ANNUAL REPORT 2017 FROM VISION TO ACHIEVEMENT

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1 FROM VISION TO ACHIEVEMENT

2 IN FY 2017*, ECOFIRST SHARPENED ITS FOCUS ON BUILDING A STEADY AND RECURRING INCOME THAT WILL ENABLE US TO SUSTAIN AND EXPAND OUR OPERATIONS OVER THE LONGER TERM. WE LAID THE FOUNDATIONS FOR THE SUCCESSFUL LAUNCH OF OUR AMPANG UKAY TOWNSHIP, WHICH IS NOW EXPECTED TO DRIVE OUR DEVELOPMENT OVER THE NEXT 12 TO 15 YEARS. *FINANCIAL YEAR ENDED 31 MAY 2017 COVER RATIONALE The cover design of our annual report expresses the theme of progress from vision to achievement. Within the growth spiral are images of our developments, the vibrant colours symbolising the energy and drive in to everything we do. Meanwhile, the spiral is set against a starry sky, reflecting our attitude of the sky s the limit.

3 TABLE OF CONTENTS OUR VISION & MISSION 2 CORPORATE INFORMATION 3 NOTICE OF FORTY-FOURTH ANNUAL GENERAL MEETING 4 STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING 9 CHAIRMAN S STATEMENT 12 GROUP CHIEF EXECUTIVE OFFICER S MANAGEMENT DISCUSSION AND ANALYSIS 18 BOARD OF DIRECTORS 24 DIRECTORS PROFILE 25 MANAGEMENT TEAM 32 FIVE-YEAR GROUP STATISTICS 36 CORPORATE GOVERNANCE STATEMENT 37 STATEMENT OF DIRECTORS RESPONSIBILITY IN PREPARING THE ANNUAL FINANCIAL STATEMENTS 46 OTHER INFORMATION 47 AUDIT COMMITTEE REPORT 48 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL 50 FINANCIAL STATEMENTS 53 PARTICULARS OF GROUP PROPERTIES 114 ANALYSIS OF SHAREHOLDINGS 115 ANALYSIS OF WARRANT HOLDINGS 118 FORM OF PROXY

4 OUR VISION & MISSION ECOFIRST CONSOLIDATED BHD (15379-V) OUR VISION We aspire to be the leading, successful pioneers and builders of innovative businesses in the region. OUR MISSION Leveraging on the experience and expertise amassed over the years and constantly acquiring new knowledge, we strive to achieve successes in our business undertakings. We are committed to delivering exceptional value to our customers, business partners, shareholders and other stakeholders. 2

5 CORPORATE INFORMATION ECOFIRST CONSOLIDATED BHD (15379-V) BOARD OF DIRECTORS CHAIRMAN/INDEPENDENT NON-EXECUTIVE DIRECTOR Dato Syed Ariff Fadzillah Bin Syed Awalluddin PRESIDENT/EXECUTIVE DIRECTOR Dato (Dr) Teoh Seng Foo GROUP CHIEF EXECUTIVE OFFICER/EXECUTIVE DIRECTOR Dato Tiong Kwing Hee INDEPENDENT NON-EXECUTIVE DIRECTOR Dato Amos Siew Boon Yeong INDEPENDENT NON-EXECUTIVE DIRECTOR Dato Boey Chin Gan INDEPENDENT NON-EXECUTIVE DIRECTOR Ng Hock Heng ALTERNATE DIRECTOR TO DATO (DR) TEOH SENG FOO Dato Teoh Seng Kian COMPANY SECRETARIES Yeoh Chong Keat (MIA 2736) Tan Fong Shian (MAICSA ) AUDITORS Russell Bedford LC & Company 10th Floor, Bangunan Yee Seng 15, Jalan Raja Chulan Kuala Lumpur SHARE REGISTRAR Symphony Share Registrars Sdn Bhd Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/ Petaling Jaya Selangor Darul Ehsan Tel : Fax : /8152 REGISTERED OFFICE Suite 11.1A, Level 11 Menara Weld 76 Jalan Raja Chulan Kuala Lumpur Tel : Fax : / STOCK EXCHANGE LISTING Bursa Malaysia Securities Berhad Main Market WEBSITE 3

6 NOTICE OF FORTY-FOURTH ANNUAL GENERAL MEETING ECOFIRST CONSOLIDATED BHD (15379-V) NOTICE IS HEREBY GIVEN that the Forty-Fourth Annual General Meeting of the Company will be held at Ballroom 1, Level 5, Summit Hotel Subang USJ, Persiaran Kewajipan USJ 1, UEP Subang Jaya, Selangor Darul Ehsan on Friday, 27 October 2017 at 2.30 p.m. to transact the following business:- AGENDA ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the financial year ended 31 May 2017 together with the Directors and Auditors Reports thereon. 2. To approve the payment of Directors fees for the financial year ended 31 May To approve the payment of Directors benefits and allowances of up to RM35,000 from 1 January 2017 until the conclusion of the next annual general meeting of the Company. (See Explanatory Notes) (Resolution 1) (Resolution 2) 4. To re-elect the following Directors who retire by rotation pursuant to the Company s Constitution and being eligible, have offered themselves for re-election:- 4.1 Dato Tiong Kwing Hee 4.2 Dato Boey Chin Gan 5. To re-appoint Messrs Russell Bedford LC & Company as the Company s Auditors for the ensuing year and to authorise the Directors to fix their remuneration. (Resolution 3) (Resolution 4) (Resolution 5) SPECIAL BUSINESS To consider and if thought fit, to pass, with or without modifications, the following Ordinary Resolutions:- 6. ORDINARY RESOLUTION Retention of Dato Syed Ariff Fadzillah Bin Syed Awalluddin as Independent Non- Executive Director (Resolution 6) THAT Dato Syed Ariff Fadzillah Bin Syed Awalluddin be and is hereby retained and continue to act as an Independent Non-Executive Director of the Company until the conclusion of the next Annual General Meeting, subject to the provisions of the relevant regulatory authorities. 7. ORDINARY RESOLUTION Retention of Dato Amos Siew Boon Yeong as Independent Non-Executive Director (Resolution 7) THAT Dato Amos Siew Boon Yeong be and is hereby retained and continue to act as an Independent Non-Executive Director of the Company until the conclusion of the next Annual General Meeting, subject to the provisions of the relevant regulatory authorities. 8. ORDINARY RESOLUTION Authority to Allot and Issue Shares pursuant to Sections 75 and 76 of the Companies Act, 2016 (Resolution 8) THAT pursuant to Sections 75 and 76 of the Companies Act, 2016 and subject to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and the approvals of the relevant governmental and/or regulatory authorities (if any), the Directors be and are hereby empowered to allot and issue new shares in the Company, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this 4

7 NOTICE OF FORTY-FOURTH ANNUAL GENERAL MEETING ECOFIRST CONSOLIDATED BHD (15379-V) resolution does not exceed ten percent (10%) of the total number of issued shares of the Company at the time of issue; AND THAT the Directors be also empowered to obtain the approval of Bursa Securities for the listing of and quotation for the additional shares so issued; AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company. 9. ORDINARY RESOLUTION Proposed Renewal of and New Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature ( Proposed Renewal of RRPT Mandate ) (Resolution 9) THAT authority be and is hereby given in line with Paragraph of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad for the Company and/or its subsidiaries to enter into any of the transactions falling within the types of the Recurrent Related Party Transactions, particulars of which are set out in Part A of the Circular/Statement to Shareholders dated 29 September 2017, with the Mandated Related Party as described in the said Circular/Statement, provided that such recurrent transactions are of revenue or trading nature, which are necessary for the day-to-day operations of the Company and/or its subsidiaries within the ordinary course of business of the Company and/or its subsidiaries, made on an arm s length basis and on normal commercial terms which are generally available to the public and are not detrimental to the minority shareholders of the Company; AND THAT such authority shall commence immediately upon the passing of this resolution until:- i. the conclusion of the next Annual General Meeting ( AGM ) of the Company at which time the authority shall lapse, unless by Ordinary Resolution passed at a general meeting whereby the authority is renewed; or ii. iii. the expiration of the period within which the next AGM of the Company after that date is required to be held pursuant to Section 340(2) of the Companies Act, 2016 ( the Act ) (but must not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or revoked or varied by a resolution passed by the shareholders of the Company at a general meeting, whichever is earlier. AND FURTHER THAT the Directors of the Company be and are hereby authorised to do all acts, deeds and things as may be deemed fit, necessary, expedient and/ or appropriate in order to implement the Proposed Renewal of RRPT Mandate with full power to assent to all or any conditions, variations, modifications and/ or amendments in any manner as may be required by any relevant authorities or otherwise and to deal with all matters relating thereto and to take all such steps and to execute, sign and deliver for and on behalf of the Company all such documents, agreements, arrangements and/or undertakings, with any party or parties and to carry out any other matters as may be required to implement, finalise and complete, and give full effect to the Proposed Renewal of RRPT Mandate in the best interest of the Company. 10. ORDINARY RESOLUTION Proposed Renewal of Share Buy-Back Authority (Resolution 10) THAT subject to the provisions of the Companies Act, 2016 ( the Act ), the Company s Constitution, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and the approvals of all relevant governmental and/or regulatory authorities, the Company be and is hereby authorised to purchase such 5

8 NOTICE OF FORTY-FOURTH ANNUAL GENERAL MEETING ECOFIRST CONSOLIDATED BHD (15379-V) number of ordinary shares of the Company as may be determined by the Directors of the Company from time to time through Bursa Securities, upon such terms and conditions as the Directors may deem fit in the best interest of the Company provided that:- i. the aggregate number of shares to be purchased does not exceed ten percent (10%) of the total number of issued shares of the Company ( Purchased Shares ) at the point of purchase(s); ii. iii. the maximum funds to be allocated by the Company for the purpose of purchasing the Purchased Shares shall not exceed the retained profits of the Company at the time of the purchase(s); the authority conferred by this resolution will commence immediately upon passing of this resolution and will continue to be in force until:- a. the conclusion of the next Annual General Meeting ( AGM ) of the Company at which time the authority shall lapse, unless by Ordinary Resolution passed at a general meeting, whereby the authority is renewed; or b. the expiration of the period within which the next AGM of the Company after that date is required to be held pursuant to Section 340(2) of the Act (but must not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or c. revoked or varied by a resolution passed by the shareholders of the Company at a general meeting, whichever is earlier. iv. upon the completion of the Proposed Renewal of Share Buy-Back Authority, the Directors be and are hereby empowered to:- a. cancel or retain as treasury shares, any or all of the Company s shares so purchased; or b. resell on Bursa Securities; or c. distribute as dividends to the Company s shareholders; or d. subsequently cancel, any or all of the treasury shares; or any combination of the above (a), (b), (c) and (d). AND THAT authority be and is hereby unconditionally and generally given to the Directors of the Company, to take all such steps as are necessary or expedient to implement, finalise and give full effect to the purchase of the Company s own shares, with full power to assent to any conditions, modifications, variations and/or amendments as may be imposed by the relevant authorities and with full power to do all such acts and things thereafter in accordance with the Act, the provisions of the Company s Constitution and the guidelines issued by Bursa Securities and any other relevant authorities. BY ORDER OF THE BOARD YEOH CHONG KEAT (MIA 2736) TAN FONG SHIAN (MAICSA ) Secretaries Kuala Lumpur 29 September

9 NOTICE OF FORTY-FOURTH ANNUAL GENERAL MEETING ECOFIRST CONSOLIDATED BHD (15379-V) Notes relating to Proxy:- i. In respect of deposited securities, only members whose names appear in the Record of Depositors on 20 October 2017 shall be eligible to attend, speak and vote at this meeting. A member shall be entitled to appoint not more than one (1) proxy to attend, speak and vote at this meeting. ii. iii. iv. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) 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. If the appointor is a corporation, this Form of Proxy must be executed under its common seal or under the hand of an officer or attorney duly authorised. To be valid, the original Form of Proxy, duly completed must be deposited at the registered office of the Company at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or at any adjournment thereof. v. The Personal Data Protection Act 2010, which regulates the processing of personal data in commercial transactions, applies to the Company. By providing to us or our agents your personal data which may include your name, contact details and mailing address, you hereby consent, agree and authorise the processing and/or disclosure of any personal data of or relating to you for the purposes of issuing the notice of this meeting and convening the meeting, including but not limited to preparation and compilation of documents and other matters, whether or not supplied by you. You further confirm to have obtained the consent, agreement and/or authorisation of all persons whose personal data you have disclosed and/or processed, in connection with the foregoing. 7

10 NOTICE OF FORTY-FOURTH ANNUAL GENERAL MEETING ECOFIRST CONSOLIDATED BHD (15379-V) Explanatory Notes:- 1. Audited Financial Statements for the financial year ended 31 May 2017 ( AFS ) The AFS is meant for discussion only as under the provisions of Section 340(1)(a) of the Companies Act, 2016 ( the Act ) and Article 67 of the Company s Constitution, the AFS do not require the formal approval of shareholders. Hence the matter will not be put forward for voting. 2. Ordinary Resolutions 6 & 7 Retention as Independent Non-Executive Directors Dato Syed Ariff Fadzillah Bin Syed Awalluddin ( Dato Syed Ariff ) and Dato Amos Siew Boon Yeong ( Dato Amos ), who have served the Board as Independent Non-Executive Directors for a tenure of exceeding nine (9) years, will be retained as Independent Directors if the Ordinary Resolutions 6 & 7 are passed. The Board, after having assessed the independence of Dato Syed Ariff and Dato Amos, considers them to be independent and recommends that Dato Syed Ariff and Dato Amos be retained as Independent Non-Executive Directors of the Company. The details of their assessment and justifications are contained in the Corporate Governance Statement of the Annual Report Ordinary Resolution 8 - Authority to Allot and Issue Shares pursuant to Sections 75 and 76 of the Act The proposed Ordinary Resolution 8, if passed, will renew the authority given to the Directors of the Company to allot and issue new shares in the Company pursuant to Sections 75 and 76 of the Act ( General Mandate ), provided that the number of shares issued pursuant to this General Mandate, when aggregated with the number of shares issued during the preceding twelve (12) months, does not exceed ten percent (10%) of the total number of issued shares of the Company at the time of issue. This General Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next annual general meeting ( AGM ) of the Company. The purpose to seek the General Mandate is to enable the Company to raise funds expeditiously for the purpose of funding future investment, working capital and/or acquisition(s) without having to convene a general meeting to seek shareholders approval when such opportunities or needs arise. The Company did not issue any new shares pursuant to the general mandate obtained at the Forty-Third AGM of the Company held on 25 October Ordinary Resolution 9 Proposed Renewal of RRPT Mandate Shareholders are advised to refer to the Proposed Renewal of RRPT Mandate set out in Part A of the Circular/Statement dated 29 September 2017, which is circulated together with the Annual Report Ordinary Resolution 10 Proposed Renewal of Share Buy-Back Authority Shareholders are advised to refer to the Proposed Renewal of Share Buy-Back Authority set out in Part B of the Circular/Statement dated 29 September 2017, which is circulated together with the Annual Report

11 STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING Further details of the following Directors standing for re-election are set out in the Directors Profile Section of the Annual Report 2017:- a. Dato Tiong Kwing Hee b. Dato Boey Chin Gan 9

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13 DRIVING REVENUE Our 87-acre, Ampang Ukay mixed development township will be sited on one of the few remaining large tracts of freehold land in the Klang Valley. March 2017 saw the launch of Phase 1 of the project, known as the Liberty@Ampang Ukay, saw an encouraging sales uptake close to 90% of the units have been sold.

14 CHAIRMAN S STATEMENT ECOFIRST CONSOLIDATED BHD (15379-V) DEAR VALUED SHAREHOLDERS, On behalf of the Board of Directors, I am proud to report that EcoFirst Consolidated Bhd ( EcoFirst/the Group ) has once again maintained its profitable track record for the financial year ended 31 May 2017 ( FY 2017 ). This is a reflection of the Group s commitment to a disciplined and prudent approach in striving for consistent operating growth and performance since its restructuring in 2010, thereby chalking up its seventh consecutive year of profitability for the company. DATO SYED ARIFF FADZILLAH BIN SYED AWALLUDDIN CHAIRMAN 12

15 CHAIRMAN S STATEMENT ECOFIRST CONSOLIDATED BHD (15379-V) INCREASE IN REVENUE TO NET PROFIT FROM RM16.06 MILLION SOAR TO RM16.71 MILLION FOR THE FINANCIAL YEAR ENDED 31 MAY 2017 RM MILLION 4% We posted a 5% increase in revenue to RM million, achieving a commendable annual net profit of RM16.71 million despite higher marketing and other expenses, compared to RM16.06 million in the previous financial year. Through our commitment of delivering beyond our customers and stakeholders expectations, we completed the Upper East@Tiger Lane ( Upper East ) project in Ipoh, Perak ahead of time by five months. The earlier than expected billings received from this project was instrumental in rounding up our financial year on a strong note compared to its preceding three quarters, driving overall revenue up to RM million compared to RM million in the previous financial year. The first phase of our ongoing development called Liberty@Ampang Ukay ( Liberty ) contributed 34% to our overall revenue. Operational contribution to the Group was derived mainly from the Upper East project in Ipoh and Liberty project in Ampang Ukay, followed by recurring income from the two malls owned by EcoFirst during the financial year under review, which is South City Plaza in Seri Kembangan, Selangor and 1Segamat Mall in Segamat, Johor. A detailed discussion on EcoFirst s business and financial performance can be found in the Group Chief Executive Officer s Management Discussion and Analysis Section included in this Annual Report. Perseverance amid a challenging landscape A weaker ringgit, rising cost of living, low oil and volatile commodity prices, as well as geopolitical tensions continued to leave its mark on FY Stringent loan requirements from financial institutions caused a drop in the number of property transactions for the year, but this has led the market to consist of more genuine purchasers without as great a speculative sentiment as during the boom period. Property prices, while stable, are increasing due to higher material costs and implementation of the Goods and Services Tax that was introduced in April This has led to potential buyers and investors remain on the sidelines. Against this landscape, the construction sector performed rather modestly driven by large infrastructure projects such as the mass rapid transit project. Despite these headwinds that applied pressure on the property sector environment, EcoFirst remained committed and focused on delivering results and quality to our customers and our stakeholders. We held steadfast to our driving proposition of developing concepts that are relevant to our target customers. To do this, we always ensure that we keep our pulse on the ground to understand our customers demands and requirements and work towards ensuring our concepts will meet their needs for today and tomorrow. Paramount to this strategy is to ensure that location is always prime and strategic. This approach is instrumental in EcoFirst weathering the subdued sentiments of purchasers, as the Group has been able to offer genuine buyers the right products in the right place at the right price. This approach is evident by the strong demand for Liberty, which comprises three residential towers atop 32 retail units in Ampang Ukay@Ulu Kelang. Liberty comprises well-priced starter homes designed to appeal to young modern professionals who want to live in the vicinity of well-heeled neighbourhoods yet be easily connected to the city centre. The first phase of this project commanded strong purchasers interest, which contributed RM43.74 million in sales which is 34% of the Group s revenue for FY I am pleased to note that we have sold close to 90% of the first phase as at end August Likewise, the well-received luxury condominium development called Upper East in Ipoh was completed ahead of time by five months due to meticulous planning and dedication to keeping to an ambitious timeline, without compromising on quality and workmanship. This project contributed 43% to the Group s revenue for the year under review, which amounts to RM55.32 million. Through efforts undertaken since 2010 to revitalise the Group-owned shopping malls, we have been in a position to realise the value of our reinvigorated 1Segamat Mall for a cash consideration of RM104.0 million offered by MTrustee Berhad (formerly known as AmTrustee Berhad), the trustee of Hektar Real Estate Investment Trust. This disposal will allow the Group to redirect the capital to facilitate other investment requirements. 13

16 CHAIRMAN S STATEMENT ECOFIRST CONSOLIDATED BHD (15379-V) The other mall under the Group s purview, which is the South City Plaza in Seri Kembangan, enjoys revitalised attention arising from the improvement plans that have been put in place over the last six years. This mall is slated to continue generating higher recurring rental income, already posting an increased revenue of RM12.57 million, from RM9.90 million in the previous financial year. On track to building value, delivering growth and performance We pride ourselves on having a clear understanding of what our target market requires. Our strategic approach is to capitalise on the underserved segment of affordable housing that is well designed, situated in prime locations and priced attractively to this target market at below RM500,000. We believe that we are in a good position to meet the growing demand of the middle-income earners for affordable homes. Given the overwhelming response to Phase 1 of Liberty, we are confident that the second phase of this development will receive as good a response when it is launched at the end of Ampang Ukay s multi-phased development project with a Gross Development Value (GDV) of more than RM5 billion will stand EcoFirst in good stead to deliver on sustainable growth and performance for the next 12 to 15 years. In realising our aspiration to create sustainable value to our stakeholders and deliver results that exceed expectations, it goes without saying that investment in our people remains the cornerstone of our success. We take an assessment approach in providing the right training to support our people in their up skilling needs. Throughout the year, our people have embarked on various technical and skills training to be better equipped to play their important roles within the organisation. AMPANG UKAY S MULTI- PHASED DEVELOPMENT PROJECT WITH A GROSS DEVELOPMENT VALUE (GDV) OF MORE THAN RM5 BILLION WILL STAND ECOFIRST IN GOOD STEAD TO DELIVER ON SUSTAINABLE GROWTH AND PERFORMANCE FOR THE NEXT 12 TO 15 YEARS. I am also proud of EcoFirst s commitment to the wellbeing of the community. Throughout the year, the Group has utilised its assets to lend the community a regular venue to conduct their charity events and social affairs. The South City Plaza and the 1Segamat Mall have been regularly used to benefit the community through collaborations with the National Kidney Foundation of Malaysia, St. John Ambulance Malaysia, and other health institutions to co-organise free health screenings and blood donation campaigns. Other events such as patriotic singing and debate competitions for Malaysia Day, Children Rights Awareness campaign and St. Johns Ambulance home nursing course were also hosted at our malls as a way of demonstrating our support for child safety and education. Our employees have also proactively organised and volunteered their time to visit with the aged community at the Ampang Old Folk s Home, raising funds for necessities and treats. We will continue to support our community as we forge ahead together. Looking ahead The year ahead will continue to be challenging arising from uncertainties on the global economic and geopolitical fronts. However, domestic demand is expected to remain sustained while the Ringgit continues to stabilise and growth for the country is expected to be positive. LIBERTY@AMPANG UKAY LIBERTY@AMPANG UKAY 14

17 CHAIRMAN S STATEMENT ECOFIRST CONSOLIDATED BHD (15379-V) On the property front, loans growth is expected to be subdued as stringent requirements are upheld to manage high debt service ratios. Cautious sentiment among buyers persists and they remain concerns on perceived oversupply of properties. We remain positive on this sector as the government continues to lend support to large infrastructuredriven projects under its Economic Transformation Programme, as well as efforts to boost ownership for affordable housing. We are well placed to capitalise on the connectivity that is being realised through government infrastructure projects and efforts at boosting homeownership, by being in the position to offer homebuyers well-designed homes in prime locations that are well priced. The Group will continue to remain vigilant on opportunities to acquire and develop prime land bank prospects through acquisition or partnerships opportunities. We will take a mindful approach in mitigating and managing the challenges that will come our way. Barring any unforeseen circumstances, the Group is expected to deliver satisfactory performance for the financial year ending 31 May Acknowledgements The challenges of the coming year cannot be underestimated. The many accomplishments that we have achieved so far have stood us in good stead to create a brand that remains attractive to our investors, offering them good value for the long-term. OLD FOLK S HOME As a Group, we are determined to meet the challenges of the market through adopting a measured approach in order to continue delivering and exceeding the expectations of our customers and stakeholders. At EcoFirst, we are proud to have a dedicated team of people who thrive on challenges, and who will never give less than their best. The Board and I would like to thank the team at EcoFirst, led by the very able Group Chief Executive Officer, Dato Tiong Kwing Hee. I would also like to accord our highest appreciation to our customers, our shareholders, bankers, business associates and regulators. Your support fuelled our enthusiasm to deliver the results we charted this year. Finally, my appreciation goes to the Board for their continued guidance and support. As we continue to navigate the future ahead, we will remain focused on delivering beyond expectations to create sustainable value for the long-term. OLD FOLK S HOME CARE & HOPE FOR THE CHILDREN@SOUTH CITY PLAZA 15

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19 BUILDING CONSISTENCY The goal of our Property Investment Division, which owns the South City Plaza retail mall in Seri Kembangan, is to boost shareholders value by generating a regular and reliable income stream. In FY 2017, the mall once again delivered an enhanced contribution to Group s revenue and profit.

20 GROUP CHIEF EXECUTIVE OFFICER S MANAGEMENT DISCUSSION AND ANALYSIS WE REMODELLED THE COMPANY TO BE BETTER EQUIPPED TO FACE CHALLENGES AND CAPITALISE ON OPPORTUNITIES TO CREATE VALUE FOR THE GROUP, ITS CUSTOMERS AND SHAREHOLDERS. DATO TIONG KWING HEE GROUP CHIEF EXECUTIVE OFFICER 18

21 GROUP CHIEF EXECUTIVE OFFICER S MANAGEMENT DISCUSSION AND ANALYSIS Overview of Group s business and operations EcoFirst Consolidated Bhd ( EcoFirst/the Group ) is a diversified company in property development, property investment, property management as well as investment and others. The Company has transformed itself from a loss-making entity into a vibrant, profitable Company since 2011, focused now on driving sustainable growth and performance. We remodelled the Company to be better equipped to face challenges and capitalise on opportunities to create value for the Group, its customers and shareholders. We are committed to delivering value to our stakeholders through our core business in property development by creating thriving residential and commercial enclaves in sought after neighbourhoods. We have successfully delivered on a wide range of property types, including residential units, commercial centres and retail malls. The Company has had a presence in Malaysia since 1973 and is listed on the Main Board of Bursa Malaysia Securities Berhad since The Group has a presence in Klang Valley and Perak with two ongoing projects. In Klang Valley, EcoFirst is developing an 87-acre freehold land in Ampang Ukay for a mixed development project for affordable and starter home properties, which is expected to fuel our growth over the next 12 to 15 years. In Ipoh, we have just completed and delivered a 7.6-acre freehold luxury residential condominium project in a sought after neighbourhood of Tiger Lane. Both these projects are key demonstrations of our drive for sustainable growth for the long-term. Group financial performance review Against a challenging economic environment that underscored the financial year ended 31 May 2017 ( FY 2017 ), EcoFirst grew its revenue by 5% to RM million for the FY 2017, compared to RM million in the previous financial year. Our increased revenue was driven by growth mainly in our business segments, which are the property development, property investment and property management. Key revenue driver for the Group was from our property development segment, which contributed 78% to EcoFirst s overall revenue at RM99.06 million. The main contributor to the revenue came from the early completion of the Upper East@Tiger Lane ( Upper East ) luxury condominium project in Ipoh, Perak, as well as the strong sales and commencement of billings from the development of Phase 1 of Ampang Ukay which is known as Liberty@Ampang Ukay ( Liberty ). The 529 units luxury condominium at the Upper East project and the 1,632 SOHO units of Liberty project contributed 43% and 34% of the Group s revenue respectively. UPPER EAST@TIGER LANE The two shopping malls belonging to the Group, South City Plaza in Seri Kembangan, Selangor and 1Segamat Mall in Segamat, Johor, contributed recurring income of 20% of total revenue to the Group through leases and rentals. In line with the increase in revenue, net profit was higher at RM16.71 million for the FY 2017, from RM16.06 million in the previous financial year. The Group s profit before tax increased marginally by RM0.18 million to RM20.43 million for FY 2017 by 1% compared to RM20.25 million recorded in the financial year ended 31 May 2016 ( FY 2016 ). This was due to accretion in fair value of investment properties of RM7.14 million despite recognition of all marketing expenses of RM15.28 million which was incurred during the early stages of the development of Liberty. The 1Segamat Mall is currently in the process of being acquired by MTrustee Berhad (formerly known as AmTrustee Berhad) the trustee of Hektar Real Estate Investment Trust ( Hektar REIT ). The disposal, for a cash consideration of RM104.0 million, is expected to contribute to the Group s performance in the first quarter of financial year ending 31 May 2018 ( FY 2018 ) as the disposal is targeted to be completed by September

22 GROUP CHIEF EXECUTIVE OFFICER S MANAGEMENT DISCUSSION AND ANALYSIS SEGMENTAL REVIEW Property Development Performance Review The property development segment of EcoFirst is the core revenue driver for the Group, and contributed 78% to the Group s overall revenue at RM99.06 million. As a boutique developer of choice, we take pride in our understanding of the market requirements and our ability to tailor our offerings to ensure that we adequately meet their demands. Securing prime and desired location is key to our strategy, and we are proud to be able to have acquired notable locations in Klang Valley and in Perak, to be able to offer our customers homes catered for the relevant demographics, including starter homes and luxury residences. Liberty is expected to contribute significantly to the Group s performance in the ensuing period as construction works progress accordingly and sale of the property increases. Phase two of Ampang Ukay@Ulu Kelang comprising 378 units of affordable homes with a GDV of RM500 million is expected to be launched earlier than we planned as the overall progress of the initial phase of this development is progressing well ahead of schedule. The third phase, which will be a fully commercial development with a projected GDV exceeding RM1 billion, is expected to be launched in mid Each phase is expected to take about three and a half to four years to complete. Ampang Ukay@Ulu Kelang The main driver of growth for the Group for the next 12 to 15 years lies in the flagship Ampang Ukay@ Ulu Kelang which will be developed on two adjacent parcels of freehold land measuring 87 acres in total; one parcel of 62 acres was acquired earlier in FY 2017, and acquisition of the adjoining parcel of 25 acres will be completed by September This mixed development project with a GDV of more than RM5 billion is located strategically on the border of Ampang township. Ampang is centrally connected to Kuala Lumpur City Centre and other major areas such as Hartamas and Damansara, and is accessible via four major highways: the MRR2, AKLEH, DUKE, and upcoming SUKE highways. This mixed development project is aimed at the affordable market segment, being well-priced starter homes for first time homebuyers. Its multiple access points and instant connectivity is key to its appeal to purchasers. The first phase of this development is called Liberty@ Ampang Ukay and is a mixed residential and retail development with three residential blocks of 1,632 SOHO units and 32 retail units with a GDV of RM606.8 million. Liberty was launched in March 2017, and despite the soft property market sentiments in Malaysia, saw an encouraging sales uptake of 58% of units sold as at the end of FY 2017, ramping up close to 90% sold by end August We recorded sales of RM43.74 million from Liberty as at end FY 2017, which contributed 34% to total revenue. The strong sales response is attributed to the prime freehold land that is centrally located. The units are also reasonably priced at RM750 per sq. ft., and are well catered to the first time and starter homebuyers. UPPER EAST@TIGER LANE 20

23 GROUP CHIEF EXECUTIVE OFFICER S MANAGEMENT DISCUSSION AND ANALYSIS Upper East@Tiger Lane Our development in Ipoh, Perak called Upper East, which is located on 7.6 acres of freehold land, contributed well to our financial performance for the financial year under review. This luxury residential project in the centre of Ipoh consists of 529 high-end condominium units spread over five 12-storey blocks building has a GDV of RM302 million. It is targeted at the middle to upper income buyers and has been very well received, with 76% of the units sold as at the end of FY To drive growth, our strategy is location, product timing, and branding. As part of our branding, we aim to deliver sustainable returns and superior results that exceed expectations. Central to this is speed, which is crucial to improving our turnaround and cash flow without compromising on quality. To that end, we are proud to have completed Upper East five months ahead of schedule and received the Certificate of Completion and Compliance, which saw revenue contribution from sales amounting to RM55.32 million. This represents 43% of revenue contribution to overall Group revenue. With delivery of vacant possession on Upper East in the first quarter of FY 2018, contribution is expected to be moderate in the ensuing period from the final billings for sold units and sales of unsold units. WE ARE PROUD TO HAVE COMPLETED UPPER EAST FIVE MONTHS AHEAD OF SCHEDULE AND RECEIVED THE CERTIFICATE OF COMPLETION AND COMPLIANCE Property Investment Performance Review EcoFirst s property investment portfolio is managed by its subsidiaries Pujian Development Sendirian Bhd and Tashima Development Sdn Bhd, for South City Plaza and 1Segamat Mall respectively. Our objective is to generate a steady stream of recurring income from leases and rental through these two fully operational retail malls. Both these shopping malls have contributed revenue of RM24.93 million for the year under review, an improvement of 14% compared to the previous year s revenue of RM21.91 million. Operating profits almost doubled to RM19.40 million from FY 2016 s RM10.31 million, an increase of 88% arising from refurbishment efforts and improvements to its retail layout. South City Plaza The South City Plaza in Seri Kembangan, Selangor is a five-storey mall which includes two blocks of residential apartments. The ongoing upgrades and improvement efforts that have been instituted over the past few years are bearing results today, as the mall boasts a stronger tenant mix and rental income, with an improving occupancy rate of 93%. The mall houses the country s largest digital device accessory centre and is also a popular spot for China porcelain, antiques and tea traders. SOUTH CITY PLAZA@SERI KEMBANGAN 21

24 GROUP CHIEF EXECUTIVE OFFICER S MANAGEMENT DISCUSSION AND ANALYSIS Property Management Performance Review Our property management segment manages the operations of the South City Plaza in Seri Kembangan. Our role includes regulating and handling tenant mix, managing effective use of space and maintenance. Our operating revenue for the property management arm for the year under review was RM2.64 million, with a profit before tax of RM610,000. This is an increase of 291% from the previous financial year due to higher management rate. 1SEGAMAT MALL@SEGAMAT 1Segamat Mall The 1Segamat Mall is in its sixth year of operation and enjoys full occupancy arising from the transformative efforts undertaken to complete the development, coupled by its strategic location next to the town s bus terminal which enables it to enjoy good traffic flow of shoppers and commuters. We have undertaken the decision to realise the value of this investment through disposal of the mall to Hektar REIT for a cash consideration of RM104.0 million. The sale of 1Segamat Mall will allow us to monetise our investment in order to re-invest the proceeds in the higher yielding property development sector focusing on Ampang Ukay development. While we expected the 1Segamat Mall sale to be concluded in the beginning of 2017 so that the gains could be reflected in the FY 2017 performance, the sale has not yet been concluded due to administrative delays. We expect that the sale and purchase agreement will be concluded by September We expect the disposal of 1Segamat Mall to contribute to the Group s performance in the first quarter of FY 2018 and as such, recurring rental income under the Property Investment Division shall be solely from the operations of the retail mall in South City Plaza, Seri Kembangan from the second quarter of FY 2018 onwards. Investment and Others Performance Review Our investment and others operations segment are mainly from the bowling centre business operation in South City Plaza in Seri Kembangan and provision of insurance services business. Our role mainly includes managing and operating the business of the bowling centre and provision of insurance services within and outside the Group. Our operating revenue for the investment and others arm for the year under review was RM0.57 million, with a profit before tax of RM1.45 million. The improved financial results as compare to the previous year due to recovery of long outstanding debts. Looking ahead Malaysia s economic landscape will continue to be impacted by the global economic and geo-political issues, which includes pressure on the currency and volatile commodity prices. Domestically, concerns of a softening property market persists and due to the implementation of GST, regulatory tightening of loans to manage household debts, rising cost of living and economic uncertainties ahead, buyers will definitely be more cautious when making decisions to purchase properties. We are mindful of the challenges ahead and are focused on ensuring that we keep being prudent and measured on our operations to manage cost and cash flow. Our market-targeted strategy in developing Ampang Ukay@Ulu Kelang and Upper East@Tiger Lane have already proven to be amenable to the right target market at the right price in the right location, and will continue to contribute meaningfully to the Group s bottom line on a sustainable basis for a period of 12 to 15 years. SOUTH CITY PLAZA@SERI KEMBANGAN 22

25 GROUP CHIEF EXECUTIVE OFFICER S MANAGEMENT DISCUSSION AND ANALYSIS LIBERTY@AMPANG UKAY Our disposal of 1Segamat Mall will prove fruitful in realising the value invested to further support the development of Ampang Ukay@Ulu Kelang. We will continue to be open to opportunities to expand our land banks and our offerings provided they meet our stringent requirements of good location, good pricing and good potential. Our strategy of adopting prudent and sound management, as well as our aspiration to exceed expectations, has earned us the seventh consecutive year of profitability since we embarked on our transformation journey to strengthen our performance. With a team in place that is focused and efficient on delivering on our strategic aims through a disciplined and far-sighted approach, the Group has been able to deliver beyond expectations. EcoFirst will continue to aim high to achieve quality and excellence, thereby strengthening the brand and delivering on our shareholders expectations. LIBERTY@AMPANG UKAY LIBERTY@AMPANG UKAY 23

26 BOARD OF DIRECTORS ECOFIRST CONSOLIDATED BHD (15379-V) From left to right :- (Standing) DATO AMOS SIEW BOON YEONG, MR NG HOCK HENG AND DATO TEOH SENG KIAN (Seated) DATO TIONG KWING HEE, DATO (DR) TEOH SENG FOO, DATO SYED ARIFF FADZILLAH BIN SYED AWALLUDDIN AND DATO BOEY CHIN GAN 24

27 DIRECTORS PROFILE ECOFIRST CONSOLIDATED BHD (15379-V) Term of Office Dato Syed Ariff Fadzillah Bin Syed Awalluddin was appointed to the Board on 27 January He was re-designated to Chairman/Independent Non- Executive Director on 1 December Board Committee - Chairman of the Nominating Committee - Member of the Remuneration Committee - Member of the Audit Committee DATO SYED ARIFF FADZILLAH BIN SYED AWALLUDDIN (CHAIRMAN/INDEPENDENT NON-EXECUTIVE DIRECTOR) 74, MALE, MALAYSIAN Education & Qualification - Bachelor of Arts degree in History from University Malaya, Malaysia (1967) - Diploma of Development Administration from London School of Economics (1973) - Master of Arts in International Relations from New York University (1984) Skills & Experience Dato Syed Ariff started his career as an Assistant District Officer in Kulim, Kedah in He was an Assistant Secretary in the Public Service Commission, Kuala Lumpur between 1970 and 1972 before being transferred to the Ministry of Foreign Affairs. Prior to retiring in November 2001, he served as the Ambassador of Malaysia to the Kingdom of Thailand from 1996 to 2001, Ambassador to the Republic of Korea with joint accreditation to Mongolia (1992 to 1995) and Ambassador of Malaysia to Fiji with concurrent accreditations to Tuvalu, Tonga, Western Samoa, Kiribati and Nauru (1998 and 1991). His other foreign assignments include postings to Indonesia, Libya and Canada. He was also the Deputy Permanent Representative of the Permanent Mission of Malaysia to the United Nations between 1982 and From 1991 to 1992, he served as the Undersecretary of the Ministry of Foreign Affairs in charge of Southeast Asia and South Pacific. Other Public Company Directorship & Offices He also serves as Director on the boards of Bermaz Auto Berhad and Ikhmas Jaya Group Berhad. He has no family relationship with any other Director and/or major shareholder of the Company and has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company. He has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He has attended all five (5) Board meetings held during the financial year ended 31 May

28 DIRECTORS PROFILE ECOFIRST CONSOLIDATED BHD (15379-V) Term of Office Dato (Dr) Teoh Seng Foo was appointed to the Board on 5 May He was re-designated from the position of an Executive Deputy Chairman to President Executive Director on 1 December DATO (DR) TEOH SENG FOO (PRESIDENT/EXECUTIVE DIRECTOR) 61, MALE, MALAYSIAN Board Committee - Chairman of the Remuneration Committee Education & Qualification - Chartered Accountant of the Malaysian Institute of Accountants (1985) - Chartered Management Accountant (1986) - Fellow Member of the Chartered Institute of Management Accountants, United Kingdom (1989) - Honorary Doctorate in Business Administration by University of Abertay Dundee, United Kingdom (2002) - Chartered Global Management Accountant (2013) - Patron of the University of Abertay Foundation based in United Kingdom Skills & Experience An accountant by profession, Dato Teoh has wide corporate experience, having held senior management positions in multi-national corporations such as Intel Technology, Woodward & Dickerson Inc., Coopers & Lybrand (now Pricewaterhouse Coopers) and Esquel Group. Other Public Company Directorship & Offices Dato Teoh currently holds board position as the Executive Director/Deputy Chairman of Meda Inc. Berhad. He is a brother to Teoh Seng Aun and Dato Teoh Seng Kian (who is also his alternate director), who are major shareholders of the Company. Apart from the above, he has no other family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He has attended all five (5) Board meetings held during the financial year ended 31 May

29 DIRECTORS PROFILE ECOFIRST CONSOLIDATED BHD (15379-V) Term of Office Dato Tiong Kwing Hee, first joined the Board as an Alternate Director on 18 September 2008 and subsequently appointed as Executive Director/Chief Executive Officer on 2 January He is currently the Group Chief Executive Officer of the Company. DATO TIONG KWING HEE (GROUP CHIEF EXECUTIVE OFFICER/ EXECUTIVE DIRECTOR) 59, MALE, MALAYSIAN Board Committee - Chairman of the Employees Share Option Scheme Committee Education & Qualification - Bachelor of Arts (Honours) majoring in Business Administration from Hanover College, United States of America (1982) - Master Degree in Business Economics from Miami University, United States of America (1983) Skills & Experience He started his career with Sim Lim Holdings Berhad in 1983 as Executive Officer in charge of corporate finance and was promoted to Manager in 1984 and General Manager in He left Sim Lim Holdings Berhad in 1987 following his venture into the timber industry and became a shareholder cum director of marketing in Wansuria Sdn Bhd. He was a substantial shareholder in London Pacific Ltd, a company listed on the New Zealand Stock Exchange between 1988 and In 1994, he left the timber industry when he sold off his stake in Wansuria Sdn Bhd. In 1995, he joined D-Systems Pte Ltd, a Singapore based company with exclusive distribution rights of drywall system from United States of America for Asia Pacific region, as the Chief Executive Officer. In 1997, he was head hunted on a two (2) years contract as an Executive Director of a listed company to prepare that company for a corporate restructuring. During the course of his career, he has been directly involved in various industrial sectors including corporate finance, financial services, manufacturing, plantations, property, construction, education, leisure, entertainment and mineral resources. He has extensive hands-on experience, knowledge and exposure in international business, corporate planning, restructuring and corporate turnaround. Other Public Company Directorship & Offices Dato Tiong is also currently the Managing Director and major shareholder of Mercury Industries Berhad. He has no family relationship with any other Director and/ or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He has attended all five (5) Board meetings held during the financial year ended 31 May

30 DIRECTORS PROFILE ECOFIRST CONSOLIDATED BHD (15379-V) DATO AMOS SIEW BOON YEONG DATO BOEY CHIN GAN 28

31 DIRECTORS PROFILE ECOFIRST CONSOLIDATED BHD (15379-V) DATO AMOS SIEW BOON YEONG (INDEPENDENT NON-EXECUTIVE DIRECTOR) 59, MALE, MALAYSIAN Term of Office Dato Amos Siew Boon Yeong was appointed to the Board on 27 October Board Committee - Chairman of the Audit Committee - Member of the Remuneration Committee Education & Qualification - Chartered Accountant with the Malaysian Institute of Accountants (1987) - Member of the Malaysian Institute of Certified Public Accountants - Associate Member of the Chartered Tax Institute of Malaysia Skills & Experience He started his auditing career and professional training with the accounting firm, Coopers & Lybrand in 1978 before establishing his own practice in He is currently the managing partner of the public accounting firm, Messrs. Siew Boon Yeong & Associates. He has vast experiences in auditing, tax planning, corporate finance and financial planning and has been involved in numerous assignments on mergers and acquisitions, debt restructuring and liquidation. Other Public Company Directorship & Offices He is also a Director of SEG International Bhd. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, within the past five (5) years, other than the reprimand in relation to the non-compliance of Vizione Holdings Bhd to the Main Market Listing Requirements, and traffic offences, if any. DATO BOEY CHIN GAN (INDEPENDENT NON-EXECUTIVE DIRECTOR) 52, MALE, MALAYSIAN Term of Office Dato Boey Chin Gan was appointed to the Board on 1 April Board Committee - Member of the Audit Committee - Member of the Nominating Committee Education & Qualification - Bachelor of Arts (Honours) from Universiti Kebangsaan Malaysia Skills & Experience Dato Boey is very active in the social economic development of the country. He has served as the Press Secretary to the Minister of Housing and Local Government of Malaysia for eleven (11) years from 1993 to In 2004, Dato Boey was the Kedah State Assemblyman. Dato Boey has vast experiences and extensive knowledge in administrative and strategic planning by virtue of his long service in government sectors. He has no family relationship with any other Director and/ or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He has attended all five (5) Board meetings held during the financial year ended 31 May He has attended all five (5) Board meetings held during the financial year ended 31 May

32 DIRECTORS PROFILE ECOFIRST CONSOLIDATED BHD (15379-V) MR NG HOCK HENG DATO TEOH SENG KIAN 30

33 DIRECTORS PROFILE ECOFIRST CONSOLIDATED BHD (15379-V) MR NG HOCK HENG (INDEPENDENT NON-EXECUTIVE DIRECTOR) 50, MALE, MALAYSIAN Term of Office Mr Ng Hock Heng was appointed to the Board on 4 March Education & Qualification - Bachelor of Economics with double majors in Banking & Accountancy from Monash University Australia (1990) - Bachelor of Law from Monash University (1992) - Master of Law (Distinction) from Monash University (1995) - Associate of Certified Practising Accountants in Australia (1998) Skills & Experience He started his career in KPMG (Australia) as a Tax Consultant before advancing his career in Deloitte Touche Totmatsu (Australia & Hong Kong) as a Senior Tax Consultant in year In 1995, he joined Zaid Ibrahim & Co. and became a partner in Previously, he also was an Advocate and Solicitor of the High Court of Malaya and a Registered Foreign Lawyer of the Law Society of New South Wales. Other Public Company Directorship & Offices He is currently the Executive Director of Zico Holdings Inc. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. DATO TEOH SENG KIAN (ALTERNATE DIRECTOR TO DATO (DR) TEOH SENG FOO) 57, MALE, MALAYSIAN Term of Office Dato Teoh Seng Kian was appointed as Alternate Director to Dato (Dr) Teoh Seng Foo, the President, on 1 December Education & Qualification - Bachelor of Engineering (Mechanical) degree from Australia (1984) Skills & Experience He started his career with an Australian company specializing in manufacturing of building materials. Upon returning to Malaysia, he served as a director in a company involved in quarrying and infrastructure construction. Other Public Company Directorship & Offices He is currently the Managing Director of Meda Inc. Berhad. He is a major shareholder of the Company and is deemed to have an interest in all the shares held by the Company in the subsidiaries by virtue of his substantial interest in shares of the Company. He is a brother to Dato (Dr) Teoh Seng Foo, the President of the Company and Teoh Seng Aun, who is a major shareholder of the Company. Apart from the above, he has no other family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He has attended all five (5) Board meetings held during the financial year ended 31 May

34 MANAGEMENT TEAM ECOFIRST CONSOLIDATED BHD (15379-V) DATO TIONG KWING HEE (GROUP CHIEF EXECUTIVE OFFICER/EXECUTIVE DIRECTOR) 59, MALE, MALAYSIAN Please refer to Dato Tiong s profile under the Directors Profile Section. 32

35 MANAGEMENT TEAM JANICE LOH CHUEN YANN (GENERAL MANAGER, MARKETING AND RETAIL LEASING) 55, FEMALE, MALAYSIAN ROBB LIM GWO BIN (CHIEF FINANCIAL OFFICER) 53, MALE, MALAYSIAN ECOFIRST CONSOLIDATED BHD (15379-V) Ms Janice Loh was appointed as General Manager, Marketing and Retail Leasing on 1 June She obtained her certification in Quality Management System and Assessment from University of Portsmouth, United Kingdom and has been involved in all aspects of property and shopping mall operations for the last thirty five (35) years. Ms Loh s career in the property industry began with MBF Property Services, City Square and Empire Tower in Jalan Tun Razak as well as Rivercity in Jalan Ipoh under Low Yat Group. Since then, she has served as Director of Leasing and Marketing for Hatten Group retail properties in Malacca including Dataran Pahlawan, Hatten Square and Hatten City. Subsequently she served at Henry Butcher Retail, in charge of leasing, marketing, promotion, management and retail operation for Seremban Prima. Prior to joining the Group, she was Vice President of Retail Leasing for See Hoy Chan Group, the Starling Mall. At EcoFirst, Ms Loh oversees the development and performance of the marketing activities for the Group s property development projects and leasing activities in assigned projects. Her role is to drive, formulate and execute marketing and strategic leasing related transactions and related matters effectively. Mr Robb Lim was appointed as Chief Financial Officer on 1 March He is professionally qualified as an Associate of the Chartered Institute of Management Accountants, London and is a Chartered Accountant with Malaysian Institute of Accountants. His professional career started in 1986 in an auditing firm and since then has held various senior financial positions in listed and non-listed companies mainly in property development, construction, education and manufacturing companies. He has more than twenty five (25) years of working experience in the areas of finance, accounting, auditing, taxation and risk management. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. She has no family relationship with any other Director and/or major shareholder of the Company. She has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. 33

36 MANAGEMENT TEAM SALLY TANG (GENERAL MANAGER, SOUTH CITY PLAZA COMPLEX) 44, FEMALE, MALAYSIAN ECOFIRST CONSOLIDATED BHD (15379-V) LIEW WEE FONG (GENERAL MANAGER, PROPERTY DEVELOPMENT & PROJECTS) 50, MALE, MALAYSIAN Ms Sally Tang was appointed as General Manager, South City Plaza on 1 January She had previously served as the Complex Manager for South City Plaza since 1 July As General Manager, Ms Tang is responsible for the entire operations of the Group s retail complex of South City Plaza, consisting of a net lettable area of 800,000 sq.ft., located in Seri Kembangan, Selangor. Her main role includes overseeing the daily operations, marketing, advertising and promotions, tenancy and maintenance for the South City Plaza. Ms Tang holds a Diploma in Computer Science and Information Technology and has served with the Low Yat Group, Luxor Properties and Henry Butcher Lim & Long Sdn Bhd prior to joining the Group. She has fifteen (15) years of experience in marketing, business development, property management, sales and leasing of residential and commercial, advertising and promotions and customer relations. She has no family relationship with any other Director and/or major shareholder of the Company. She has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. Mr Liew Wee Fong was appointed as General Manager, Property Development & Projects on 24 November He holds a Diploma in Civil Engineering and a Bachelors of Applied Science in Construction Management and Economics from Curtin University of Technology, Western Australia. Mr Liew is also a Corporate Member of the Chartered Institute of Builders (UK), The Chartered Institute of Building Engineers (UK) and The Royal Institute of Chartered Surveyors (UK). He is also an associate member of The Institution of Engineers of Singapore as well as a Licentiate Member of City & Guilds of London Institute (UK). With twenty eight (28) years of experience in Civil Engineering, Property Development and Building Construction and some of Mr Liew s significant completed projects under his portfolio include the One Ampang Avenue in Ampang, the Kuala Lumpur City Centre Petronas Twin Towers, the Melawati 20trees in Melawati, the Verticas Residensi Service Suites in Bukit Ceylon and Le Nouvel KLCC Condominiums in Jalan Ampang. At EcoFirst, Mr Liew role is to oversee the overall property development planning and implementation ensuring the project is completed within the deadline and required quality standard through thorough tracking of construction schedule and progress. He is also in charge of maintaining close coordination with consultants on all technical issues and work compliances in accordance with contractual specifications, good engineering practices, relevant statutory acts, authority regulations and guidelines. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. 34

37 MANAGEMENT TEAM CHEW YET GOR (HUMAN RESOURCE AND ADMINISTRATION MANAGER) 53, FEMALE, MALAYSIAN LIM BEE TENG (LEGAL MANAGER) 32, FEMALE, MALAYSIAN ECOFIRST CONSOLIDATED BHD (15379-V) Ms Chew Yet Gor was appointed as the Group s Human Resource and Administration Manager on 1 November She started her career in human resource after obtaining her Bachelor of Development Science degree from the National University of Malaysia. Ms Chew has more than twenty six (26) years of experience in staff recruitment, payroll administration, compensation and benefits, training and development, performance management, human resource policies and procedures and employee relations. Prior to joining the Group, she served at a manufacturing company as its Human Resource and Administration Manager. Currently at EcoFirst, Ms Chew is responsible for all human resources management and administration matters for the Group. She has no family relationship with any other Director and/or major shareholder of the Company. She has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. Ms Lim Bee Teng was appointed as the Group s Legal Manager on 12 May She holds a Bachelor of Law (LLB, Hons) degree from the University of London (2008) and obtained her Certification in Legal Practice in Prior to joining the Group, Ms Lim served as the corporate in-house legal counsel in AEON Retail and possesses a wide spectrum of experience in conveyancing, litigation, legal negotiations, corporate and commercial agreements. At EcoFirst, she handles the Group s conveyancing matters including but not limited to the preparation of the sale and purchase agreements, lease and tenancy agreements, land acquisition matters and preparation of various applications to the relevant authorities. She is also involved in the preparation of the various security documents pertaining to large financial loans and bridging agreements for the Group s development projects. She advises the Group on all legal matters including human resource matters. Ms Lim also provides legal training to the various departments of the Group on a regular basis. She has no family relationship with any other Director and/or major shareholder of the Company. She has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. 35

38 FIVE-YEAR GROUP STATISTICS ECOFIRST CONSOLIDATED BHD (15379-V) REVENUE (RM MILLION) PROFIT BEFORE TAX AND NON-CONTROLLING INTERESTS (RM MILLION) SHAREHOLDERS FUNDS (RM MILLION) Year Ended 31 May Revenue Profit Before Tax and Non-controlling Interests Profit Attributable to Shareholders Shareholders Funds Total Assets Employed Basic Earnings Per Share Net Assets Per Share Number of Shares Issued (RM Million) (RM Million) (RM Million) (RM Million) (RM Million) (Sen) (RM) ( 000) , , , , ,148 36

39 CORPORATE GOVERNANCE STATEMENT The Board of Directors ( Board ) of EcoFirst Consolidated Bhd ( the Company ) supports the Principles and Recommendations as promulgated by the Malaysian Code on Corporate Governance 2012 ( the Code ); and recognises the importance of enhancing shareholders value through building a sustainable business by implementing and maintaining high standards of corporate governance in managing the business affairs of the Company. The Board is pleased to report herewith on how the Code has been applied throughout the Company, and to a certain extent the Company and its subsidiaries ( the Group ). PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES 1.1 Establish clear functions reserved for the Board and those delegated to Management The Board has established clear functions between the Board and the Management, where the Board is effectively responsible, but not limited to the following functions:- a) Setting Vision and Mission, and strategic plans for the Group. Such plans would include the formulation of budgets and forecasts; b) Approval of financial statements, both for regulatory and management reporting; c) Setting dividend policy for shareholders; d) Appointment of auditors, both external and internal, and the company secretary. The external auditors shall then be recommended for approval by the shareholders; e) Succession planning for both the Board and the Senior Management of the Group; f) Setting authority limits within which Management decisions are to be made, in line with good corporate governance and the applicable limits imposed by regulatory bodies; g) Approval of significant changes in the internal accounting policies and procedures; and h) Ascertaining the risk management framework and internal control system for the Group. Further details of the Board s key roles and responsibilities are outlined in Paragraph 1.2 below. The Executive Directors and the Management are then tasked with implementing the strategies, policies and decisions of the Board, overseeing the administration and management of the day-to-day operations of the business, for sustainability and growth of the Group. Budgets and projections are implemented and monitored on a regular basis by the Board to ensure that the Company s goals are met. 1.2 Establish clear roles and responsibilities in discharging its fiduciary and leadership functions The Board recognises the key roles it plays in charting the strategic direction of the Group and has assumed the following principal responsibilities in discharging its fiduciary and leadership functions:- Reviewing and adopting a strategic plan for the Group addressing the sustainability of the Group s business; Overseeing the conduct of the Group s business and evaluating whether or not its businesses are being properly managed; Identifying principal business risks faced by the Group and ensuring the implementation of appropriate internal controls and mitigating measures to address such risks; Ensuring that all candidates appointed to senior management positions are of sufficient calibre, including having in place programmes to provide for the orderly succession of senior management personnel and members of the Board; 37

40 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES 1.2 Establish clear roles and responsibilities in discharging its fiduciary and leadership functions (cont d) Overseeing the development and implementation of shareholder communications policy; Reviewing the adequacy and integrity of the Group s internal control and management information systems; and Determining the remuneration of Executive Directors and recommending the fees of Non-Executive Directors of the Company for shareholders approval, with the individuals concerned abstaining from discussions of their own remuneration. To assist in the discharge of its stewardship roles, the Board has established board committees, namely the Audit Committee, Remuneration Committee and Nominating Committee to examine specific matters within their respective terms of reference as approved by the Board and each committee head reports to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board. 1.3 Formalise ethical standards through a code of conduct and monitoring of its compliance The Code of Ethics and Conduct, which is formulated to enhance the standard of corporate governance and promote ethical conduct, is to be observed by the Directors and employees of the Group. The Board recognises the importance on adherence to the Code of Ethics and Conduct and takes measures to put in place a process to ensure its compliance. A copy of the Code of Ethics and Conduct can be viewed at the Company s website, The said Code will be reviewed from time to time for changes and new developments in the external and internal environment. The Board has on 30 August 2017 formalised and adopted a Whistle-Blowing Policy. Any Director or employee who knows of, or suspects, a violation of the Code of Ethics and Conduct, is encourage to whistle-blow or report the violation or suspected violation through the Whistle-Blowing Policy of the Group. A copy of which can be viewed at the Company s website at Group s strategies to promote sustainability The Board is mindful of the importance of business sustainability and, in developing the corporate strategy of the Group, its impact on the environmental, social and governance aspects. The Group s activities on corporate and social responsibilities for the financial year under review are disclosed in the Chairman s Statement of this Annual Report. 1.5 Allows the Board access to information and advice The Board has unrestricted access to all information pertaining to the Group, at the Company s expense, including the appointed external service providers, namely the Company s Internal and External Auditors, Tax Advisors and Company Secretary. The Management supplies the Board with relevant information and reports on financial, operational, corporate, regulatory, business development and audit matters; either for Board meetings or upon specific requests by the Board. Such information is provided in a timely manner to allow for sufficient time for dissemination and understanding by Board members. If required, the Directors, collectively and individually, are also entitled to seek external independent professional advice at the Company s expense. During the financial year under review, the Board met five (5) times, with details of attendance of each member as outlined in the Directors Profile Section of this Annual Report. 1.6 The Board has to be supported by a suitably qualified and competent Company Secretary The Board recognises that the Company Secretary is a central source of information for the provision of relevant advice on compliance and policy issues as set out by the Board and external regulatory bodies, such as Bursa Malaysia Securities Berhad ( Bursa Securities ), the Suruhanjaya Syarikat Malaysia and the Securities Commission Malaysia ( SC ). 38

41 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES 1.6 The Board has to be supported by a suitably qualified and competent Company Secretary (cont d) The Board is supported by the Company Secretary pertaining to corporate secretarial matters which include, among others, convening of Board and general meetings, preparation of circular resolutions and minutes of meetings, maintenance of statutory registers and records, release of announcements to Bursa Securities and SC, and advising the Board on compliance with the relevant laws and regulations. 1.7 The Board should formalise, periodically review and make public its Board Charter The Board has established the Board Charter as a source of reference to the Board in the fulfilment of its roles, duties and responsibilities, which are in line with the recommendations of the Code. The Board reviews this Board Charter from time to time, and will make amendments where necessary, consistent to the Board s objectives, current laws and regulations and best practice. A copy of the Board Charter can be viewed at the Company s website, PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD 2.1 Establishment of a Nominating Committee The Nominating Committee comprises wholly of Non-Executive Directors, and its members, as at the date of this Annual Report are as follows:- Dato Syed Ariff Fadzillah Bin Syed Awalluddin (Chairman) Independent Non-Executive Director Dato Boey Chin Gan Independent Non-Executive Director Ng Hock Heng Independent Non-Executive Director The full Terms of Reference setting out the Nominating Committee s composition, meeting procedures, functions and reporting procedures, can be viewed at the Company s website, Dato Syed Ariff is also the Senior Independent Director, identified by the Board to whom shareholders can channel their concerns to, via the Company s website: During the financial year ended 31 May 2017, the Nominating Committee held a total of two (2) meetings, all of which were fully attended by the members of the Nominating Committee, during which the following activities were carried out:- a) Reviewed and assessed the Board structure, size, composition and diversity as well as the Board s and individual Director s required mix of skills, experience and other qualities. b) Reviewed and assessed the effectiveness of the Board, Committees of the Board and the contribution of each individual Director. c) Reviewed and assessed the Directors standing for re-election and re-appointment and recommended the same to the Board for consideration. d) Reviewed the term of office and performance of the Audit Committee and its members. 2.2 Nominating Committee to develop, maintain and review criteria to be used in the recruitment process and annual assessment of Directors Part of the terms of reference of the Nominating Committee includes the following responsibilities:- Assessment and recommendation to the Board the candidature of new Directors; Appointment of Directors to board committees; 39

42 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD 2.2 Nominating Committee to develop, maintain and review criteria to be used in the recruitment process and annual assessment of Directors (cont d) Review of Board s and Senior Management s succession planning; and Outlining training programmes for the Board. The Nominating Committee has implemented a formal and transparent selection process for the identification of new Directors, which includes assessment of ideal composition of the Board, and the suitability of the candidate in meeting the needs of the Board and the Company. Similarly, the appointment of Directors to the board committees would be made under a similar formal and transparent process, taking into account the Director s competencies, commitment and ability to contribute effectively. The Nominating Committee has formalised a practical and transparent succession planning process for the Board, where amongst others, each Director is requested to identify names of persons suitable as board members, for submission and review by the Nominating Committee. The Nominating Committee has also set broad criteria for each Director to achieve during the financial year under review. Details of these programmes are outlined in Paragraph 2.3 below. The Board acknowledges that gender diversity is one of the key attributes to an effective and balanced board. At the moment, the Board is of the opinion that the current composition of the Board is balanced and effective, with a good mix of skills and experience from the different background of both Executive and Non-Executive Directors. Details of the profiles of the Board are available on the Directors Profile Section of this Annual Report. 2.3 Establish formal and transparent remuneration policies and procedures for the Board The Board has established a Remuneration Committee to oversee the function of remunerating the Board in a manner that attracts, retains and motivates Directors, and its membership comprise:- Dato (Dr) Teoh Seng Foo (Chairman) President/Executive Director Dato Syed Ariff Fadzillah Bin Syed Awalluddin Independent Non-Executive Director Dato Amos Siew Boon Yeong Independent Non-Executive Director The components of Directors remuneration are structured so as to link rewards to corporate and individual performance in the case of Executive Directors. The Remuneration Committee shall also adopt the approved employees share option scheme to add to the remuneration of its Executive Directors. In the case of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the individual Non-Executive Director concerned. During the financial year under review, two (2) Remuneration Committee meetings were held and attended by all its members. The Remuneration Committee reviewed and recommended to the Board, the remuneration for the Executive Directors of the Company and further recommended the Non-Executive Directors fees to the Board for shareholders approval at the Company s Annual General Meeting. 40

43 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD 2.3 Establish formal and transparent remuneration policies and procedures for the Board (cont d) Details of the remuneration of the Board for the financial year ended 31 May 2017 are as follows:- 1. Aggregate remuneration of the Directors categorised into appropriate components:- Remuneration Fee and others Total RM RM RM Executive Directors - 1,642,588 1,642,588 Non-Executive Directors 176,000 16, , The number of Directors of the Company in each remuneration band is as follows:- Range of Remuneration Number of Director Executive Non-Executive RM50,000 and below - 2 RM50,000 to RM100,000-2 RM800,001 to RM850, PRINCIPLE 3 - REINFORCE INDEPENDENCE OF THE BOARD 3.1 Assessment of the Independent Directors At present, the Board of the Company is made up of six (6) Directors, with four (4) being independent. The Nominating Committee has formalised an assessment policy and procedure for the Independent Directors, to ensure that these Directors continue to be independent and bring objective judgement to the Board. As the Nominating Committee comprise wholly of Independent Directors, the assessment is thus carried out by the Non-Independent Directors, namely the President and Chief Executive Officer ( CEO ). Similarly, for the re-election of Independent Directors, the Non-Independent Directors together with other Independent Directors who are not named in the re-election has undertaken assessment of the state of independence of the Independent Directors. 3.2 Tenure of Independent Director The Board does not have term limit for its Independent Directors and is of the view that the independence of the Independent Director should not be determined by their tenure of service. The Board is confident that the Independent Directors themselves, having provided all the relevant confirmations on their independence, will be able to determine if they can continue to being independent and objective judgement on Board deliberations and decision making. The Board currently has two (2) Directors who have served exceeding the tenure of nine (9) years, i.e. Dato Syed Ariff Fadzillah Bin Syed Awalluddin ( Dato Syed Ariff ) and Dato Amos Siew Boon Yeong ( Dato Amos ). As recommended by the Code, the Board, upon recommendation by the Nominating Committee, has considered the tenure of Dato Syed Ariff and Dato Amos. Based on the assessment, the Board has concluded that Dato Syed Ariff and Dato Amos remain to be independent and recommended that they continue to act as Independent Non-Executive Directors based on the following justifications:- a) They have fulfilled the criteria under the definition of Independent Director as stated in the Main Market Listing Requirements ( Listing Requirements ) of Bursa Securities and thus, would be able to function as a check and balance, bringing an element of objectivity to the Board. 41

44 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 3 - REINFORCE INDEPENDENCE OF THE BOARD 3.2 Tenure of Independent Director (cont d) b) They have been with the Company for more than nine (9) years and are familiar with the Company s business operations. c) They have exercised due care during their tenure as Independent Non-Executive Directors of the Company and have carried out their duties proficiently in the interest of the Company and the shareholders. 3.3 Retention of Independent Director whose tenure exceeds a cumulative term of nine (9) years The Board would seek shareholders approval at the Forty-Fourth AGM on the proposed retention of Dato Syed Ariff and Dato Amos as Independent Non-Executive Directors of the Company. 3.4 Positions of the Chairman and the CEO should be held by two (2) different individuals, and the Chairman must be a Non-Executive Director The Board is pleased to report that the Company has identified separate individuals holding the positions of the Chairman and CEO. The Chairman, namely Dato Syed Ariff, who is also an Independent Non-Executive Director, is responsible for the orderly conduct and effectiveness of the Board, whereas Dato Tiong Kwing Hee as the Group CEO, is responsible for the implementation of the Board s policies and decisions, and maintaining the operational conduct of the Group. Besides the above, the President plays a supporting role to the Group CEO. 3.5 Where the Chairman is not an Independent Director, the majority of the Board must comprise of Independent Directors Notwithstanding that the Board is headed by an Independent Chairman, the Board itself comprise majority of Independent Directors. PRINCIPLE 4 - FOSTER COMMITMENT OF DIRECTORS 4.1 Time commitment and protocols for new Directors The Board of the Company acknowledges the need to devote sufficient time to carry out their responsibilities for the Company. It is also the Board s policy for Directors to notify the Chairman before accepting any new directorships notwithstanding that the Listing Requirements allow a Director to sit on the boards of five (5) listed issuers. Such notification is expected to include an indication of time expected to be spent on the new appointment. 4.2 Access to appropriate continuing education programmes The Board, via the Nominating Committee, continues to identify and has attended appropriate briefings, seminars, conferences and courses to keep abreast of their respective areas of expertise and enhance their skills through appropriate continuing education programmes. 42

45 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 4 - FOSTER COMMITMENT OF DIRECTORS 4.2 Access to appropriate continuing education programmes (cont d) During the financial year ended 31 May 2017, the Directors have attended the following programmes:- Name Programme Date Dato Syed Ariff Fadzillah Bin Syed Awalluddin Dato (Dr) Teoh Seng Foo Dato Tiong Kwing Hee Sustainability Engagement Series for Directors/ Chief Executive Officer The Cyber Security Threat and How Board should mitigate the risks Key Offences under Companies Act 2016 & Interest Scheme Act June November April 2017 Dato Amos Siew Boon Yeong National Tax Conference August 2016 Forum on Key Audit Matters 14 September 2016 Seminar Percukaian Kebangsaan October 2016 Ng Hock Heng Companies Bill December 2016 The Samurai Game January 2017 Dato Teoh Seng Kian (Alternate Director to Dato (Dr) Teoh Seng Foo) Companies Bill December 2016 Apart for the above-mentioned programmes, the Company Secretary keeps the Board abreast on the relevant guidelines on statutory and regulatory requirements from time to time at Board meetings. The External and Internal Auditors also briefed the Board members on any changes to the Malaysian Financial Reporting Standards and internal audit guidelines that affect the financial statements and internal controls of the Group. PRINCIPLE 5 - UPHOLD INTEGRITY IN FINANCIAL REPORTING BY COMPANY 5.1 Financial statements must comply with applicable financial reporting standards The Board acknowledges its responsibility for the quality, correctness and completeness of the financial statements of the Company and the Group, hence sufficient time and efforts are put aside to review and to ensure that the financial statements are prepared in accordance with applicable financial reporting standards. In order to achieve this objective, the Board has entrusted the Audit Committee in ensuring that this responsibility is carried out effectively. The Audit Committee, which is headed by Dato Amos, who himself is a qualified member of the Malaysian Institute of Accountants, reviews the financial statements not only against past results but with the inclusion of budgeted and forecast figures as well. A Statement by Directors on their responsibilities in preparing the Annual Financial Statements is set out in page 46 of this Annual Report. 43

46 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 5 - UPHOLD INTEGRITY IN FINANCIAL REPORTING BY COMPANY 5.2 Policies and procedures to assess the suitability and independence of External Auditors The Board upholds the integrity of financial reporting by the Company, and hence the Audit Committee has established procedures in assessing the suitability and independence of the External Auditors. Amongst others, such procedures include the following:- The provision of written assurance by the External Auditors, confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the Malaysian Institute of Accountants. The scrutiny of non-audit services prior to acceptance of any appointment. The Audit Committee undertakes rigorously review of the terms of the non-audit services, to determine if such services would impair the independence of the External Auditors. The annual assessment formally adopted by the Audit Committee on the suitability and independence of External Auditors. Having separate sessions with External Auditors without the presence of Management to allow for frank and candid dialogue with the External Auditors. PRINCIPLE 6 - RECOGNISE AND MANAGE RISKS 6.1 Sound framework to manage risks The Board affirms its overall responsibility for the Group on the implementation of an effective risk management system, and internal control system. The Board via the Audit Committee ensures that actions are taken to review the adequacy, integrity and effectiveness of these systems. Details of the risk management framework and its corresponding action plans taken to mitigate the risks are outlined in the Statement on Risk Management and Internal Control Section of this Annual Report. 6.2 Establish an internal audit function The Board, through the Audit Committee, has appointed Internal Auditors to review the implementation of the internal control systems to ensure that the system is viable and robust. Further details of the activities of the Internal Auditors are available in the Audit Committee Report Section of this Annual Report. The Audit Committee also undertakes an annual assessment of the suitability and performance of the Internal Auditors, including the qualifications of the team and resources available, and holds separate sessions with the Internal Auditors without the presence of Management to allow for frank and candid dialogue. PRINCIPLE 7 - ENSURE TIMELY AND HIGH QUALITY DISCLOSURE 7.1 Implementation of appropriate corporate disclosure policies and procedures The Board is aware of the need to establish an internal corporate disclosure policies and procedures which are practical and in compliance with the disclosure requirements imposed by Bursa Securities s Listing Requirements. The Board has also ensured that apart from the regulatory requirement of public announcements via the Bursa Link, the Annual Report, being a key source of information which is available for each shareholder, contains easy and comprehensive details of the business, the financial performance of the Group and the Company and corporate policies and procedures. In addition, and as outlined further below, the Company has a dedicated website that discloses the necessary corporate reports and information for the public s viewing. 44

47 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 7 - ENSURE TIMELY AND HIGH QUALITY DISCLOSURE 7.1 Implementation of appropriate corporate disclosure policies and procedures (cont d) Whilst the Board attempts to be as transparent as possible in its corporate disclosure policies and procedures, it must be mindful of the legal and regulatory framework surrounding the release of material and price-sensitive information. Therefore certain information, such as release of corporate proposals, financial results and other market sensitive details will not be disseminated to the shareholders without first making the official announcement to the Bursa Link for public release. 7.2 Leverage on information technology for effective dissemination of information In the Company, a dedicated website - is in place where employees alongside the public can access to, where pertinent information, such as the ones listed below, are displayed:- The Company s Vision and Mission statement The Company s latest financial performance Corporate Social Responsibility activities taken by the Group Message from the Group CEO PRINCIPLE 8 - STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS 8.1 Shareholders participation at general meetings The Board acknowledges the importance of general meetings as an avenue for the shareholders not only to exercise their rights to vote, but to be heard as well. As such, the Board has taken steps to encourage shareholders participation by implementing the following steps:- Notices for the general meetings are issued on timely manner, ahead of the twenty-one (21) days notice requirement as stipulated by Bursa Securities. The additional time given to shareholders allows them to make necessary arrangements to attend and participate either in person, by corporate representative, by proxy or by attorney. Adequate questions and answers time is allocated for each resolution to be passed, where shareholders are given the opportunity to seek clarification on matters pertaining to the Company. The Management and External Auditors are also invited to attend the general meetings, and are available to answer to queries relating to the respective subject matter. The Board, through their appointed share registrars shall consider the adoption of electronic voting to facilitate greater shareholder participation. 8.2 Poll voting The Company shall be conducting poll voting for all resolutions proposed for shareholders approval at the general meeting of the Company and a scrutineer will be appointed to validate the votes cast at the general meeting. 8.3 Effective communication and proactive engagements with shareholders The Board recognises the importance of direct engagement with shareholders to provide a better appreciation of the Company s objectives, quality of its management and challenges, whilst making the Company aware of shareholders expectations and concerns. As such, the Company has via its website, included a Contact Us link where shareholders and the public can direct their queries to. 45

48 STATEMENT OF DIRECTORS RESPONSIBILITY IN PREPARING THE ANNUAL FINANCIAL STATEMENTS The Directors are legally required, in accordance with the Companies Act, 2016, to prepare financial statements, which present a true and fair view of the state of affairs, and of the results of the operations of the Group and the Company and in preparing the financial statements for the financial year ended 31 May 2017, the Directors have:- ensured compliance with applicable approved accounting standards in Malaysia; adopted and consistently applied appropriate accounting policies; and made judgements and estimates that are prudent and reasonable. The Directors are responsible for ensuring that proper accounting records are maintained, which disclose with reasonable accuracy, the financial position of the Group and also to ensure that the financial statements comply with applicable approved accounting standards in Malaysia. In addition, the Board is responsible for the proper safeguarding of the Group s assets and to take reasonable steps for the prevention and detection of fraud and other irregularities. 46

49 OTHER INFORMATION ECOFIRST CONSOLIDATED BHD (15379-V) Material Contracts Except as disclosed in Note 29(a) of the Financial Statements, there were no material contracts subsisting at the end of the financial year or entered into since the end of the previous financial year by the Company or its subsidiaries, which involved the interests of the Directors and major shareholders other than contracts entered into in the normal course of business. Audit Fees During the financial year, the amount of audit fees paid/payable to the External Auditors by the Group and the Company were RM189,000 and RM50,000 respectively. Non-Audit Fees During the financial year, the amount of non-audit fees paid/payable to the External Auditors by the Group and the Company were RM16,000 and RM5,000 respectively. Employees Share Option Scheme The Company s shareholders had, at the Extraordinary General Meeting held on 20 June 2014, approved the establishment of a new employees share option scheme governed by the Bylaws for the eligible employees and directors of the Company and its active subsidiary companies ( ESOS ). The ESOS is for a period of five (5) years from 22 August The ESOS may be extended/renewed for a further period of five (5) years. As at the end of the financial year, the Company has yet to grant any options under the ESOS. Utilisation of Proceeds Raised from Corporate Proposal On 14 September 2016, the Company completed a private placement exercise involving the placement of 73,014,765 new ordinary shares in the Company. During the financial year, the Company raised RM8.988 million from the following:- (i) 2nd tranche of the private placement by way of issuance of 35,000,000 new ordinary shares at an issue price of RM0.243 per share ; and (ii) 3rd and final tranche of the private placement by way of issuance of 2,014,765 new ordinary shares at an issue price of RM0.240 per share. The Company has fully utilised the total proceeds of RM8.988 million received during the financial year ended 31 May Recurrent Related Party Transactions of a Revenue or Trading Nature The existing shareholders mandate for the Group to enter into recurrent related party transactions of a revenue or trading nature ( Shareholders Mandate ) which is necessary for its day-to-day operations shall expire at the conclusion of the forthcoming AGM and is subject to renewal by the shareholders at the said AGM. The aggregate value of transactions conducted pursuant to the Shareholders Mandate during the financial year is as follow:- Related Party Transactions Actual value awarded/ transacted from 1 June 2016 to 31 May 2017 Paramount Bounty Sdn Bhd Construction works RM238,000,000 47

50 AUDIT COMMITTEE REPORT ECOFIRST CONSOLIDATED BHD (15379-V) COMPOSITION The Audit Committee comprises wholly of Independent Non-Executive Directors as follows:- Chairman : Members : Dato Amos Siew Boon Yeong Dato Syed Ariff Fadzillah Bin Syed Awalluddin Dato Boey Chin Gan TERMS OF REFERENCE The Audit Committee is guided by its Terms of Reference in the discharge of its roles, functions and responsibilities. The details of the Terms of Reference are available on the Company s website at MEETINGS AND ATTENDANCES A total of five (5) meetings of the Audit Committee were held during the financial year ended 31 May The meetings were appropriately structured through the use of agendas, which were distributed in advance to all the members of the Audit Committee. Attendances of each member were as follows and the Company Secretary attended all the meetings during the financial year:- Members Total Attendance % of Attendance Dato Amos Siew Boon Yeong 5/5 100 Dato Boey Chin Gan 5/5 100 Dato Syed Ariff Fadzillah Bin Syed Awalluddin 5/5 100 SUMMARY OF WORK DONE DURING THE FINANCIAL YEAR During the financial year, the Audit Committee carried out the following duties in accordance with its Terms of Reference:- Reviewed with the External Auditors their audit planning memorandum, audit approach and reporting requirements which were presented by representatives from the External Auditors prior to commencement of the audit for the financial year ended 31 May Significant developments within the Group, noted by the External Auditors during the audit planning, were highlighted whilst a brief was given on the areas of audit focus which were discussed at the meeting. Subsequent to the audit, the External Auditors presented their audit progress memorandum which highlighted significant audit observations and outstanding audit matters which were subsequently addressed at the completion of the audit. Reviewed the audited financial statements of the Group and the Company for the financial year ended 31 May 2017 together with the presence of the External Auditors prior to submission to the Board for their consideration and approval for tabling to the shareholders for adoption at the forthcoming annual general meeting. The review was to ensure that the financial statements were prepared in accordance with the provisions of the Companies Act 2016 and the Financial Reporting Standards in Malaysia. The Audit Committee was given assurance by the Management that the audited financial statements did not contain material misstatements and gave a true and fair view of the financial position of the Group and the Company. Reviewed the internal audit plan for the financial year 2017 to ensure that the scope and coverage of the internal audit on the operations of the Group is adequate and comprehensive and recommended changes where necessary. Reviewed the internal audit reports, which highlighted the audit issues, recommendations and Management s response. The Audit Committee was briefed on pertinent audit issues, findings and observations by the Internal Auditors at the meetings of the Audit Committee. The Audit Committee also discussed the actions taken by Management to improve the system of internal control based on recommendations made in the internal audit reports. 48

51 AUDIT COMMITTEE REPORT ECOFIRST CONSOLIDATED BHD (15379-V) SUMMARY OF WORK DONE DURING THE FINANCIAL YEAR Met with the External Auditors and Internal Auditors twice during the financial year, in the absence of Management, to discuss problems/issues and reservations (where applicable) arising from their audits and the assistance given by the employees of the Group during the course of audit. Reviewed the quarterly unaudited financial results and commented where necessary before making a recommendation to the Board for approval prior to announcement to Bursa Securities. The review is to ensure that the Group s quarterly financial reporting and disclosure present a true and fair view of the Group s financial position and performance and are in compliance with the applicable reporting standards as well as the provisions of the Main Market Listing Requirements of Bursa Securities. Approved the Audit Committee Report for inclusion in the Company s Annual Report for the financial year ended 31 May Assessed the Group s state of risk management and internal control in order to ensure that the system is adequate and effective in all material aspects and reviewed the Statement on Risk Management and Internal Control, which was prepared in conjunction with the risk management and internal control assessment, for inclusion in the Company s Annual Report Reviewed the suitability and independence of the External Auditors for re-appointment at the annual general meeting held in October 2016 against criteria adopted by the Audit Committee (eg. the adequacy of the External Auditors experience and resources and the capability of the audit team assigned to the Group s audit) in recommending for their continuing office as the statutory auditors in respect of the audit for the financial year ending 31 May Reviewed the procedures set out by Management to ensure that potential related party transactions and recurrent related party transactions of a revenue or trading nature, which are necessary for the day-to-day operations entered with the mandated related party are undertaken at arm s length basis and on normal commercial terms which are consistent with the Group s normal business practice, at terms which are not more favourable to the mandated related party than those generally available to the public and are not to the detriment of the minority shareholders and formed its opinion therein which was included in the circular to shareholders dated 30 September Reviewed the related and recurrent related party transaction, i.e. the terms of the construction works as described in the Letter of Appointment issued by the architect appointed by the wholly-owned subsidiary company, Pujian Development Sendirian Berhad to a related party, Paramount Bounty Sdn Bhd, a 70% owned subsidiary of Mercury Industries Berhad, and opined that the transaction is in the ordinary course of business, entered in the best interests of the Company, were fair and reasonable and on normal commercial terms and not detrimental to the interest of the Company and its minority shareholders. INTERNAL AUDIT FUNCTION AND ACTIVITIES The internal audit function is outsourced to an independent professional consultancy firm entrusted with the role of providing independent and systematic reviews on the systems of internal control of the Group. The internal audit function provides an independent and objective feedback to the Audit Committee and the Board on the adequacy, effectiveness and efficiency of the internal control system within the Group. Throughout the financial year under review, the Internal Auditors carried out the internal audit works on the business operations of the Group covering property investment, property management and including a special audit assignment on the completion of the disposal of 1Segamat Shopping Mall and assignments which were in accordance with the annual internal audit plan as approved by the Audit Committee. A summary of the reviews carried out by the Internal Auditors are listed in the Statement on Risk Management and Internal Control. Upon completion of each audit cycle, the Internal Auditors would report to the Audit Committee on their audit findings, their recommendations of corrective actions to be taken by the Management together with the Management s responses in relation thereto. The Internal Auditors would also conduct follow-up reviews on previously reported issues during the audit cycles where necessary and the results of their observations would be reported to the Audit Committee accordingly. There was no material internal control failure reported in respect of internal audit works carried out during the financial year under review that would have resulted in any significant loss to the Group. 49

52 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Introduction The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of risk management and internal controls to safeguard shareholders investments and the Group s assets. The Bursa Malaysia Securities Berhad s ( Bursa Securities ) Main Market Listing Requirements require directors of public listed companies to include a statement in their annual reports on the state of their risk management and internal controls. The Bursa Securities Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers ( Guidelines ) provides guidance for compliance with these requirements. Set out below is the Board s Statement on Risk Management and Internal Control, which has been prepared in accordance with the Guidelines. Board s Responsibilities The Board has overall responsibility to ensure that the Group maintains a system of risk management and internal controls to safeguard shareholders investments and the Group s assets. The Board is committed to establish an appropriate control environment and also to review the adequacy and integrity of the system of risk management and internal controls. Due to the limitations inherent in any system of risk management and internal controls, these systems, though implemented, are designed to manage, rather than to eliminate the risk of failure to achieve corporate objectives. Accordingly, the systems can only provide reasonable but not absolute assurance against material misstatement or loss. The Board confirms that there is an underlying and ongoing process in the Group for the identification, evaluation and mitigation of its significant risks. The Board further confirmed that these processes are being regularly reviewed and accords with the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers. The Board has undertaken a review of the adequacy and effectiveness of the risk management and internal control system and concluded that the risk management and internal control system is adequate and effective. Further, the Board has obtained assurance from the Chief Executive Officer and Chief Financial Officer that the Group s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Group. Risk Management Framework The Board recognises that risk management is an integral part of the Group s business operations and has put in place the Risk Management Framework within the Group as an ongoing process for identifying, evaluating, monitoring and managing the significant risk affecting the achievement of its business objectives. Risk Profile consists of principal business risks which are identified and documented in the Registry of Risks. The Registry of Risks identified the risk factors, statement of risk, risk owner, impact, likelihood and risk control actions. The risk identification process involving reviewing and identifying the possible risk exposure arising from changes in both external business environment and internal operating conditions. The risk measurement guidelines consist of financial and non-financial qualitative measures of risk consequences based on the risk likelihood rating and risk impact rating. The risk control actions are prioritized and implemented as per the risk control actions assigned to the respective risk owners. The Registry of Risks which comprises of corporate level and subsidiaries is tabled to the Audit Committee once a year for review and approval. The Board is of the view that there is an ongoing process for identifying, evaluating, monitoring and managing the significant risks affecting the achievement of its business objectives in their daily activities throughout the financial year and up to the date of approval of the Annual Report. Internal Audit Function The Group has outsourced the internal audit function to an independent professional consultancy firm. The internal audit function reports directly to the Audit Committee on quarterly basis to provide feedback regarding the adequacy and integrity of the Group s system of internal control. The internal audit function reviews the key activities of the Group based on the annual audit plan approved by the Audit Committee. The Audit Committee is chaired by an Independent Non-Executive Director and its members comprises of Independent Non-Executive Directors. 50

53 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Internal Audit Function (cont d) The internal audit plan is designed to address the critical business processes and internal control gaps, gauge the effectiveness and adequacy of the existing state of internal control and recommend continuous improvements to the internal control system. The Audit Committee reviews the audit plan, together with internal audit reports to obtain the necessary level of assurance with respect to the adequacy of the internal controls as required by the Board. On a quarterly basis, the Internal Auditors report to the Audit Committee on the areas of possible improvements and the Management s response to such improvement recommendations. The Audit Committee presents its findings to the Board on a quarterly basis or as appropriate. During the financial year, the Internal Auditors reviewed the adequacy of the Group s internal control system and management information system of the key functions including system for compliance with applicable laws, regulations, rules, directives and guidelines. Follow-up visits were also carried out to ensure weaknesses identified have been or are being addressed. Periodic audit reports and status report on follow-up actions were tabled to the Audit Committee during its quarterly meetings. For the financial year ended 31 May 2017, the total costs incurred for the outsourced internal audit function is approximately RM48,548. For the financial year ended 31 May 2017, the following reviews had been carried out by the Internal Auditors:- Financial Reporting Quarter Reporting Month Name of Entity Audited Audited Areas June August 2016 October 2016 Tashima Development Sdn Bhd (1Segamat Mall) Conditions Precedent and Completion as stated in the Sale & Purchase Agreement for Proposed Disposal of 1Segamat Property and Car Park Rights September November 2016 January 2017 Pujian Development Sendirian Berhad (South City Plaza) Sales & Marketing Leasing Management Customer Service Procurement Facilities Management Car Park Management Finance and Accounts December February 2017 April 2017 Tashima Development Sdn Bhd (1Segamat Mall) Sales & Marketing Leasing Management Facilities Management Car Park Management Pujian Development Sendirian Berhad (South City Plaza) Follow-up actions on previously reported audit findings:- Sales & Marketing Leasing Management Customer Service Procurement Facilities Management Car Park Management Finance and Accounts Tenancy Management March May 2017 July 2017 EcoFirst Consolidated Bhd and its subsidiaries Review of the Risk Matrix, Registry of Risks and Risk Measurement Criteria 51

54 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Other Risks and Control Processes In addition to the risk management and internal audit function, the Board has put in place an organisational structure with formally defined lines of responsibility and delegation of authority, allowing internal checks and balances. This includes a Procurement & Quality Assurance standard operational procurement manual. These procedures are relevant to the Group and provide continuous assurance to top management and the Board. The Group has also developed and made available to employees an Employee Handbook. Quarterly updates of the financial results of the Group are provided to the Audit Committee and the Board for assessment of the performance of the Group. Management meetings, which involve Executive Directors and selected executive personnel, are regularly held in order to identify and address any problems encountered by the Group, so that appropriate actions could be taken to address the issues. Review of Statement by External Auditors Based on the procedures performed, the External Auditors have reviewed this statement for inclusion in the Annual Report 2017 and reported to the Board that nothing has come to their attention that causes them to believe that this statement is not prepared, in all material respects, in accordance with the disclosures required by Paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers to be set out, nor is the Statement on Risk Management and Internal Control factually inaccurate. Conclusion For the financial year under review and up to the date of approval of this statement, the Board is of the opinion that the risk management and internal control system currently in place is as far as practicable, adequate and effective to safeguard the Group s interests and assets. For the coming year, the Board will continually assess the adequacy and effectiveness of the Group s system of internal control and to strengthen it, as and when necessary. This statement is made in accordance with the resolution passed by the Board of Directors on 30 August

55 FINANCIAL STATEMENTS DIRECTORS REPORT 54 STATEMENT BY DIRECTORS 58 STATUTORY DECLARATION 58 INDEPENDENT AUDITORS REPORT 59 STATEMENTS OF COMPREHENSIVE INCOME 63 STATEMENTS OF FINANCIAL POSITION 64 STATEMENTS OF CHANGES IN EQUITY 65 STATEMENTS OF CASH FLOWS 67 NOTES TO THE FINANCIAL STATEMENTS 69