk Management Committee that is chaired by the Managing Director and its members comprise the two Executive Directors and an Independent Non-Executive Director. The objective of the Risk Management Committee is to assist the Board through the Audit Committee in the effective discharge of its responsibilities of identifying principal risks and implementing appropriate systems and risk assessment process to manage such risks that are in line with applicable laws, regulations, rules, directives and guidelines. The Statement of Risk Management and Internal Controls which provides an overview of the management of risks and the state of internal controls within the Group is set out on pages 28 to 29 of this Annual Report. Internal Audit In accordance with the provision in the Code and the Listing Requirements of Bursa Securities, the Board has outsourced the internal audit function to M/s. Sam & Co., Chartered Accountants, who report directly to the Audit Committee. The Internal Auditors have carried out the internal audits of the Group and highlighted all important issues to the Audit Committee. The Audit Committee will then bring up the issues for the Board s attention if it is necessary. The internal audit works carried out during the financial year is disclosed in the Audit Committee Report as set out in page 15 of this Annual Report. PRINCIPLE 7 - ENSURE TIMELY AND HIGH QUALITY DISCLOSURE Corporate Disclosure and Communication Channel The Board is aware that communication with shareholders and investors are important for enhancing their understanding of and confidence in the Group s business and activities. The Board recognizes that timely and equitable dissemination of relevant information shall be provided to shareholders and investors through public announcements made to Bursa Securities and the importance of information technology for effective dissemination of information. The Group s quarterly financial results, annual audited accounts, annual reports and other announcements are published via the website of Bursa Securities within the stipulated timeframe. The Company also maintains its website at containing corporate information for the general public. The Company s website has become a key communication channel for the Company to further enhance shareholder and investor communication. PRINCIPLE 8 - STRENGHTEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS i. Dialogue between Company and Investors The Board places great importance of being transparent and accountable to its investors and as such, has maintained an active and constructive communication policy that enables the Board and the Management to communicate effectively and on a timely basis with its investors, stakeholders and the public generally. The information about the Group can accessed through the Company s website at

29 ANNUAL REPORT Statement on Corporate Governance PRINCIPLE 8 - STRENGHTEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS (CONT D.) ii. Annual General Meeting The Annual General Meeting is the principal forum for the Directors, the Management and shareholders to meet and discuss the Group s business developments, strategies, performance, corporate governance, matters affecting shareholders interests and future prospects. Notice of Annual General Meeting together with annual report is sent out to shareholders at least 21 days before the date of the meeting. At each Annual General Meeting, shareholders are encouraged to participate in the question and answer session. Where appropriate, the Chairman of the Meeting will undertake to provide a written answer to any question that cannot be readily answered on the spot. However, any information, which may be regarded as undisclosed material information about the Group, will not be given to any single shareholder or shareholder group. The Board always takes active steps to encourage shareholder participation at general meetings such as serving notices for meetings earlier than the minimum notice period. The Board takes note of putting all resolutions to vote by poll and make an announcement of the detailed results showing the number of votes cast for and against each resolution as required by the Listing Requirements. The Company conducted a poll voting in respect of all resolutions put before the shareholders at the last Annual General Meeting. The Company will explore the suitability and feasibility of employing electronic means for poll voting. The Company places utmost importance on effective dissemination of timely, comprehensive and accurate information to shareholders and investors by leveraging on information technology, as recommended under the Code. As an accountable and responsible public listed entity, the Group discloses all corporate developments comprehensively through annual reports, circulars to shareholders, announcements, quarterly financial announcements submitted to Bursa Securities and through regular updates with investors as well as press releases. The quarterly financial announcement is a channel to keep the shareholders informed of the quarterly progress made by the Company during the year. iii Annual Report The Directors believe that an important channel to reach shareholders and investors is through Annual Reports which can be obtained from the Company s website at Besides including comprehensive financial performance and information on business activities, the Group strives to improve the contents of the Annual Report in line with the developments in corporate governance practices. Compliance Statement The Company has committed to achieving high standard of corporate governance throughout the Group and to the highest level of integrity and ethical standards in all its business dealings. This Statement is made in accordance with a resolution of the Board dated 9 th October 2017.

30 28 GRAND HOOVER BERHAD STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLS The Board of Director is fully committed to maintain a sound of internal control and risk management in accordance with the principle of the Malaysian Code on Corporate Governance 2012 to safeguard the interest of stakeholders. The Board is pleased to present the Statement on Risk Management and Internal Control which outlines the Group s internal control framework and risk management system for the financial year ended. Board Responsibility The Board is fully committed and acknowledges the importance of sound systems internal controls and risk management practices to good corporate governance. The Board affirms its overall responsibility for the Group s system of internal control covering financial, operational, compliance controls and risk management, and for reviewing its adequacy and integrity. The Board is overall responsible for the Group s systems of internal controls and is expected, in the discharge of its stewardship responsibilities for identifying the major risks faced by the Group and for determining the appropriate course of action to manage those risks. The Board undertakes a more structured approach to formalize the existing procedures and processes in which risks are being identified, assessed, and reviewed so that they would be embedded into the Group s business. The Group has embarked on continuous process of reviewing the adequacy and integrity of the Group s system of internal controls. Internal Control and Risk Management Framework The Board confirms that there are reasonable sound internal control frameworks and on-going process for identifying, evaluating, monitoring and managing the significant risks faced by the Group in achieving its objectives. The Board regularly reviews the regulatory and business environment to ensure reasonable, adequate and effective system of risk management and internal control. The Board recognises that the system of internal control and risk management are designed to identify, manage and minimize the risks of failure rather than eliminate the risks involved. Therefore, the Board is aware that the system has been implemented to provide only reasonable and not absolute assurance against the occurrence of any material misstatement and loss. The Board recognises that there should be a balance of reasonable cost and benefit in implementation the internal control and risk management. The following are the key elements of the Group s internal control systems : - The Group has defined delegation of authority with clear lines of responsibility. It sets out the appropriate approving authority at various levels of Management for decisions to be taken including matters that require Board approvals. These policies are reviewed regularly and updated when necessary. The Group has ensured that financial and operational policies and procedures are in place, like standard operating procedure (SOP) Manual for the property and construction division which sets out standard procedures for its major divisions, for example, Contract and Project Division, Purchasing Division and Human Resource Division. The manual is subject to review from time to time. The internal control mechanism is embedded in various work processes at appropriate levels of the Group, like credit control and aging review of debtors and creditors. Regular performance reports provide management and the Board with comprehensive financial information on the Group s performance. The Group has implemented budgetary controls for its projects.

31 ANNUAL REPORT Statement on Risk Management and Internal Controls Monitoring and Review The Board recognises that the Managing Director oversees the strategies and business direction of the Group and the two (2) Executive Directors oversee the operation, development, finance, treasure function of the Group who are aided by a team of qualified and experienced officers. The Board places importance on risk management and internal control to safeguard the interest of stakeholders. To ensure the internal control of the Group functions effectively, the internal audit function has been outsourced to an external consultant, M/s. Sam & Co., Chartered Accountants who will review the internal controls of the selected activities of the Group s business units based on an internal audit plan presented to the Audit Committee for approval. The Internal Auditors will present their findings in internal audit reports to the Audit Committee. The Audit Committee Chairman will then report to the Board on the matter. The Board places the reliance on the internal audit function to identify the state of internal control system of the Group. The Group paid the Internal Auditors 15,500 to carry out the internal audit functions of the Group for the financial year ended. Review of the Statement by External Auditors The External Auditors have reviewed this Statement and reported to the Board that nothing has gone to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and effectiveness of the risk management and internal control system of the Group. Conclusion by the Board The Board, through the Audit Committee, has reviewed the adequacy and effectiveness of the risk management and internal control system based on information : - provided by key Management in the Company delegated with the responsibility for the development and maintenance of the internal control and risk management framework and process; from the Internal Auditors who submit report to the Audit Committee which include their independent and objective opinion on the adequacy of the Company s risk management and internal control together with recommendations for improvement; and provided by External Auditors. The Board viewed that the system of internal control in place throughout the year under review is sound and sufficient to safeguard the shareholders investment, the interests of the customers, regulators, employees and other stakeholders. The Board has received assurance from Managing Director and Finance Director that the Group s management and internal control system is operating adequately and effectively in identifying, evaluating, monitoring and managing and significant risk that may materially affect the Group. There are no losses that incurred during the financial year under review as a result of weaknesses in the risk management and the internal control systems. The Board members are satisfied with the risk management and internal control of the Company for the financial year under review and committed to improve any weaknesses identified by the External Auditors and Internal Auditors. The Group will continue to take necessary measures to strengthen its internal control structure and management of risks by taking into consideration the ever changing business environment. This Statement is made in accordance with a resolution of the Board dated 9 th October 2017.

32 30 GRAND HOOVER BERHAD ADDITIONAL COMPLIANCE INFOATION In conformance with the Listing Requirements of the Bursa Malaysia Securities Berhad, the following compliance information is provided : - Utilization of Proceeds from Corporate Proposal During the financial year under review, there were no proceeds raised by the Company from any corporate proposal. Audit and Non-audit fees The audit fees paid or payable to M/s. Kreston John & Gan by the Company and the Group during the financial year under review were as follows : Audit Fees Company () Group () 22,000 72,200 The non-audit fees paid or payable to M/s. Kreston John & Gan or a firm or a corporation affiliated to M/s. Kreston John & Gan by the Company and the Group during the financial year under review were as follows : Non-Audit Fees Company () Group () 4,700 14,400 Material Contract Involving Directors and Major Shareholders Interest There were no material contracts being entered into by the Company and/or its subsidiaries involving the directors and major shareholders interest subsisting at the end of the financial year 30 th June, 2017 or entered into since the end of previous financial year except the following : - Hoover Builders Sdn Bhd ( HB ), a wholly owned subsidiary of the Company, as the Vendor, had on 20 th March 2017 entered into a Sale and Purchase Agreement ( SPA ) with Sim Cheng Young ( SCY ), as the Purchaser, for the disposal of a unit of 2-Storey Shop Office known as Lot No. KP(T)12, Taman Mutiara Rinching, Impiana Semenyih with land size measuring approximately 143 square metres and build up area measuring approximately square metres constructed and erected by HB on that piece of land held under the master title Geran Mukim 1376, Lot 742, Mukim Semenyih, Daerah Hulu Langat, Negeri Selangor measuring approximately hectares for a cash sale consideration of 1,000, ( the Disposal ). SCY is the Managing Director and a major shareholder of the Company. He is also an Executive Director of the Group. Datin Low Ti Ah Lan, a major shareholder of the Company, is deemed interested in the Disposal by virtue of her being the mother of SCY. SCY is the sole director and shareholder of Dynamic Merchant Limited which is also a major shareholder of the Company. Further details on the Disposal are set out in the announcement made by the Company on 20 th March Corporate Social Responsibility The Group will continuously ensure that all activities relating to corporate social responsibility are considered and supported in its operations for the well being of stakeholders and the community. As part of effort towards the preservation of environment, the Group will ensure there are measures at the construction sites to prevent any adverse impact on the environment. The Group will also ensure priority will be given to environmental friendly material to be used in all the construction with balance of benefit and cost. The Group also recognizes the importance of staff welfare and provides continuous training including taking appropriate construction works safety measure for the employees. The Group believes human capital is an important asset and constantly invests in them. The Group has a workforce of 68 employees as at The workforce consists of 94% Malaysian and 36% female. This Statement is made in accordance with a resolution of the Board dated 9 th October 2017.

33 FINANCIAL STATEMENT Directors Report Independent Auditors Report Consolidated Statement of Financial Position Consolidated Statement of Profit or Loss and Other Comprehensive Income Statement of Profit or Loss and Other Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Consolidated Statement of Changes in Equity Statement by Directors Consolidated Statement of Cash Flows Statement of Financial Position Statutory Declaration

34 32 GRAND HOOVER BERHAD Directors Report for the year ended The directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended. Principal activities The Company is principally engaged in investment and property holding, whilst the principal activities of the subsidiary companies are set out in Note 8 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. Results Group Company Profit /(Loss) after taxation attributable to : - Equity holders of the Company 405,038 (924,211) Non-controlling interests 849,581-1,254,619 (924,211) Dividends No dividend has been paid, declared or proposed since the end of the previous financial year. The directors also do not recommend any dividend payment in respect of the current financial year. Reserves and provisions There were no material transfers to or from reserves or provisions during the financial year other than those as disclosed in the financial statements. Bad and doubtful debts Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and adequate allowance had been made for doubtful debts. At the date of this report, the directors of the Group and of the Company are not aware of any circumstances which would render the amount written off for bad debts, or the amount of the allowance for doubtful debts, in the Group or in the Company inadequate to any substantial extent. Current assets Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain whether any current assets, other than debts, were unlikely to realise in the ordinary course of business their value as shown in the accounting records of the Group and of the Company and to the extent so ascertained were written down to an amount that they might be expected to realise. At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading. Valuation methods At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

35 ANNUAL REPORT Directors Report for the year ended Contingent and other liabilities At the date of this report, there does not exist : - i. any charge on the assets of the Group or of the Company that has arisen since the end of the financial year which secures the liabilities of any other person, or ii. any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year. No contingent liability or other liability of the Group or of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group or of the Company to meet its obligations as and when they fall due. Change of circumstances At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of the Group and of the Company, that would render any amount stated in the financial statements misleading. Items of an unusual nature The results of the operations of the Group and of the Company for the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group or of the Company for the current financial year. Shares and debentures The Company did not issue any shares or debentures during the year. Directors of the Company The directors of the Company in office at any time during the year and since the end of the year are : - Hj Basar Bin Juraimi Sim Cheng Young Tan Teck Khong Allan Ngu Kea Ping Yap Chi Keong Chai Moi Kim Directors interests The interests and deemed interest in the ordinary shares of the Company of those who are Directors at year end (including the interests of the spouses or children of the Directors) as recorded in the Register of Directors Shareholdings are as follows : - Number of ordinary shares As at Bought Sold As at 1/7/ /6/2017 Direct interests Sim Cheng Young 11,043, ,043,100 Tan Teck Khong 21, ,500 Hj Basar Bin Juraimi 10,666 - (10,666) - Allan Ngu Kea Ping 880, ,133 Indirect interests Sim Cheng Young 4,931, ,931,970 Tan Teck Khong 2,400, ,400,000

36 34 GRAND HOOVER BERHAD Directors Report for the year ended Directors interests (Cont d.) By virtue of Section 8 of the Companies Act, 2016, Sim Cheng Young is deemed to have an interest in shares of the subsidiary companies during the financial year to the extent that Grand Hoover Berhad has an interest. Directors remuneration The details of the directors remuneration paid or payable to the directors of the Group and of the Company during the financial year are disclosed in Note 31 to the financial statements. Indemnifying Directors, Officers or Auditors No indemnities have been given or insurance premiums paid, during or since the end of the year, for any person who is or has been the director, officer or auditor of the Company. Directors benefits Since the end of the previous financial year, none of the directors of the Company have received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may deemed to have arisen by virtue of the significant related party transactions as disclosed in Note 42 to the financial statements. There were no arrangements during and at the end of the financial year, to which the Company or its subsidiary companies is a party, which had the object of enabling the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Significant event Details of significant event is disclosed in Note 43 to the financial statements. Auditors a. Details of the auditors remuneration for the Group and the Company are disclosed in Note 29 to the financial statements. b. The auditors, Kreston John & Gan, Chartered Accountants, have indicated their willingness to accept reappointment. Signed on behalf of the Board of Directors in accordance with a resolution of the directors. Sim Cheng Young Tan Teck Khong Shah Alam, Date : 9 th October 2017

37 ANNUAL REPORT INDEPENDENT AUDITORs Report to the member of Grand Hoover Berhad Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Grand Hoover Berhad, which comprise the statements of financial position as at of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 38 to 99. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at, and of their financial performance and their cash flows for the year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and Other Ethical Responsibilities We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ( By-Laws ) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. No. Key audit matter Our audit performed and responses thereon 1 Trade receivables As at, the Group carries significant outstanding trade receivables balance of approximately amounted to 22.0 million and is subject to major credit risk exposures. The assessment of recoverability of receivables involved judgements and estimation uncertainty in analysing historical bad debts, customer concentration, customer creditworthiness, current economic trends, customer payment terms, etc. Our audit procedures included as following : - a. Obtaining an understanding of the Group s control over the receivable collection process, how the Group identifies and assesses the impairment of receivables and how the Group makes the accounting estimates for impairment; b. Reviewing the ageing analysis of receivables and testing the reliability thereof; c. Reviewing subsequent cash collections for major receivables and overdue amount; d. Making inquiries of management regarding the action plans to recover overdue amounts; e. Comparing and challenging management s view on the recoverability of overdue amounts to historical patterns of collections; f. Examining other evidence including customer correspondences, proposed or existing settlement plans, repayment schedules, etc.; g. Evaluating the reasonableness and adequacy of the allowance for impairment recognised for identified exposures; and h. Obtaining positive confirmation from major receivables to proof the accuracy of the amounts correspondence to auditor s records.

38 36 GRAND HOOVER BERHAD Independent Auditors Report to the member of Grand Hoover Berhad Key Audit Matters (Cont d.) No. Key audit matter Our audit performed and responses thereon 2 Revenue recognition Revenue is one of the significant accounts in the financial statements and also an important driver of the Group s operating results. Revenue recognition is a key audit matter as the Group is involved in voluminous transactions, whereby there is a risk that revenue may be over or understated. Our audit procedures included as following : - a. Tested the operating effectiveness of the Group s internal controls over timing and amount of revenue recognised; b. Verified the documents which are transactions selected based on sampling basis; c. Tested sales transactions as well as credit notes issued, near to year ended to assess whether the revenue was recognised in the correct period; and d. Checked the sales prior and subsequent to the year-end and inspected the documents which evidenced the delivery of goods and services to customers. Information Other than the Financial Statements and Auditors Report Thereon The directors of the Company are responsible for the other information. The other information comprises the Chairman s Statement and Directors Report, but does not include the financial statements of the Group and of the Company and our auditors report thereon. Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Statements The directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Group and of the Company, the directors are responsible for assessing the Group s and of the Company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. Auditors Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also : - Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

39 ANNUAL REPORT Independent Auditors Report to the member of Grand Hoover Berhad Auditors Responsibilities for the Audit of the Financial Statements (Cont d.) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group s and of the Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group s or the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Group or the Company to cease to continue as going concern. Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current financial year and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Reporting Responsibilities The supplementary information set out in Note 44 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ( MIA Guidance ) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act, 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the contents of this report. Kreston John & Gan Charles Lee King Long ( AF 0113 ) Approval No: 3142/04/2019(J) Chartered Accountants Chartered Accountant Kuala Lumpur, Date : 9 th October 2017

40 38 GRAND HOOVER BERHAD Consolidated Statement of Financial Position Note ASSETS Non-current Assets Property, plant and equipment 4 21,693,846 21,989,305 Investment properties 5 8,505,000 8,440,000 Prepaid lease payments 6 96, ,981 Land held for property development 7 8,770,288 8,770,288 Goodwill on consolidation 9 1,151,202 1,435,803 40,217,260 40,738,377 Current Assets Property development costs ,387 7,410,498 Inventories 11 13,035,672 9,984,907 Trade receivables 12 22,044,879 24,268,384 Other receivables, deposits and prepayments 13 1,750, ,322 Current tax assets 28, Deposits with licensed banks 15 1,261,921 1,228,046 Cash and bank balances 3,619,497 4,750,576 42,110,142 48,084,365 Total Assets 82,327,402 88,822,742 EQUITY AND LIABILITIES Equity attributable to owners Share capital 16 40,000,000 40,000,000 Share premium 16 4,186,166 4,186,166 Reserves 17 3,968,034 3,372,929 48,154,200 47,559,095 Non-controlling interests 11,038,622 10,355,727 59,192,822 57,914,822 Non-current Liabilities Borrowings 18 3,646,415 4,105,813 Deferred tax liabilities 23 2,893,400 2,875,400 6,539,815 6,981,213 Current Liabilities Trade payables 24 9,430,234 15,100,557 Other payables and accruals , ,390 Borrowings 18 5,932,383 7,456,586 Current tax liabilities 516, ,174 16,594,765 23,926,707 Total Liabilities 23,134,580 30,907,920 Total Equity and Liabilities 82,327,402 88,822,742 The accompanying accounting policies and explanatory notes form an integral part of the financial statements

41 ANNUAL REPORT 2017 Consolidated Statement of Profit or Loss and Other Comprehensive Income 39 Note Revenue 26 54,018,802 63,539,366 Cost of sales 26 (43,611,033) (54,744,422) Gross profit 10,407,769 8,794,944 Other income , ,736 Direct expenses (31,542) (4,051) Distribution costs (536,836) (576,445) Administrative expenses (6,539,638) (6,808,878) Other expenses (1,009,879) (696,612) Profit from operations 2,890,675 1,384,694 Finance costs 28 (641,153) (662,481) Profit before taxation 29 2,249, ,213 Income tax expense 32 (994,903) (997,355) Profit /(Loss) for the year 1,254,619 (275,142) Other comprehensive income, net of tax Items that will not be reclassified subsequently to profit or loss Revaluation surplus /(deficit), net of deferred tax ,381 (2,847) Total comprehensive income /(loss) 1,428,000 (277,989) Profit /(Loss) for the year attributable to : - Equity holders of the Company 405,038 (1,150,473) Non-controlling interests 849, ,331 1,254,619 (275,142) Total comprehensive income /(loss) for the year attributable to : - Equity holders of the Company 595,105 (1,129,666) Non-controlling interests 832, ,677 1,428,000 (277,989) Basic earnings per share (sen) (2.88) The accompanying accounting policies and explanatory notes form an integral part of the financial statements

42 40 GRAND HOOVER BERHAD Consolidated Statement of Changes in Equity Attributable to equity holders of the company Non-Distributable Distributable Non- Share Share Revaluation Accumulated controlling Total capital premium reserves losses Total interests equity Balance at 1 st July ,000,000 4,186,166 7,876,930 (3,374,335) 48,688,761 9,729,050 58,417,811 Comprehensive income : Net profit /(loss) for the financial year (1,150,473) (1,150,473) 875,331 (275,142) Other comprehensive income : Revaluation surplus /(deficit), net of deferred tax ,807-20,807 (23,654) (2,847) Total comprehensive loss for the year ,807 (1,150,473) (1,129,666) 851,677 (277,989) Transactions with owners : Dividends paid to non-controlling shareholders (225,000) (225,000) Balance at 30 th June ,000,000 4,186,166 7,897,737 (4,524,808) 47,559,095 10,355,727 57,914,822 Comprehensive income : Net profit for the financial year , , ,581 1,254,619 Other comprehensive income : Revaluation surplus /(deficit), net of deferred tax , ,067 (16,686) 173,381 Total comprehensive income for the year , , , ,895 1,428,000 Transactions with owners : Dividends paid to non-controlling shareholders (150,000) (150,000) Balance at 30th June ,000,000 4,186,166 8,087,804 (4,119,770) 48,154,200 11,038,622 59,192,822 The accompanying accounting policies and explanatory notes form an integral part of the financial statements

43 ANNUAL REPORT Consolidated Statement of Cash Flows for the year ended Note Cash flows from operating activities Profit before taxation 2,249, ,213 Adjustments for : - Amortisation of prepaid lease payments 6,057 6,057 Bad debts written off 3,182 9,808 Depreciation of property, plant and equipment 561, ,380 Dividend earned from Al-Mudharabah Investment (34,059) (38,083) Fair value adjustment on investment properties (65,000) (250,000) Gain on disposal of plant and equipment (42,699) - Impairment loss on trade receivables 153, ,923 Impairment loss on goodwill 284,601 - Interest expense 575, ,905 Interest income (109,865) (55,081) Islamic bank financing expense 65, ,576 Other deposits written off Plant and equipment written off Reversal of impairment loss on trade receivables (173,544) (211,517) Operating profit before working capital changes 3,475,388 1,526,625 Decrease in property development costs 7,041,111 4,076,009 (Increase) /Decrease in inventories (3,050,765) 461,097 (Increase) /Decrease in trade receivables 2,240,667 (2,259,679) Increase in other receivables, deposits and prepayments (1,309,378) (61,855) Decrease in trade payables (5,670,323) (2,718,812) Increase /(Decrease) in other payables and accruals 103,838 (552,706) Cash generated from operations 2,830, ,679 Interest paid (575,399) (517,905) Islamic bank financing expense paid (65,754) (144,576) Tax paid (1,301,187) (525,113) Tax refund 1,936 - Net cash from /(used in) operating activities carried forward 890,134 (716,915) The accompanying accounting policies and explanatory notes form an integral part of the financial statements

44 42 GRAND HOOVER BERHAD Consolidated Statement of Cash Flows for the year ended Note Net cash from /(used in) operating activities brought forward 890,134 (716,915) Cash flows from investing activities Dividend received from Al-Mudharabah Investment 34,059 38,083 Interest received 109,865 55,081 Placement of pledged deposits with licensed bank (33,875) (38,083) Proceeds from disposal of plant and equipment 42,700 - Purchase of investment property - (250,000) Purchase of plant and equipment 35 (40,361) (71,571) Net cash from /(used in) investing activities 112,388 (266,490) Cash flows from financing activities 1,002,522 (983,405) Dividends paid to non-controlling shareholders (150,000) (225,000) Proceeds from /(Repayment of) bankers acceptance (207,000) 324,000 Repayment of Islamic bank financing (269,950) (191,129) Repayment of term loan - (1,996,030) Repayment of finance lease liabilities (243,412) (223,534) Net cash used in financing activities (870,362) (2,311,693) Net increase /(decrease) in cash and cash equivalents 132,160 (3,295,098) Cash and cash equivalents at the beginning of the year (1,801,962) 1,493,136 Cash and cash equivalents at the end of the year 36 (1,669,802) (1,801,962) The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

45 ANNUAL REPORT Statement of Financial Position for the year ended Note ASSETS Non-current Assets Property, plant and equipment 4 38,555 39,893 Investment properties 5 10,300,000 10,000,000 Land held for property development 7 8,770,288 8,770,288 Investment in subsidiary companies 8 6,398,255 6,841,942 25,507,098 25,652,123 Current Assets Other receivables, deposits and prepayments , ,711 Amount due from subsidiary companies 14 11,691,847 13,947,875 Curent tax assets 26,913 - Cash and bank balances 8,603 4,569 11,922,819 14,143,155 Total Assets 37,429,917 39,795,278 EQUITY AND LIABILITIES Equity attributable to owners Share capital 16 40,000,000 40,000,000 Share premium 16 4,186,166 4,186,166 Reserves 17 (13,138,044) (12,213,833) 31,048,122 31,972,333 Non-current Liabilities Deferred tax liabilities 23 1,058, ,000 Current Liabilities Other payables and accruals , ,580 Amount due to subsidiary companies 14 56,810 57,027 Borrowing 18 5,040,701 6,552,538 Current tax liabilities - 37,800 5,323,795 6,835,945 Total Liabilities 6,381,795 7,822,945 Total Equity and Liabilities 37,429,917 39,795,278 The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

46 44 GRAND HOOVER BERHAD Statement of Profit or Loss and Other Comprehensive Income for the year ended Note Revenue 26 1,011,450 1,760,045 Other income , ,000 Administrative expenses (1,148,025) (1,005,023) Other expenses (454,024) (10,581) Profit /(Loss) from operations (290,599) 844,441 Finance costs 28 (529,192) (474,792) Profit /(Loss) before taxation 29 (819,791) 369,649 Income tax expense 32 (104,420) (115,779) Profit /(loss) for the year, representing total comprehensive income /(loss) for the year (924,211) 253,870 The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

47 ANNUAL REPORT Statement of Changes in Equity for the year ended Reserves Non- Distributable Share Share Accumulated capital premium losses Total Balance at 1st July ,000,000 4,186,166 (12,467,703) 31,718,463 Total comprehensive income for the year , ,870 Balance at 30th June ,000,000 4,186,166 (12,213,833) 31,972,333 Total comprehensive loss for the year - - (924,211) (924,211) Balance at 30th June ,000,000 4,186,166 (13,138,044) 31,048,122 The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

48 46 GRAND HOOVER BERHAD Statement of Cash Flows for the year ended Note Cash flows from operating activities Profit /(Loss) before taxation (819,791) 369,649 Adjustments for : - Depreciation of plant and equipment 10,337 10,581 Dividend income (350,000) (525,000) Fair value adjustment on investment properties (300,000) (100,000) Impairment loss on investment in subsidiary 443,687 - Interest expenses 529, ,792 Interest income (661,450) (911,762) Operating loss before working capital changes (1,148,025) (681,740) Increase in other receivables, deposits and prepayments (4,745) (173,419) Increase /(Decrease) in other payables and accruals 37,704 (132,885) Cash used in operations (1,115,066) (988,044) Interest paid (529,192) (474,792) Tax paid (98,133) (40,979) Net cash used in operating activities (1,742,391) (1,503,815) Cash flows from investing activities (Advance to) /Repayment from subsidiary companies 2,256,028 (2,044,972) Dividends received 350, ,000 Interest received 661, ,762 Purchase of plant and equipment 35 (8,999) - Net cash from /(used in) investing activities 3,258,479 (608,210) Cash flows from financing activity 1,516,088 (2,112,025) Repayment to subsidiary companies (217) (21,605) Net increase /(decrease) in cash and cash equivalents 1,515,871 (2,133,630) Cash and cash equivalents at the beginning of the year (6,547,969) (4,414,339) Cash and cash equivalents at the end of the year 36 (5,032,098) (6,547,969) The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

49 ANNUAL REPORT Notes to the Financial Statements 1. General information Grand Hoover Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The address of the principal place of business and registered office of the Company is as follows : - No. 63-G, Jalan Anggerik Vanilla T31/T, Kota Kemuning, Section 31, Shah Alam, Selangor Darul Ehsan. The consolidated financial statements of the Company as at and for the financial year ended 30th June 2017 comprise the Company and its subsidiaries (together referred to as the Group and individually referred to as Group entities ). The financial statements of the Company as at and for the year ended 30th June 2017 do not include other entities. The Company is principally engaged in investment and property holding. The principal activities of the subsidiary companies are set out in Note 8 to the financial statements. These financial statements were authorised for issue by the Board of Directors on 9th October Basis of preparation of financial statements a. Statement of compliance The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards ( FRSs ) and the requirements of the Companies Act, 2016 in Malaysia. The following are accounting standards, amendments and interpretations of the FRS framework that have been issued by the Malaysian Accounting Standards Board ( MASB ) but have not been adopted by the Group and the Company. FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2017 Amendments to FRS 12, Disclosures of Interests in Other Entities (Annual Improvements to FRS Standards Cycle) Amendments to FRS 107, Statement of Cash Flows - Disclosure Initiative Amendments to FRS 112, Income Tax - Recognition of Deferred Tax Assets for Unrealised Losses FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018 Amendments to FRS 1, First-Time Adoption of Financial Reporting Standards (Annual Improvements to FRS Standards Cycle) Amendments to FRS 2, Share-based Payment Classification and Measurement of Share-based Payment Transactions Amendments to FRS 4, Insurance Contracts Applying FRS 9 Financial Instruments with FRS 4 Insurance Contracts FRS 9, Financial Instruments (2014) Amendments to FRS 128, Investments in Associates and Joint Ventures (Annual Improvements to FRS Standards Cycle) Amendments to FRS 140, Investment Property Transfers of Investment Property IC Interpretation 22, Foreign Currency Transactions and Advance Consideration FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019 IC Interpretation 23, Uncertainty Over Income Tax Treatments

50 48 GRAND HOOVER BERHAD Notes to the Financial Statements 2. Basis of preparation of financial statements (Cont d.) a. Statement of compliance (Cont d.) FRSs, Interpretations and amendments effective for a date yet to be confirmed Amendments to FRS 10, Consolidated Financial Statements and FRS 128, Investments in Associates and Joint Ventures Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. The Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations : - from the annual period beginning on 1st July 2017 for those accounting standards, amendments or interpretations that are applicable to the Group and the Company and effective for annual periods beginning on or after 1st January 2017; from the annual period beginning on 1st July 2018 for those accounting standards, amendments or interpretations that are applicable to the Group and the Company and effective for annual periods beginning on or after 1st January 2018; from the annual period beginning on 1st July 2019 for those accounting standards, amendments or interpretations that are applicable to the Group and the Company and effective for annual periods beginning on or after 1st January 2019; The initial application of the accounting standards, amendments or interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and the Company except as mentioned below : - FRS 9, Financial Instruments FRS 9 replaces the guidance in FRS 139, Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities and on hedge accounting. Amendments to FRS 10, Consolidated Financial Statements and FRS 128, Investments in Associated and Joint Ventures Investment Entities: Applying the Consolidation Exception. The amendments to FRS 10 and FRS 128 require an investment entity parent to fair value a subsidiary providing investment-related services that is itself an investment entity, an intermediate parent owned by an investment entity group can be exempted from preparing consolidated financial statements and non-investment entity investor can retain the fair value accounting applied by its investment entity associate or joint venture. The Group and the Company are currently assessing the financial impact that may arise from the adoption of FRS 9 and amendments to FRS 10 and FRS 128. Malaysian Financial Reporting Standards (MFRS Framework) The Malaysian Financial Reporting Standards ( MFRS ) Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1st January 2012, with the exception of entities that are within the scope of MFRS 141, Agriculture and /or IC Interpretation 15 Agreements for the Construction of Real Estate, including its parent, significant investor and joint venture (herein called Transitioning Entities ). Generally, Transitioning Entities are entitles involved in the real estate and agriculture industries that had been given the option to continue applying the FRS Framework. On 8th September 2015, The Malaysian Accounting Standards Board ( MASB ) confirmed that the effective date of MFRS 15 will be deferred to annual periods beginning on or after 1st January As a result, the effective date for Transitioning Entities to apply the MFRS framework will also be deferred to annual periods beginning on or after 1st January 2018.

51 ANNUAL REPORT Notes to the Financial Statements 2. Basis of preparation of financial statements (Cont d.) a. Statement of compliance (Cont d.) Malaysian Financial Reporting Standards (MFRS Framework) (Cont d.) The core principle of MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For real estate industry, MFRS 15 includes new disclosures (quantitative and /or qualitative information) to help investors better understand the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers. The new comprehensive disclosures are in response to investors comments that companies present revenue in isolation which make it difficult for them to relate to the entity s financial position. The Group expect to present their first set of MFRS financial statements from the financial year ending 30th June In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits. The Group has not completed its assessment of the financial impact of the differences between Financial Reporting Standards and accounting standards under MFRS Framework. Accordingly the financial performance and financial position as disclosed these financial frameworks for year ended 30th June 2017 could be different if prepared under the MFRS Framework. b. Basis of measurement The financial statements have been prepared on the historical cost basis other than as disclosed in Note 3. c. Functional and presentation currency These financial statements are presented in Ringgit Malaysia ( ), which is the Group s and Company s functional currency. d. Use of estimates and judgements The preparation of the financial statements in conformity with FRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than the following items : - i. Classification between investment properties and plant and equipment The Group and the Company have developed certain criteria based on FRS 140 in making judgement whether a property qualifies 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 finance lease), the Group and the Company would account for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant 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 significant that a property does not qualify as investment property.

52 50 GRAND HOOVER BERHAD Notes to the Financial Statements 2. Basis of preparation of financial statements (Cont d.) d. Use of estimates and judgements (Cont d.) ii. Depreciation of property, plant and equipment Property, plant and equipment are depreciated in a straight-line basis over their estimated useful life. Management estimated the useful life of these assets to be within 5 to 50 years. The long term leasehold land is depreciated over the remaining useful economic life period. Changes in the expected level of usage and technological developments could impact the economic useful life and the residual values of these assets, therefore future depreciation charges could be revised. iii. Impairment losses for trade receivables At the end of the reporting period, included in the allowance account for trade receivables of the Group is individually and collectively assessed impairment losses for trade receivables amounting to 635,906 ( ,134). The estimates of individually and collectively assessed impairment for trade receivables are based on the historical default rate. Hence, should the actual default rate becomes higher than the estimated default rate, the Group may be required to charge additional impairment losses to the profit or loss within the next financial year. iv. Deferred tax assets Deferred tax assets are recognised for all unabsorbed tax losses, unabsorbed capital allowances and unutilised reinvestment allowance to the extent that it is probable that taxable profit will be available against which the unabsorbed tax losses, unabsorbed capital allowances and unutilised reinvestment allowance can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The amount of unrecognised deferred tax assets arising from unabsorbed tax losses and capital allowances was approximately 3,038,000 (2016 2,673,500). v. Income tax expense There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group and the Company recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made. vi. Allowance for inventories Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews required judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories. vii. Property development The Group recognises property development profits by reference to the stage of completion of the development activity in respect of development units sold. The stage of completion is measured by the completion of a physical proportion of contract work to date. Where it is probable that total property development costs of a development phase will exceed total property development revenue of the development phase, the expected loss on the development phase is recognised as an expense immediately. Significant judgement is required in the estimation of total property development costs. Where the actual total property development costs is different from the estimated total property development costs, such difference will impact the property development profits /(losses) recognised.

53 ANNUAL REPORT Notes to the Financial Statements 2. Basis of preparation of financial statements (Cont d.) d. Use of estimates and judgements (Cont d.) viii. Impairment of investment in subsidiary companies The Company reviews the investments in subsidiaries for impairment when there is an indication of impairment and assess the impairment of receivables on the amounts due from subsidiaries when the receivables are long outstanding. The recoverable amounts of the investments in subsidiaries and amounts due from subsidiaries are assessed by reference to the value in use of the respective subsidiaries. The value in use is the net present value of the projected future cash flows derived from the business operations of the respective subsidiaries discounted at an appropriate discount rate. For such discounted cash flow method, it involves the use of estimated future results and a set assumptions to reflect their income and cash flows. Judgement had also been used to determine the discount rate for the cash flows and the future growth of the businesses of the business of the subsidiaries. The carrying amounts of investment in subsidiary companies of the Company as at 30th June 2017 was 6,398,255 (2016 6,841,942). ix. Fair value of investment property The fair value of investment property is determined by the directors based on valuations by an independent valuer, who holds a recognised qualification and has relevant experience, by reference to market evidence of transaction prices of similar properties or comparable available market data. x. Impairment of goodwill The Group determines whether goodwill is impaired at least on annual basis. This requires an estimation of the value in use of the cash generating units ( CGU ) to which the goodwill is allocated. Estimating value in use amount requires management to make an estimate of expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of goodwill as at 30 th June 2017 was 1,151,202 (2016 1,435,803). Further details are disclosed in Note 9 to the financial statements. 3. Significant accounting policies The accounting policies set out below have been applied consistently to the periods presented in these financial statements and have been applied consistently by Group entities, unless otherwise stated. a. Basis of consolidation i. Subsidiaries Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee s return. Investments in subsidiaries are measured in the Company s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.

54 52 GRAND HOOVER BERHAD Notes to the Financial Statements 3. Significant accounting policies a. Basis of consolidation (Cont d.) ii. Business combinations Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group. For new acquisitions, the Group measures the cost of goodwill at the acquisition date as : - the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree s identifiable net assets at the acquisition date. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. iii. Acquisitions of non-controlling interests The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. 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. iv. Loss of control Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained. v. Non-controlling interests Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and owners of the Company. Losses applicable to the non-controlling interests in a subsidiary are allocated to the noncontrolling interests even if doing so causes the non-controlling interests to have a deficit balance.

55 ANNUAL REPORT Notes to the Financial Statements 3. Significant accounting policies a. Basis of consolidation (Cont d.) vi. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted associates and joint ventures are eliminated against the investment to the extent of the Group s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. b. Financial instruments i. Initial recognition and measurement A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument. A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised as fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract. ii. Financial instrument categories and subsequent measurement The Group and the Company categorise financial instruments as follows : - Financial assets a. Financial assets at fair value through profit or loss Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument), contingent consideration in a business combination or financial assets that are specifically designated into this category upon initial recognition. Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost. Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss. b. Held-to-maturity investments Held-to-maturity investments category comprises debt instruments that are quoted in an active market and the Group or the Company has the positive intention and ability to hold them to maturity. Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective interest method.

56 54 GRAND HOOVER BERHAD Notes to the Financial Statements 3. Significant accounting policies (Cont d.) b. Financial instruments (Cont d.) ii. Financial instrument categories and subsequent measurement (Cont d.) c. Loans and receivables Loans and receivables category comprises debt instruments that are not quoted in an active market. Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method. d. Available-for-sale financial assets Available-for-sale category comprises investment in equity and debt securities instruments that are not held for trading. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedge items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss. All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see Note 3(j)(i)). Financial liabilities All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss. Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument), contingent consideration in a business combination or financial liabilities that are specifically designated into this category upon initial recognition. Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quoted price in an active market for identical instruments whose fair values otherwise cannot be reliably measured are measured at cost. Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss. iii. Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Fair value arising from financial guarantee contracts are classified as deferred income and is amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharged of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.

57 ANNUAL REPORT Notes to the Financial Statements 3. Significant accounting policies (Cont d.) b. Financial instruments (Cont d.) iv. Regular way purchase or sale of financial assets A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned. A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to : - a. the recognition of an asset to be received and the liability to pay for it on the trade date, and b. derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date. v. Derecognition A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or control of the asset is not retained or substantially all the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss. A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. c. Property, plant and equipment i. Recognition and measurement Items of property, plant and equipment except for freehold land are measured at cost or valuation less any accumulated depreciation and any accumulated impairment losses. Freehold land with indefinite useful life is not depreciated. The Group revalues its freehold and leasehold land, and buildings every 5 years and at shorter intervals whenever the fair value of the revalued assets is expected to differ materially from their carrying value. Valuation of the properties involves a degree of judgement before arriving at the respective property s revalued amount. As such, the revalued amount of the properties may be different from its actual market price. Surpluses arising from revaluation are dealt with in the revaluation reserve account. Any deficit arising is offset against the revaluation reserve to the extent of a previous increase for the same property. In all other cases, a decrease in carrying amount is charged to the profit or loss. Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Costs also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

58 56 GRAND HOOVER BERHAD Notes to the Financial Statements 3. Significant accounting policies (Cont d.) c. Property, plant and equipment (Cont d.) i. Recognition and measurement (Cont d.) Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing parties in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items when available and replacement cost when appropriate. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within other income and other expenses respectively in profit or loss. ii. Subsequent costs The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group and the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. iii. Depreciation Depreciation is based on the cost /valuation of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment from the date that they are available for use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. The leasehold land is amortised over the remaining useful economic life lease period of 68 years and 69 years. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use. The principal annual rates of depreciation for the property, plant and equipment are as follows : - Rate % Buildings 2 Office equipment, furniture and fittings and renovation Plant, machinery, tools and equipment Motor vehicles 20 Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.

59 ANNUAL REPORT Notes to the Financial Statements 3. Significant accounting policies (Cont d.) d. Leased assets i. Finance lease Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Assets with unexpired economic life of 50 years and above will be classified as long term lease assets, whereas short term lease assets will be those assets with unexpired economic life of less than 50 years. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. Leasehold land which in substance is a finance lease is classified as property, plant and equipment, or as investment property if held to earn rental income or for capital appreciation or for both. ii. Operating lease Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property and measured using fair value model. Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred. Leasehold land which in substance is an operating lease is classified as prepaid lease payments. e. Intangible assets Goodwill Goodwill arises on business combinations are measured at cost less any accumulated impairment losses. In respect of equity-accounted associates and joint venture, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity accounted associates and joint venture. f. Investment property i. Investment property carried at fair value Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment properties are measured initially at cost and subsequently at fair value with any changes therein recognised in profit or loss for the period in which they arise. Where the fair value of the investment property under construction is not reliably determinable, the investment property under construction is measured at cost until either its fair value becomes reliably determinable or construction is complete, whichever is earlier.

60 58 GRAND HOOVER BERHAD Notes to the Financial Statements 3. Significant accounting policies (Cont d.) f. Investment property (Cont d.) i. Investment property carried at fair value (Cont d.) Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs. An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period in which the item is derecognised. ii. Reclassification to /from investment property When an item of property, plant and equipment is transferred to investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity as a revaluation of property, plant and equipment. However, if a fair value gain reverses a previous impairment loss, the gain is recognised in profit or loss. Upon disposal of an investment property, any surplus previously recorded in equity is transferred to retained earnings; the transfer is not made through profit or loss. When the use of a property changes such that it is reclassified as property, plant and equipment or inventories, its fair value at the date of reclassification becomes its cost for subsequent accounting. g. Property development i. Land held for property development Land held for property development shall be classified as non-current asset where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. The change in the classification of land held for property development to current assets shall be 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. 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. ii. Property development costs Property development costs comprise costs associated with the acquisition of land and all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. Property development costs are stated in the statement of financial position at the lower of cost and net realisable value. The excess of revenue recognised in profit or loss over billings to purchasers is shown as accrued billings under trade receivables and the excess of billings to purchasers over revenue recognised in profit or loss is shown as progress billings under trade payables.

61 ANNUAL REPORT Notes to the Financial Statements 3. Significant accounting policies (Cont d.) h. Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories (other than completed properties) is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of workin-progress and finished goods, cost includes an appropriate share of production overheads based on normal operating capacity. The cost of completed properties held for sale is determined on specific identification method, and comprises cost associated with the development costs and appropriate proportions of common costs. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. i. Cash and cash equivalents Cash and cash equivalents consists of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits. j. Impairment i. Financial assets All financial assets (except for financial assets categorised as fair value through profit or loss, investment in subsidiaries and investment in associates and joint venture) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset is estimated. An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the asset s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset s acquisition cost (net of any principal repayment and amortisation) and the asset s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss. An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available for sale is not reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

62 60 GRAND HOOVER BERHAD Notes to the Financial Statements 3. Significant accounting policies (Cont d.) j. Impairment (Cont d.) ii. Other assets The carrying amounts of other assets (except for inventories, amount due from contract customers, deferred tax asset, assets arising from employee benefits, investment property measured at fair value and non-current assets (or disposal groups) classified as held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period at the same time. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the combination. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash generating unit. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (group of cash-generating units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the 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. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised. k. Equity instruments Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently. i. Ordinary shares Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the year they are declared.

63 ANNUAL REPORT Notes to the Financial Statements 3. Significant accounting policies (Cont d.) k. Equity instruments (Cont d.) ii. Issue expenses Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. iii. Distributions of assets to owners of the Company The Group measures a liability to distribute assets as a dividend to the owners of the Company at the fair value of the assets to be distributed. The carrying amount of the dividend is remeasured at each reporting period and at the settlement date, with any changes recognised directly in equity as adjustments to the amount of the distribution. On settlement of the transaction, the Group recognises the difference, if any, between the carrying amount of the assets distributed and the carrying amount of the liability in profit or loss. l. Employee benefits i. Short term employee benefits Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation can be estimated reliably. ii. State plans As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund ( EPF ). Such contributions are recognised as an expense in the profit or loss as incurred. iii. Termination benefits m. Provisions Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting period, then they are discounted. A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. n. Revenue and other income i. Sale of properties Revenue from sale of properties under development is accounted for by the stage of completion method as described in Note 3(g). Revenue from sale of land and completed properties are recognised upon the finalisation of sale and purchase agreements and when the risks and rewards of ownership have passed.

64 62 GRAND HOOVER BERHAD Notes to the Financial Statements 3. Significant accounting policies (Cont d.) n. Revenue and other income (Cont d.) ii. Goods sold Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised. iii. Insurance commission Insurance commission is recognised on the issuance of debit notes which are approximate to be the effective commencement or renewal dates of related policies when the services are rendered. iv. Rental income Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income from sub-leased property is recognised as other income. v. Dividend income Dividend income is recognised in profit or loss on the date that the Group s or the Company s right to receive payment is established, which in the case of quoted securities is the ex-dividend date. vi. Interest income and dividend from Islamic Banking deposit Interest income is recognised as it accrues using the effective interest /dividend method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs. vii. Management fee o. Borrowing costs Management fee is recognised upon the service rendered. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

65 ANNUAL REPORT Notes to the Financial Statements 3. Significant accounting policies (Cont d.) p. Income tax Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years. Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reserve, based on the laws that have been enacted or substantively enacted by the end of the reporting period. Where investment properties are carried at their fair value in accordance with the accounting policy set out in note 3(g), the amount of deferred tax recognised is measured using the tax rates that would apply on sale of those assets at their carrying value at the reporting date unless the property is depreciable and is held with the objective to consume substantially all of the economic benefits embodied in the property over time, rather than through sale. In all other cases, the amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised. q. Earnings per ordinary shares The Group presents basic and diluted earnings per share data for its ordinary shares ( EPS ). Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.

66 64 GRAND HOOVER BERHAD Notes to the Financial Statements 3. Significant accounting policies (Cont d.) r. Operating segments An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components. Operating segments results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available. s. Contingencies i. Contingent liabilities Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote. ii. Contingent assets When an inflow of economic benefit of an asset is probable where it arises from past events and where existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, the asset is not recognised in the statements of financial position but is being disclosed as a contingent asset. When the inflow of economic benefit is virtually certain, then the related asset is recognised. t. Fair value measurements Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market. For non-financial asset, the fair value measurement takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows : - Level 1 : Level 2 : Level 3 : quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date. inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. unobservable inputs for the asset or liability. The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.

67 ANNUAL REPORT Notes to the Financial Statements 4. Property, plant and equipment Office Plant, equipment, machinery, furniture tools and Long term and fittings, equipment Freehold leasehold and and motor Group land land Buildings renovation vehicles Total 2017 At cost /valuation Balance at 1/7/16 3,300,000 7,075,000 10,190,000 1,813,580 2,766,445 25,145,025 Additions ,849 14,512 40,361 Revaluation - (240,000) 300, ,000 Disposal /Written off (43,845) (397,135) (440,980) Balance at 30/6/17 3,300,000 6,835,000 10,490,000 1,795,584 2,383,822 24,804,406 Accumulated Depreciation Balance at 1/7/ ,453,705 1,702,015 3,155,720 Charge for the year - 102,701 63,680 85, , ,954 Deletion (43,600) (397,133) (440,733) Revaluation restatement - (102,701) (63,680) - - (166,381) Balance at 30/6/ ,495,393 1,615,167 3,110,560 Carrying amount 3,300,000 6,835,000 10,490, , ,655 21,693,846 Representing : - At cost , ,655 1,068,846 At valuation 3,300,000 6,835,000 10,490, ,625,000 3,300,000 6,835,000 10,490, , ,655 21,693, At cost/valuation Balance at 1/7/15 3,300,000 6,755,000 10,540,000 1,811,689 2,382,274 24,788,963 Additions , , ,571 Revaluation - 320,000 (350,000) - - (30,000) Disposal /Written off (3,509) - (3,509) Balance at 30/6/16 3,300,000 7,075,000 10,190,000 1,813,580 2,766,445 25,145,025 Accumulated Depreciation Balance at 1/7/ ,362,134 1,427,424 2,789,558 Charge for the year - 27,153-94, , ,380 Deletion (3,065) - (3,065) Revaluation restatement - (27,153) (27,153) Balance at 30/6/ ,453,705 1,702,015 3,155,720 Carrying amount 3,300,000 7,075,000 10,190, ,875 1,064,430 21,989,305 Representing : - At cost ,875 1,064,430 1,424,305 At valuation 3,300,000 7,075,000 10,190, ,565,000 3,300,000 7,075,000 10,190, ,875 1,064,430 21,989,305

68 66 GRAND HOOVER BERHAD Notes to the Financial Statements 4. Property, plant and equipment (Cont d.) Office equipment, Company furniture and fittings and renovation 2017 At cost Balance at 1/7/16 682,778 Additions 8,999 Written off (17,956) Balance at 30/6/17 673,821 Accumulated Depreciation Balance at 1/7/16 642,885 Charge for the year 10,337 Deletion (17,956) Balance at 30/6/17 635,266 Net Book Value 38, At cost Balance at 1/7/15 682,778 Additions - Balance at 30/6/16 682,778 Accumulated Depreciation Balance at 1/7/15 632,304 Charge for the year 10,581 Balance at 30/6/16 642,885 Net Book Value 39,893 i. The land and buildings of the Group at carrying amount of 20,625,000 ( ,565,000) are stated at directors valuations based on professional valuations made by an independent professional qualified valuer on the open market value basis conducted in year Had the land and buildings been carried at historical cost less accumulated depreciation, the carrying amounts of the revalued assets that would have been included in the financial statements at the end of the year are as follows : - Group Freehold land 215, ,000 Long term leasehold land 3,886,916 3,943,276 Buildings 4,833,540 4,936,305 8,935,456 9,094,581

69 ANNUAL REPORT Notes to the Financial Statements 4. Property, plant and equipment (Cont d.) ii. Details of the Group s freehold and leasehold land and buildings and information about the fair value hierarchy as at 30th June are as follows : - Fair value Level 1 Level 2 Level 3 Group 2017 Freehold land - 3,300,000 - Long term leasehold land - 6,835,000 - Buildings - 10,490, ,625, Freehold land - 3,300,000 - Long term leasehold land - 7,075,000 - Buildings - 10,190, ,565,000 - The fair values of the freehold land, long term leasehold land and buildings of the Group are categorised as Level 2. The properties are valued by an independent firm of professional valuers based on the market value which is defined as the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm length transaction after proper marketing wherein the parties has each acted knowledgeably, prudently and without compulsion. Level 2 fair value Level 2 fair value freehold and long term leasehold land and building have been generally derived using the open market value approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is comparing the subject property with comparable properties which have been sold or are being offered for sale and making adjustment for factors which affect value such as location, floor level and siting, floor area, finishes, building services, management and maintenance, age and state of repair, market conditions and other relevant factors. The Group does not have non-financial assets measured at Level 1 and Level 3 hierarchy. iii. The carrying amounts of properties charged to licensed banks as securities for borrowings granted to the Group as at the reporting date are as follows : - Group Freehold land 3,300,000 3,300,000 Long term leasehold land 6,835,000 7,075,000 Buildings 10,165,000 9,865,000 20,300,000 20,240,000

70 68 GRAND HOOVER BERHAD Notes to the Financial Statements 4. Property, plant and equipment (Cont d.) iv. The gross carrying amounts of fully depreciated plant and equipment of the Group and of the Company are as follows : - Group Company Office equipment, furniture and fittings and renovation 1,031,173 1,065, , ,525 Plant, machinery, tools and equipment 14,760 14, Motor vehicles 838,763 1,061, ,884,696 2,142, , ,525 v. The carrying amount of plant and equipment of the Group at the reporting date held under finance lease arrangements is as follows : - Group Motor vehicles 740,772 1,013, Investment properties Long term Freehold leasehold Group land land Buildings Total 2017 At fair value Balance at 1/7/16 5,905, ,000 2,335,000 8,440,000 Fair value adjustment, net ,000 65,000 Balance at 30/6/17 5,905, ,000 2,400,000 8,505, At fair value Balance at 1/7/15 5,820,000-2,120,000 7,940,000 Additional - 200,000 50, ,000 Fair value adjustment, net 85, , ,000 Balance at 30/6/16 5,905, ,000 2,335,000 8,440,000 Company 2017 At fair value Balance at 1/7/16 4,000,000-6,000,000 10,000,000 Fair value adjustment, net , ,000 Balance at 30/6/17 4,000,000-6,300,000 10,300, At fair value Balance at 1/7/15 4,000,000-5,900,000 9,900,000 Fair value adjustment, net , ,000 Balance at 30/6/16 4,000,000-6,000,000 10,000,000

71 ANNUAL REPORT Notes to the Financial Statements 5. Investment properties (Cont d.) Investment properties comprise a number of commercial properties that are leased to third parties. Certain investment properties of the Company and a subsidiary company were leased to companies within the Group for their respective own use, and accordingly, classified as property, plant and equipment in the consolidated statement of financial position. No contingent rents are charged. The fair values of the investment properties of the Group and the Company at 30th June 2017 are determined by an independent professional qualified valuer using the open market value basis. The long term leasehold land and buildings of the Group have unexpired lease periods range from 76 to 88 years. Rental income earned by the Group amounted to 33,680 ( ,060) is recognised in profit or loss in respect of the investment properties. Included in investment properties are the following : - i. The titles of the freehold land and buildings of the Group at fair values of 2,730,000 (2016 1,275,000) are in the process of being registered in the name of the subsidiary, Heap Wah Enterprise Sdn. Bhd. ii. The investment properties of the Company at carrying amount of 6,300,000 (2016 6,000,000) are charged to a licensed bank as security for borrowing granted to the Company. Fair value information The fair values of investment properties of the Group and of the Company are categorised as follows : - Group Level 1 Level 2 Level 3 Total 2017 Investment properties - 8,505,000-8,505, Investment properties - 8,440,000-8,440,000 Company 2017 Investment properties - 10,300,000-10,300, Investment properties - 10,000,000-10,000,000 Investment properties are stated at fair value based on valuation performed by independent professional valuer, who holds a recognised relevant professional qualification and has recent experience in the locations and categories of investment properties valued. The fair value of the investment properties of the Group and of the Company as at 30th June 2017 were 8,505,000 and 10,300,000 respectively. Fair value is determined based on comparison method of valuation using significant observable inputs (Level 2 inputs). Changes in fair value are recognised in the profit or loss during the period in which they are reviewed. Level 2 fair value freehold land and building has been generally derived using the open market value approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot of comparable properties. The Group and the Company does not have non-financial assets measured at Level 1 and Level 3 hierarchy.

72 70 GRAND HOOVER BERHAD Notes to the Financial Statements 6. Prepaid lease payments Short term leasehold Group land 2017 At valuation Balance at 1/7/16 163,396 Additions - Balance at 30/6/17 163,396 Accumulated amortisation Balance at 1/7/16 60,415 Charge for the year 6,057 Balance at 30/6/17 66,472 Carrying amount 96, At valuation Balance at 1/7/15 163,396 Additions - Balance at 30/6/16 163,396 Accumulated amortisation Balance at 1/7/15 54,358 Charge for the year 6,057 Balance at 30/6/16 60,415 Carrying amount 102,981 The short term leasehold land have unexpired lease periods of 16 years expiring in year Land held for property development Freehold Development Group and Company land expenditure Total 2017 At cost Balance at 1/7/16 5,000,000 3,770,288 8,770,288 Additions Balance at 30/6/17 5,000,000 3,770,288 8,770, At cost Balance at 1/7/15 5,000,000 3,770,288 8,770,288 Additions Balance at 30/6/16 5,000,000 3,770,288 8,770,288 The titles of the freehold land are in the process of being transferred and registered in the name of the Company.

73 ANNUAL REPORT Notes to the Financial Statements 8. Investment in subsidiary companies Company Unquoted shares 17,933,085 17,933,085 Less : Impairment losses (11,534,830) (11,091,143) 6,398,255 6,841,942 The principal activities of the subsidiaries in the Group, all of which are incorporated and domiciled in Malaysia, and the interest of Grand Hoover Berhad are as follows : - Name of subsidiary Principal activities Effective ownership interest % % Hoover Tiling Trading Sdn. Bhd. Sale of ceramic tiles, marble and parquet Hoover Builders Sdn. Bhd. Property development, building and civil contractors. Hoover Property Development Property development, building and Sdn. Bhd. civil contractors. Grand Hoover Property Sdn. Bhd. Property development and investment holding Hoover Management Sdn. Bhd. Management services Heap Wah Enterprise Sdn. Bhd. Trading and supply of hardwares and all related products. All the above subsidiaries are audited by Kreston John & Gan. Non-controlling interest in subsidiary company The Group s subsidiary companies that have material non-controlling interest ( NCI ) are as follows : - Heap Wah Enterprise Sdn. Bhd NCI percentage of ownership interest and voting interest 30% 30% Carrying amount of NCI () 11,038,622 10,355,727 Profit allocated to NCI () 832, ,677 Summarised financial information before intra-group elimination : As at 30th June Non-current assets 15,052,195 15,313,802 Current assets 36,200,313 37,926,300 Non-current liabilities (4,180,770) (4,538,003) Current liabilities (10,276,325) (14,183,004) Net assets 36,795,413 34,519,095

74 72 GRAND HOOVER BERHAD Notes to the Financial Statements 8. Investment in subsidiary companies (Cont d.) Non-controlling interest in subsidiary company (Cont d.) Summarised financial information before intra-group elimination : Heap Wah Enterprise Sdn. Bhd Year ended 30th June Revenue 45,532,837 50,163,174 Profit for the year, representing total comprehensive income 2,776,318 2,838,924 Cash flows from operating activities 382,671 1,255,776 Cash flows from /(used in) investing activities 79,522 (211,604) Cash flows used in financing activities (1,014,343) (659,475) Net increase /(decrease) in cash and cash equivalents (552,150) 384,697 Dividends paid to NCI 150, , Goodwill on consolidation Group As at 1st July 1,435,803 1,435,803 Less : Impairment loss (284,601) - As at 30th June 1,151,202 1,435,803 For the purpose of impairment testing, goodwill is allocated to the Group s cash generating units ( CGUs ) identified according to the particular business segments which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. The aggregate carrying amounts of goodwill allocated to each unit are as follows : - Group Trading 1,132,770 1,132,770 Construction /Development - 284,601 Management and services 18,432 18,432 1,151,202 1,435,803 The recoverable amount of a CGU is determined based on value-in-use calculations applying a discounted future cash flow model based on financial projections approved by management covering a business plan. The forecasted growth rate used to extrapolate cash flow beyond the 5 year period are as follows : - Growth rate % Trading 3 Property development /Construction * Investment and services 5 * For construction /development segment, the performance depends on the development cycle of each project and therefore growth rate vary according to the stage of development cycle. The average annual growth rate for the property development /construction segment is 3%.

75 ANNUAL REPORT Notes to the Financial Statements 9. Goodwill on consolidation (Cont d.) Value-in-use was determined by discounting the future cash flows generated from the continuing use of the unit and was based on the following key assumptions : - Cash flows were projected based on past experience, actual operating results and management s expectations of market development. The revenue used to calculate the cash flows from operations was determined after taking into consideration performance trends of the industries in which the CGUs are exposed to. Value assigned are consistent with the external sources of information. The pre-tax discount rate of 8% was applied in determining the recoverable amount of the CGUs. The discount rate was estimated based on the CGUs weighted average cost of capital. The above estimates are particularly sensitive in the following areas : - An increase of 1 percentage point in the discount rate used would have reduced the value-in-use by : Trading 384 Property development /Construction 134 Investment and services 845 A 1% decrease in future planned revenues would have reduced the value-in-use by : Trading 2,035 Property development /Construction 858 Investment and services 2, Property development costs Cumulative property development costs Group At 1st July : - Freehold land - at cost 4,905,900 4,905,900 Development expenditure 30,732,986 22,833,928 35,638,886 27,739,828 Costs incurred during the year : Development expenditure 1,165,028 7,899,058 At 30th June : - Freehold land - at cost 4,905,900 4,905,900 Development costs 31,898,014 30,732,986 36,803,914 35,638,886

76 74 GRAND HOOVER BERHAD Notes to the Financial Statements 10. Property development costs(cont d.) Cumulative costs recognised in profit or loss Group At 1st July (28,228,388) (16,253,321) Recognised during the year (5,045,375) (11,975,067) At 30th June (33,273,763) (28,228,388) Transfer to inventories (3,160,764) - Property development costs at 30th June 369,387 7,410,498 Included in development expenditure incurred is interest capitalised of Nil ( ,768). 11. Inventories Group At cost : - Completed property units held for sale 3,160,764 - Finished goods 9,874,908 9,984,907 13,035,672 9,984,907 The cost of inventories recognised as an expense during the financial year in the Group amounted to 38,571,333 ( ,749,276). 12. Trade receivables Group Trade receivables 22,680,785 24,767,875 Less : Allowance account (635,906) (793,134) 22,044,879 23,974,741 Accrued billings in respect of property development - 293,643 22,044,879 24,268,384 The reconciliation of the allowance account is as follows : - Group At beginning of the financial year 793, ,441 Impairment losses recognised 153, ,923 Amounts written off (136,884) - Amounts recovered and reversed (173,544) (123,230) At the end of the financial year 635, ,134

77 ANNUAL REPORT Notes to the Financial Statements 12. Trade receivables (Cont d.) The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivables directly. Allowance account at end of the financial year represents the following : - Group Individual impairment 286, ,134 Collective impairment 349, , , ,134 The normal credit term of trade receivables is up to 60 days. Other terms are assessed and approved on a case-by-case basis. 13. Other receivables, deposits and prepayments Group Company Other receivables 1,281, , , ,000 Less : Allowance account - (42,170) - - 1,281,198 88, , ,000 Other deposits 301, ,494 14,293 14,293 Trade deposits 99, Prepayments 68,295 52, ,418 1,750, , , ,711 The reconciliation of the allowance account is as follows : - Group At beginning of the financial year 42,170 42,170 Amount written off (42,170) - At end of the financial year - 42,170 Allowance account at end of the financial year represents individually assessed impairment. Group Included in other deposits is cash deposit of 60,400 ( ,400) pledged with a licensed bank as security for bank guarantees issued in favour of third parties (Note 41). 14. Amounts due from /(to) subsidiary companies Company Amount due from subsidiary companies 11,691,847 13,947,875 Amount due to subsidiary companies (56,810) (57,027)

78 76 GRAND HOOVER BERHAD Notes to the Financial Statements 14. Amounts due from /(to) subsidiary companies (Cont d.) Non-trade balances due from /(to) subsidiary companies are in respect of advances and payments made on behalf, which are unsecured, interest free and repayable on demand in cash and cash equivalent. Included in the amount due from subsidiary companies is an unsecured loan of 10,536,283 ( ,953,833) due from a subsidiary company, Hoover Builders Sdn. Bhd., which bears interest at rates range from 2.95% to 7.60% ( % to 7.60%) per annum and repayable on demand in cash and cash equivalent. 15. Deposits with licensed banks Group Al-Mudharabah Investment 1,158,721 1,124,846 Other fixed deposits 103, ,200 1,261,921 1,228,046 Group Included in deposits with a licensed bank are as follows : - i. an amount of 1,158,721 (2016-1,124,846) pledged as security for bank credit facilities granted to the subsidiary company, Heap Wah Enterprise Sdn. Bhd. ii. an amount of 103,200 ( ,200) pledged to a licensed bank as security for a bank guarantee issued in favour of a third party. The profit rate of Al-Mudharabah Investment that was effective during the financial year is 2.95% ( %) per annum. The interest rates of fixed deposits with licensed banks that was effective during the financial year is 3.20% ( % to 3.20%) per annum. 16. Share capital and share premium Group and Company 30/6/ /6/ /6/ /6/2016 Number of shares Authorised : At beginning of the financial year N/A 100,000,000 N/A 100,000,000 At end of the financial year N/A 100,000,000 N/A 100,000,000 Issued and fully paid : Ordinary shares with no par value (2016: par value of 1.00 each) As at 1st July / 30th June 40,000,000 40,000,000 40,000,000 40,000,000 Group and Company 30/6/ /6/2016 Share premium As at 1st July / 30th June 4,186,166 4,186,166

79 ANNUAL REPORT Notes to the Financial Statements 16. Share capital (Cont d.) The new Companies Act, 2016 ( New Act ), which came into operation on 31st January 2017, abolished the concept of authorised share capital and par value of share capital. Consequently, the amount standing to the credit of the share premium account becomes part of the Company s share capital pursuant to the transitional provisions set out in Section 618(2) of the New Act. Notwithstanding this provision, the Company may within 24 months from the commencement of the Act, use the amount standing to the credit of its share premium account of 4,186,166 for purposes as set in Section 618(3) of the Act. There is no impact on the numbers of ordinary shares in issue or the relative entitlement of any of the members as a result of this transition. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank pari passu with regard to the Company s residual assets. 17. Reserves Group Company Non-distributable Revaluation reserves 8,087,804 7,897, ,087,804 7,897, Distributable Accumulated losses (4,119,770) (4,524,808) (13,138,044) (12,213,833) 3,968,034 3,372,929 (13,138,044) (12,213,833) 18. Borrowings Group Company Non-current liabilities Secured Islamic bank financing 3,067,414 3,337, Finance lease liabilities 579, , ,646,415 4,105, Current liabilities Secured Bank overdraft 5,289,299 6,552,538 5,040,701 6,552,538 Bankers acceptance 117, , Islamic bank financing 335, , Finance lease liabilities 190, , ,932,383 7,456,586 5,040,701 6,552,538 Total borrowings Secured Bank overdraft (Note 19) 5,289,299 6,552,538 5,040,701 6,552,538 Bankers acceptance (Note 20) 117, , Islamic bank financing (Note 21) 3,403,246 3,673, Finance lease liabilities (Note 22) 769,253 1,012, ,578,798 11,562,399 5,040,701 6,552,538

80 78 GRAND HOOVER BERHAD Notes to the Financial Statements 18. Borrowings (Cont d.) Effective interest /expense rates per annum on the borrowings of the Group and of the Company are as follows : - Group Company % % % % Bank overdraft Bankers acceptance Islamic bank financing Finance lease liabilities Bank overdraft Secured Group and Company The bank overdraft of the Group and the Company is secured by fixed charge over the building of the Company, and freehold land and building of a subsidiary, Grand Hoover Property Sdn. Bhd. (Note 4). At the reporting date, the Group and the Company have unutilised bank overdrafts facilities of 1,960,701 ( ,462) and 1,959,299 ( ,462) respectively. 20. Bankers acceptance Secured Group The bankers acceptance is secured by the following : - i. fixed charge over a leasehold land and building of the Group; ii. deposit of 1,158,721 (2016 1,124,846) pledged as Mudharabah General Investment. 21. Islamic bank financing Al-Bai Bithaman Ajil Group Secured Islamic bank financing - Al-Bai Bithaman Ajil 3,403,246 3,673,196 Repayable as follows : - Non-current liabilities - later than one year and not later than two years 335, ,832 - later than two years and not later than five years 1,007,496 1,007,496 - Later than five years 1,724,086 1,994,036 3,067,414 3,337,364 Current liabilities - not later than one year 335, ,832 The Islamic bank financing is secured by the following : - 3,403,246 3,673,196 i. first legal charge over leasehold land and building of a subsidiary, Heap Wah Enterprise Sdn. Bhd.; ii. debenture of 6,750,000 on fixed and floating assets of a subsidiary, Heap Wah Enterprise Sdn. Bhd. The Islamic bank financing is repayable by 240 equal monthly instalments of 27,986.

81 ANNUAL REPORT Notes to the Financial Statements 22. Finance lease liabilities Group Minimum lease payments : - - not later than one year 223, ,142 - later than one year and not later than two years 220, ,596 - later than two years and not later than five years 361, ,269 - later than five years 49, , ,605 1,143,747 Less : Future interest charges (85,352) (131,082) Present value of finance lease liabilities 769,253 1,012,665 Repayable as follows : - Non-current liabilities - later than one year and not later than two years 196, ,248 - later than two years and not later than five years 333, ,871 - later than five years 48, , , ,449 Current liabilities - not later than one year 190, , ,253 1,012,665 The Group obtains finance lease facilities to finance its purchase of motor vehicles. The remaining finance lease terms are in the range from 1 to 6 years as at 30th June Implicit interest rates of the finance lease are fixed at the inception of the finance lease arrangements, and the finance lease instalments are fixed throughout the finance lease period. The Group has the option to purchase the assets at the end of the agreements. There are no significant restriction clauses imposed on the finance lease arrangements. 23. Deferred tax liabilities Group Company Balance at the beginning of the year 2,875,400 2,882, , ,000 Recognised in profit or loss (Note 32) (35,000) (7,000) 71,000 24,000 Transfer from equity 53, Balance at the end of the year 2,893,400 2,875,400 1,058, ,000 The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting are as follows : - Recognised As at in profit Transfer As at 1st July or loss from equity 30th June Group 2017 Deferred tax assets Accelerated capital allowances (298,500) 10,000 - (288,500) Deferred tax liabilities Revaluation on land and building 2,721,400 (46,000) 53,000 2,728,400 Investment properties 452,500 1, ,500 3,173,900 (45,000) 53,000 3,181,900

82 80 GRAND HOOVER BERHAD Notes to the Financial Statements 23. Deferred tax liabilities (Cont d.) Recognised As at in profit Transfer As at 1st July or loss from equity 30th June Group 2016 Deferred tax assets Accelerated capital allowances (289,000) (9,500) - (298,500) Deferred tax liabilities Revaluation on land and building 2,700,400 21,000-2,721,400 Investment properties 471,000 (18,500) - 452,500 3,171,400 2,500-3,173,900 Company 2017 Deferred tax liabilities Accelerated capital allowances 4, ,000 Investment properties 983,000 71,000-1,054, ,000 71,000-1,058, Deferred tax liabilities Accelerated capital allowances 5,000 (1,000) - 4,000 Investment properties 958,000 25, , ,000 24, ,000 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 where the deferred income taxes relate to the same tax authority. The net deferred tax assets and liabilities shown on the statement of financial position after appropriate off setting are : - Group Company Deferred tax assets (288,500) (298,500) - - Deferred tax liabilities 3,181,900 3,173,900 1,058, ,000 2,893,400 2,875,400 1,058, , Trade payables Group The credit terms of trade payables are up to 90 days. However, the terms may vary upon negotiation with the trade payables. Included in trade payables is a retention sum of 709,306 ( ,600).

83 ANNUAL REPORT Notes to the Financial Statements 25. Other payables and accruals Group Company Other payables 471, , ,150 85,880 Accruals 228, , , ,700 Other deposits 15,580 15, , , , , Revenue and cost of sales Group Company Revenue Sale of goods 46,779,113 51,040, Sale of properties under development 7,238,535 12,174, Dividend income received from subsidiary company , ,000 Rental income - 323, ,283 Interest income from subsidiary company , ,762 Commission income 1, ,018,802 63,539,366 1,011,450 1,760,045 Cost of sales Cost of goods sold 38,565,658 42,743, Property development cost 5,045,375 11,975, Direct costs - 25, ,611,033 54,744, Other income Group Company Bad debts recovered 125,200 66, Dividends earned from Al-Mudharabah Investment 34,059 38, Fair value adjustment on investment properties 65, , , ,000 Gain on disposal of plant and equipment 42, Insurance claim 4,400 12, Interest income 109,865 55, Realised gain on foreign exchange - 7, Rental income 35,680 30, Reversal of impairment loss on trade receivables 173, , Sundry income 7, Transport income 2,604 3, , , , ,000

84 82 GRAND HOOVER BERHAD Notes to the Financial Statements 28. Finance costs Group Company Interest expense of financial liabilities that are not at fair value through profit or loss : - Bank overdraft interest 530, , , ,792 Finance lease interest 45,347 42, Islamic bank financing expense 65, , Term loan interest - 58, , , , ,792 Less: Financing expense capitalised in qualifying assets : Property development costs (Note 10) - (58,768) , , , , Profit /(Loss) before taxation Profit /(Loss) before tax is arrived at after charging : - Group Company Amortisation of prepaid lease payments 6,057 6, Auditors remuneration 72,200 72,200 22,000 22,000 Bad debts written off 3,182 9, Depreciation of property, plant and equipment 561, ,380 10,337 10,581 Employee benefits expense (Note 30) 5,042,044 5,022, , ,129 Finance costs : - - Bank overdrafts 530, , , ,792 - Finance lease 45,347 42, Islamic bank financing 65, , Term loan - 58, Impairment loss on goodwill 284, Impairment loss on investment in subsidiary companies ,687 - Impairment loss on trade receivables 153, , Management fee paid to a subsidiary company - - 3,600 3,600 Other deposits written off Plant and equipment written off Rental expenses on land and buildings 266, , Rental expense on warehouse 31,500 39, and after crediting : - Bad debts recovered 125,200 66, Dividend earned from Al-Mudharabah Investment 34,059 38, Dividends received from subsidiary company , ,000 Fair value adjustment on investment properties 65, , , ,000 Gain on disposal of plant and equipment 42, Interest income - Fixed deposits 90,130 41, Subsidiary company , ,762 - Others 19,735 13, Rental income on land and buildings 35,680 30, Reversal of impairment losses on trade receivables 173, ,

85 ANNUAL REPORT Notes to the Financial Statements 30. Employee benefits expense Group Company Salaries, allowances and bonus 4,244,406 4,182, , ,550 Employees Provident Fund 464, ,896 81,666 81,667 Social security costs 39,530 34,417 2,486 1,912 Other staff related expenses 293, , ,042,044 5,022, , ,129 Included in employee benefits expense of the Group and of the Company are executive directors remuneration excluding benefits-in-kind, amounting to 1,317,104 (2016 1,244,191) and 638,550 ( ,550) respectively as disclosed in Note Directors remuneration Directors of the Company Group Company Executive directors - Other emoluments 680, , , ,550 - Benefits-in-kind 57,500 52, Employees Provident Fund 81, ,387 81,666 81,667 Non-executive directors - Fees 76,000 76,000 76,000 76,000 - Other emoluments 4,900-4, , , , ,217 Total excluding benefits-in-kind 761, , , ,550 Directors of a subsidiary company Executive directors - Other emoluments 762, , Benefits-in-kind 7,000 8, Employees Provident Fund 43, , , Total excluding benefits-in-kind 762, , The number of directors of the Company and the subsidiary companies whose total remuneration during the year fell within the following bands is analysed below : - Number of directors Group Company Directors of the Company Executive directors : - Below 50, , , , , , , Non-Executive directors : - Below 50,

86 84 GRAND HOOVER BERHAD Notes to the Financial Statements 31. Directors remuneration (Cont d.) Number of directors Group Company Directors of a subsidiary company Executive directors : - Below 50, , , , , , , , , Income tax expense Group Company Income tax - current year provision 1,000, ,000-76,000 - underprovision in previous year 29,103 25,355 33,420 15,779 1,029,903 1,004,355 33,420 91,779 Deferred taxation (Note 23) (35,000) (7,000) 71,000 24, , , , ,779 Income tax is calculated at the Malaysian statutory tax rate of 24% of the estimated assessable profit for the year. The numerical reconciliation between the effective tax rate and the applicable tax rate is as follows : - Group Company % % % % Applicable tax rate Tax effects of : - Depreciation on non-qualifying property, plant and equipment Non-allowable expenses Non-taxable income (3) (7) (19) (10) - Deferred tax assets not recognised during the year Under provision in previous year Effective tax rate Unabsorbed tax losses and capital allowances of the Group which are available to set-off against future chargeable income for which the tax effects have not been recognised in the financial statements are shown below : - Group Unabsorbed tax losses 13,407,000 10,902,000 Unabsorbed capital allowances 373, ,000

87 ANNUAL REPORT Notes to the Financial Statements 32. Income tax expense (Cont d.) The potential deferred tax benefits that have not been accounted for in the financial statements are as follows : - Unabsorbed Accelerated Unabsorbed capital capital tax losses allowances allowances Total Group Balance at 1st July ,266,240 67,000 (24,940) 2,308,300 Arising during the year 350,560 11,960 2, ,200 Balance at 30th June ,616,800 78,960 (22,260) 2,673,500 Arising during the year 374,200 (11,660) 1, ,500 Balance at 30th June ,991,000 67,300 (20,300) 3,038,000 No deferred tax asset has been recognised as the Group is unable to ascertain whether it is probable that taxable profit of the subsidiary companies will be available against which the deductible temporary differences can be utilised. 33. Other comprehensive income Group Revaluation of property, plant and equipment Before tax 226,381 (2,847) Tax expense (53,000) - Net of tax 173,381 (2,847) 34. Earnings per share Basic : Basic earnings per share is calculated by dividing the profit /(loss) for the year attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year. Group Profit /(Loss) for the year attributable to ordinary equity holders of the Company 405,038 (1,150,473) Weighted average number of ordinary shares in issue 40,000,000 40,000,000 Basic earnings per share (sen) 1.01 (2.88) Diluted : The basic and diluted earnings per share are equal as the Company has no dilutive potential ordinary shares.

88 86 GRAND HOOVER BERHAD Notes to the Financial Statements 35. Purchase of plant and equipment During the financial year, the Group and the Company made the following cash payments to purchase plant and equipment : - Group Company Purchase of plant and equipment (Note 4) 40, ,571 8,999 - Financed by finance lease arrangements - (318,000) - - Cash payments on purchase of plant and equipment 40,361 71,571 8, Cash and cash equivalents Cash and cash equivalents included in the statements of cash flows comprise the following amounts : - Group Company Cash and bank balances - Housing Development Account 214, , Others 3,405,380 3,891,327 8,603 4,569 Deposits with licensed banks (Note 15) 1,261,921 1,228, Bank overdraft (5,289,299) (6,552,538) (5,040,701) (6,552,538) (407,881) (573,916) (5,032,098) (6,547,969) Less : Pledged deposits (Note 15) (1,261,921) (1,228,046) - - (1,669,802) (1,801,962) (5,032,098) (6,547,969) Housing Development Account represents monies deposited pursuant to Section 7A of the Housing Development (Control and Licensing) Act, 1966 and the utilisation is in accordance with the Housing Developers (Housing Development Account) Regulations It is therefore restricted from use in other operations. 37. Segmental information The Group has three reportable segments, as described below, which are the Group s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different corporate and marketing strategies. For each of the strategic business units, the Group s Chief Executive Officer (the chief operating decision maker) reviews internal management reports at the least on quarterly basis. The following summary describes the operations in each of the Group s reportable segments : - Trading Trading and supply of hard wares and all related products Property development / construction Property development, building and civil contractors. Investment and services Management services. The accounting policies of the reportable segments are the same as described in Note 3 to the financial statements. There are varying levels of integration among the reportable segments. This integration includes transfers of raw materials, shared managed services and financial resources. Inter-segment pricing is determined on negotiated basis in a manner similar to transactions with third parties. Performance is measured based on segment profit before tax, interest, depreciation and amortisation, as included in the internal management reports that are reviewed by Group s Chief Executive Officer (the chief operating decision maker). Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

89 ANNUAL REPORT Notes to the Financial Statements 37. Segmental information (Cont d.) Segment assets and liabilities The total of segment assets and liabilities are measured based on all assets and liabilities of a segment, as included in the internal management reports that are reviewed by the Group s Chief Executive Officer. Segment capital expenditure Segment capital expenditure is the total cost incurred during the financial year to acquire property, plant and equipment, and intangible assets other than goodwill. a. Business segment Property development / Investment Trading construction and services Elimination Total 2017 Revenue Sales to external customers 46,779,113 7,238,535 1,154-54,018,802 Inter-segment revenue 5,676 72,000 1,061,250 (1,138,926) - Total revenue 46,784,789 7,310,535 1,062,404 (1,138,926) 54,018,802 Results Operating results 3,579,593 (2,235,205) (945,226) 2,381,648 2,780,810 Interest income 90,130 19, ,450 (661,450) 109,865 Finance costs (72,799) (184,355) (529,192) 145,193 (641,153) Profit before taxation 3,596,924 (2,399,825) (812,968) 1,865,391 2,249,522 Income tax expense (964,152) 1,783 (103,534) 71,000 (994,903) Profit /(Loss) for the year 2,632,772 (2,398,042) (916,502) 1,936,391 1,254,619 Assets Segment assets / Total assets 51,725,051 10,510,983 37,798,292 (17,706,924) 82,327,402 Liabilities Segment liabilities / Total liabilities 15,075,083 12,871,381 6,460,326 (11,272,210) 23,134,580 Other information Amortisation of prepaid lease payments 6, ,057 Depreciation of property, plant and equipment 298, ,921 10, ,954 Non-cash expenses Impairment losses - goodwill , ,601 - investment in subsidiary companies ,687 (443,687) - - trade receivables 153, ,200 Bad debts written off 3, ,182 Other deposits written off Plant and equipment written off Non-cash income Fair value adjument - investment properties 65, ,000 (300,000) 65,000 Gain on disposal - plant and equipment 4,699 38, ,699 Reversal of impairment losses - trade receivables 173, ,544

90 88 GRAND HOOVER BERHAD Notes to the Financial Statements 37. Segmental information (Cont d.) a. Business segment (Cont d.) Property development / Investment Trading construction and services Elimination Total 2017 Included in the measure of segment assets are : - Additions to non-current assets other than financial instruments and deferred tax assets 25,304-15,057-40, Revenue Sales to external customers 51,040,353 12,174, ,255-63,539,366 Inter-segment revenue 5,468 72,000 1,486,562 (1,564,030) - Total revenue 51,045,821 12,246,758 1,810,817 (1,564,030) 63,539,366 Results Operating results 3,778,055 (1,758,251) (65,191) (625,000) 1,329,613 Interest income 41,986 13, ,762 (911,762) 55,081 Finance costs (154,065) (33,624) (474,792) - (662,481) Profit before taxation 3,665,976 (1,778,780) 371,779 (1,536,762) 722,213 Income tax expense (903,074) (300) (117,981) 24,000 (997,355) Profit /(Loss) for the year 2,762,902 (1,779,080) 253,798 (1,512,762) (275,142) Assets Segment assets / Total assets 53,811,862 17,197,124 40,188,101 (22,374,345) 88,822,742 Liabilities Segment liabilities / Total liabilities 19,239,047 17,159,480 7,933,633 (13,424,240) 30,907,920 Other information Amortisation of prepaid lease payments 6, ,057 Depreciation of property, plant and equipment 196, ,155 10, ,380 Non-cash expenses Impairment losses - trade receivables 283, ,923 Plant and equipment written off Bad debts written off 9, ,808 Non-cash income Fair value adjustment - investment properties 250, ,000 (100,000) 250,000 Reversal of impairment losses - trade receivables 211, ,517 Included in the measure of segment assets are : - Additions to non-current assets other than financial instruments and deferred tax assets 3, , ,571

91 ANNUAL REPORT Notes to the Financial Statements 37. Segmental information (Cont d.) b. Geographical segments Segment information by geographical segment is not provided as the activities of the Group are located principally on Malaysia. c. There is no single customer with revenue equal or more than 10% of the Group revenue. Major customers information During the financial year, revenue generated from five major customers amounted to approximately 11.3 million ( million) that derived from sales made by the trading segment. 38. Financial instruments a. Categories of financial instruments The table below provides an analysis of financial instruments categorised as follows : - a. Loans and receivables ( L&R ); b. Financial liabilities measured at amortised cost ( FL ). Carrying amount L&R FL Group 2017 Financial assets Trade receivables 22,044,879 22,044,879 - Other receivables 1,281,198 1,281,198 - Deposits with licensed banks 1,261,921 1,261,921 - Cash and bank balances 3,619,497 3,619,497-28,207,495 28,207,495 - Financial liabilities Trade payables (9,430,234) - (9,430,234) Other payables and accruals (715,228) - (715,228) Bank overdraft (5,289,299) - (5,289,299) Bankers acceptance (117,000) - (117,000) Islamic bank financing (3,403,246) - (3,403,246) Finance lease liabilities (769,253) - (769,253) (19,724,260) - (19,724,260) 2016 Financial assets Trade receivables 24,268,384 24,268,384 - Other receivables 88,143 88,143 - Deposits with licensed banks 1,228,046 1,228,046 - Cash and bank balances 4,750,576 4,750,576-30,335,149 30,335,149 -

92 90 GRAND HOOVER BERHAD Notes to the Financial Statements 38. Financial instruments (Cont d.) a. Categories of financial instruments (Cont d.) Carrying Group amount L&R FL 2016 Financial liabilities Trade payables (15,100,557) - (15,100,557) Other payables and accruals (611,390) - (611,390) Bank overdraft (6,552,538) - (6,552,538) Bankers acceptance (324,000) - (324,000) Islamic bank financing (3,673,196) - (3,673,196) Finance lease liabilities (1,012,665) - (1,012,665) (27,274,346) - (27,274,346) Company 2017 Financial assets Other receivable 180, ,263 - Amount due from subsidiary companies 11,691,847 11,691,847 - Cash and bank balances 8,603 8,603-11,880,713 11,880,713 - Financial liabilities Other payables and accruals (226,284) - (226,284) Amount due to subsidiary companies (56,810) - (56,810) Bank overdraft (5,040,701) - (5,040,701) (5,323,795) - (5,323,795) 2016 Financial assets Other receivable 175, ,000 - Amount due from subsidiary companies 13,947,875 13,947,875 - Cash and bank balances 4,569 4,569-14,127,444 14,127,444 - Financial liabilities Other payables and accruals (188,580) - (188,580) Amount due to subsidiary companies (57,027) - (57,027) Bank overdraft (6,552,538) - (6,552,538) (6,798,145) - (6,798,145)

93 ANNUAL REPORT Notes to the Financial Statements 38. Financial instruments (Cont d.) b. Financial risk management The Group and the company have exposure to the following risks from its use of financial instruments as follows : - Credit risk Liquidity and cash flow risk Market risk Operational risk i. Credit risk Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group s exposure to credit risk arises principally from its receivables from customers. The Company s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries. Receivables Risk management objectives, policies and processes for managing the risk The credit risk is controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Group s associations to business partners with high credit worthiness. The Group also has an internal credit review which is conducted if the credit risk is material. Trade receivables are monitored on an ongoing basis via Group management reporting procedures. Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statement of financial position. The following shows the total amount due from the top ten (10) major customers as at the reporting date, which represents more than 39% ( %) of the total trade receivables. Group Trade receivables 8,585,683 8,497,555 Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are measured at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any past due receivables having significant balances, which are deemed to have higher credit risk, are monitored individually. The Group receives financial guarantees given by shareholders or directors of customers in managing exposure to credit risk. At the end of the reporting period, financial guarantees received by the Group amounted to 36,980,000 ( ,575,000) in respect of 16,873,156 ( ,543,660) trade receivables. The remaining balance of trade receivables are not secured by any collateral or supported by any other credit enhancement.

94 92 GRAND HOOVER BERHAD Notes to the Financial Statements 38. Financial instruments (Cont d.) b. Financial risk management (Cont d.) i. Credit risk (Cont d.) Receivables (Cont d.) The Group maintains an ageing analysis in respect of trade receivables only. The ageing of trade receivables as at the end of the reporting period was : - Individual Collective Gross impairment impairment Net Group 2017 Not past due 9,074, ,074,432 Past due 1-30 days 3,081, ,081,597 Past due over 30 days 10,524,756 (286,706) (349,200) 9,888,850 22,680,785 (286,706) (349,200) 22,044, Not past due 13,138, ,138,426 Past due 1-30 days 3,654, ,654,632 Past due over 30 days 8,268,460 (597,134) (196,000) 7,475,326 25,061,518 (597,134) (196,000) 24,268,384 At the end of the reporting period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement. The collective impairment allowance is determined based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience. Inter-company loans and advances Risk management objectives, policies and processes for managing the risk The Company provides unsecured loans and advances to subsidiaries. The Company monitors the results of the subsidiaries regularly. Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position. Impairment losses As at the end of the reporting period, there was no indication that the loans and advances to the subsidiaries are not recoverable. The Company does not specifically monitor the ageing of current advances to the subsidiaries.

95 ANNUAL REPORT Notes to the Financial Statements 38. Financial instruments (Cont d.) b. Financial risk management (Cont d.) ii. Liquidity and cash flow risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group s exposure to liquidity risk arises principally from its various payables, loans and borrowings. The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due. It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts. Maturity analysis The table below summarises the maturity profile of the Group s and the Company s financial liabilities as at the end of the reporting period based on undiscounted contractual payments : - Effective Interest / Contractual More Carrying Expense cash Under than Group amount Rate flows 1 year years years 5 years % 2017 Non-derivative financial liabilities Trade payables 9,430,234-9,430,234 9,430, Other payables and accruals 715, , , Bank overdraft 5,289, ,289,299 5,289, Bankers acceptance 117, , , Islamic bank financing 3,403, ,037, , ,832 1,007,496 3,358,320 Finance lease liabilities 769, , , , ,323 49,616 19,724,260 21,443,846 16,111, ,902 1,368,819 3,407, Non-derivative financial liabilities Trade payables 15,100,557-15,100,557 15,100, Other payables and accruals 611, , , Bank overdraft 6,552, ,552,538 6,552, Bankers acceptance 324, , , Islamic bank financing 3,673, ,373, , ,832 1,007,496 3,694,152 Finance lease liabilities 1,012, ,143, , , , ,740 27,274,346 29,105,544 23,213, ,428 1,494,765 3,837,892

96 94 GRAND HOOVER BERHAD Notes to the Financial Statements 38. Financial instruments (Cont d.) b. Financial risk management (Cont d.) ii. Liquidity and cash flow risks (Cont d.) Maturity analysis (Cont d.) Effective Interest / Contractual Carrying Expense cash Under Company amount Rate flows 1 year % 2017 Non-derivative financial liabilities Other payables and accruals 226, , ,284 Amount due to subsidiary companies 56,810-56,810 56,810 Bank overdraft 5,040, ,040,701 5,040,701 5,323,795 5,323,795 5,323, Non-derivative financial liabilities Other payables and accruals 188, , ,580 Amount due to subsidiary companies 57,027-57,027 57,027 Bank overdraft 6,552, ,552,538 6,552,538 6,798,145 6,798,145 6,798,145 iii. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest / expense rates and other prices that will affect the Group s financial position or cash flows. Other than interest /expense rates risk, the Group is not exposed to foreign exchange rate risk and other prices risk. Interest /Expense rate risk The Group s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest /expense rates. The Group s variable rate borrowings are exposed to a risk of change in cash flows due to changes interest /expense rates. Short term investment such as deposits with licensed bank are not significantly exposed to interest rate risk. Risk management objectives, policies and processes for managing the risk The Group s policy is to borrow principally on the floating rate basis but to retain a proportion of fixed rate debt. The objectives for the mix between fixed and floating rate borrowings are set to reduce the impact of an upward change in interest rates while enabling benefits to be enjoyed if interest rates fall.

97 ANNUAL REPORT Notes to the Financial Statements 38. Financial instruments (Cont d.) b. Financial risk management (Cont d.) iii. Market risk (Cont d.) Exposure to interest /expense rate risk The interest /expense rate profile of the Group s significant interest /expense-bearing financial instruments, based on carrying amounts as at the end of the reporting period was : - Effective Effective Interest / Interest / Expense Expense Group 2017 rate 2016 rate % % Fixed rate instruments Deposits with licensed banks 1,261, ,228, Finance lease liabilities (769,253) (1,012,665) Floating rate instruments Bank overdraft (5,289,299) 8.40 (6,552,538) 8.35 Bankers acceptance (117,000) 3.80 (324,000) Islamic bank financing (3,403,246) 4.42 (3,673,196) Company Fixed rate instruments Amount due from subsidiary companies 10,536, ,953, Floating rate instruments Bank overdraft (5,040,701) 8.40 (6,552,538) 8.35 Interest rate risk sensitivity analysis : - Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change on interest rates at the end of the reporting period would not affect profit or loss. Cash flow sensitivity analysis for variable rate instruments At the reporting date, if interest rates had been 100 basis points lower /higher, with all other variables held constant, the Group s loss net of tax would have been 88,095 higher /lower, arising mainly as a result of lower /higher interest expense on floating rate borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment. iv. Operational risk The operational risk arises from the daily activities of the Group which includes legal, credit reputation and financing risk and other risks associated to daily running of its business operations. Such risks are mitigated through proper authority levels of approval limits, clear reporting structure, segregation of duties, policies and procedures implemented and periodic management meetings. In dealing with its stewardship, the directors recognise that effective risk management is an integral part of good business practice. The directors will pursue an ongoing process of identifying, assessing and managing key business areas, overall operational and financial risks faced by the business units as well as regularly reviewing and enhancing risk mitigating strategies with its appointed and key management personnel.

98 96 GRAND HOOVER BERHAD Notes to the Financial Statements 38. Financial instruments (Cont d.) c. Fair value information The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowings reasonably approximate their fair value due to the relatively short term nature or that they are floating rate instruments that are re-priced to market interest rates on or near to the reporting date. The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their fair values and carrying amounts shown in the statement of financial position. Fair value of financial instruments Fair value of financial instruments Total Carrying carried at fair value not carried at fair value fair value amount Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Group 2017 Financial liabilities Bank overdraft ,881,901 4,881,901 4,881,901 5,289,299 Banker s acceptance , , , ,000 Islamic bank financing ,370,941 3,370,941 3,370,941 3,403,246 Finance lease liabilities , , , , ,119,056 9,119,056 9,119,056 9,578, Financial liabilities Bank overdraft ,047,993 6,047,993 6,047,993 6,552,538 Banker s acceptance , , , ,000 Islamic bank financing ,639,670 3,639,670 3,639,670 3,673,196 Finance lease liabilities , , ,885 1,012, ,994,042 10,994,042 10,994,042 11,562,399 Company 2017 Financial liabilities Bank overdraft ,652,567 4,652,567 4,652,567 5,040, ,652,567 4,652,567 4,652,567 5,040, Financial liabilities Bank overdraft ,047,993 6,047,993 6,047,993 6,552, ,047,993 6,047,993 6,047,993 6,552,538

99 ANNUAL REPORT Notes to the Financial Statements 39. Capital management The primary objective of the Group s capital management is to ensure that it maintains an appropriate capital structure in order to support its business and maximise equity holder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. No changes were made in the objectives, policies or processes during the years ended 30th June 2017 and 30th June 2016 respectively. 40. Capital commitment Capital commitment to purchase property, plant and equipment - Authorised and contracted for 900, ,000 On 3rd September 2012, the Company s wholly owned subsidiary, Hoover Builders Sdn. Bhd. entered into a Sale and Purchase agreement with Sim Tee Ming Holdings Sdn. Bhd., a company in which one of the directors, Sim Cheng Young has an interest for the acquisition of 50 pieces of freehold vacant land for a total cash consideration of 900,000. The acquisition is still in progress as at the reporting date. 41. Contingent liabilities Group Company Unsecured Corporate guarantees issued to third parties for supplies of goods and services to : - - subsidiary companies - - 7,220,000 7,220,000 Secured Bank guarantees issued in favour of third parties 1,060, , ,060, , Amounts utilised are as follows : Corporate guarantees issued to third parties for supplies of goods and services to : - - subsidiary companies ,981 2,185,298 Bank guarantee issued in favour of third parties 1,060, , ,060, , ,981 2,185,298 Secured The bank guarantee is secured by cash deposit of 60,400 ( ,400) (Note 13). The directors are of the opinion that adequate allowance has been made in the financial statements for any possible liabilities.

100 98 GRAND HOOVER BERHAD Notes to the Financial Statements 42. Related parties Identity of related parties For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group, and certain members of the senior management of the Group. The Group has related party relationship with its subsidiaries, Directors and key management personnel. Significant related party transactions Related party transactions have been entered into the normal course of business under normal trade terms. The significant related party transactions of the Group and of the Company are show below. The related party balances are shown in Note 14. a. Related party /companies transactions : - i. Transactions with a person connected to a director of subsidiary company, Lam Weng Wai : - Group Rental expenses - Yap Siew Lian (15,600) (15,600) ii. Transactions with a person connected to a director of company, Sim Chong Leong : - Group Progress billing - Sim Chong Leong 48,300 96,600 iii. Transactions with director of the Company, Sim Cheng Young : - Group Progress billing 1,048,300 96,600 iv. Transactions with persons connected to directors of subsidiary company, Lam Weng Wai and Lum Pek Yoke : - Group Salaries, allowances, bonus and commission - Paid to persons connected to directors of subsidiary company (169,198) (183,993)

101 ANNUAL REPORT Notes to the Financial Statements 42. Related parties (Cont d.) a. Related party /companies transactions : - (Cont d.) v. Significant related company transactions in the financial statements are as follows : - Company Dividend income received from a subsidiary company - Heap Wah Enterprise Sdn. Bhd. 350, ,000 Interest on loan to a subsidiary company - Hoover Builders Sdn. Bhd. 661, ,762 Management fee paid and payable to a subsidiary company - Hoover Management Sdn. Bhd. (3,600) (3,600) b. Compensation of key management personnel The remuneration paid by the Group and the Company to key management personnel during the year are as follows : - Group Company Short-term employee benefits : - Fees 76,000 76,000 76,000 76,000 - Remuneration 1,448,004 1,286, , ,550 Post-employment benefits : - Defined contribution plan - EPF 125, ,816 81,667 81,667 Estimated value of benefits-in-kind 66,300 61, ,716,012 1,566, , ,217 Included in the total key management personnel are : - Group Company Directors remuneration (Note 31) - Directors of the Company 719, , , ,550 - Directors of the subsidiaries 804, , ,524,004 1,362, , , Significant event The Companies Act, 2016 ( New Act ) was enacted to replace the Companies Act, 1965 and was passed by Parliament on 4th April The New Act was subsequently gazetted on 15th September On 26th January 2017, the Minister of Domestic Trade, Co-operatives and Consumerism announced that the effective date of the New Act, except for section 241 and Division 8 of Part lll of the New Act, to be 31st January Amongst the key changes introduced in the New Act, which will affect the financial statements of the Company would include the removal of the authorised share capital, replacement of no par value shares in place of par or nominal value shares, and the treatment of share premium and capital redemption reserves. The adoption of the New Act does not have any other financial impact on the Group and the Company for the financial year ended 30th June 2017.

102 100 GRAND HOOVER BERHAD Notes to the Financial Statements 44. Supplementary information on the breakdown of realised and unrealised profits or losses The breakdown of the retained earnings of the Group and of the Company as at 30th June 2017, into realised and unrealised profits, pursuant to Paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows : Group Total retained profits /(accumulated losses) of the Company and its subsidiaries : - - realised 6,247,925 8,026,697 - unrealised 7,052,050 6,705,050 13,299,975 14,731,747 Less : Consolidation adjustments (17,419,745) (19,256,555) Total accumulated losses (4,119,770) (4,524,808) Company Total accumulated losses of the Company - realised (17,763,844) (16,610,633) - unrealised 4,625,800 4,396,800 Total accumulated losses (13,138,044) (12,213,833) The determination of realised and unrealised profits is based on the Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profit or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by Malaysian Institute of Accountants on 20th December 2010.

103 ANNUAL REPORT 2017 We, Sim Cheng Young and Tan Teck Khong, being two of the directors of Grand Hoover Berhad, do hereby state that, in the opinion of the directors, the financial statements set out on pages 38 to 99 are drawn up in accordance with Financial Reporting Standards issued by the Malaysian Accounting Standards Board and the requirements of the Companies Act, 2016 so as to give a true and fair view of the state of affairs of the Group and of the Company at 30th June 2017 and of the results and the cash flows of the Group and of the Company for the financial year ended on that date. The information set out in Note 44 to the financial statements have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. Signed on behalf of the Board of Directors in accordance with a resolution of the directors 101 Statement by Directors Pursuant to Section 251(2) of the Companies Act, 2016 Sim Cheng Young Tan Teck Khong Shah Alam, Date : 9 th October 2017 Statutory Declaration Pursuant to Section 251(1)(b) of the Companies Act, 2016 I, Tan Teck Khong, NRIC : , being the director primarily responsible for the financial management of Grand Hoover Berhad, do solemnly and sincerely declare that the financial statements set out on pages 38 to 100, to the best of my knowledge and belief, are correct. And, I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared at Kuala Lumpur on 9 th October Tan Teck Khong Before me D. Selvaraj (W 320) Commissioner for Oath

104 102 GRAND HOOVER BERHAD PROPERTIES HELD BY THE GROUP As at Land Area/ Net Book / Date of Built Up Fair Value Existing Revaluation/ Title/Location Description Tenure Area Owner ( 000) Use Acquisition No. 63-1A, 1B & 1C 1 st Floor of a Freehold 6,287 sqft Grand 2,100 Corporate Revalued on Jalan Anggerik Six Storey Hoover office Vanilla T31/T, Shop Office Berhad Kota Kemuning, Section 31, Shah Alam, Selangor Darul Ehsan. No. 63-G, Ground Floor of Freehold 6,358 sqft Grand 4,200 Corporate Revalued on Jalan Anggerik a Six Storey Hoover office Vanilla T31/T, Shop Office Berhad Kota Kemuning, Section 31, Shah Alam, Selangor Darul Ehsan. Part of GRN Converted Freehold 125 Acres Grand 8,745 Vacant Acquired on (Lot5), GRN 212 vacant Land Hoover (Lot347), GRN 213 Berhad (Lot348) and GRN 214 (Lot 349), Mukim Sungai Ular, Daerah Kulim, Kedah. No. 51, Four Storey Freehold 2,997 sqft/ Grand 4,100 Showroom Revalued on Jalan 17/45 Corner 6,600 sqft Hoover & office Petaling Jaya, Shop Office Property Selangor Darul Ehsan. Sdn Bhd No. 46, Jalan 18/2 A Renovated Leasehold 1,875 sqft/ Heap Wah 700 Showroom Revalued on Section 18, Double Storey 16 years 6,720 sqft Enterprise Petaling Jaya, End ( ) Sdn Bhd Selangor Darul Ehsan. Shophouse No. 10, Jalan Four Storey Leasehold 1,680 sqft/ Heap Wah 1,500 Store Revalued on Petaling Utama 9, Intermediate 68 years 6,720 sqft Enterprise Petaling Utama, Shop Office ( ) Sdn Bhd Petaling Jaya, Selangor Darul Ehsan. No.16, Jalan Vacant Land Freehold 11,709 sqft Heap Wah 500 Vacant Revalued on Kesuma 6/10, for Enterprise Bandar Tasik Kesuma, Bungalow Lot Sdn Bhd Beranang, Selangor Darul Ehsan. C-OG-02, Perdana Service Leasehold 1,046 sqft Heap Wah 325 Tenanted Revalued on Selatan, Taman Condominium 76 years Enterprise Serdang Perdana ( ) Sdn Bhd (Seksyen 1), Seri Kembangan, Selangor Darul Ehsan.

105 ANNUAL REPORT Properties Held by the Group As at Land Area/ Net Book / Date of Built Up Fair Value Existing Revaluation/ Title/Location Description Tenure Area Owner ( 000) Use Acquisition Unit No.5A-3-19, 2 units Freehold 721 sqft Heap Wah 230 Tenanted Revalued on 5A-3-20, Low Medium Enterprise Desa Jati 2 Apartment, Cost Sdn Bhd Off Persiaran Perdana Apartments BBN, Bandar Baru Nilai, Nilai, N. Sembilan. Unit No , 5 Storey Freehold 720 sqft Heap Wah 90 Vacant Revalued on Block P2 Pangsapuri Low Medium Enterprise Pinewood Court, Cost Sdn Bhd Pinggiran Lembah Apartment Hijau 8, Bandar Tasik Puteri, Rawang, Selangor. No.11, Persiaran A Single Storey Leasehold 5,591 sqm Heap Wah 8,400 Warehouse Revalued on Pusat Bandar 1, Detached 69 years Enterprise Section 13, Industrial ( ) Sdn Bhd Bandar Baru Building cum Bangi, Selangor. Warehouse C.T. Nos & Two Adjoining Freehold 11.4 Acres Grand 4,000 Vacant Revalued on 25446, Lot Nos Parcels of Hoover & 1926 Mukim of Agricultural Berhad Beranang, District of Land Ulu Langat, Selangor Darul Ehsan. B-12-8, Block B, Apartment Freehold 945 sqft Heap Wah 380 Vacant Revalued on Casa Magna, Enterprise Jalan Prima 10, Kepong, Sdn Bhd Selangor Darul Ehsan. Lot 1389, HS(D)7702, Bungalow Lot Freehold 9,260 sqft Heap Wah 140 Vacant Revalued on PT2621 Enterprise No.1, Jalan Orkid 2B/1, Sdn Bhd Seksyen BB1, Bandar Bukit Beruntung, Rawang, Selangor Darul Ehsan. Lot 1734, HS(D)7702, Bungalow Lot Freehold 8,232 sqft Heap Wah 130 Vacant Revalued on PT2621 Enterprise No.34, Jalan Ros 2, Sdn Bhd Seksyen BB1, Bandar Bukit Beruntung, Rawang, Selangor Darul Ehsan.

106 104 GRAND HOOVER BERHAD Properties Held by the Group As at Land Area/ Net Book / Date of Built Up Fair Value Existing Revaluation/ Title/Location Description Tenure Area Owner ( 000) Use Acquisition Lot 1733, HS(D)7702, Bungalow Lot Freehold 7,174 sqft Heap Wah 110 Vacant Revalued on PT2621 Enterprise No.36, Jalan Orkid 2, Sdn Bhd Seksyen BB1, Bandar Bukit Beruntung, Rawang, Selangor Darul Ehsan. D-01-04, Pangsapuri Service Freehold 757 sqft Heap Wah 285 Vacant Revalued on Servis Springvilla, Apartment Enterprise Jalan UP1/1B, Sdn Bhd Taman Ukay Perdana, Ampang, Selangor Darul Ehsan. G-2-49A, Jalan PJU Apartment Freehold 1,063 sqft Heap Wah 170 Vacant Revalued on 10/10A, Saujana Enterprise Damansara PJU 10, Sdn Bhd Petaling Jaya, Selangor Darul Ehsan. No.B-3A-12A, Block B, Commercial Freehold 834 sqft Heap Wah 230 Vacant Revalued on Jalan Kota/KS 1, Pusat Office Enterprise Perniagaan Prima Klang, Sdn Bhd Klang, Selangor Darul Ehsan. No. A1-1-5, Type A, Condominium Freehold 1,586 sqft Heap Wah 640 Vacant Revalued on Storey No.1, Building Enterprise No.A1, Sdn Bhd Cheras Heights Condominium, Taman Bukit Cheras. 7 pieces of land for Lot Vacant Freehold 3,003 sqft Heap Wah 525 Vacant Revalued on Nos to 15280, Industrial each Enterprise Title Nos. GM5534 Lands Sdn Bhd to GM5536, GM5561, GM5564, GM5567 & GM5553, Mukim of Simpang Kiri, District of Batu Pahat, Johor. 2 Pieces of land for Lot Vacant Freehold 16,609 sqft Heap Wah 500 Vacant Revalued on Nos & 14967, Industrial & Enterprise Title Nos. GM5365 Lands 11,248 sqft Sdn Bhd & GM5366, Mukim of Simpang Kiri, District of Batu Pahat, Johor. H.S.(D).72071, Industrial Leasehold 1,604 sqft Heap Wah 250 Vacant Revalued on Lot P.T.48, Pekan building 76 years Enterprise Batu 23, Sg. Larang ( ) Sdn Bhd No.48, Jln Villaraya ½, Selangor Darul Ehsan.

107 ANNUAL REPORT SHAREHOLDERS INFOATION As at 21 st September 2017 Issued and Paid-up Capital Class of shares Voting Rights : 40,000,000 consisting of 40,000,000 ordinary shares : Ordinary shares : One vote per ordinary share ANALYSIS OF SHAREHOLDINGS Shareholders Shareholdings Size of Shareholdings No. % No. % , , , ,001 10,000 1, ,809, , , ,548, ,001 1,999, ,027, ,000,000 and above ,519, Grand Total 1, ,000, SUBSTANTIAL SHAREHOLDERS (excluding bare trustees) (As per Register of Substantial Shareholders) No. of shares held Direct Interest Indirect Interest Name of Substantial Shareholders No. % No. % Dynamic Merchant Limited 2,333, Sim Cheng Young 11,823, ,151,970## Chuah Hun Leong 6,362, Tan Teck Khong 21, ,400,000^ 6.00 Notes: ## Deemed interest by virtue of his 100% shareholding in Dynamic Merchant Limited pursuant to Section 8 of the Companies Act, 2016 (2,333,333 shares) and Datin Low Ti Ah Lan, his mother s direct shareholding (1,818,637 shares) in the Company. ^ Deemed interest by virtue of his and his spouse s 100% shareholdings in Gigantic Excellence Sdn. Bhd. (1,400,000 shares) and Season Mission Sdn. Bhd. (1,000,000 shares) pursuant to Section 8 of the Companies Act, DIRECTORS SHAREHOLDINGS (As per Register of Directors Shareholdings) No. of shares held Direct Interest Indirect Interest Name of Directors No. % No. % Sim Cheng Young 11,823, ,151,970## Hj Basar Bin Juraimi Yap Chi Keong Tan Teck Khong 21, ,400,000 ^ 6.00 Chai Moi Kim Allan Ngu Kea Ping 880, Notes: ## Deemed interest by virtue of his 100% shareholding in Dynamic Merchant Limited pursuant to Section 8 of the Companies Act, 2016 (2,333,333 shares) and Datin Low Ti Ah Lan, his mother s direct shareholding (1,818,637 shares) in the Company. ^ Deemed interest by virtue of his and his spouse s 100% shareholdings in Gigantic Excellence Sdn. Bhd. (1,400,000 shares) and Season Mission Sdn. Bhd. (1,000,000 shares) pursuant to Section 8 of the Companies Act, 2016.

108 106 GRAND HOOVER BERHAD Shareholders Information As at 21 st September 2017 THIRTY LARGEST SHAREHOLDERS (As per Record of Depositors) No. Name No. of shares held % of total number of issued shares 1. Sim Cheng Young 11,823, Chuah Hun Leong 6,362, Dynamic Merchant Limited 2,333, Kool Triumph Sdn Bhd 1,985, Low Ti Ah Lan 1,818, RHB Capital Nominees (Tempatan) Sdn. Bhd. 1,703, Pledged Securities Account for Pua Meng Hong 7. Eminent Tactics Sdn. Bhd. 1,560, Gigantic Excellence Sdn. Bhd. 1,400, Season Mission Sdn. Bhd. 1,000, Allan Ngu Kea Ping 880, RHB Capital Nominees (Tempatan) Sdn. Bhd. 600, Pledged Securities Account for Yu Kuan Chon (CEB) 12. Tang Lin Tang Yau 353, Alvin Leong Kar Wai 265, Hew Kon Ngow 251, Thean Lan Then Swee Chen 223, MBF Leasing Sdn. Bhd. 198, Nyiam Lee Ping 152, Liau Kim Keong 138, Ng Mee Ling 135, AllianceGroup Nominees (Tempatan) Sdn. Bhd. 127, Pledged Securities Account for Chan Sow Keng ( ) 21. Wong Woon Yee 119, Hoon Ly Mei 115, Ho Tau Tai 100, Ng Kok Yu 100, Lai Thiam Poh 86, Lim Wai Seng 81, RHB Nominees (Tempatan) Sdn. Bhd. 81, Pledged Securities Account for Yu Kuan Chon 28. Kenanga Nominees (Tempatan) Sdn. Bhd. 80, Pledged Securities Account for Hian Bee Geok (015) 29. Maybank Securities Nominees (Tempatan) Sdn. Bhd. 78, Pledged Securities Account for Lee Kuan Yik (REM 613) 30. RHB Nominees (Tempatan) Sdn. Bhd. 72, Pledged Securities Account for Tan Gaik Suan Total 34,226, The thirty largest shareholders refer to the thirty securities account holders having the largest number of securities according to the Record of Depositors (without aggregating the securities from different securities accounts belonging to the same depositor).

109 CDS Account No. Contact No. PROXY FO I/We Company No./ NRIC No. [new] [old] of being [a] member[s] of GRAND HOOVER BERHAD do hereby appoint: NRIC No. [new] [old] of and / or failing whom NRIC No. [new] [old] of or failing whom THE CHAIAN OF THE MEETING, as my/our proxy to attend and vote for me/us on my/our behalf at the FORTY-SIXTH ANNUAL GENERAL MEETING of the Company, to be held at Danau Room, Kota Permai Golf & Country Club, No. 1, Jalan 31/100A, Kota Kemuning, Section 31, Shah Alam, Selangor Darul Ehsan on Wednesday, 27 th December 2017 at 9.30 a.m. and at any adjournment thereof in the manner indicated below No. Ordinary Resolution For Against 1 Adoption of Reports and Audited Financial Statements 2 Payment of Directors fees 3 Payment of Directors benefits 4 Re-election of Director : Mr. Sim Cheng Young 5 Re-election of Director : Mr. Tan Teck Khong 6 Re-appointment of Auditors 7 Authority to Directors to allot and issue shares 8 Retention of Independent Non-Executive Director : Tuan Hj. Basar Bin Juraimi 9 Retention of Independent Non-Executive Director : Mr. Yap Chi Keong [Please indicate with an X in the spaces provided whether you wish your votes to be cast for or against the resolutions. Unless otherwise instructed, the proxy may vote as he thinks fit.] No. of Shares Held Dated this day of 2017 Signature[s] / Common Seal of member[s] For appointment of two proxies, percentage of shareholdings to be represented by proxies: No. of shares Percentage Proxy 1 Proxy 2 Total 100% NOTES: 1. A member whose name appears in the Record of Depositors as at 20 th December 2017 shall be regarded as a member entitled to attend, speak and vote at the meeting. 2. A member entitled to attend and vote at the meeting is entitled to appoint any person as his proxy to attend, speak and vote instead of him. 3. The instrument appointing a proxy must be deposited at the Registered Office of the Company at No. 63-G, Jalan Anggerik Vanilla T31/T, Kota Kemuning, Section 31, Shah Alam, Selangor Darul Ehsan, not less than fortyeight (48) hours before the time set for holding the meeting or any adjornment thereof. 4. A member shall be entitled to appoint more than one (1) 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 specifies the proportions of his holdings to be represented by each proxy. 5. If the appointer is a corporation, the proxy form must be executed under its seal or under the hand of its attorney duly authorised. 6. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

110 Fold this flap for sealing Then fold here The Company Secretaries Affix Stamp GRAND HOOVER BERHAD (10493-P) No. 63-G, Jalan Anggerik Vanilla T31/T, Kota Kemuning, Section 31, Shah Alam, Selangor Darul Ehsan First fold here

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112 IV GRAND hoover berhad No.63-G, Jalan Anggerik Vanilla T31/T, Kota Kemuning, Section 31, Shah Alam, Selangor Darul Ehsan. (Co. No P)