Profile of Board of Directors

Transcription

1 Profile of Board of Directors DATO IKMAL HIJAZ BIN HASHIM Independent Non-Executive Chairman Member of Audit Risk Management Committee Member of Nomination & Remuneration Committee Malaysian 65 years old Male Appointed on 26 February 2016 Dato Ikmal began his career in the Administrative and Diplomatic Service of the Government of Malaysia in In late 1991 he left the government services and joined United Engineers (M) Berhad as General Manager of Malaysia Singapore Second Crossing project. In 1993, he became the Chief Operating Officer of Projek Lebuhraya Utara-Selatan Berhad ( PLUS ) and in 1995 he was promoted as the company s Managing Director. In 1999, he was then appointed as Managing Director of Prolink Development Sdn Bhd ( Prolink ) and concurrently assumed the position of President for Property Division of the Group. He was subsequently appointed as Managing Director of Renong Berhad from 2002 until In November 2003, Dato Ikmal was seconded to Pos Malaysia Berhad as Chief Executive Officer/ Managing Director as well as Group Managing Director of Pos Malaysia and Services Holdings Berhad. Then in November 2007 he was appointed as Chief Executive of Iskandar Regional Development Authority ( IRDA ) until February He then became the Chairman of Faber Group Berhad from 1 March 2009 until June His other previous directorship was with Scomi Engineering Bhd. from October 2013 to March Currently, Dato Ikmal s other directorship in public companies include EP Manufacturing Bhd, Nadayu Properties Berhad, and Kumpulan Perangsang Selangor Berhad. He has no family relationship with any of the Directors and major shareholders of the Company and does not have any conflict of interest with the Company. He has had no convictions for any offences within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He does not hold any shares of the Company. Dato Ikmal has attended all five (5) Board Meetings held during the financial year. MR. CHONG JIUN SHYANG Independent Non-Executive Director Chairman of Audit Risk Management Committee Member of Nomination & Remuneration Committee Malaysian 53 years old Male Appointed on 28 March 2016 Mr. Chong is a Chartered Accountant by profession and a member Accountant of the Malaysian Institute of Accountants ( MIA ). Mr. Chong has over twentynine (29) years of experience during his career in the accounting profession with various private and public listed companies. He is currently the Group Financial Controller of Komarkorp Berhad, a public company listed on the Main Market of Bursa Malaysia Securities Berhad. He does not hold any directorship in any other public listed companies. He has no family relationship with any Directors and major shareholders of the Company and does not have any conflict of interest with the Company. He has had no convictions for any offences within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He does not hold any shares of the Company. Mr. Chong has attended all five (5) Board Meetings held during the financial year. 19

2 Profile of Board of Directors MR. PANG SIEW HENG Independent Non-Executive Director Chairman of Nomination & Remuneration Committee Member of Audit Risk Management Committee Malaysian 56 years old Male Appointed on 26 February 2016 Mr. Pang is a businessman with over thirty-seven (37) years of experience and is currently involved in a number of companies engaged in construction, property development, metal fabrication and engineering works. He was involved in various large-scale property development projects which include Today Mall in Ulu Tiram, Johor, Hatten Malacca, Millennium Project in Puchong, Selangor, Bayu Marina Resort in Johor Bahru, and Gold Coast Morib International Resort in Selangor. Mr. Pang holds directorships and has interest in several private limited companies, some of which carry out businesses similar to the Company. MR. NG LIANG KHIANG Non Independent Executive Director Key Senior Management He does not hold any directorship in any other public listed companies. He has no family relationship with any of the Directors and major shareholders of the Company. He has had no convictions for any offences within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He does not hold any shares of the Company. Mr. Pang has attended all five (5) Board Meetings held during the financial year. Malaysian 67 years old Male Appointed on 26 February 2016 Mr. Ng has over forty-four (44) years of experience in construction, property development and project management. In 1972, after completing his secondary education in Muar High School, Mr. Ng began his career as Site Supervisor with Binajaya Sdn. Bhd. in Kuala Lumpur, where he spent eleven (11) years and held the position of Project Manager when he left. Over the years, he has co-founded companies which are principally involved in, amongst others, property development, construction, and hotel management under SKS Group. Mr. Ng is responsible for managing and leading the Group s overall business operations. He does not hold any directorship in any other public listed companies. He has no family relationship with any of the Directors and major shareholders of the Company. He has had no convictions for any offences within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He does not directly hold any shares of the Company. He has deemed interest in 929,000 and 1,500,000 ordinary shares in the Company held by Ngsinar Sdn. Bhd. and his son, Ng Kok Boon, respectively, by virtue of Section 8 and Section 9(11)(C) of the Companies Act, Mr. Ng has attended all five (5) Board Meetings held during the financial year. 20

3 Profile of Board of Directors Malaysian 39 years old FEMale Appointed on 26 February 2016 MS. WONG YEAN NI Non Independent Executive Director Key Senior Management Ms. Wong graduated with a Bachelor s Degree in Accountancy (Honours) from University Utara Malaysia. She is an Accountant by profession and a member Accountant of the Malaysian Institute of Accountants ( MIA ) since 2007 with over fourteen (14) years of experience garnered from professional firms and commercial companies in the area of audit, taxation, consultancy and financial management. Ms. Wong has the overall responsibility of overseeing the Group s financial matters. She is also the designated Chief Financial Officer of MB World Group Berhad. MS. CINDI SIM Non Independent Executive Director Key Senior Management She does not hold any directorship in any other public listed companies. She has no family relationship with any of the Directors and major shareholders of the Company. She has had no convictions for any offences within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies during the financial year. She does not hold any shares of the Company. Ms. Wong is the director nominated by Kim Feng Capital Sdn. Bhd.. She has attended all five (5) Board Meetings held during the financial year. Malaysian 29 years old FEMale Appointed on 26 February 2016 Ms. Sim obtained a Bachelor of Science (Honours) Degree in Applied Accounting from Oxford Brookes University, London and a professional qualification from the Association of Certified Chartered Accountant ( ACCA ) in She entered into the property construction and development industry upon graduation in She was subsequently promoted to Business Development Manager with hands-on exposure to all major areas of the property development industry covering building planning and development, project management and execution and financial management. Ms. Sim has the overall responsibility for overseeing a wide spectrum of matters related to the Group s business operations. Currently she is the Group Managing Director of SKS Group of Companies and holds directorships in various private limited companies which are involved in the property development, property investment and hospitality industry, some of which are similar to that carried out by MB World Group Berhad. She does not hold any directorship in any other public listed companies. She is the sister of Mr. Simon Sim Yow Yung, an Executive Director and a major shareholder of the Company. Apart from this, she has no family relationship with any of the other Directors and major shareholders of the Company. She has had no convictions for any offences within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies during the financial year. She does not hold any shares of the Company. Ms. Sim has attended all five (5) Board Meetings held during the financial year. 21

4 Profile of Board of Directors MR. SIMON SIM YOW YUNG Non Independent Executive Director Key Senior Management Malaysian 23 years old Male Appointed on 26 February 2016 Mr. Sim graduated with a Bachelor of Commerce from the University of Western Australia, Australia and joined MB Builders Sdn. Bhd. (now known as SKS Southern Sdn. Bhd.), a property development company as Business Development Manager upon graduation in He has the overall responsibility for overseeing the Group s strategic planning, project management and business operations. Mr. Sim does not hold any directorship in any other public listed company. He is the brother of Ms. Cindi Sim, an Executive Director of the Company. Apart from this, he has no family relationship with any of the other Directors and major shareholders of the Company. He has had no convictions for any offences within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He does not directly hold any shares of the Company. He is a major shareholder of the Company by virtue of his deemed interest in 110,537,241 ordinary shares held by Kim Feng Capital Sdn. Bhd. the holding Company, pursuant to Section 8 of the Companies Act, Mr. Sim has attended all five (5) Board Meetings held during the financial year. 22

5 Profile of Senior Management MB WORLD GROUP BERHAD ( MB WORLD GROUP OR ) IS MANAGED BY A TEAM OF EXPERIENCED EXECUTIVE DIRECTORS LED BY MR. NG LIANG KHIANG. TO COMPLEMENT THE EXECUTIVE DIRECTORS IS A TEAM OF SENIOR MANAGEMENT AND PROFESSIONAL MANAGERS. Malaysian 32 years old Male Appointed on 1 April 2017 MR. NG KOK BOON, LESTER Chief Executive Officer of Construction Division Mr. Ng graduated with a Bachelor of Civil Engineering from Universiti Tenaga Nasional. Upon graduation, he started his career with Malpakat Sdn. Bhd. as Site Engineer where he was involved in project planning and construction of high-rise buildings. He has nine (9) years of experience in building and construction industry. Prior to joining MB World Group, Mr. Ng was the Executive Director of SKS Group of Companies overseeing the property development and construction portfolio. He is responsible for the daily management and operations of Construction Division under MB World Builders Sdn. Bhd. and also holds directorship in the said subsidiary and other MB World Group s subsidiaries. Mr. Ng also holds directorship and has interests in other private limited company which carries out business/trade similar to that carried out by MB World Group. He directly holds 1,500,000 ordinary shares in the Company and has deemed interest in 929,000 ordinary shares in the Company held by Ngsinar Sdn. Bhd. by virtue of Section 8 of the Companies Act, He is the son of Mr. Ng Liang Khiang, an Executive Director of MB World Group Berhad. Apart from this, he has no family relationship with any of the other Directors and major shareholders of the Company. He has not been convicted for any offences within the past five (5) years. There was no public sanction or penalty imposed on him by any regulatory bodies during the financial year. 23

6 Corporate Governance Overview Statement The Board of MB World Group Berhad ( MB WORLD GROUP ) recognises that good Corporate Governance ( CG ) practices is of utmost importance to protect, enhance and support the business affairs and financial performance of the Group to safeguard shareholders investment and value. This statement is to provide shareholders and investors with an overview of the application of the Principles set out in the Malaysian Code on Corporate Governance ( MCCG ) by MB World Group and should be read together with the CG Report 2017 of MB World Group ( CG Report ) which accompanies this Annual Report and is also available on MB World Group s website at The CG Report provides the details on how MB World Group has applied each Practice as set out in the MCCG during the financial year ended 2017 ( FY2017 ). Other than Practice 4.1, 7.2 and 12.3, the Board is of the view that MB World Group has substantially complied with the recommendations of MCCG. PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS I. BOARD RESPONSIBILITIES The roles and responsibilities of the Board and Management, the Board Committees and the individual Directors are set out in the Board Charter which is accessible through MB World Group s website. The Board Charter will be reviewed on an annual basis. The Board has enhanced its Board Charter and adopted new policies and made it available together with other existing policies on MB World Group s website at as follows: Whistle Blowing Policy Code of Business Conduct and Ethics Board Policy on Time Commitment Corporate Disclosure Policy Shareholders Communication Policy Continuing Education Policy Gender Diversity Policy (adopted on 28 March 2018) Policy Framework on Remuneration of Directors (adopted on 28 March 2018) It is the primary governance responsibilities of the Board to lead and control MB World Group Berhad and its subsidiaries ( the Group ). The Board s responsibilities in respect of the stewardship of the Group include planning for the strategic direction, development and control of the Group and initiating to embrace the responsibilities listed in the MCCG. While the Board sets the strategic plan and policies, the Executive Directors are responsible for making and implementing the operational and corporate decisions while the Independent Non-Executive Directors ensure corporate accountability by providing unbiased and independent views, advice and judgement and challenging the Management s assumptions and projections in safeguarding the interests of shareholders. The Board has defined the roles and responsibilities for the Board and its Directors. In discharging their fiduciary responsibilities, the Board during its Board meetings deliberates and reviews the financial performance of the Group, the execution of strategic plans by the Executive Directors, the principal risks faced by the Group and the effectiveness of management mitigation plan, the appraisal of Executive Management and Senior Management succession plan as well as the integrity of management information and systems of internal control of the Group. 24

7 Corporate Governance Overview Statement The day-to-day management of the business operations of the Group is led by the Executive Directors and a team of Senior Management Executives. The Board is also kept updated on the Group s strategic direction initiatives, significant operational and regulatory challenges faced by the Group during its meetings. The Board is headed by an Independent Non-Executive Chairman with a wealth of experience garnered from both the public and private sector. The roles of the Independent Non-Executive Chairman is defined and set out in the Board Charter and is further explained in the CG Report. The positions of the Chairman and the Executive Management are separately held ensuring balance of power, accountability and division of roles and responsibilities of the Board and the Management of the Group s business and operations. The Board has developed descriptions for responsibilities of the Board Chairman, Executive Directors, the individual Board Members as well as the Chief Financial Officer designate. The roles and responsibilities of the Chief Financial Officer is currently carried out by the Executive Director in charge of corporate finance and administration. The details of these responsibilities are articulated in the Board Charter which is accessible from MB World Group s corporate website at The Board maintains specific Board Committees namely the Audit Risk Management Committee ( ARMC ) and the Nomination and Remuneration Committee ( NRC ). The ARMC and Board are further assisted by a newly established Sustainability & Risk Management Committee ( SRMC ), a sub-committee of the ARMC. These Committees ensure greater focus, objectivity and independence in the deliberation of specific board agenda. The Board has defined the terms of reference for each Committee and the Chairman of these respective committees would report to the Board during the Board meetings on significant matters and salient matters deliberated in the Committees. The Board is supported by two (2) External Company Secretaries. Both Company Secretaries of MB World Group are qualified to act as Company Secretary under Section 235 of the Companies Act 2016, of which one is a Fellow Member and the other, an Associate Member of the Malaysian Institute of Chartered Secretaries & Administrators. The Company Secretaries provide the required support to the Board in carrying out its duties and stewardship role, providing the necessary advisory role with regards to the Company s constitution, Board s policies and procedures as well as compliance with all regulatory requirements, codes, guidance and legislation. II. BOARD COMPOSITION MB World Group is led and managed by a diverse, competent and experienced Board of Directors with a mix of suitably qualified and experienced professionals having wide and varied expertise in the fields of business, property development, accounting and taxation. This enables the Board to carry out its responsibilities effectively and ensures accountability. The current Board is drawn from different ethnic, cultural and socio-economic background with their age ranging from 23 years to 67 years to ensure that different viewpoints are considered in the decision making process. The profile of each Director is set out in pages 19 to 22 of this Annual Report. The Board acknowledges the importance of diversity to ensure the mix and profiles of the Board members, in terms of age, ethnicity and gender, ability to provide the necessary range of perspectives, experiences and expertise required are well balanced in order to achieve effective board stewardship. The Board had adopted a Gender Diversity Policy which is made available at MB World Group s website. The Board currently includes two Executive Directors of female gender. During the FY2017, the Board through its NRC conducted an annual review of the Board s size, composition and balance and concluded that the Board s dynamics are healthy and effective. The present members of the Board possess the appropriate skills, experience and qualities to steer the Group forward. The NRC is also satisfied that the existing structure, size, composition, current mix of skills, competence, knowledge, experience and qualities of the existing Board members are appropriate to enable the Board to carry out its responsibilities effectively. The Board will continue to monitor and review the Board size and composition and will nominate new members as and when the need arises. 25

8 Corporate Governance Overview Statement The Board takes cognizance of the recommendation for at least half of the Board to comprise independent directors and although the Board has not made any decision at this juncture, going forward, the Board will be reviewing and deliberating on the merits of the recommendation vis a vis, the Group s size, structure and dynamics during the coming financial year. The Board has also adopted the best practices for assessing the independence of Independent Directors annually and the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. When the Board retains an Independent Director who has served in that capacity for more than nine (9) years, the Board would justify its decision and seek shareholders approval. The re-election of Directors provides an opportunity for shareholders to renew their mandate conferred to the Directors. The Constitution of the Company provides that all directors shall retire by rotation once in every three (3) years or at least one-third (1/3) of the Board shall retire but shall be eligible to offer themselves for re-election at the Annual General Meeting ( AGM ). The above provisions are adhered to by the Board in every AGM. Information on Directors standing for re-election are outlined in the Profile of Board of Directors covering their details of profession, directorships in other public companies and shareholdings in the Company and their attendance of the Board meetings are set forth on pages 19 to 22 of this Annual Report. At the forthcoming 2018 AGM, Ms Cindi Sim and Mr Chong Jiun Shyang are due to retire by rotation under Article 109 of the Constitution and being eligible have offered themselves for re-election. Following the NRC s review on the performance of the two Directors and having noted their significant and valued contributions to the Board, the NRC has recommended their re-election to the Board and the Board has concurred with such recommendation and is recommending that shareholders re-elect the said Directors at the forthcoming 2018 AGM. In compliance with the provision of Paragraph 15.08A(3) of the Bursa Malaysia Securities Berhad s ( Bursa Securities ) Main Market Listing Requirements ( Listing Requirements ), the activities of the NRC for the FY2017 are set out in Practices 4.4, 4.6 & 5.1 of the CG Report. III. REMUNERATION The NRC and Board are mindful of the need to remunerate and retain its Directors to ensure that their commitment remains and therefore their remuneration package is directly linked to their performance, service, seniority, experience and scope of responsibilities. The NRC is responsible to establish, recommend and constantly review a formal and transparent remuneration policy framework and terms of employment for the Board to attract and retain directors which should be aligned with the business strategy and long-term objectives of the Group taking into consideration that the remuneration of the Board should reflect the Board s responsibilities, expertise and complexity of the Group s activities. During the FY2017, the NRC had reviewed the Director s fees and benefits and the Executive Directors remuneration for the financial year ending 31 December 2018 ( FY2018 ) and recommended to the Board for approval. PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT I. AUDIT RISK MANAGEMENT COMMITTEE The Board has opted to combine the functions of Risk Management Committee with the functions of the Audit Committee ( AC ) on 28 March 2018 and the AC has been appropriately renamed as the Board s Audit Risk Management Committee ( ARMC ). The ARMC of MB World Group comprises wholly of Independent Non-Executive Directors. The ARMC Chairman, Mr. Chong Jiun Shyang, is a member of the Malaysian Institute of Accountants. He is not the Chairman of the Board. 26

9 Corporate Governance Overview Statement The ARMC is authorised by the Board to investigate any activity within its Terms of Reference. It shall have full and unrestricted access to any information pertaining to the Group. The ARMC is authorised to seek any information it requires from any employee and all employees are directed to cooperate with any request made by the ARMC. The detailed Terms of Reference of the ARMC outlining the composition, duties and functions, authority and procedures of the ARMC are published and available on MB World Group s website at MB World Group has always recognised the need to uphold independence. None of the members of the current Board was a former key audit partner within the cooling-off period of two (2) years. Hence, no such person being appointed as a member of the ARMC. The ARMC has amended the Terms of Reference of the ARMC to include the requirements for former key audit partner to observe a cooling-off period of at least 2 years before being appointed as a member of the ARMC. II. The ARMC carried out an assessment of the performance and suitability of Messrs Crowe Horwath the External Auditors based on the quality of services, sufficiency of resources, adequate resources and trained professional staff assigned to the audit. The ARMC is generally satisfied with the independence, performance and suitability of Messrs Crowe Horwath based on the assessment and is recommending to the Board and shareholders for approval for the re-appointment of Messrs Crowe Horwath as External Auditors for the FY2018. The assessment of Performance of ARMC is conducted annually. The NRC evaluated and assessed the performance and effectiveness of the ARMC. The evaluation process amongst others considered whether the Committees had met its purpose, whether its composition was appropriate, and whether it had the necessary authority and processes to carry out its functions and fulfil its obligations. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK During FY2017, the Board and ARMC were assisted by the Executive Directors and its Finance Department to maintain its risk management system, which is reviewed and updated constantly to safeguard shareholders investments and the Group s assets. The Group s internal audit function has been outsourced to an external consultant which reports directly to the ARMC. The internal audit function currently reviews and appraises the risk management and internal control processes of the Group. The Statement on Risk Management and Internal Control set out on pages 33 to 34 of this Annual Report provides an overview of the Group s approach to ensure the effectiveness of the risk management and internal processes within the Group. Going forward, the Board has restructured its risk management and internal control processes with the establishment of the ARMC and the SRMC. PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS I. COMMUNICATION WITH STAKEHOLDERS MB World Group is committed to upholding high standards of transparency and promotion of investor confidence through the provision of comprehensive, accurate and quality information on a timely and even basis. The Board has in place the Shareholders Communication Policy and Corporate Disclosure Policy the details of which are available on MB World Group s website at 27

10 Corporate Governance Overview Statement II. CONDUCT OF GENERAL MEETINGS As stated earlier, the Board recognises the importance of communications with its shareholders and will take additional measures to encourage shareholders participation at general meetings as recommended by the MCCG. This includes the Chairman highlighting to shareholders and proxy holders, their right to speak up at general meetings, the conduct of poll voting for all resolutions tabled at general meetings and a review of the performance of the Group during the AGMs. To ensure effective participation of and engagement with shareholders at the AGM in 2017, all Directors, including members of ARMC and NRC, attended and participated in said AGM. In line with the best CG practice, the Notice of the 19th AGM and Annual Report are sent out to shareholders at least 28 days before the date of the meeting to allow sufficient time for shareholders to consider the proposed resolutions to be tabled at the AGM. This CG Overview Statement was approved by the Board of Directors of MB World Group on 28 March

11 Audit Risk Management Committee Report COMPOSITION OF AUDIT RISK MANAGEMENT COMMITTEE The Audit Committee embraced the functions of the Risk Management Committee as required by the Malaysian Code of Corporate Governance 2017 with the functions of the Audit Committee and renamed the Audit Committee as the Audit Risk Management Committee ( ARMC ) on 28 March The Audit Risk Management Committee ( ARMC ) of MB World Group Berhad ( MB World Group or the Company ) is comprised wholly of Independent Non-Executive Directors as follows: Mr. Chong Jiun Shyang (Chairman) Independent Non-Executive Director Dato Ikmal Hijaz bin Hashim (Member) Independent Non-Executive Director Mr. Pang Siew Heng (Member) Independent Non-Executive Director Mr. Chong Jiun Shyang, the Chairman, is a Member of the Malaysian Institute of Accountants. The Company is in compliance with Paragraph (1)(c)(i) of Bursa Malaysia Securities Berhad s ( Bursa Securities ) Main Market Listing Requirements ( Listing Requirements ). SECRETARY The secretaries to the ARMC are the Company Secretaries of the Company. TERMS OF REFERENCE The detailed Terms of Reference of the ARMC outlining the composition, duties and functions, authority and procedures of the ARMC are published and available on the Company s website at The ARMC is now required amongst others to review significant matters highlighted including financial reporting issues, significant judgements made by management, significant and unusual events or transactions and how these matters are addressed. MEETINGS The attendance record of all members of the ARMC during the financial year ended 31 December 2017 ( FY2017 ) at meetings of the ARMC are as follows: - number of Percentage of Name Meetings Attended attendance (%) Mr. Chong Jiun Shyang 5/5 100 Dato Ikmal Hijaz bin Hashim 5/5 100 Mr. Pang Siew Heng 5/5 100 The Agenda for meetings, the relevant reports and papers were furnished to all ARMC members by the Secretary after consultation with the ARMC Chairman in advance to facilitate effective deliberation and decision making at the respective meetings. During its scheduled quarterly meetings, the ARMC reviewed the risk management and internal control processes (with the assistance of its outsourced Internal Audit Function), the interim and year-end financial report, the internal and external audit plans and reports, Related Party Transactions ( RPT ), and all other areas within the scope of responsibilities of the ARMC under its Terms of Reference. 29

12 Audit Risk Management Committee Report All issues and challenges were deliberated during ARMC meetings before arriving at any decisions, conclusions or recommendations and brought to the attention of the Board where necessary. The minutes of these deliberations and its resultant decisions, conclusions or recommendations at each ARMC meeting were properly minuted by the Company Secretary and subsequently elevated to the Board for review and notation. The Executive Director in charge of Finance, who currently carries out the functions of the Chief Financial Officer and the Head of the respective operating subsidiaries were invited to and attended all ARMC meetings to facilitate direct communication and interaction as well as provide clarifications on audit, financial and operational issues. The representatives of the Outsourced Internal Audit ( OIA ) Function attended the ARMC meetings to table their respective Internal Audit Reports ( IAR ). The External Auditors of the Company represented by their Engagement Partner leading the Audit attended ARMC meetings to present their Audit Planning Memorandum and Audit Findings Memorandum and to assist the ARMC in its review of year-end financial statement. SUMMARY OF ACTIVITIES In respect of the FY2017, the ARMC in discharging its duties and functions carried out activities which are summarised broadly as follows: - (a) Internal Audit During the FY2017, the Internal Audit Plan was developed in consideration of the Group s risk profile and the Board and management concerns and the total cost incurred during the FY2017 for the internal audit function of the Group was RM 63,600. On 22 May 2017, the OIA tabled the first IAR for the ARMC s review covering the process and internal controls in respect of the Project Management Department for its Property Development Division focusing on the management control over the master work program of the projects including the revision of master work program and the work performed by the subcontractor. On 23 August 2017, the OIA tabled the second IAR for the ARMC s review covering the effectiveness of risk management activities at operation level and their implementation including review of risk register of the Group. On 27 November 2017, the OIA tabled the third IAR for the ARMC s review covering the process and internal controls in respect of the Procurement Department for its Construction Division. The report focused on the Standard Operating Procedure of procurement cycle and the understanding of management control over the progress claim from the subcontractors. All reports outlined the audit objective, scope of work, source of information, restriction, conduct of internal audit, list of observation, risk status of findings together with the Internal Auditors recommendations and the management s response. On 23 February 2018, the OIA tabled the fourth IAR for the ARMC s review covering the Risk Chart of the Group and procedural compliance test relating to the Sales and Marketing, Contract, Project Control and Procurement Departments. 30

13 Audit Risk Management Committee Report (b) Financial Reporting In overseeing and discharging its responsibilities in respect of financial reporting, the ARMC: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) Reviewed the financial positions, Quarterly Interim Financial Reports and announcements for the respective financial quarters prior to submission to the Board for consideration and approval. The 1st, 2nd, 3rd and 4th Quarter Interim Financial Reports were tabled at the ARMC meetings held on 22 May 2017, 23 August 2017, 27 November 2017 and 23 February Ensured the Quarterly Reports and Audited Financial Statements ( AFS ) were prepared in compliance with the Malaysian Financial Reporting Standard ( MFRS ) while the quarterly reports took into consideration Paragraph 9.22 including Appendix 9B of Bursa Securities s Listing Requirements; Reviewed the External Auditors Audit Planning Memorandum for the FY2017 which covered the engagement and reporting requirements, audit approach, areas of audit emphasis, significant events during the year, communication with the management, engagement team, the reporting and deliverables as well as the proposed audit fees; Reviewed the External Auditors findings and recommendations for the FY2017 on 23 February 2018 and the AFS for the FY2017 on 28 March 2018; Reviewed and approved the draft Circular to Shareholders on the proposed renewal of shareholders mandate and proposed new shareholders mandate for recurrent related party transactions on 28 March 2018; Conducted two independent meeting sessions with the External Auditors without the presence of executive board members and management personnel on 27 November 2017 and 23 February 2018; During these private sessions, the external auditors conveyed that there were no areas of major concerns and that they had received full co-operation from the management during their audit. Considered the performance of External Auditors, reviewed the independence of External Auditors and recommended to the Board for re-appointment; Ensured the integrity of the financial information, received assurance from the Executive Directors and Executive Director in charge of Finance, that: - - Appropriate accounting policies had been adopted and applied consistently; - The going concern basis applied in the Annual Consolidated Financial Statements was appropriate; - Prudent judgements and reasonable estimates had been made in accordance with the requirements set out in the MFRSs; - Adequate controls and processes were in place for effective and efficient financial reporting and relevant disclosures under MFRSs and Bursa Securities s Listing Requirements; and - The Consolidated Annual Financial Statements and the Quarterly Condensed Consolidated Financial Statements did not contain material misstatements and gave a true and fair view of the financial position. Reviewed the ARMC Report, Corporate Governance Report and Statement on Risk Management and Internal Control for publication in the 2017 Annual Report. Reviewed the Statement of Risk Management and Internal Control together with the Internal Auditors and External Auditors and received assurance from the Executive Directors and Executive Director in charge of Finance that the Group s risk management and internal control systems are operating adequately and effectively in all material aspects before recommending the Statement to the Board of Directors. Considered the performance of Internal Auditors and reviewed the independence and objectivity of Internal Auditors and effectiveness of internal control. 31

14 Audit Risk Management Committee Report (c) External Audit Messrs Crowe Horwath is the External Auditors for the Company and all its subsidiaries except Noblecorp Capital Sdn Bhd. Messrs Crowe Horwath led by their engagement partner presented their External Audit Planning Memorandum for the FY2017 on 27 November 2017 and had declared and confirmed that they were independent and would be independent throughout their audit engagement. Subsequent to the FY2017, the ARMC met with the External Auditors in the absence of the Management on 23 February The ARMC had the opportunity to assess the co-operation extended by the Management to the External Auditors, their attitude and readiness to provide documentation and explanations, as well as the adequacy of resources in the Group s Financial Department. There were no areas of major concern raised by Messrs. Crowe Horwath that warranted escalation to the Board. The External Auditors were also informed by the ARMC that should there be any significant incidents or matters detected in the course of their audits or reviews which warrant their knowledge or intervention, it shall be reported to the ARMC accordingly. At the same time, Messrs Crowe Horwath had the opportunity to obtain feedback from the ARMC on their perspectives on the areas of major concerns, which they would like the External Auditors to look into. The non-audit fees paid to the External Auditors amounted to RM56,800 for the FY2017. The non-audit fees were in respect of services rendered in respect of tax compliance services and review of the Statement on Risk Management and Internal Control. The ARMC carried out an assessment of the performance and suitability of Messrs Crowe Horwath based on the quality of services, sufficiency of resources, adequate resources and trained professional staff assigned to the audit. The ARMC is generally satisfied with the independence, performance and suitability of Messrs Crowe Horwath based on the assessment and is recommending to the Board and shareholders for approval for the re-appointment of Messrs Crowe Horwath as External Auditors for the financial year ending 31 December (d) Related Party Transaction On each quarterly basis, ARMC took note of all Related Party Transactions reported by the executive director following their review to satisfy themselves whether those transactions were in accordance with the mandate approved by shareholder on 22 May 2017, in respect of Related Party Transactions of a recurring and trading nature. On 28 March 2018, the ARMC reviewed and approved the draft Circular to Shareholders on the proposed renewal of shareholders mandate and proposed new shareholders mandate for recurrent Related Party Transactions. CORPORATE GOVERNANCE PRACTICES Apart from discharging its duties with respect to the internal audit, financial reporting and external audit, the ARMC also reviewed the disclosures made in respect of the financial results and Annual Report of the Company in line with the principles and spirit set out in the Malaysian Code on Corporate Governance 2017, other applicable laws, rules, directives and guidelines. In addition, before finalising the various governance disclosures in the Annual Report, the ARMC together with all other Board Members and Management had reviewed the Corporate Governance Report, ARMC Report, Statement on Risk Management and Internal Control together with other compliance disclosures. 32

15 Statement on Risk Management and Internal Control INTRODUCTION The Board of MB World Group Berhad ( MB WORLD GROUP ) acknowledges its responsibilities for maintaining an effective system of risk management and internal controls so that there is reasonable assurance that adverse impact arising from a foreseeable future event is mitigated or managed. The system of risk management and internal controls are designed to manage rather than to eliminate the risks which may impede the achievement of an entity s business objectives and strategies. Due to the inherent limitations of internal controls, the system can only provide reasonable but not absolute assurance against any material loss. Pursuant to Paragraph 15.26(b) of the Main Market Listing Requirements ( Listing Requirements ) of the Bursa Securities Malaysia Berhad ( Bursa Securities ), the Board is pleased to provide the following statement on the state of internal control of MB World Group and its subsidiaries ( the Group ). RISK MANAGEMENT Since the financial year ended 2015 ( FY2015 ), the Group has been rapidly expanding its property development business such that property development has become the Group s core business during the financial year ended 2017 ( FY2017 ). During the year, the Board has yet to formally establish the Risk Management Committee and hence the task of overseeing of the risk management and internal control systems has been delegated to the Audit Committee ( AC ). Due to the rapid expansion into property development business, in the FY2017, the Group developed a Risk Scorecard with an emphasis on property development activities in order to enhance the Board s and AC s assessment and management of the significant risks in the property development business. The building of this Risk Scorecard was facilitated by our Outsourced Internal Audit service provider, Forreststone Corporate Advisory Sdn. Bhd. ( FCA ). Pursuant to the building of the above risk scorecard, internal audits were conducted in respect of the controls relating to project management and procurement cycles which were assessed to be of high priority areas by the AC and corrective actions were formulated for the identified shortcomings. The Board acknowledges that the Group has yet to complete the development of a formal enterprise wide risk management ( ERM ) framework which is based on an internationally recognised framework. The Board, in February 2018, resolved that the Group s risk management and internal control systems is to be overseen by the AC which has been renamed to the Audit Risk Management Committee ( ARMC ). By the end of 2018, the Board expects the ARMC to complete the development of an ERM framework which will be based on internationally recognised standards. KEY ELEMENTS OF INTERNAL CONTROL The principal features of the Group s system of internal controls are as follows: Organisational structure with defined roles and responsibilities The Group has in place an operating structure and organisation chart with defined lines of responsibility and adequate segregation. 33

16 Statement on Risk Management and Internal Control Annual Budgets Annual budgeting process is in place and performance is monitored on an on-going basis. The variances of actual performance against the budget are monitored and presented to the ARMC on a regular basis. Reporting and Review The Board and the ARMC meet at least quarterly and have a schedule of matters which are required to be brought up for their review, namely : (i) (ii) (iii) (iv) Interim quarterly financial reports; Related Party Transactions; Corporate Governance related matters; and Internal and external audit related matters. Documented Policies and Procedures The Group has clearly established internal policies and procedures which are documented in a series of manuals which cover most of the Group s major operations. Internal Audit The Group outsources its internal audit function to FCA, a professional firm which provides risk management and internal audit outsourcing services to provide independent assessment on the adequacy and effectiveness of the Group s system of internal controls. The internal audit plan is approved by the AC on an annual basis. The internal audit function also checks compliance with policies and procedures established by the Group, advises Management on areas for improvement and performs followup reviews to determine the extent to which the agreed upon action plans have been implemented. During the year, the internal audit activities were focused on the Group s project management and procurement cycles in the Group s property development business and the findings of audit were reported to AC for review. The AC and the Board view such findings seriously and have been or are currently taking measures to address them. Mr Lew Sze How who is a Member of the Institute of Internal Auditors Malaysia heads the internal audit function which consists of 3 persons. The engagement personnel employed by FCA do not have any relationship with the Group s personnel nor do they have any conflicts of interest which could impair their objectivity and/or independence. ADEQUACY AND EFFECTIVENESS OF S RISK MANAGEMENT AND INTERNAL CONTROL Although the Group s has yet to complete the development of its ERM framework during the financial year under review, the Board is satisfied with the adequacy and effectiveness of the Group s system of risk management and internal control. There has been no control weakness or failure which resulted in material losses that would require disclosure in the Group s financial statements for the FY2017. REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS Pursuant to Paragraph of the Bursa Securities s Listing Requirements, the external auditors have reviewed this statement for inclusion in the Annual Report of MB World Group for the FY2017. Their review is performed in accordance with Recommended Practice Guide 5 (Revised) Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control ( RPG 5 ) issued by the Malaysia Institute of Accountants. RPG 5 does not require the reviewer to form an opinion on the adequacy and effectiveness of Group s risk management and internal controls system. The Statement is made in accordance with a resolution of the Directors dated 28 March

17 FINANCIAL STATEMENTS 36 Directors Report 41 Statement by Directors 41 Statutory Declaration 42 Independent Auditors Report 46 Statements of Financial Position 47 Statements of Profit or Loss and Other Comprehensive Income 49 Statements of Changes in Equity 52 Statements of Cash Flows 55 Notes to the Financial Statements 35

18 Directors Report The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are set out in Note 8 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS THE GROUP rm THE COMPANY RM Profit after taxation for the financial year 30,558, ,394 Attributable to:- Owners of the Company 30,558, ,394 DIVIDENDS Dividends paid or declared by the Company since 31 December 2016 are as follows:- In respect of the financial year 31 December 2017 RM A single tier dividend of 3.5 sen per ordinary share, paid on 29 November ,508,200 The directors do not recommend the payment of any further dividend for the financial year. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements. 36

19 Directors Report ISSUES OF SHARES AND DEBENTURES During the financial year, (a) the Company increased its issued and paid-up share capital from RM45,929,950 to RM125,248,161 due to the following: issuance of 65,517,241 new ordinary shares of RM1.16 each for a non-cash consideration of RM76,000,000 in connection with the acquisition of the entire equity interest in Cocoa Valley Development Sdn. Bhd.; and transfer of RM3,318,211 from the share premium account for purpose of compliance with Section 618(2) of the Companies Act (b) The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company. there were no issues of debentures by the Company. OPTIONS GRANTED OVER UNISSUED SHARES During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company. BAD AND DOUBTFUL DEBTS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for impairment losses on receivables, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for impairment losses on receivables. At the date of this report, the directors are not aware of any circumstances that would require the further writing off of bad debts, or the additional allowance for impairment losses on receivables in the financial statements of the Group and of the Company. CURRENT ASSETS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ensure that any current assets, which were unlikely to be realised in the ordinary course of business, including their value as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise. At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements misleading. VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. 37

20 Directors Report CONTINGENT AND OTHER LIABILITIES The contingent liabilities are disclosed in Note 35 to the financial statements. At the date of this report, there does not exist:- (a) (b) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group and of the Company which has arisen since the end of the financial year. No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. ITEMS OF AN UNUSUAL NATURE The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made. DIRECTORS The names of directors of the Company who served during the financial year and up to the date of this report are as follows:- Cindi Sim Ng Liang Khiang Chong Jiun Shyang Dato Ikmal Hijaz Bin Hashim Simon Sim Yow Yung Pang Siew Heng Wong Yean Ni The names of directors of the Company s subsidiaries who served during the financial year and up to the date of this report, not including those directors mentioned above, are as follows:- Ng Kok Boon (Appointed on ) Lim Yew Hoe Chung Chee Wai Edward Thanarajah A/L Easupatham Samuel 38

21 Directors Report DIRECTORS INTERESTS According to the register of directors shareholdings, the interests of directors holding office at the end of the financial year in shares of the Company and its related corporations during the financial year are as follows:- The Company Number of Ordinary Shares at at Bought Sold Direct Interests Cindi Sim 920,000 (920,000) Indirect Interests Cindi Sim (i) 46,664,000 65,517,241 (1,644,000) 110,537,241 Ng Liang Khiang (ii) 2,464,300 20,000 (55,300) 2,429,000 Simon Sim Yow Yung (i) 47,584,000 65,517,241 (2,564,000) 110,537,241 (i) (ii) Deemed interested by virtue of their direct substantial shareholdings in Kim Feng Capital Sdn. Bhd. as well as their family members direct shareholdings in the Company. Deemed interested by virtue of his direct substantial shareholdings in NgSinar Sdn. Bhd. as well as his family members direct shareholdings in the Company. By virtue of their shareholdings in the Company, Cindi Sim and Simon Sim Yow Yung are deemed to have interests in shares in its related corporations during the financial year to the extent of the Company s interests, in accordance with Section 8 of the Companies Act The other directors holding office at the end of the financial year had no interest in shares of the Company or its related corporations during the financial year. DIRECTORS BENEFITS Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by directors shown in the financial statements or the fixed salary of a full-time employee of the Company or related corporations) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain directors have substantial financial interests as disclosed in Note 36 to the financial statements. Neither during nor at the end of the financial year was the Group or the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. DIRECTORS REMUNERATION The details of the directors remuneration paid or payable to the directors of the Group and of the Company during the financial year are disclosed in Note 38 to the financial statements. 39

22 Directors Report SUBSIDIARIES The details of the Company s subsidiaries are disclosed in Note 8 to the financial statements. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR The significant event during the financial year is disclosed in Note 41 to the financial statements. INDEMNITY AND INSURANCE COST During the financial year, the total amount of indemnity coverage and insurance premium paid for the directors and certain officers of the Company and of the Group were RM10,000,000 and RM14,850 respectively. No indemnity was given to or insurance effected for auditors of the Company. HOLDING COMPANY The holding company is Kim Feng Capital Sdn. Bhd., a company incorporated in Malaysia. AUDITORS The auditors, Messrs. Crowe Horwath, have expressed their willingness to continue in office. The auditors remuneration are disclosed in Note 25 to the financial statements. Signed in accordance with a resolution of the directors dated 28 March 2018 Cindi Sim ng Liang Khiang 40

23 Statement by Directors pursuant to section 251(2) of the Companies Act 2016 We, Cindi Sim and Ng Liang Khiang, being two of the directors of MB World Group Berhad, state that, in the opinion of the directors, the financial statements set out on pages 46 to 121 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2017 and of their financial performance and cash flows for the financial year ended on that date. Signed in accordance with a resolution of the directors dated 28 March 2018 Cindi Sim Ng Liang Khiang Statutory Declaration pursuant to section 251(1)(b) of the Companies Act 2016 I, Wong Yean Ni, MIA Membership Number: 27774, being the director primarily responsible for the financial management of MB World Group Berhad, do solemnly and sincerely declare that the financial statements set out on pages 46 to 121 are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the declaration to be true, and by virtue of the Statutory Declarations Act Subscribed and solemnly declared by the abovementioned Wong Yean Ni, NRIC Number: , at Johor Bahru in the state of Johor on this 28 March 2018 Before me Wong Yean Ni Nur Amreeta Kaur Gubachen Singh Commissioner for Oaths No. J276 41

24 Independent Auditors Report to the members of MB World Group Berhad (Incorporated In Malaysia) Company No : H REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Opinion We have audited the financial statements of MB World Group Berhad, which comprise the statements of financial position as at 31 December 2017 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 46 to 121. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and Other Ethical Responsibilities We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ( By-Laws ) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current financial year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report. Reasonableness of revenue recognition arising from contracts with customers Refer to Note 5.23(a) and 22 to the financial statements Key Audit Matter How our audit addressed the Key Audit Matter Area of focus The Group s revenue is mainly derived from property development activities. Judgement is required to assess the performance obligations and revenue recognition. Judgements impacting the revenue recognition are as follow:- interpreting of contract terms and conditions; assessing and identifying the performance obligations; and assessing the computation of revenue recognition. To address this risk, our audit procedures involved the following: reviewing the contract terms and identifying performance obligations stipulated in the contracts; evaluating whether the performance obligations are satisfied at point in time or over time; and assessing the revenue recognised is in accordance with MFRS 15 Revenue with Contract Customers. 42

25 Independent Auditors Report to the members of MB World Group Berhad (Incorporated In Malaysia) Company No : H REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT D) Key Audit Matters (cont d) Reasonableness of attributable profits arising from property development projects Refer to Note 5.1(g), 11, 22 and 23 to the financial statements Key Audit Matter How our audit addressed the Key Audit Matter Area of focus The Group s property development division recognises revenue, cost and profit by reference to the progress towards complete satisfaction of the performance obligation at the end of the reporting period. This requires the use of estimates, namely project development revenue and cost. Significant judgement is required in determining the accuracy and completeness of the estimates. Substantial changes to project development revenue and cost estimates in the future can have a significant effect on the Group s results. Information Other than the Financial Statements and Auditors Report Thereon To address this risk, our audit procedures included, amongst others: making inquiries and obtaining an understanding from management on the procedures and controls in relation to the estimation of and revision to the project development revenue and cost; reviewing the reasonableness of the estimated project development revenue by comparing the selling prices of units sold to the estimated selling prices of unsold units; and reviewing the reasonableness of the estimated project development cost by reviewing the contract works awarded, assessing the basis of estimation for contract works not awarded and comparing to the actual costs incurred up to the end of the reporting period. The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors report thereon. Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Statements The directors of the Company are responsible for the preparation of the financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Group and of the Company, the directors are responsible for assessing the Group s and of the Company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. 43

26 Independent Auditors Report to the members of MB World Group Berhad (Incorporated In Malaysia) Company No : H REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT D) Auditors Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:- Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group s and the Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group s and the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. 44

27 Independent Auditors Report to the members of MB World Group Berhad (Incorporated In Malaysia) Company No : H REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT D) Auditors Responsibilities for the Audit of the Financial Statements (cont d) From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current financial year and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiary of which we have not acted as auditors, is disclosed in Note 8 to the financial statements. OTHER MATTERS This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. Crowe Horwath Firm No. : AF 1018 Chartered Accountants Wong Tak Mun Approval No : 01793/09/2018 J Chartered Accountant 28 March 2018 Johor Bahru 45

28 Statements Of Financial Position at 31 December 2017 THE COMPANY note RM RM RM RM ASSETS NON-CURRENT ASSETS Property, plant and equipment 6 10,609,924 11,298,495 48,985 58,113 Land held for property development 7 170,842,631 Investment in subsidiaries 8 86,702,998 9,952,998 Goodwill 9 4,160,547 4,160,547 Other investments 10 50,000 Deferred tax asset 20 2,244, ,857,902 15,509,042 86,751,983 10,011,111 CURRENT ASSETS Property development costs ,035,279 36,612,259 Inventories 12 2,249,007 1,141,929 Receivables and contract assets ,371,843 53,204,713 44,315,962 48,648,802 Current tax assets 13, ,258 7,644 3,938 Fixed deposit with licensed banks 15 5,145 14,804,268 14,023,918 Cash and bank balances 16 42,612,745 8,316,341 14,241,801 1,997, ,287, ,384,768 58,565,407 64,674,155 TOTAL ASSETS 476,145, ,893, ,317,390 74,685,266 EQUITY AND LIABILITIES EQUITY Share capital ,248,161 45,929, ,248,161 45,929,950 Reserves 70,006,709 48,248,128 13,651,023 22,305,040 TOTAL EQUITY 195,254,870 94,178, ,899,184 68,234,990 NON-CURRENT LIABILITIES Borrowings 19 20,497,282 3,405,132 Deferred tax liabilities ,651 2,442,072 25,000 25,000 20,820,933 5,847,204 25,000 25,000 CURRENT LIABILITIES Payables and contract liabilities ,287,312 26,919,615 6,393,206 6,425,276 Borrowings 19 16,912,447 1,210,029 Current tax liabilities 7,869,460 1,738, ,069,219 29,868,528 6,393,206 6,425,276 TOTAL LIABILITIES 280,890,152 35,715,732 6,418,206 6,450,276 TOTAL EQUITY AND LIABILITIES 476,145, ,893, ,317,390 74,685, The annexed notes form an integral part of these financial statements.

29 Statements of Profit or Loss and Other Comprehensive Income THE COMPANY note RM RM RM RM (Restated) CONTINUING OPERATIONS REVENUE ,167, ,853,545 COST OF SALES 23 (155,052,822) (68,100,956) GROSS PROFIT 80,115,001 32,752,589 OTHER INCOME 3,807,576 1,210,728 1,096, ,735 83,922,577 33,963,317 1,096, ,735 SELLING AND MARKETING EXPENSES (19,145,293) (1,296,285) ADMINISTRATIVE EXPENSES (13,131,492) (2,795,263) (535,092) (367,072) OTHER EXPENSES (766,392) (3,303,345) (389,287) (2,708,032) FINANCE COSTS 24 (472,109) (101,984) PROFIT/(LOSS) BEFORE TAXATION 25 50,407,291 26,466, ,394 (2,646,369) INCOME TAX EXPENSE 26 (16,692,335) (8,564,027) PROFIT/(LOSS) AFTER TAXATION FROM CONTINUING OPERATIONS 33,714,956 17,902, ,394 (2,646,369) DISCONTINUED OPERATIONS LOSS AFTER TAXATION FROM DISCONTINUED OPERATIONS 28 (3,156,773) (2,112,792) PROFIT/(LOSS) AFTER TAXATION 30,558,183 15,789, ,394 (2,646,369) OTHER COMPREHENSIVE INCOME 27 Items that May be Reclassified Subsequently to Profit or Loss - Foreign currency translation 109,335 Reclassified to profit or loss: - Foreign currency translation on disposal of a subsidiary 26,809 TOTAL OTHER COMPREHENSIVE INCOME 26, ,335 TOTAL COMPREHENSIVE INCOME/(EXPENSES) FOR THE FINANCIAL YEAR 30,584,992 15,898, ,394 (2,646,369) The annexed notes form an integral part of these financial statements. 47

30 Statements of Profit or Loss and Other Comprehensive Income THE COMPANY note RM RM RM RM (Restated) PROFIT/(LOSS) AFTER TAXATION ATTRIBUTABLE TO:- Owners of the Company 30,558,183 15,831, ,394 (2,646,369) Non-controlling interests (41,620) 30,558,183 15,789, ,394 (2,646,369) TOTAL COMPREHENSIVE INCOME/ (EXPENSES) ATTRIBUTABLE TO:- Owners of the Company 30,584,992 15,940, ,394 (2,646,369) Non-controlling interests (41,620) EARNINGS/(LOSS) PER SHARE (SEN) 29 Basic: - continuing operations discontinued operations (2.81) (2.25) 30,584,992 15,898, ,394 (2,646,369) Diluted: - continuing operations N/A N/A - discontinued operations N/A N/A N/A Not applicable 48 The annexed notes form an integral part of these financial statements.

31 Statements of Changes in Equity i ATTRIBUTABLE TO OWNERS OF THE COMPANY I I NON-DISTRIBUTABLE I DISTRIBUTABLE FOREIGN CURRENCY OTHer nonshare SHARE TRANSLATION CAPITAL RETained CONTROLLING TOTAL CAPITAL PREMIUM RESERVES RESERVES PROFITS TOTAL INTEREST EQUITY NOTE (Note 17) (Note 18(a)) (Note 18(b)) rm RM RM RM RM RM RM RM At ,929,950 3,318, , ,998 28,145,243 78,273, ,601 78,455,436 Profit after taxation 15,831,241 15,831,241 (41,620) 15,789,621 Other comprehensive income for the financial year: Foreign currency translation differences 109, , ,335 Total comprehensive income for the financial year 109,335 15,831,241 15,940,576 (41,620) 15,898,956 Contribution by and distribution to owners of the Company:- - Realisation upon disposal of subsidiaries (266,577) (749,998) 980,242 (36,333) (36,333) - Disposal of subsidiaries 31 (139,981) (139,981) Balance at ,929,950 3,318,211 (26,809) 44,956,726 94,178,078 94,178,078 The annexed notes form an integral part of these financial statements. 49

32 Statements of Changes in Equity i ATTRIBUTABLE TO OWNERS OF THE COMPANY I i NON-DISTRIBUTABLE I DISTRIBUTABLE FOREIGN CURRENCY share SHARE TRANSLATION RETAINED TOTAL CAPITAL PREMIUM RESERVES PROFITS EQUITY NOTE (Note 17) (Note 18(a)) (Note 18(b)) rm RM RM RM RM At ,929,950 3,318,211 (26,809) 44,956,726 94,178,078 Profit after taxation 30,558,183 30,558,183 Other comprehensive income for the financial year:- 27 Reclassified to profit or loss on a disposal of subsidiary 26,809 26,809 Total comprehensive income for the financial year 26,809 30,558,183 30,584,992 Contribution by and distribution to owners of the Company:- - Issuance of new shares 76,000,000 76,000,000 - Dividends 32 (5,508,200) (5,508,200) - Transfer to share capital upon implementation of the Companies Act ,318,211 (3,318,211) Total transactions with owners of the Company 79,318,211 (3,318,211) (5,508,200) 70,491,800 Balance at ,248,161 70,006, ,254, The annexed notes form an integral part of these financial statements.

33 Statements of Changes in Equity i NON-DISTRIBUTABLE I DISTRIBUTABLE SHARE SHARE RETAINED TOTAL CAPITAL PREMIUM PROFITS EQUITY NOTE (Note 17) (Note 18(a)) THE COMPany rm RM RM RM At ,929,950 3,318,211 21,633,198 70,881,359 Loss after taxation/total comprehensive expenses for the financial year (2,646,369) (2,646,369) Balance at / ,929,950 3,318,211 18,986,829 68,234,990 Profit after taxation/total comprehensive income for the financial year 172, ,394 Contributions by and distribution to owners of the Company:- - Issuance of new shares 76,000,000 76,000,000 - Dividends 32 (5,508,200) (5,508,200) - Transfer to share capital upon implementation of the Companies Act ,318,211 (3,318,211) Total transaction with owners of the Company 79,318,211 (3,318,211) (5,508,200) 70,491,800 Balance at ,248,161 13,651, ,899,184 The annexed notes form an integral part of these financial statements. 51

34 Statements of Cash Flows THE COMPANY rm RM RM RM CASH FLOWS FROM/(FOR) OPERATING ACTIVITIES Profit/(Loss) before taxation - continuing operations 50,407,291 26,466, ,394 (2,646,369) - discontinued operations (3,156,773) (2,112,792) 47,250,518 24,353, ,394 (2,646,369) Adjustments for:- Impairment losses on: - goodwill 26,694 - receivables 581,712 1,280,760 Bad debts written off 578,980 Depreciation of property, plant and equipment 764, ,864 5,332 30,201 Imputed interest on non-current trade receivable (326,701) Imputed interest on non-current trade payable 359,003 Interest expenses 162, ,296 Interest income (245,745) (565,212) (96,773) (427,889) Inventories written down 545,812 38,355 Loss/(Gain) on disposal: - property, plant and equipment 107, ,739 - investments in subsidiaries 2,546,295 (823,376) (1,000,000) 298,442 - investment in an associate (7,799) Property, plant and equipment written off 8, ,352 8, ,352 Reversal of impairment losses on receivables (155,092) (836,159) Share of results of an associate (4,955) Unrealised loss on foreign exchange 13,694 20,908 Write-back in value of inventories (3,631) (40,555) Operating profit/(loss) before working capital changes 51,603,833 25,299,148 (910,549) (2,579,263) 52 The annexed notes form an integral part of these financial statements.

35 Statements of Cash Flows THE COMPANY note RM RM RM RM Operating profit/(loss) before working capital changes 51,603,833 25,299,148 (910,549) (2,579,263) Increase in inventories (2,212,585) (414,245) (Increase)/Decrease in property development costs (86,178,602) 15,329,506 Increase in land held for property development (169,842,631) (Increase)/Decrease in receivables and contract assets (51,093,334) (8,407,836) (21,843) 42,195 Increase/(Decrease) in payables and contract liabilities 193,047,555 (22,652,216) (32,070) (338,852) CASH (FOR)/FROM OPERATIONS (64,675,764) 9,154,357 (964,462) (2,875,920) Interest received (280,296) Income tax (paid)/refunded (13,058,659) (5,820,256) (3,706) 1,037 NET CASH (FOR)/FROM OPERATING ACTIVITIES (77,734,423) 3,053,805 (968,168) (2,874,883) CASH FLOWS FROM/(FOR) INVESTING ACTIVITIES Investment in subsidiary companies (750,000) (750,002) Net cash inflow from acquisition of subsidiaries 30(a) 75,160,229 Withdrawal of fixed deposit pledged to licensed banks 302,460 2,488, ,460 (2,460) Withdrawal/(Placement) of fixed deposits with original maturity period of more than 3 months 2,796,169 (2,796,169) 2,015,819 (2,015,819) Interest received 245, ,212 96, ,889 Net cash (outflow)/inflow from disposal of subsidiaries 31 (2,540,324) 966,759 Proceeds from disposal of: - property, plant and equipment 188,715 97,171 11,660 - subsidiaries 31 1,000,000 2,745,228 - an associate 15,000 Purchase of property, plant and equipment 37(a) (2,645,288) (3,249,429) (16,362) (62,773) NET CASH FROM/(FOR) INVESTING ACTIVITIES 73,507,706 (1,912,591) 2,660, ,063 The annexed notes form an integral part of these financial statements. 53

36 Statements of Cash Flows THE COMPANY note RM RM RM RM CASH FLOWS FROM/(FOR) FINANCING ACTIVITIES Net advances/(repayment) from subsidiaries 4,354,683 (763,474) Net drawdown of term loans 62,869, ,362 Repayment of hire purchase obligations (224,779) (226,210) Repayment of term loans (27,717,037) Dividend paid 32 (5,508,200) (5,508,200) Interest paid (1,893,632) NET CASH FROM/(FOR) FINANCING ACTIVITIES 27,525, ,152 (1,153,517) (763,474) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 23,298,983 1,747, ,665 (3,296,294) EFFECTS OF FOREIGN EXCHANGE TRANSLATION 200,935 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 19,318,907 17,370,606 13,703,136 16,999,430 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 42,617,890 19,318,907 14,241,801 13,703, The annexed notes form an integral part of these financial statements.

37 1. GENERAL INFORMATION The Company is a public limited company, incorporated and domiciled in Malaysia. The registered office and principal place of business are as follows:- Registered office : Suite 5.11 & 5.12, 5th Floor Menara TJB, No.9, Jalan Syed Mohd Mufti, Johor Bahru, Malaysia. Principal place of business : Unit 5.01, Level 5, Plaza DNP, No. 59, Jalan Dato Abdullah Tahir, Johor Bahru, Malaysia. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 28 March PRINCIPAL ACTIVITIES The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are set out in Note 8 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. 3. HOLDING COMPANY The holding company is Kim Feng Capital Sdn. Bhd., a company incorporated in Malaysia. 4. BASIS OF PREPARATION The financial statements of the Group are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with Malaysian Financial Reporting Standards ( MFRSs ), International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. 4.1 During the current financial year, the Group has adopted the following new accounting standards and/or interpretations (including the consequential amendments, if any):- MFRSs and/or IC Interpretations (Including The Consequential Amendments) Amendments to MFRS 107: Disclosure Initiative Amendments to MFRS 112: Recognition of Deferred Tax Assets for Unrealised Losses Annual Improvements to MFRS Standards Cycles: Amendments to MFRS 12: Clarification of the Scope of the Standard The adoption of the above accounting standards and/or interpretations (including the consequential amendments, if any) did not have any material impact on the Group s financial statements. 55

38 4. BASIS OF PREPARATION (CONT D) 4.2 The Group has not applied in advance the following accounting standards and/or interpretations (including the consequential amendments, if any) that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the current financial year:- MFRSs and/or IC Interpretations (Including The Consequential Amendments) Effective Date MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) 1 January 2018 MFRS 16 Leases 1 January 2019 MFRS 17 Insurance Contracts 1 January 2021 IC Interpretation 22 Foreign Currency Transactions and Advance Consideration 1 January 2018 IC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019 Amendments to MFRS 2: Classification and Measurement of Share-based Payment Transactions 1 January 2018 Amendments to MFRS 4: Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts 1 January 2018 Amendments to MFRS 9: Prepayment Features with Negative Compensation 1 January 2019 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred Amendments to MFRS 119: Plan Amendment, Curtailment or Settlement 1 January 2019 Amendments to MFRS 128: Long-term Interests in Associates and Joint Ventures 1 January 2019 Amendments to MFRS 140 Transfers of Investment Property 1 January 2018 Annual Improvements to MFRS Standards Cycles: Amendments to MFRS 1: Deletion of Short-term Exemptions for First-time Adopters Amendments to MFRS 128: Measuring an Associate or Joint Venture at Fair Value 1 January 2018 Annual Improvements to MFRS Standards Cycles 1 January 2019 The adoption of the above mentioned accounting standards and/or interpretations (including the consequential amendments, if any) is not expected to have material impact on the financial statements of the Group upon their initial application except as follows:-. MFRS 9 (IFRS 9 issued by IASB in July 2014) MFRS 9 (IFRS 9 issued by IASB in July 2014) replaces the existing guidance in MFRS 139 and introduces a revised guidance on the classification and measurement of financial instruments, including a single forward-looking expected loss impairment model for calculating impairment on financial assets, and a new approach to hedge accounting. Under this MFRS 9, the classification of financial assets is driven by cash flow characteristics and the business model in which a financial asset is held. Furthermore, pursuant to MFRS 9, it will no longer be necessary for a loss event to occur before an impairment loss is recognised. Instead, the Group is required to recognise and measure a lifetime expected credit loss ( ECL ) on its debt instruments. This application will result in earlier recognition of credit losses. The expected impact from implementation of MFRS 9 and the determination of ECL is expected to be immaterial to the Group as the vast majority of the Group s trade receivables comprise property purchasers who have end financing arrangements with licensed financial institutions. 56

39 5. SIGNIFICANT ACCOUNTING POLICIES 5.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Key Sources of Estimation Uncertainty Management believes that there are no key assumptions made concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year other than as disclosed below:- (a) Depreciation of Property, Plant and Equipment The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial factors which could change significantly as a result of technical innovations and competitors actions in response to the market conditions. The Group anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amount of property, plant and equipment as at the reporting date is disclosed in Note 6 to the financial statements. (b) Income Taxes There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax expense and deferred tax balances in the year in which such determination is made. The carrying amount of current tax liabilities and assets as at the reporting date is RM7,869,460 and RM13,101 respectively ( RM1,738,884 and RM305,258 respectively). (c) Deferred Tax Assets Deferred tax assets are recognised for deductible temporary differences and unused tax losses to the extent that it is probable that future taxable profits would be available against which the deductible temporary differences and unused tax losses could be utilised. Management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the assessment of the probability of the future taxable profits. The carrying amount of deferred tax assets as at the reporting date is disclosed in Note 20 to the financial statements. (d) Write-down of Inventories Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories. The carrying amount of inventories as at the reporting date is disclosed in Note 12 to the financial statements. 57

40 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT D) (e) Impairment of Trade Receivables (f) An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its trade receivables and analyses their ageing profiles, historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgement to evaluate the adequacy of the allowance for impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables. The carrying amount of trade receivables as at the reporting date is disclosed in Note 13 to the financial statements. Impairment of Goodwill The assessment of whether goodwill is impaired requires an estimation of the value in use of the cash-generating unit to which the goodwill is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill as at the reporting date is disclosed in Note 9 to the financial statements. (g) Revenue and Profit Recognition of Property Development Projects Revenue is recognised when or as the control of the asset is transferred to the customers and, depending on the terms of the contract and the applicable laws governing the contract, control of the asset may transfer over time or at a point in time. If control of the asset transfers over time, revenue is recognised based on progress towards complete satisfaction of the performance obligation is measured based on a method that best depicts the Group s performance in satisfying the performance obligation of the contract over the period of contract by reference to the following: For landed development projects, the progress is determined by reference to the progress, based on the physical proportion of contract work-to-date certified by professional consultants. For high rise development projects, the progress is determined by reference to the property development costs incurred up to the end of the reporting period as a percentage of total estimated costs for complete satisfaction of the contract. The revenue, cost and hence profit for each project are estimates based on approved budgets which require assessment, judgment and reliance on past experience as well as the work of specialists. 5.2 BASIS OF CONSOLIDATION The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to the end of the reporting period. Subsidiaries are entities controlled by the Group. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee s return. 58

41 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.2 BASIS OF CONSOLIDATION (CONT D) Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate. Intragroup transactions, balances, income and expenses are eliminated on consolidation. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group. (a) Business Combinations Acquisitions of businesses are accounted for using the acquisition method. Under the acquisition method, the consideration transferred for acquisition of a subsidiary is the fair value of the assets transferred, liabilities incurred and the equity interests issued by the Group at the acquisition date. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs, other than the costs to issue debt or equity securities, are recognised in profit or loss when incurred. In a business combination achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss. Non-controlling interests in the acquiree may be initially measured either at fair value or at the non-controlling interests proportionate share of the fair value of the acquiree s identifiable net assets at the date of acquisition. The choice of measurement basis is made on a transaction-by-transaction basis. (b) Non-Controlling Interests Non-controlling interests are presented within equity in the consolidated statement of financial position, separately from the equity attributable to owners of the Company. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. (c) Changes In Ownership Interests In Subsidiaries Without Change of Control All changes in the parent s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity of the Group. (d) Loss of Control Upon the loss of control of a subsidiary, the Group recognises any gain or loss on disposal in profit or loss which is calculated as the difference between:- (i) (ii) the aggregate of the fair value of the consideration received and the fair value of any retained interest in the former subsidiary; and the previous carrying amount of the assets (including goodwill), and liabilities of the former subsidiary and any non-controlling interests. 59

42 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.2 BASIS OF CONSOLIDATION (CONT D) (d) Loss of Control (cont d) Amounts previously recognised in other comprehensive income in relation to the former subsidiary are accounted for in the same manner as would be required if the relevant assets or liabilities were disposed of (i.e. reclassified to profit or loss or transferred directly to retained profits). The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 139 or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture. 5.3 GOODWILL Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. The impairment value of goodwill is recognised immediately in profit or loss. An impairment loss recognised for goodwill is not reversed in a subsequent period. Under the acquisition method, any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interests recognised and the fair value of the Group s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree s identifiable assets and liabilities at the date of acquisition is recorded as goodwill. Where the latter amount exceeds the former, after reassessment, the excess represents a bargain purchase gain and is recognised in profit or loss immediately. In respect of equity-accounted associates, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill that forms part of the carrying amount of the equity-accounted associates. 5.4 CONTRACT ASSETS/CONTRACT LIABILITIES Where property development revenue recognised in the profit or loss exceeds the billings to purchasers, the balance is shown as contract assets under current assets. Where billings to purchasers exceed the property development revenue recognised to the profit or loss, the balances is shown as contract liabilities under current liabilities. 5.5 FUNCTIONAL AND FOREIGN CURRENCIES (a) Functional and Presentation Currency The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency. The consolidated financial statements are presented in Ringgit Malaysia ( RM ), which is the Company s functional and presentation currency. 60

43 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.5 FUNCTIONAL AND FOREIGN CURRENCIES (CONT D) (b) Foreign Currency Transactions and Balances Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the exchange rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are recognised in profit or loss. (c) Foreign Operations Assets and liabilities of foreign operations (including any goodwill and fair value adjustments arising on acquisition) are translated to the Group s presentation currency at the exchange rates at the end of the reporting period. Income, expenses and other comprehensive income of foreign operations are translated at exchange rates at the dates of the transactions. All exchange differences arising from translation are taken directly to other comprehensive income and accumulated in equity; attributed to the owners of the Company and non-controlling interests, as appropriate. Goodwill and fair value adjustments arising from the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the end of the reporting period. On the disposal of a foreign operation (i.e. a disposal of the Group s entire interest in a foreign subsidiary, or a partial disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that foreign operation attributable to the owners of the Company are reclassified to profit or loss as part of the gain or loss on disposal. The portion that related to noncontrolling interests is derecognised but is not reclassified to profit or loss. In addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are reattributed to non-controlling interests and are not recognised in profit or loss. When the Group disposes of only part of its investment in an associate that includes a foreign operation while retaining significant influence, the proportionate share of the accumulative exchange differences is reclassified to profit or loss. In the consolidated financial statements, when settlement of an intragroup loan is neither planned nor likely to occur in the foreseeable future, the exchange differences arising from translating such monetary item are considered to form part of a net investment in the foreign operation and are recognised in other comprehensive income. 5.6 FINANCIAL INSTRUMENTS Financial assets and financial liabilities are recognised in the statements of financial position when the Group has become a party to the contractual provisions of the instruments. Financial instruments are classified as financial assets, financial liabilities or equity instruments in accordance with the substance of the contractual arrangement and their definitions in MFRS 132. Interest, dividends, gains and losses relating to a financial instrument classified as a liability are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. 61

44 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.6 FINANCIAL INSTRUMENTS (CONT D) A financial instrument is recognised initially at its fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial instrument (other than a financial instrument at fair value through profit or loss) are added to/ deducted from the fair value on initial recognition, as appropriate. Transaction costs on the financial instrument at fair value through profit or loss are recognised immediately in profit or loss. Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item. (a) Financial Assets On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss, heldto-maturity investments, loans and receivables financial assets, or available-for-sale financial assets, as appropriate. (i) Financial Assets at Fair Value through Profit or Loss Financial assets are classified as financial assets at fair value through profit or loss when the financial asset is either held for trading or is designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges. Fair value through profit or loss category also comprises contingent consideration in a business combination. Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Dividend income from this category of financial assets is recognised in profit or loss when the Group s right to receive payment is established. Financial assets at fair value through profit or loss could be presented as current assets or non-current assets. Financial assets that are held primarily for trading purposes are presented as current assets whereas financial assets that are not held primarily for trading purposes are presented as current assets or non-current assets based on the settlement date. (ii) Held-to-maturity Investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the management has the positive intention and ability to hold to maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment loss, with interest income recognised in profit or loss on an effective yield basis. Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current assets. (iii) Loans and Receivables Financial Assets Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. 62

45 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.6 FINANCIAL INSTRUMENTS (CONT D) (a) Financial Assets (cont d) (iii) Loans and Receivables Financial Assets (cont d) The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. Loans and receivables financial assets are classified as current assets, except for those having settlement dates later than 12 months after the reporting date which are classified as non-current assets. (iv) Available-for-sale Financial Assets Available-for-sale financial assets are non-derivative financial assets that are designated in this category or are not classified in any of the other categories. After initial recognition, available-for-sale financial assets are remeasured to their fair values at the end of each reporting period. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the fair value reserve, with the exception of impairment losses. On derecognition, the cumulative gain or loss previously accumulated in the fair value reserve is reclassified from equity into profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group s right to receive payments is established. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less accumulated impairment losses, if any. Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date. (b) Financial Liabilities (i) Financial Liabilities at Fair Value through Profit or Loss Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges. (ii) Other Financial Liabilities Other financial liabilities are initially measured at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. 63

46 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.6 FINANCIAL INSTRUMENTS (CONT D) (c) Equity Instruments Equity instruments classified as equity are measured initially at cost and are not remeasured subsequently. Ordinary Shares (d) (e) Ordinary shares are classified as equity and recorded at the proceeds received, net of directly attributable transaction costs. Dividends on ordinary shares are recognised as liabilities when approved for appropriation. Derecognition A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss. A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. Financial Guarantee Contracts A financial guarantee contract is a contract that requires the issuer to make specific payments to reimburse the holder for a loss it incurs because a specific debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. The Group and the Company designates performance bond granted in favour of third parties for contract work undertaken by the Group and corporate guarantees given to financial institutions for credit facilities granted to subsidiaries as insurance contracts as defined in MFRS 4 Insurance Contracts. The Group and the Company recognises these performance bonds and corporate guarantees as liabilities when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. 5.7 INVESTMENTS IN SUBSIDIARIES Investments in subsidiaries are stated at cost in the statement of financial position of the Company, and are reviewed for impairment at the end of the reporting period if events or changes in circumstances indicate that the carrying values may not be recoverable. The cost of the investments includes transaction costs. On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the carrying amount of the investments is recognised in profit or loss. 64

47 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.8 PROPERTY, PLANT AND EQUIPMENT All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that are directly attributable to the acquisition of the asset and other costs directly attributable to bringing the asset to working condition for its intended use. Subsequent to initial recognition, all property, plant and equipment, other than freehold land are stated at cost less accumulated depreciation and any impairment losses. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Freehold land is not depreciated. Depreciation on other property, plant and equipment is charged to profit or loss (unless it is included in the carrying amount of another asset) on the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:- Buildings 2% Plant and machinery 4% - 12% Motor vehicles 20% Furniture and equipment 8% - 40% Renovation 10% Capital work-in-progress included in property, plant and equipment are not depreciated as these assets are not yet available for use. The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period to ensure that the amounts, method and periods of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment. Any changes are accounted for as a change in estimate. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset, being the difference between the net disposal proceeds and the carrying amount, is recognised in profit or loss. 5.9 IMPAIRMENT (a) Impairment of Financial Assets All financial assets and contract assets (other than those categorised at fair value through profit or loss), are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. For an equity instrument, a significant or prolonged decline in the fair value below its cost is considered to be an objective evidence of impairment. 65

48 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.9 IMPAIRMENT (CONT D) (a) Impairment of Financial Assets (cont d) An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets is recognised in profit or loss and is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the financial asset s original effective interest rate. An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the fair value reserve. In addition, the cumulative loss recognised in other comprehensive income and accumulated in equity under fair value reserve, is reclassified from equity into profit or loss. With the exception of available-for-sale debt instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss made is recognised in other comprehensive income. An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods. (b) Impairment of Non-Financial Assets The carrying values of assets, other than those to which MFRS Impairment of Assets does not apply, are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. When the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount and an impairment loss shall be recognised. The recoverable amount of an asset is the higher of the asset s fair value less costs to sell and its value-in-use, which is measured by reference to discounted future cash flows using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An impairment loss is recognised in profit or loss immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset. Any impairment loss recognised in respect of a cash-generating unit is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to reduce the carrying amounts of the other assets in the cash-generating unit on a pro rata basis. 66 In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately, unless the asset is carried at its revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

49 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.10 LEASED ASSETS Finance Assets A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. The corresponding liability is included in the statement of financial position as hire purchase payables. Minimum lease payments made under finance leases are apportioned between the finance costs and the reduction of the outstanding liability. The finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the profit or loss and allocated over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each accounting period INVENTORIES Inventories are stated at the lower of cost and net realisable value. (a) Operating supplies Cost is determined on the first-in-first-out basis and comprises the purchase price and incidentals incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less the estimated costs of completion and the estimated costs necessary to make the sale. (b) Unsold properties The cost of unsold properties is stated at the lower of historical cost and net realisable value. Historical cost includes, where relevant, cost associated with the acquisition of land, including all related costs incurred subsequent to the acquisition necessary to prepare the land for its intended case, related development costs to projects, direct building costs and other costs of bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less applicable variable selling expenses DISCONTINUED OPERATIONS A discontinued operation is a component of the Group s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is restated as if the operation had been discontinued from the start of the comparative period. 67

50 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.13 CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash in hand, bank balances, and demand deposits that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value with original maturity periods of three months or less. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the provision is the present value of the estimated expenditure required to settle the obligation. The unwinding of the discount is recognised as interest expense in profit or loss EMPLOYEE BENEFITS (a) Short-term Benefits Wages, salaries, paid annual leave and bonuses are measured on an undiscounted basis and are recognised in profit or loss in the period in which the associated services are rendered by employees of the Group. (b) Defined Contribution Plans The Group s contributions to defined contribution plans are recognised in profit or loss in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans INCOME TAXES (a) Current tax Current tax assets and liabilities are expected amount of income tax recoverable or payable to the taxation authorities. Current taxes are measured using tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period and are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss (either in other comprehensive income or directly in equity). (b) Deferred tax Deferred tax are recognised using the liability method for all temporary differences other than those that arise from goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period. 68

51 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.16 INCOME TAXES (CONT D) (b) Deferred tax (cont d) Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benefits will be realised. Current and deferred tax items are recognised in correlation to the underlying transactions either in profit or loss, other comprehensive income or directly in equity. Deferred tax arising from a business combination is adjusted against goodwill or negative goodwill. Current tax assets and liabilities or deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxable entity (or on different tax entities but they intend to settle current tax assets and liabilities on a net basis) and the same taxation authority. (c) Goods and Services Tax ( GST ) Revenues, expenses and assets are recognised net of GST except for the GST in a purchase of assets or services which are not recoverable from the taxation authorities, the GST are included as part of the costs of the assets acquired or as part of the expense item whichever is applicable. In addition, receivables and payables are also stated with the amount of GST included (where applicable). The net amount of the GST recoverable from or payable to the taxation authorities at the end of the reporting period is included in other receivables or other payables CONTINGENT LIABILITIES A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably. A contingent liability is not recognised but is disclosed in the notes to the financial statements, unless the probability of outflow of economic benefits is remote. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision. 69

52 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.18 LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (a) Land held for property development Land held for property development consists of land and land development rights where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 5.9. Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle. (b) Property development costs Property development costs is determined based on a specific identification basis. Property development costs comprising costs of land, direct materials, direct labour, other direct costs, attributable overheads and payments to subcontractors that meet the definition of inventories are recognised as an asset and are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable selling expenses. The asset is subsequently recognised as an expense in profit or loss when or as the control of the asset is transferred to the customer over time or at a point in time. Incremental costs of obtaining a contract with a customer are recognised as assets if the entity expects to recover those costs. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognised as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained OPERATING SEGMENTS An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components. An operating segment s operating results are reviewed regularly by the directors to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available EARNINGS PER ORDINARY SHARE Basic earnings per ordinary share is calculated by dividing the consolidated profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the reporting period, adjusted for own shares held. Diluted earnings per ordinary share is determined by adjusting the consolidated profit or loss attributable to ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary shares, which comprise of share options granted to employees. 70

53 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.21 BORROWING COSTS Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. The capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted. All other borrowing costs are recognised in profit or loss as expenses in the period in which they are incurred. Investment income earned on the temporary investment of specific borrowing pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using a valuation technique. The measurement assumes that the transaction takes place either in the principal market or in the absence of a principal market, in the most advantageous market. For non-financial asset, the fair value measurement takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. For financial reporting purposes, the fair value measurements are analysed into level 1 to level 3 as follows:- Level 1 : Inputs are quoted prices (unadjusted) in active markets for identical assets or liability that the entity can access at the measurement date; Level 2 : Inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 : Inputs are unobservable inputs for the asset or liability. The transfer of fair value between levels is determined as of the date of the event or change in circumstances that caused the transfer REVENUE AND OTHER INCOME (a) Revenue from contracts with customers Revenue which represents income arising in the course of the Group s ordinary activities is recognised by reference to each distinct performance obligation promised in the contract with customer when or as the Group transfers the control of the goods or services promised in a contract and the customer obtains control of the goods or services. Depending on the substance of the respective contract with customer, the control of the promised goods or services may transfer over time or at a point in time. A contract with customer exists when the contract has commercial substance, the Group and its customer has approved the contract and intend to perform their respective obligations, the Group s and the customer s rights regarding the goods or services to be transferred and the payment terms can be identified, and it is probable that the Group will collect the consideration to which it will be entitled to in exchange of those goods or services. 71

54 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.23 REVENUE AND OTHER INCOME (CONT D) (a) Revenue from contracts with customers (cont d) Recognition and measurement At the inception of each contract with customer, the Group assesses the contract to identify distinct performance obligations, being the units of account that determine when and how revenue from the contract with customer is recognised. A performance obligation is a promise to transfer a distinct good or service (or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer) to the customer that is explicitly stated in the contract and implied in the Group s customary business practices. A good or service is distinct if: the customer can either benefit from the good or service on its own or together with other readily available resources; and the good or service is separately identifiable from other promises in the contract. If a good or service is not distinct, the Group combines it with other promised goods or services until the Group identifies a distinct performance obligation consisting a distinct bundle of goods or services. Revenue is measured based on the consideration specified in a contract with a customer excludes amounts collected on behalf of third parties such as goods and services taxes. If the amount of consideration varies due to discounts, rebates, refunds, credits, incentives, performance bonuses, penalties or other similar items, the Group estimates the amount of consideration that it expects to be entitled based on the expected value or the most likely outcome but the estimation is constrained up to the amount that is highly probable of no significant reversal in the future. If the contract with customer contains more than one distinct performance obligation, the amount of consideration is allocated to each distinct performance obligation based on the relative stand-alone selling prices of the goods or services promised in the contract. The consideration allocated to each performance obligation is recognised as revenue when or as the customer obtains control of the goods or services. At the inception of each contract with customer, the Group determines whether control of the goods or services for each performance obligation is transferred over time or at a point in time. Control over the goods or services are transferred over time and revenue is recognised over time if: the customer simultaneously receives and consumes the benefits provided by the Group s performance as the Group performs; the Group s performance creates or enhances a customer-controlled asset; or the Group s performance does not create an asset with alternative use and the Group has a right to payment for performance completed to date. Revenue for performance obligation that is not satisfied over time is recognised at the point in time at which the customer obtains control of the promised goods or services. 72

55 5. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 5.23 REVENUE AND OTHER INCOME (CONT D) (a) Revenue from contracts with customers (cont d) The revenue recognition policies for each of the Group s major activities are described below:- i. Sale of Goods ii. iii. Revenue is recognised upon delivery of goods and customers acceptance, and the Group has a present right to payment for goods sold. Revenue is measured based on the consideration specified in a contract with customer and where applicable, net of GST, expected returns, cash and trade discounts. Property Development Activities Revenue is recognised progressively when property development services are rendered and such services do not create an asset with an alternative use to the Group, and the Group has a present right to payment for services rendered to date. The progress towards complete satisfaction of the performance obligation is measured based on a method that best depicts the Group s performance in satisfying the performance obligation of the contract. This is determined as follows: For landed development projects, the progress is determined by reference to the progress, based on the physical proportion of contract work-to-date certified by professional consultants. For high rise development projects, the progress is determined by reference to the property development costs incurred up to the end of the reporting period as a percentage of total estimated costs for complete satisfaction of the contract. When the services rendered exceed the billings to customers, a contract asset is recognised. If the billings exceed the services rendered, a contract liability is recognised. Construction Activities Revenue is recognised progressively when construction services are rendered and such services do not create an asset with an alternative s use to the Group, and the Group has a present right to payment for services rendered to date. The progress towards complete satisfaction of the performance obligation is measured based on a method that best depicts the Group s performance in satisfying the performance obligation of the contract. This is determined by reference to the construction costs incurred up to the end of the reporting period as a percentage of total estimated costs for complete satisfaction of the contract. When the services rendered exceed the billings to customers, a contract asset is recognised. If the billings exceed the services rendered, a contract liability is recognised. (b) Interest income Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective rate over the period of maturity, unless collectability is in doubt, in which case it is recognised on a cash receipt basis. 73

56 6. PROPERTY, PLANT AND EQUIPMENT Capital Furniture Freehold work and Motor Plant and land Buildings in-progress equipment vehicles machinery Renovation Total 2017 RM RM RM RM RM RM RM RM NET BOOK VALUE At 1 January ,041 2,330,632 5,953, ,610 1,485, ,469 11,298,495 Additions 313, ,288 1,032,361 1,612,098 48,661 3,400,288 Acquisition of subsidiaries (Note 30) 15,385 15,385 Disposals: - disposal during the financial year (2,249) (189,485) (104,177) (295,911) - disposal of subsidiaries (Note 31) (2,704,740) (2,568) (327,618) (3,034,926) Reclassification 3,563,033 (3,563,033) Written off (8,498) (8,498) Depreciation charges (Note 25 and 28) (103,657) (136,894) (350,170) (137,854) (36,334) (764,909) At 31 December ,041 5,790, ,572 1,650,938 1,474, ,121 10,609,924 At 31 December 2017 Cost 814,041 6,073, ,904 2,514,021 1,612, ,396 12,225,048 Accumulated depreciation (283,580) (261,332) (863,083) (137,854) (69,275) (1,615,124) Net book value 814,041 5,790, ,572 1,650,938 1,474, ,121 10,609,924 74

57 6. PROPERTY, PLANT AND EQUIPMENT (CONT D) Capital Furniture Freehold work and Motor Plant and land Buildings in-progress equipment vehicles machinery Renovation Total 2016 RM RM RM RM RM RM RM RM NET BOOK VALUE At 1 January ,041 5,572,736 3,350, ,728 1,990,144 95, ,564 12,404,967 Additions 2,603, , , ,533 3,651,329 Disposals - disposal during the financial year (239,910) (239,910) - disposal of subsidiaries (Note 31) (3,111,785) (49,670) (281,512) (69,924) (99,914) (3,612,805) Written off (45,096) (121,256) (166,352) Depreciation charges (Note 25 and 28) (77,825) (119,212) (416,960) (23,755) (45,112) (682,864) Translation differences (52,494) (88) (1,942) (1,346) (55,870) At 31 December ,041 2,330,632 5,953, ,610 1,485, ,469 11,298,495 At 31 December 2016 Cost 814,041 2,510,555 5,953,893 1,149,074 2,576, ,052 13,491,619 Accumulated depreciation (179,923) (885,464) (1,090,154) (37,583) (2,193,124) Net book value 814,041 2,330,632 5,953, ,610 1,485, ,469 11,298,495 75

58 6. PROPERTY, PLANT AND EQUIPMENT (CONT D) THE COMPANY Furniture and Equipment Renovation Total 2017 RM RM RM Net book value At 1 January ,272 51,841 58,113 Additions 16,362 16,362 Disposal (11,660) (11,660) Written off (8,498) (8,498) Depreciation charges (1,897) (3,435) (5,332) At 31 December ,737 28,248 48,985 At 31 December 2017 Cost 22,850 34,348 57,198 Accumulated depreciation (2,113) (6,100) (8,213) Net book value 20,737 28,248 48, Net book value At 1 January , , ,893 Additions 6,488 56,285 62,773 Written off (45,096) (121,256) (166,352) Depreciation charges (8,238) (21,963) (30,201) At 31 December ,272 51,841 58,113 At 31 December 2016 Cost 6,488 56,285 62,773 Accumulated depreciation (216) (4,444) (4,660) Net book value 6,272 51,841 58,113 76

59 6. PROPERTY, PLANT AND EQUIPMENT (CONT D) (a) As at end of the reporting period, the net book value of the Group s motor vehicles acquired under hire purchase arrangements is as follows: rm RM Motor vehicles 1,570, ,366 (b) The freehold land and buildings have been pledged to licensed financial institutions for credit facilities (other than hire purchase) granted to the Group. 7. LAND HELD FOR PROPERTY DEVELOPMENT rm RM Non-current Land cost At 1 January Acquisition of a subsidiary (Note 30(a)) 1,000,000 Costs incurred during the financial year 147,430,476 At 31 December 148,430,476 Development costs At 1 January Cost incurred during the financial year 22,412,155 At 31 December 22,412,155 Cumulative costs/carrying amount 170,842,631 77

60 8. INVESTMENT IN SUBSIDIARIES THE COMPANY rm RM Unquoted shares, at cost 93,508,581 18,258,928 Accumulated impairment losses (6,805,583) (8,305,930) 86,702,998 9,952,998 Unquoted shares, at cost: At 1 January 18,258,928 22,463,795 Addition during the financial year 76,750, ,002 Disposal during the financial year (1,500,347) (4,954,869) At 31 December 93,508,581 18,258,928 Accumulated impairment losses: At 1 January 8,305,930 10,217,129 Disposal during the financial year (1,500,347) (1,911,199) At 31 December 6,805,583 8,305,930 During the financial year, the Company: (a) (b) (c) On 18 January 2017, acquired the entire equity interest in Cocoa Valley Development Sdn. Bhd. for a consideration of RM76 million which was satisfied via the issuance of 65,517,241 new ordinary shares in the Company at an issue price of RM1.16 per share. On 27 December 2017, acquired 750,000 ordinary shares representing the entire equity interest in Danga Palms Sdn. Bhd. for a total cash consideration of RM750,000. On 25 May 2017, disposed of 9,000,000 ordinary shares representing the entire equity interest in Emas Kiara Marketing Sdn. Bhd. ( EKM ) for a total cash consideration of RM1,000,000. Consequently, EKM ceased to be a subsidiary. In the previous financial year, the Company: 78 (a) (b) (c) (d) (e) Disposed of 2,500,000 ordinary shares representing the entire equity interest in Noblecorp Builders Sdn. Bhd. ( NCB ) for a total cash consideration of RM1,200,000. Consequently, NCB ceased to be a subsidiary. Disposed of 1,800,000 ordinary shares representing 90% equity interest in Emas Kiara Electrical Sdn. Bhd. ( EKEL ) for a total cash consideration of RM1,470,228 and settlement of outstanding shareholder loan of RM1,593,659. Consequently, EKEL ceased to be a subsidiary. Disposed of 50,000 ordinary shares representing the entire equity interest in Kiaratex Exports Pte. Ltd. ( KEX ) for a total cash consideration of RM75,000. Consequently, KEX ceased to be a subsidiary. Incorporated a subsidiary under the name MB World Builders Sdn. Bhd. with an issued and paid up capital of RM750,000. Incorporated a subsidiary under the name MB World Trading Sdn. Bhd. with an issued and paid up capital of RM2.

61 8. INVESTMENT IN SUBSIDIARIES (CONT D) Name of Subsidiaries Principal Place of Business/Country of Incorporation Percentage of Issued Share Capital Held by Parent 2017 % 2016 % Principal Activities Subsidiaries of the Company Emas Kiara Marketing Sdn. Bhd. Malaysia 100 Marketing, trading and contract installation of geosynthetic products Emas Kiara Marketing & Engineering Sdn. Bhd. MB World Properties Sdn. Bhd. (Formerly known as Emas Kiara Properties Sdn. Bhd.) Malaysia Trading and contract installation of industrial fabrics and geosynthetic products and provision of management services Malaysia Investment holding Noblecorp Capital Sdn. Bhd. # Malaysia Trading of industrial fabrics and geosynthetic products Noblecorp Sdn. Bhd. Malaysia Provision of management services MB World Builders Sdn. Bhd. Malaysia Building and civil contractor MB World Trading Sdn. Bhd. Malaysia Dormant Cocoa Valley Development Sdn. Bhd. Malaysia 100 Property development Danga Palms Sdn. Bhd. Malaysia 100 Property development Subsidiary of MB World Properties Sdn. Bhd. (Formerly known as Emas Kiara Properties Sdn. Bhd.) MB Max Sdn. Bhd. Malaysia Property development # Subsidiary not audited by Messrs. Crowe Horwath. 9. GOODWILL rm RM The details of the subsidiaries are as follows:- Cost:- At 31 December 4,160,547 4,160,547 79

62 9. GOODWILL (CONT D) (a) (b) The carrying amount of goodwill is allocated to MB Max Sdn. Bhd. The recoverable amount of a cash generating unit is determined based on value-in-use calculations using cash flow projections on the financial budget approved by the Board of Directors. Cash flows were projected based on upcoming property development projects which are expected to be launched over the next two financial years. The key assumptions used for value-in-use calculations are as follows:- Gross margin : 23% ( %) Duration : 1 January 2018 to 31 December 2020 ( January 2017 to 31 December 2018) Discount rate : 8.05% ( %) (i) (ii) Budgeted gross margin The budgeted gross margin is based on the upcoming property development project and there will not be any significant changes in economic conditions or other abnormal factors, which will adversely affect the operation. Discount rate The discount rate used is based on the weighted average cost of capital. Sensitivity to changes in assumptions The management believes that no reasonably possible changes in any of the above key assumptions would cause the carrying value of the goodwill to be materially higher than its recoverable amount. 10. OTHER INVESTMENTS rm RM Redeemable Convertible Preference Shares ( RCPS ) (Note 10.1) Club membership (Note 10.2) 50,000 50,000 80

63 10. OTHER INVESTMENTS (CONT D) 10.1 Redeemable Convertible Preference Shares ( RCPS ) THE COMPANY rm RM At cost 8,000,000 14,000,000 Less: Accumulated impairment losses (8,000,000) (14,000,000) RCPS, at cost: At 1 January 14,000,000 14,000,000 Converted during the financial year (6,000,000) At 31 December 8,000,000 14,000,000 Accumulated impairment losses: At 1 January 14,000,000 14,000,000 Reversal of impairment losses (6,000,000) At 31 December 8,000,000 14,000, Club membership rm RM At cost 50,000 50,000 Less: Disposal of a subsidiary (Note 31) (50,000) 50,000 The club membership is designated as available-for-sale financial asset. 81

64 11. PROPERTY DEVELOPMENT COSTS rm RM Land, at cost At 1 January 27,297,889 35,278,054 Acquisition of a subsidiary (Note 30 (a)) 1,338,231 Cost incurred during the financial year 84,215,292 Reversal of completed project (20,000,000) Amortisation of fair value (7,297,889) (7,980,165) At 31 December 85,553,523 27,297,889 Development costs At 1 January 81,596,304 32,665,702 Reversal of completed project (125,809,903) Cost incurred during the financial year 150,216,626 48,930,602 At 31 December 106,003,027 81,596,304 Cumulative costs 191,556, ,894,193 Cumulative cost recognised in profit or loss At 1 January (72,281,934) (14,006,949) Reversal of completed project 145,809,903 Unsold completed units transferred to inventories (2,249,007) Recognised during the financial year (138,800,233) (58,274,985) At 31 December (67,521,271) (72,281,934) Carrying amount 124,035,279 36,612,259 The following expense has been included in the development costs: rm RM Interest capitalised 1,786,644 69,903 82

65 12. INVENTORIES rm RM At cost Finished goods 672 Unsold completed development properties 2,249,007 2,249, At net realisable value Raw materials Finished goods Recognised in profit or loss 25,872 1,115,385 1,141,257 2,249,007 1,141,929 Inventories recognised as cost of sales 978, ,503 Inventories written down 545,812 83

66 13. RECEIVABLES AND CONTRACT ASSETS THE COMPANY rm RM RM RM Current Trade Third parties 97,276,755 38,805,486 Related parties 3,139,024 10,805,244 Contract assets (Note 14) 3,372,753 7,308, ,788,532 56,918,923 Non-trade Subsidiaries 46,852,440 51,207,123 Other receivables 182,547 1,117, Deposits 610, ,468 29,674 10,500 Prepayments 170,441 1,641,170 11,317 9,282 Deferred expenditure (Note a) 14,372,996 Goods and services tax receivable 646,396 23,467 15,983,135 2,925,110 46,894,065 51,226,905 Less: Impairment losses Trade (399,824) (6,353,263) Non-trade (286,057) (2,578,103) (2,578,103) (399,824) (6,639,320) (2,578,103) (2,578,103) 119,371,843 53,204,713 44,315,962 48,648,802 Impairment losses:- At 1 January 6,639,320 6,960,722 2,578,103 2,578,103 Addition during the financial year 581,712 1,280,760 Reversal of impairment losses (155,092) (836,159) Disposal of subsidiaries (6,666,116) (750,536) Written off during the financial year (15,467) At 31 December 399,824 6,639,320 2,578,103 2,578,103 84

67 13. RECEIVABLES AND CONTRACT ASSETS (CONT D) (a) Deferred expenditure rm RM At 1 January Add: Incurred during the financial year 22,727,197 (b) (c) (d) 22,727,197 Less: Cost recognised in profit or loss during the financial year (8,354,201) At 31 December 14,372,996 Deferred expenditure relating to sales agent commission and legal costs incurred to secure sales of property units are recognised in the profit or loss in proportion to the income recognised for the respective financial years. The normal credit terms granted by the Group range from 14 to 60 days ( to 120 days). Included in trade receivables of the Group are retention sums amounting to RM342,712 (2016 RM2,493,480). The amounts owing by subsidiaries are unsecured, interest-free and are repayable on demand. 14. CONTRACT ASSETS/(LIABILITIES) rm RM Net carrying amount of contract assets/(liabilities) is analysed as follows:- At 1 January 7,226,092 23,951,057 Disposal of subsidiaries (699,174) 427,650 Property development revenue recognised on performance obligation during the financial year 223,237,566 96,501,267 Construction revenue recognised on performance obligation during the financial year 10,698,452 3,685,598 Less: Billings during the financial year (251,260,474) (117,339,480) At 31 December (10,797,538) 7,226,092 Contract assets (Note 13) - Construction contracts in progress (Note a) 3,372,753 1,400,152 - Property development in progress (Note b) 5,908,041 3,372,753 7,308,193 Contract liabilities (Note 21) - Construction contracts in progress (Note c) (82,101) - Property development in progress (Note d) (14,170,291) (14,170,291) (82,101) (10,797,538) 7,226,092 85

68 14. CONTRACT ASSETS/(LIABILITIES) (CONT D) (a) (b) (c) (d) (e) The amount represents consideration for construction services rendered but not billed at the end of the reporting period. This balance will be billed progressively in the future upon the fulfillment of contractual milestones. The amount represents the Group s rights to consideration for property development activities carried out but not billed at the end of the reporting period. This balance will be billed progressively in the future upon the fulfillment of contractual milestones notwithstanding the control of the properties under development has not been transferred to buyers. The amount represents excess of progress billings to construction contract customers over revenue recognised in profit or loss at the end of the reporting period. The amount represents the excess of progress billings to buyers over revenue recognised in profit or loss in respect of property development activities at the end of the reporting period. Contract value yet to be recognised as revenue Revenue expected to be recognised in the future relating to performance obligations that are unsatisfied (or partially unsatisfied) at the reporting date, are as follows: RM RM Property development revenue 149,231,902 49,877,629 Construction revenue 15,458, ,690,300 49,877, RM Property development revenue 71,116,747 Construction revenue 2,553,110 73,669, FIXED DEPOSIT WITH LICENSED BANKS The fixed deposit with licensed banks of the Group at the end of the reporting period bore effective interest rates at 2.65% ( to 4.50%) per annum. The fixed deposits have maturity period of 1 month ( to 12 months). 16. CASH AND BANK BALANCES Included in the cash and bank balances of the Group is an amount of RM13,238,286 (2016 RM3,465,549) held pursuant to Section 7A of the Housing Development (Control and Licensing) Act

69 17. SHARE CAPITAL The movements in the authorised and paid-up share capital of the Company are as follows:- Authorised /THE COMPANY number of shares rm rm At 1 January N/A 100,000,000 N/A 50,000,000 Creation during the financial year N/A 900,000,000 N/A 450,000,000 At 31 December N/A 1,000,000,000 N/A 500,000,000 N/A - Not applicable pursuant to Companies Act 2016 which came into operation on 31 January 2017 as disclosed in item (ii) below. Issued and Fully Paid-Up Ordinary shares with no par value (2016 Par value of RM0.50 each):- /THE COMPANY number of shares rm rm At 1 January 91,859,900 91,859,900 45,929,950 45,929,950 Issuance of new shares 65,517,241 76,000,000 Transfer from share premium account 3,318,211 At 31 December 157,377,141 91,859, ,248,161 45,929,950 (i) (ii) The holders of ordinary shares are entitled to receive dividends as and when declared by the Company, and are entitled to one vote per ordinary share at meetings of the Company. On 31 January 2017, the concepts of authorised share capital and par value of share capital were abolished in accordance with the Companies Act Consequently, the amount standing to the credit of the Company s share premium account became part of the Company s share capital pursuant to the transitional provisions set out in Section 618(2) of the Companies Act There is no impact on the numbers of ordinary shares in issue or the relative entitlement of any of the members as a result of this transition. 87

70 18. RESERVES (a) Share Premium The Company has adopted the transitional provisions set out in Section 618(2) of the Companies Act 2016 where the sum standing to the credit of the share premium account becomes part of the Company s share capital. (b) Foreign Currency Translation Reserve 19. BORROWINGS The currency translation reserve is used to record foreign currency exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group s presentation currency. The reserve is not distributable by way of dividends. Current liabilities rm RM Hire purchase payables (Note 19.1) 174, ,081 Term loans (Note 19.2) 16,737, ,875 Bank overdraft (Note 37(c)) 703,073 16,912,447 1,210,029 Non-current liabilities Hire purchase payables (Note 19.1) 909, ,363 Term loans (Note 19.2) 19,587,368 3,055,769 Total borrowings 20,497,282 3,405,132 Hire purchase payables (Note 19.1) 1,084, ,444 Term loans (Note 19.2) 36,325,064 3,357,644 Bank overdraft (Note 37(c)) 703,073 37,409,729 4,615,161 88

71 19. BORROWINGS (CONT D) 19.1 HIRE PURCHASE PAYABLES rm RM Minimum hire purchase payments:- - not later than 1 year 245, ,420 - later than 1 year and not later than 5 years 956, ,885 - later than 5 years 76,838 1,278, ,305 Less: Future finance charges (194,015) (53,861) Present value of hire purchase payables 1,084, ,444 Analysed by:- Current liabilities 174, ,081 Non-current liabilities 909, ,363 (a) 1,084, ,444 The hire purchase payables of the Group are secured by the Group s motor vehicles under finance leases as disclosed in Note 6(a) to the financial statements. (b) The hire purchase payables of the Group at the end of the reporting period bore effective interest rates ranging from 4.29% to 10.22% ( % to 4.94%). The interest rates are fixed at the inception of the hire purchase arrangements TERM LOANS rm RM Current liabilities 16,737, ,875 Non-current liabilities 19,587,368 3,055,769 36,325,064 3,357,644 (a) The term loans as at 31 December 2017 are secured by: (i) (ii) (iii) (iv) Legal charge over land which a subsidiary has development rights; Corporate guarantee by the Company; A specific debenture by way of floating charge over all present and future assets of a subsidiary including bank balances placed with OCBC Bank (Malaysia) Berhad which amounted to RM4,017,549 as at year end; and Fixed charges on property of a subsidiary. (b) The above term loans bore floating rates with effective interest rates ranging from 5.70% to 6.73% ( % to 5.85%). (c) The bank overdraft bore effective interest rate of Nil ( %). 89

72 20. DEFERRED TAX (ASSETS)/LIABILITIES recognised At in Profit At or Loss rm RM RM Deferred tax liabilities Property, plant and equipment 54,400 99, ,400 Property development costs 2,387,672 (2,217,421) 170,251 Deferred tax asset Provision Deferred tax liabilities 2,442,072 (2,118,421) 323,651 (2,244,800) (2,244,800) 2,442,072 (4,363,221) (1,921,149) Recognised At in Profit At or Loss rm RM RM Property, plant and equipment 17,600 36,800 54,400 Property development costs 6,172,414 (3,784,742) 2,387,672 Deferred tax assets 6,190,014 (3,747,942) 2,442,072 Unutilised business losses (478,000) 478,000 5,712,014 (3,269,942) 2,442,072 THE COMPANY 2017 RM Deferred tax liabilities Property, plant and equipment 25,000 THE COMPANY 2016 RM Deferred tax liabilities 90 Property, plant and equipment 25,000

73 21. PAYABLES AND CONTRACT LIABILITIES THE COMPANY rm RM RM RM Current Trade Third parties 27,148,316 10,596,610 Related parties 31,716,917 9,727,679 Accrued development cost (Note a) 100,132,970 Contract liabilities (Note 14) 14,170,291 82, ,168,494 20,406,390 Non-trade Subsidiaries 6,283,284 6,283,284 Related parties 1,253,346 5,785 Other payables 15,216,415 5,892,568 13,462 39,332 Accruals 44,248, ,091 96, ,660 Deposits received 489,771 1,781 Goods and service tax payables 911,072 62,118,818 6,513,225 6,393,206 6,425, ,287,312 26,919,615 6,393,206 6,425,276 (a) (b) (c) (d) (e) This represents liabilities to the landowners of certain development projects which have crystalised as a result of the landowners agreeing to accept a fixed consideration from the Group instead of a share of the gross development value of these projects. The normal trade credit terms of trade payables range from 30 to 90 days ( to 90 days) from the date of the invoice. Included in the trade payables of the Group is the total retention sum amounting to RM6,436,983 (2016 RM7,711,077). They are payable upon the expiry of the defect liabilities period of 24 months ( months). The trade balances owing to related parties subject to normal credit terms ranging from 60 to 90 days. The amount is to be settled in cash. The non-trade balances owing to subsidiaries and related parties are unsecured, interest free and repayable on demand. 91

74 22. REVENUE The breakdown of revenue from contracts with customers is presented in Note 39.4 to the financial statements. 23. COST OF SALES Included in cost of sales are the following: rm RM (Restated) Property development costs 144,273,651 64,260,109 Construction contract costs 9,660,301 3,267,095 Cost of inventories recognised 978, ,503 Others 140,780 62, FINANCE COSTS 155,052,822 68,100, rm RM (Restated) Interest expense: - hire purchase 36,554 16,584 - term loans 70,434 85,400 - bank charges 365, , ,984 92

75 25. PROFIT/(LOSS) BEFORE TAXATION THE COMPANY rm RM RM RM (Restated) Profit/(Loss) before taxation is arrived at after charging/(crediting):- Auditors remuneration: - audit fees - current financial year 218, ,000 65,000 53,000 - under/(over) provision in the previous financial year 13,700 (6,270) 4,000 (8,000) - non-audit fees - auditors of the Company 5,000 70,500 5,000 70,500 Depreciation of property, plant and equipment 752, ,954 5,332 30,201 Hire of machineries 8,370,991 Impairment losses on: - goodwill 26,694 - receivables 399,824 Inventories written down 545,812 Loss/(Gain) on disposal of: - property, plant and equipment 91, ,255 - investments in subsidiaries 2,546,295 (823,376) (1,000,000) 298,442 Loss/(Gain) on foreign exchange: - realised (58,569) - unrealised 13,694 17,611 Property, plant and equipment written off (Note 6) 8, ,352 8, ,352 Rental of premises 329,775 76,110 84,435 9,404 Interest income on financial assets that are not at fair value through profit or loss: - fixed deposits with licensed banks (95,927) (427,889) (96,773) (427,889) - others (139,856) (81,371) Rental income (108,000) 93

76 26. INCOME TAX EXPENSE THE COMPANY RM rm RM rm Income tax expense:- - current financial year 19,496,419 9,838,927 - over provision in the previous financial year (265,335) 19,231,084 9,838,927 Deferred tax expense:- - origination and reversal of temporary differences (2,538,749) (1,277,300) - under provision in the previous financial year 2,400 (2,538,749) (1,274,900) 16,692,335 8,564,027 A reconciliation of income tax expense applicable to the profit/(loss) before taxation at the statutory tax rate to income tax expense at the effective tax rate of the Group and of the Company is as follows:- THE COMPANY RM rm RM rm Profit/(Loss) before taxation 50,407,291 26,466, ,394 (2,646,369) Tax at the statutory tax rate of 24% ( %) 12,097,750 6,351,946 41,375 (635,129) Tax effects of:- Non-deductible expenses 2,934,160 2,107, , ,025 Non-taxable income (181,304) (240,000) (102,896) Deferred tax assets not recognised during the financial year 1,925, ,165 Utilisation of deferred tax assets previously not recognised (22,000) Over provision of income tax expense in the previous financial year (265,335) Under provision of deferred tax expense in the previous financial year 2,400 Income tax expense 16,692,335 8,564,027 94

77 26. INCOME TAX EXPENSE (CONT D) Subject to agreement with the tax authorities, at the end of reporting period, unused tax losses and unabsorbed capital allowances of the Group are as follows: RM rm Unused tax losses 11,459,000 3,435,000 Unabsorbed capital allowances 7,625,000 7,625,000 19,084,000 11,060,000 No deferred assets are recognised in respect of these items as it is not probable that taxable profits of the subsidiaries will be available against which the deductible temporary differences can be utilised. The unused tax losses and unabsorbed capital allowances do not expire under current tax legislation. However, the availability of unused tax losses for offsetting against future taxable profits of the respective subsidiaries are subject to no substantial changes in shareholdings of those subsidiaries under the Income Tax Act 1967 and guidelines issued by the tax authorities. 27. OTHER COMPREHENSIVE INCOME rm RM Items that will be reclassified subsequently to profit or loss Foreign currency translation: - changes during the financial year 109,335 - transfer to profit or loss on disposal of a subsidiary (Note 31) 26,809 26, ,335 95

78 28. LOSS AFTER TAXATION FROM DISCONTINUED OPERATIONS An analysis of the results of the discontinued operations is as follows: rm RM (Restated) Revenue 1,505,354 26,160,043 Cost of sales (1,612,745) (23,190,450) Gross (loss)/profit (107,391) 2,969,593 Other income 219,200 1,276,961 Distribution cost (52,718) (380,692) Administrative expenses (493,421) (5,965,124) Other expenses (146,972) (265,975) Finance costs (55,985) (583,685) Share of profit in an associate 4,955 Results for operating activities (637,287) (2,943,967) Income tax expense Results for operating activities, net of tax (637,287) (2,943,967) (Loss)/Gain on disposal of discontinued operations (2,519,486) 831,175 Loss after taxation from discontinued operations (3,156,773) (2,112,792) An analysis of the results of the discontinued operations is as follows: rm RM (Restated) Attributable to:- Owners of the Company (3,156,773) (2,071,172) Non-controlling interests (41,620) Loss after taxation from discontinued operations (3,156,773) (2,112,792) 96

79 28. LOSS AFTER TAXATION FROM DISCONTINUED OPERATIONS (CONT D) (a) Included in loss before taxation from the discontinued operations are the following: rm RM (Restated) Auditors remuneration 13,750 46,500 Bad debts written off 578,980 Depreciation of property, plant and equipment (Note 6) 12, ,910 Directors remuneration: - director fee 12,000 33,387 - non-fee emoluments 92,685 1,014,165 Impairment losses on receivables 181,888 1,280,760 Imputed interest on non-current receivable (326,701) Imputed interest on non-current payable 359,003 Interest expense on financial liabilities that are not at fair value through profit or loss: - overdraft 6,528 67,925 - hire purchase 1,356 4,608 - term loans 40,680 99,573 - others 7,421 25,654 Inventories written down 38,355 Loss/(Gain) on disposal of: - investment in subsidiaries (823,376) - investment in an associate (7,799) - property, plant and equipment 16,115 28,484 (Gain)/Loss on foreign exchange: - realised (50,513) 110,676 - unrealised 3,297 Rental of office and warehouse 92, ,327 Staff costs 27,304 2,136,601 Interest income on financial assets that are not at fair value through profit or loss: - fixed deposits with licensed banks (9,962) (55,952) Reversal of impairment losses on receivables (155,092) (836,159) Write-back in value of inventories (3,631) (40,555) 97

80 28. LOSS AFTER TAXATION FROM DISCONTINUED OPERATIONS (CONT D) (b) The cash flows attributable to the discontinued operations are the following: rm RM (Restated) Net cash from operating activities 3,389,723 1,003,546 Net cash from/(for) investing activities 206,387 (258,275) Net cash from/(for) financing activities 173,455 (365,157) Net cash from discontinued operations 3,769, , EARNINGS/(LOSS) PER SHARE (Restated) Continuing operations Profit attributable to owners of the Company (RM) 33,714,956 17,902,413 Weighted average number of ordinary shares in issue 112,345,406 91,859,900 Basic earnings per share (Sen) Discontinued operations Loss attributable to owners of the Company (RM) (3,156,773) (2,071,172) Weighted average number of ordinary shares in issue 112,345,406 91,859,900 Basic loss per share (Sen) (2.81) (2.25) The Company has not issued any dilutive potential ordinary shares and hence, the diluted earnings per share is equal to basic earnings/(loss) per share. 98

81 30. ACQUISITION OF SUBSIDIARIES On 18 January 2017 and 27 December 2017, the Company acquired the entire equity interests in Cocoa Valley Development Sdn. Bhd. and Danga Palms Sdn. Bhd.. The acquisition of these subsidiaries is to enable the Group to expand its business in property development. This is in line with the Group s strategic direction to focus on property development activities to sustain its growth. The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the date of acquisition. (a) Cash Flows Arising from Acquisition 2017 RM Equipment (Note 6) 15,385 Land held for property development (Note 7) 1,000,000 Property development cost (Note 11) 1,338,231 Other receivables and deposits 19,507,293 Cash and bank balances 75,910,229 Other payables (21,047,832) Net identifiable assets and liabilities 76,723,306 Add: Goodwill 26,694 Total purchase consideration 76,750,000 Less: Cash and bank balances of the subsidiaries acquired (75,910,229) Less: Payment not in cash consideration (76,000,000) Net cash inflow from the acquisition of subsidiaries (75,160,229) (b) Goodwill Arising from Acquisition 2017 RM Goodwill arising from acquisition (item (a) above) 26,694 Less: Impairment losses on goodwill (26,694) 99

82 30. ACQUISITION OF SUBSIDIARIES (CONT D) (c) Impact of Acquisition on the Group s Results Cocoa Valley Development Sdn. Bhd. has contributed the following results to the Group: RM Revenue 113,672,016 Profit after taxation 21,494,109 The acquisition was completed at the beginning of the year, therefore the revenue and profit after taxation has reflected the full year result for the current financial year. Danga Palms Sdn. Bhd. has not contributed to the Group s revenue and profit after taxation as the subsidiary has not commenced its principal activity as a property developer. 31. DISPOSAL OF SUBSIDIARIES During the financial year, the Company disposed of its entire equity interest in Emas Kiara Marketing Sdn. Bhd.. In previous financial year, the Company disposed of its entire equity interest in Noblecorp Builders Sdn. Bhd., Emas Kiara Electrical Sdn. Bhd. and Kiaratex Exports Pte. Ltd. 100

83 31. DISPOSAL OF SUBSIDIARIES (CONT D) The financial effects of the disposal at the date of disposal are summarised below:- THE COMPANY rm RM RM RM Investment in subsidiaries 3,043,670 Property, plant and equipment (Note 6) 3,034,926 3,612,805 Other investments (Note 10.2) 50,000 Inventories 563,326 1,037,777 Receivables and contract assets 1,374,448 7,747,445 Amount owing by related companies 2,632, ,797 Current tax assets 250,308 Fixed deposits with licensed banks 356,711 1,504,309 Cash and bank balances 3,183, ,160 Payables and contract liabilities (5,741,384) (7,617,783) Amount owing to related companies (2,585,322) Borrowings (Note 37(b)) (2,184,891) (2,315,355) Non-controlling interest (139,981) Carrying amount of net assets disposed of 3,519,486 1,921,852 3,043,670 Add: (Loss)/Gain on disposal of subsidiaries (2,546,295) 823,376 1,000,000 (298,442) Add: Net exchange gain included in the loss of disposal 26,809 Consideration received, satisfied in cash 1,000,000 2,745,228 1,000,000 2,745,228 Less: Cash and bank balances of subsidiaries disposed of (3,540,324) (1,778,469) Net cash (outflow)/inflow from the disposal of subsidiaries (2,540,324) 966,759 1,000,000 2,745, DIVIDENDS rm RM A single tier dividend of 3.5 sen per ordinary share (2016- Nil) 5,508,

84 33. EMPLOYEE BENEFITS rm RM Salaries, wages, bonuses and allowances 4,385,185 2,608,681 Defined contribution plan 533, ,016 Other employee benefits 8,790 (5,889) 4,927,957 2,855, CAPITAL COMMITMENT rm RM Purchase of property, plant and equipment 172, , CONTINGENT LIABILITIES No provisions are recognised on the following matters as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement:- THE COMPANY rm RM RM RM Performance bond issued in favour of third parties for contract work undertaken by the Group 252,448 Corporate guarantee given to licensed banks for credit facilities granted to subsidiaries 92,200,000 7,137, RELATED PARTY DISCLOSURES (a) Identities of Related Parties Parties are considered to be related to the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. In addition to the information detailed elsewhere in the financial statements, the Group has related party relationships with its directors, key management personnel and entities within the same group of companies. 102

85 36. RELATED PARTY DISCLOSURES (CONT D) (b) Significant Related Party Transactions and Balances Other than those disclosed elsewhere in the financial statements, the Group also carried out the following significant transactions with the related parties during the financial year: rm RM Companies of which certain directors or their family members have substantial financial interests Contractors Building works and supplies paid/payable 100,652,089 44,978,097 Services paid/payable 278,911 Sales of property units 17,373,936 Family members of certain directors Sales of property units 3,697,735 The significant outstanding balances of the related parties together with their terms and conditions are disclosed in the respective notes to the financial statements. 37. CASH FLOW INFORMATION (a) The cash disbursed for the purchase of property, plant and equipment is as follows:- THE COMPANY rm RM RM RM Cost of property, plant and equipment purchased (Note 6) 3,400,288 3,651,329 16,362 62,773 Amount financed through hire purchase (Note 37(b)) (755,000) (401,900) Cash disbursed for purchase of property, plant and equipment 2,645,288 3,249,429 16,362 62,

86 37. CASH FLOW INFORMATION (CONT D) (b) The reconciliations of liabilities arising from financing activities are as follows:- Term Hire loans Purchase Total 2017 RM RM RM At 1 January 3,357, ,444 3,912,088 Changes in Financing Cash Flows Proceeds from drawdown 62,869,348 62,869,348 Repayment of borrowing principal (27,717,037) (224,779) (27,941,816) Repayment of borrowing interests (1,857,078) (36,554) (1,893,632) Non-cash Changes Disposal of subsidiary (Note 31) (2,184,891) (2,184,891) New hire purchase (Note 37(a)) 755, ,000 Finance charges recognised in profit or loss 70,434 36, ,988 Finance charges capitalised under property development costs (Note 11) 1,786,644 1,786,644 At 31 December 36,325,064 1,084,665 37,409,729 Comparative information is not presented by virtue of the exemption given in MFRS 107. (c) The cash and cash equivalents comprise the following:- THE COMPANY rm RM RM RM Cash and bank balances 42,612,745 8,316,341 14,241,801 1,997,497 Fixed deposits with licensed banks 5,145 14,804,268 14,023,918 Bank overdraft (Note 19) (703,073) 42,617,890 22,417,536 14,241,801 16,021,415 Less: Fixed deposits pledged to licensed banks (302,460) (302,460) Less: Fixed deposits with original maturity period of more than 3 months (2,796,169) (2,015,819) 42,617,890 19,318,907 14,241,801 13,703,

87 38. KEY MANAGEMENT PERSONNEL COMPENSATION The key management personnel of the Group and of the Company include executive directors and non-executive directors of the Company and certain members of senior management of the Group and of the Company. The key management personnel compensation during the financial year are as follows:- THE COMPANY R rm RM RM RM (a) Directors Directors of the Company Short term employee benefits - fees 201, , , ,366 - salaries, bonuses and other benefits 1,414, ,620 34,500 37,000 Defined contribution plans 127,263 47,280 1,743, , , ,366 Directors of the Subsidiaries Short term employee benefits - fees 49,300 33,387 - salaries, bonuses and other benefits 764, ,019 Defined contribution plans 84,601 75, , ,448 Total directors remuneration 2,641,200 1,504, , ,366 (b) The estimated monetary value of benefits-in-kind provided by the Group to the directors of the Company were RM45,000 (2016 Nil). THE COMPANY R rm RM RM RM Other key management personnel Short term employee benefits 180,621 Defined contribution benefits 21,600 Total compensation for other key management personnel 202,

88 39. OPERATING SEGMENTS Operating segments are prepared in a manner consistent with the internal reporting provided to the Executive Directors as its chief operating decision makers in order to allocate resources to segments and to assess their performance on a quarterly basis. For the management purposes, the Group is organised into the following business segments based on their products and services as follows:- Property Development : Developing property projects and leasing of properties. Geosynthetic Engineering : Trading, marketing and installation of geosynthetic products and technical fabrics for technical, engineering and industrial applications. Others : General trading, investment holding, property investment holding and provision of management services BUSINESS SEGMENTS i Continuing Operations I 2017 Geosynthetic engineering Property (Trading & discontinued Development Installation) Others Total Operations Total rm RM RM RM RM RM Revenue External sales 223,237,566 11,821, , ,167,823 1,505, ,673,177 Total 223,237,566 11,821, , ,167,823 1,505, ,673,177 Results Segment results 54,103,548 (2,140,872) (1,083,276) 50,879,400 (581,302) 50,298,098 Finance costs (472,109) (55,985) (528,094) Income tax expense (16,692,335) (16,692,335) Loss on disposal of discontinued operations (2,519,486) (2,519,486) Consolidated profit/(loss) after taxation 33,714,956 (3,156,773) 30,558,

89 39. OPERATING SEGMENTS (CONT D) 39.1 BUSINESS SEGMENTS (CONT D) i Continuing Operations I 2017 Geosynthetic engineering Property (Trading & discontinued Development Installation) Others Total Operations Total rm RM RM RM RM RM Included in segments results are: Depreciation of property, plant and equipment 387, , , ,249 12, ,909 Hire of machineries 8,370,991 8,370,991 8,370,991 Impairment losses on receivables 399, , , ,712 Inventories written down 545, , ,812 Loss on disposal of property, plant and equipment ,351 91,081 16, ,196 Loss on disposal of a subsidiary 2,546,295 2,546,295 2,546,295 Property, plant and equipment written off 8,498 8,498 8,498 Loss on foreign exchange - realised (50,513) (50,513) - unrealised 13,694 13,694 13,694 Interest income (139,010) (96,773) (235,783) (9,962) (245,745) Reversal of impairment losses on receivables (155,092) (155,092) Write-back in value of inventories (3,631) (3,631) 107

90 39. OPERATING SEGMENTS (CONT D) 39.1 BUSINESS SEGMENTS (CONT D) I Continuing Operations I 2017 Geosynthetic engineering Property (Trading & Development Installation) Others Total rm RM RM RM Segment assets 479,134,489 10,950,057 88,152, ,237,125 Unallocated assets:- - Current tax assets 13,101 - Deferred tax assets 2,244,800 Consolidation adjustments (104,350,004) Consolidated total assets 476,145,022 Segment liabilities 304,923,276 8,397,886 26,316, ,637,316 Unallocated liabilities:- - Current tax liabilities 7,869,460 - Deferred tax liabilities 323,651 - Hire purchase payables 1,084,665 - Term loans 36,325,064 Consolidation adjustments (104,350,004) Consolidated total liabilities 280,890,152 i Continuing Operations I Geosynthetic engineering Property (Trading & discontinued Development Installation) Others Total Operations Total 2017 RM RM RM RM RM RM Additions to non-current assets other than financial instruments are:- Property, plant and equipment 2,935, ,241 3,126, ,541 3,400,

91 39. OPERATING SEGMENTS (CONT D) 39.1 BUSINESS SEGMENTS (CONT D) I Continuing Operations I 2016 Geosynthetic (Restated) engineering Property (Trading & discontinued Development Installation) Others Elimination Total Operations Total rm RM RM RM RM RM RM Revenue External sales 96,501,267 4,335,998 16, ,853,545 26,160, ,013,588 Inter-segment sales 14,603 (14,603) Total 96,501,267 4,335,998 30,883 (14,603) 100,853,545 26,160, ,013,588 Results Segment results 29,322,066 (181,288) (2,557,751) (14,603) 26,568,424 (1,529,107) 25,039,317 Finance costs (101,984) (583,685) (685,669) Income tax expense (8,564,027) (8,564,027) Consolidated profit/(loss) after taxation 17,902,413 (2,112,792) 15,789,

92 39. OPERATING SEGMENTS (CONT D) 39.1 BUSINESS SEGMENTS (CONT D) i Continuing Operations I 2016 Geosynthetic (Restated) engineering Property (Trading & discontinued Development Installation) Others Total Operations Total rm RM RM RM RM RM Included in segments results are:- Bad debts written off 578, ,980 Depreciation of property, plant and equipment 74, , , , , ,864 Impairment losses on receivables 1,280,760 1,280,760 Imputed interest on non-current payable 359, ,003 Inventories written down 38,355 38,355 Loss on disposal of property, plant and equipment 114, ,255 28, ,739 Gain on disposal of subsidiaries (823,376) (823,376) (823,376) (Gain)/Loss on foreign exchange: - realised (58,596) (58,569) 110,676 52,107 - unrealised 17,611 17,611 3,297 20,908 Property, plant and equipment written off 166, , ,352 Imputed interest on non-current receivable (326,701) (326,701) Interest income (81,397) (427,863) (509,260) (55,952) (565,212) Reversal of impairment loss on receivables (836,159) (836,159) Write-back in value of inventories (40,555) (40,555) 110

93 39. OPERATING SEGMENTS (CONT D) 39.1 BUSINESS SEGMENTS (CONT D) I Continuing Operations I Geosynthetic engineering Property (Trading & Development Installation) Others Total 2016 RM RM RM RM Segment assets 82,691,407 24,328,726 81,582, ,602,473 Unallocated assets:- - Current tax assets 305,258 Consolidation adjustments (59,013,921) Consolidated total assets 129,893,810 Segment liabilities 16,238,971 21,075,274 48,619,291 85,933,536 Unallocated liabilities:- - Current tax liabilities 1,738,884 - Deferred tax liabilities 2,442,072 - Hire purchase payables 554,444 - Term loans 3,357,644 - Bank overdraft 703,073 Consolidation adjustments (59,013,921) Consolidated total liabilities 35,715,732 I Continuing Operations I Geosynthetic engineering Property (Trading & Development Installation) Others Total 2016 RM RM RM RM Additions to non-current assets other than financial instruments are:- Property, plant and equipment 984,796 1,207,793 1,458,740 3,651,

94 39. OPERATING SEGMENTS (CONT D) 39.2 GEOGRAPHICAL INFORMATION Revenue is based on the country in which the customers are located. REVENUE rm RM (Restated) Domestic 235,167, ,853,545 The information for non-current assets by geographical segments is not presented as the non-current assets are located in Malaysia MAJOR CUSTOMERS During the year, revenue from 2 customers who contributed to more than 10% of the Group s revenue amounted to RM60,433, DISAGGREGATION OF REVENUE FROM CONTINUING OPERATIONS Revenue from contracts with customers is disaggregated by primary geographical market, major products/services lines and timing of revenue recognition as below:- Geosynthetic engineering Property (Trading & THE Development Installation) Others GROUP 2017 RM RM RM RM Major products and services 223,237,566 11,821, , ,167,823 Timing of Revenue Recognition At a point of time 1,122, ,900 1,231,805 Over time 223,237,566 10,698, ,936, ,237,566 11,821, , ,167,

95 39. OPERATING SEGMENTS (CONT D) 39.4 DISAGGREGATION OF REVENUE FROM CONTINUING OPERATIONS (CONT D) Revenue from contracts with customers is disaggregated by primary geographical market, major products/services lines and timing of revenue recognition as below (cont d):- Geosynthetic engineering Property (Trading & THE 2016 Development Installation) Others GROUP (Restated) rm RM RM RM Major products and services 96,501,267 4,335,998 16, ,853,545 Timing of Revenue Recognition At a point of time 650,400 16, ,680 Over time 96,501,267 3,685, ,186, FINANCIAL INSTRUMENTS 96,501,267 4,335,998 16, ,853,545 The Group s activities are exposed to a variety of market risk (including foreign currency risk, interest rate risk and equity price risk), credit risk and liquidity risk. The Group s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group s financial performance FINANCIAL RISK MANAGEMENT POLICIES The Group s policies in respect of the major areas of treasury activity are as follows:- (a) Market risk (i) Foreign Currency Risk The Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than the respective functional currencies of entities within the Group. The currencies giving rise to this risk are primarily United States Dollar and Indian Rupee. Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level. The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes. 113

96 40. FINANCIAL INSTRUMENTS 40.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT D) (a) Market risk (cont d) (i) Foreign Currency Risk (cont d) The Group s exposure to foreign currency risk (a currency which is other than the functional currency of the entities within the Group) based on the carrying amounts of the financial instruments at the end of the reporting period is summarised below:- Foreign Currency Exposure United States Indian dollar Rupee 2016 RM RM Financial Assets Trade and other receivables 1,227,370 Cash and cash equivalents 161,819 1,389,189 Financial Liabilities Trade and other payables 827, ,400 Net financial assets/(liabilities) 561,643 (308,400) Currency exposure 561,643 (308,400) Foreign Currency Risk Sensitivity Analysis Any reasonably possible change in the foreign currency exchange rates at the end of the reporting period against the respective functional currencies of the entities within the Group does not have material impact on the profit/loss after taxation and other comprehensive income of the Group and of the Company and hence, no sensitivity analysis is presented. (ii) Interest Rate Risk Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group s exposure to interest rate risk arises mainly from long-term borrowings with variable rates. The Group s policy is to obtain the most favourable interest rates available and by maintaining a balanced portfolio of mix of fixed and floating rate borrowings. The Group obtains its external financing through long-term and short-term borrowings which are based on floating rates. The Group actively reviews its borrowings in order to access to cheaper funding in a low interest rate environment. 114 The Group s fixed rate receivables, borrowings and fixed deposits with licensed banks are carried at amortised cost. Therefore, they are not subject to interest rate risk as defined MFRS7 since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

97 40. FINANCIAL INSTRUMENTS 40.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT D) (a) Market risk (cont d) (ii) Interest Rate Risk (cont d) The Group s exposure to interest rate risk based on the carrying amounts of the financial instruments at the end of the reporting period is disclosed in Note 19 to the financial statements. Interest Rate Risk Sensitivity Analysis Any reasonable possible change in the interest rates of floating rate term loans at the end of the reporting period does not have material impact on the profit/(loss) after taxation and other comprehensive income of the Group and of the Company and hence, no sensitivity analysis is presented. (iii) Equity Price Risk (b) Credit Risk The Group does not have any quoted investments and hence is not exposed to equity price risk. The Group s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from receivables and cash and cash equivalents. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an on-going basis. For cash and cash equivalents, the Group seeks to ensure that cash assets are invested safely and profitably by assessing counterparty risks and allocating placement limits for various creditworthy financial institutions. The Group considers the risk of material loss in the event of nonperformance by the above parties to be unlikely. The Group s maximum exposure to credit risk is equal to the carrying value of those financial instruments. The Group uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables having significant balances past due or more than 14 to 60 days, which are deemed to have higher credit risk, are monitored individually. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified (where applicable). Impairment is estimated by management based on prior experience and the current economic environment. The Group provides both performance guarantee to third parties for contract works undertaken by certain subsidiaries and corporate guarantee to financial institutions for credit facilities granted to certain subsidiaries. The Company monitors the progress of these contract works to ensure that the agreed terms of the contract works are duly fulfilled by the subsidiaries. The Company also monitors the results of these subsidiaries regularly and repayments made by the subsidiaries. (i) Credit Risk Concentration Profile The Group s major concentration credit risk relates to amounts owing by 1 customer which constituted approximately 39% of its trade receivables (including related parties) at the end of the reporting period. 115

98 40. FINANCIAL INSTRUMENTS 40.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT D) (b) Credit risk (cont d) (ii) Exposure To Credit Risk At the end of the reporting period, the maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position of the Group and of the Company after deducting any allowance for impairment losses (where applicable). (iii) Ageing Analysis Gross Individual Collective Carrying amount Impairment Impairment Amount 2017 RM RM RM RM Not past due 63,327,129 63,327,129 Retention monies receivables 342, ,712 Past due: - less than 3 months 32,777,436 32,777,436-3 to 6 months 3,590,952 (399,824) 3,191,128 - more than 6 months 377, , ,415,779 (399,824) 100,015, Not past due 16,340,918 16,340,918 Retention monies receivables 3,115,145 (481,778) (139,887) 2,493,480 Past due: - less than 3 months 16,109,698 16,109,698-3 to 6 months 4,853,872 4,853,872 - more than 6 months 1,461,345 1,461,345 - more than 1 year 7,729,752 (4,974,915) (756,683) 1,998,154 49,610,730 (5,456,693) (896,570) 43,257,467 At the end of the reporting period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement. The Group believes that no impairment allowance is necessary in respect of trade receivables that are past due but not impaired because they are companies with good collection track record and no recent history of default. 116

99 40. FINANCIAL INSTRUMENTS (CONT D) 40.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT D) (b) Credit Risk (cont d) (iii) Ageing Analysis (cont d) Property Development Segment The management is of the opinion that the recoverability of the amount owed by the purchasers is duly recoverable, due to the following reasons:- (c) (1) the transfer of the property to the purchaser is subject to the full payment of the outstanding amount; (2) most of the purchasers have end financing arrangements, and payments are slow because of the credit processes of the end financiers; and (3) in the event the sale is terminated for non-payment, the Group will be able to recover the property. Other Segments The Group believes that no impairment allowance is necessary in respect of these trade receivables. They are substantially companies with good collection track record and no recent history of default. Liquidity Risk Liquidity risk arises mainly from general funding and business activities. The Group practices prudent risk management by maintaining sufficient cash balances and the availability of funding through certain committed credit facilities. Maturity Analysis The following table sets out the maturity profile of the financial liabilities at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):- Weighted Average Effective Contractual Over Interest Carrying Undiscounted Within Rate Amount Cash Flows 1 Year Years Years 2017 % RM RM RM RM RM Non-derivative Financial Liabilities Hire purchase payables ,084,665 1,278, , ,758 76,838 Term loans ,325,064 40,967,089 19,127,106 21,839,983 Trade and other payables (excluding contract liabilities and GST payables) 220,205, ,205, ,205, ,615, ,451, ,578,139 22,796,741 76,

100 40. FINANCIAL INSTRUMENTS (CONT D) 40.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT D) (c) Liquidity Risk (cont d) Maturity Analysis (cont d) The following table sets out the maturity profile of the financial liabilities at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period) (cont d):- Weighted Average Effective Contractual Over Interest Carrying Undiscounted Within Rate Amount Cash Flows 1 Year Years Years 2016 % RM RM RM RM RM Non-derivative Financial Liabilities Hire purchase payables , , , ,885 Term loans ,357,644 4,169, ,875 2,220,633 1,646,820 Bank overdraft , , ,073 Trade and other payables (excluding contract liabilities) ,837,514 26,837,514 26,837,514 31,452,675 32,318,220 28,070,882 2,600,518 1,646,820 Contractual Carrying Undiscounted Within Amount Cash Flows 1 Year THE COMPany rm rm rm 2017 Non-derivative Financial Liabilities Other payables and accruals 6,393,206 6,393,206 6,393, Non-derivative Financial Liabilities Other payables and accruals 6,425,276 6,425,276 6,425,

101 40. FINANCIAL INSTRUMENTS (CONT D) 40.2 CAPITAL RISK MANAGEMENT The Group manages its capital to ensure that entities within the Group will be able to maintain an optimal capital structure so as to support its businesses and maximise shareholders value. To achieve this objective, the Group may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares. The Group manages its capital based on debt-to-equity ratio that complies with debt covenants and regulatory, if any. The debt-to-equity ratio is calculated as net debt divided by total equity. The Group includes within net debt, loans and borrowings from financial institutions less cash and cash equivalents. Capital includes equity attributable to the owners of the parent and non-controlling interest. The Group manages its capital based on debt-to-equity ratio. The debt-to-equity ratio of the Group at the end of the reporting period is not presented as its cash and cash equivalents exceeded the total external borrowings. There was no change in the Group s approach to capital management during the financial year CLASSIFICATION OF FINANCIAL INSTRUMENTS Financial Assets THE COMPANY rm RM RM RM Available-for-sale Financial Assets Club membership 50,000 Loans and Receivables Financial Assets Trade and other receivables (excluding prepayments, deferred expenditure and GST receivable) 104,182,010 51,540,076 44,304,645 48,639,520 Cash and cash equivalents 42,617,890 23,120,609 14,241,801 16,021, ,799,900 74,660,685 58,546,446 64,660,935 Financial Liabilities Other Financial Liabilities Trade and other payables (excluding contract liabilities and GST payable) 220,205,949 26,837,514 6,393,206 6,425,276 Borrowings 37,409,729 4,615, ,615,678 31,452,675 6,393,206 6,425,

102 40. FINANCIAL INSTRUMENTS (CONT D) 40.4 FAIR VALUE INFORMATION The fair values of the financial assets and financial liabilities of the Group and of the Company that maturing within the next 12 months approximated their carrying amounts due to the relatively short-term maturity of the financial instruments. As the Group does not have any financial instruments carried at fair value, the following table sets out only the fair value profile of financial instruments that are not carried at fair value at the end of the reporting period:- Fair Value of Financial Instruments not Carried at Fair Value Total Fair Carrying Level 1 Level 2 Level 3 Value Amount rm RM RM RM RM 2017 Financial Liabilities Hire purchase payables 1,093,333 1,093,333 1,084,665 Term loans 36,325,064 36,325,064 36,325, Financial Assets Other investment - Club membership 70,000 70,000 50,000 Financial Liabilities Hire purchase payables 558, , ,444 Term loans 3,357,644 3,357,644 3,357,644 Fair Value of Financial Instruments Not Carried at Fair Value The fair values, which are for disclosure purposes, have been determined using the following basis:- The fair values of the Group s term loans that carry floating interest rates approximated their carrying amounts as they are repriced to market interest rates on or near the reporting date. The fair values of hire purchase payables that carry fixed interest rates are determined by discounting the relevant future contractual cash flows using current market interest rates for similar instruments at the end of the reporting period. The interest rates used to discount the estimated cash flows are as follows: % % Hire purchase payables

103 41. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR On 27 December 2017, the Company acquired the entire equity interest in Danga Palms Sdn. Bhd. ( DP ) for a total cash consideration of RM750,000. Subsequently, on 31 December 2017, DP entered into a Development Right Agreement ( DRA ) with PIJ Property Development Sdn Bhd ( PIJPD ). Pursuant to the DRA, DP undertakes to develop a piece of leasehold land measuring acres located in Johor Bahru into a mixed development project over a period of 10 years subject to such extensions of time at the discretion of PIJPD. In return, PIJPD shall be entitled to receive a certain percentage of the gross development value of the Project, subject to a minimum value of RM100 million. 42. COMPARATIVE FIGURES The following figures have been reclassified to conform with the presentation of the current financial year:- As As previously restated Reported rm rm Statement of Profit or Loss and Other Comprehensive Income (Extract):- Continuing operations REVENUE 100,853, ,697,018 COST OF SALES (68,100,956) (87,775,026) OTHER INCOME 1,210,728 2,421,103 SELLING AND MARKETING EXPENSES (1,296,285) (1,513,648) ADMINISTRATIVE EXPENSES (2,795,263) (7,247,632) OTHER EXPENSES (3,303,345) (3,503,501) FINANCE COSTS (101,984) (622,151) Discontinued operations LOSS AFTER TAXATION FROM DISCONTINUED OPERATIONS (2,112,792) (102,515) The figures were reclassified as the operations of Emas Kiara Marketing Sdn. Bhd. was classified as a discontinued operation, therefore, the comparative statement of profit or loss and other comprehensive income was restated as if the operation had been discontinued from the start of the comparative period. 121

104 Additional Compliance Information 1. Audit and Non-Audit Fees The amount of audit fees and non-audit fees paid or payable by MB World Group Berhad and its subsidiaries ( the Group ) to the Group s external auditors and a firm affiliated to the external auditors firm for the financial year ended 2017 ( FY2017 ) are as follows: Fees Company Group Audit Services RM RM Audit fees 65, , Non-audit fees 11, , TOTAL 76, , Material contract Save as disclosed below, there is no material contracts entered with the Group involving directors and/or major shareholders interest:- Acquisition of Cocoa Valley Development Sdn. Bhd. ( CV Development ) MB World Group completed the acquisition of CV Development on 18 January 2017 with the issuance of 3,750,000 Consideration Shares in respect of the First Payment to Kim Feng Capital Sdn. Bhd. ( KF Capital ) pursuant to the Share Sale Agreement ( SSA ) dated 15 April 2016 entered into in the previous FY2016. Following the acquisition, CV Development becomes a wholly-owned subsidiary of MB World Group. The second payment was satisfied by the issuance of 61,767,241 Consideration Shares on 18 July Recurrent Related Party Transactions of a Revenue or Trading Nature At MB World Group s last Annual General Meeting ( AGM ) held on 22 May 2017, MB World Group obtained mandate from its shareholders for the Group to enter into the Recurrent Related Party Transactions. Pursuant to Paragraph 10.09(2)(b) and Section of Practice Note 12 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the details of the transactions conducted pursuant to the mandate during the FY2017 are disclosed in Note 36 on pages 102 and 103 of this Annual Report. MB World Group will be seeking renewal of the shareholders mandate for recurrent Related Party Transactions and a new shareholders mandate for new recurrent Related Party Transactions at the forthcoming AGM to be convened on 28 May

105 Additional Compliance Information 4. Statement of Directors Responsibility in Relation to the Financial Statements The Directors are responsible for the preparation of the Annual Audited Financial Statements which give a true and fair view of the state of affairs of the Group and will ensure that they are presented in accordance with the provisions of the Companies Act, 2016 and the applicable approved accounting standards in Malaysia. In the preparation of the Financial Statements for FY2017, the Directors are satisfied that the Group had used appropriate accounting policies that were consistently applied and supported by reasonable and prudent judgement and estimates. 5. List of properties as at 31 December 2017 Registered Owner Noblecorp Capital Sdn. Bhd. (Note a) Location Lot No Jalan Pekeliling Tanjung 27/1 Kawasan Perindustrian Indahpura Kulaijaya Johor Approximate Land Area/ Built-up Area 2,801.2 sq m (Land) 1,236 sq m (Building) Description/ Existing Use Single storey detached factory with double storey office Tenure Date of Acquisition Freehold (Date of Sale & Purchase Agreement) Net book value as at (RM) 814,041 (Land) 2,280,421 (Building) Age of building (years) 5 Noblecorp Sdn. Bhd. (Note b) Parcel No & 01-03A, Level 3 & 3A, Building D-01, Aeropod,District of Kota Kinabalu, Sabah sq m per unit Retail office Leasehold (Date of Sale & Purchase Agreement) 3,509,587 3 Notes: a) MB World Group entered into a SSA on 17 April 2018 to dispose of its entire equity interest of Emas Kiara Marketing & Engineering Sdn Bhd ( EKME ). Prior to this, on 2 February 2018, MB World Group disposed of its entire equity interest of Noblecorp Capital Sdn Bhd ( NCSB ) to EKME as internal group restructuring. Upon the fulfillment of Conditions Precedent of SSA, both EKME and NCSB ceased as subsidiaries of the Group. b) Noblecorp Sdn. Bhd. entered into a Sale & Purchase Agreement on 15 February 2018 to dispose of two units of retail offices with a total consideration of RM 3,537,600. The Group does not have a policy on revaluation of landed properties and neither has the Group re-valued its land properties during FY

106 Analysis of Shareholdings SHARE CAPITAL AS AT 30 MARCH 2018 Issued and fully paid up capital : RM125,248, comprised of 157,377,141 ordinary shares fully paid Class of shares : Ordinary shares Voting rights : One (1) vote per ordinary share DISTRIBUTION OF SHAREHOLDERS ACCORDING TO STATISTICAL SUMMARY OF THE RECORD OF DEPOSITORS AS AT 30 MARCH 2018 No. of shareholders Size of shareholdings no. of shares held % 9 Less than 100 shares to 1,000 shares 124, ,001 to 10,000 shares 1,311, ,001 to 100,000 shares 6,220, ,001 to less than 5% of issued shares 39,183, % and above of issued shares 110,537, TOTAL 157,377, LIST OF 30 LARGEST SHAREHOLDERS ACCORDING TO THE RECORD OF DEPOSITORS AS AT 30 MARCH 2018 No. Name of shareholders No. of shares held % 1 KIM FENG CAPITAL SDN. BHD. 110,537, PLUS AMBER SDN. BHD. 4,333, CIMSEC NOMINEES (TEMPATAN) SDN. BHD. CIMB FOR KONG CHONG CHI SUIM (PB) 4 CIMB GROUP NOMINEES (TEMPATAN) SDN. BHD. HONG LEONG ASSET MANAGEMENT BHD. FOR HONG LEONG ASSURANCE BERHAD (LP FUND ED102) 3,381, ,713, KOPERASI PERMODALAN FELDA MALAYSIA BERHAD 2,000, CITIGROUP NOMINEES (ASING) SDN. BHD. EXEMPT AN FOR CITIBANK NEW YORK (NORGES BANK 14) 2,000, LEONG MEI FOONG 1,990, CITIGROUP NOMINEES (TEMPATAN) SDN. BHD. EMPLOYEES PROVIDENT FUND BOARD (PHEIM) 9 PUBLIC NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR HAW SIEW HOOI (E-TSA) 1,700, ,590, NG KOK BOON 1,500,

107 Analysis of Shareholdings No. Name of shareholders No. of shares held % 11 PUBLIC NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR HING SOH TEE (E-JBU) 12 CITIGROUP NOMINEES (ASING) SDN. BHD. CEP FOR PHEIM SICAV-SIF 1,492, ,225, SEE CHII WEI 1,220, CIMB GROUP NOMINEES (TEMPATAN) SDN. BHD. CIMB COMMERCE TRUSTEE BERHAD FOR HONG LEONG STRATEGIC OPPORTUNITY FUND II 968, NGSINAR SDN. BHD. 929, CHEONG HUI SHEAN 895, PEE PHEK YEN 895, MAYBANK NOMINEES (TEMPATAN) SDN. BHD. MAYBANK TRUSTEES BHD. FOR LIBRA AMANAH SAHAM WANITA (N ) 19 MAYBANK NOMINEES (TEMPATAN) SDN. BHD. MAYBANK TRUSTEES BHD. FOR LIBRA SYARIAHEXTRA FUND (N ) 810, , TEE KOK SUAH 668, FAN CHUEN YEE 540, MAYBANK NOMINEES (TEMPATAN) SDN. BHD. MAYBANK TRUSTEES BHD. FOR LIBRA INCOMEEXTRA FUND (240491) 23 MAYBANK NOMINEES (TEMPATAN) SDN. BHD. MAYBANK TRUSTEES BHD. FOR LIBRA EQUITYEXTRA FUND (990405) 24 CIMB GROUP NOMINEES (TEMPATAN) SDN. BHD. CIMB COMMERCE TRUSTEE BERHAD LIBRA DIVIDENDEXTRA FUND 507, , , FAN CHUEN YEE 400, CIMB GROUP NOMINEES (ASING) SDN BHD EXEMPT AN FOR DBS BANK LTD (SFS) 27 DB (MALAYSIA) NOMINEE (TEMPATAN) SDN. BHD. DEUTSCHE TRUSTEES MALAYSIA BHD. FOR HONG LEONG STRATEGIC FUND 28 CIMSEC NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR CHEW MENG HEAN (J DEDAP-CL) 29 MAYBANK NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR LAW CHOO KIANG 387, , , , WONG WENG HO 262, TOTAL 145,548,

108 Analysis of Shareholdings SUBSTANTIAL SHAREHOLDERS AS AT 30 MARCH 2018 (As per Register of Substantial Shareholders) I No. of shares held I D direct deemed No. Name of shareholder interest % Interest % 1 KIM FENG CAPITAL SDN BHD 110,537, SIMON SIM YOW YUNG 110,537, DIRECTORS SHAREHOLDINGS AS AT 30 MARCH 2018 (As per Register of Directors Shareholdings) I No. of shares held I Direct deemed No. Name of Director interest % Interest % 1. CINDI SIM 2. SIMON SIM YOW YUNG 110,537, DATO IKMAL HAJIZ BIN HASHIM 4 NG LIANG KHIANG 929,000 * ,500, PANG SIEW HENG 6 WONG YEAN NI 7 CHONG JIUN SHYANG * Deemed interested in shares held by NgSinar Sdn Bhd ( H) + Deemed interested in shares held by his son. 126

109 Notice of 19th Annual General Meeting NOTICE IS HEREBY GIVEN THAT the 19th Annual General Meeting of MB WORLD GROUP BERHAD will be held at the Hibiscus Room, Amansari Residence Resort, Jalan Persiaran Seri Alam, Bandar Seri Alam, Johor Bahru, Johor on Monday, the 28th day of May, 2018 at a.m. for the following purposes: 1. To receive the Audited Financial Statements for the Financial Year Ended 31 December 2017 ( FY2017 ) together with the Reports of the Directors and Auditors thereon. (See Explanatory Note 1) 2. To re-elect the following Directors retiring by rotation pursuant to Article 109 of the Company s Constitution. MS. CINDI SIM MR. CHONG JIUN SHYANG 3. To approve the payment of Directors Fees of RM225,000 (FY 2017: RM201,000) for the Financial Year Ending 31 December 2018 ( FY2018 ). 4. To approve the payment of Directors Benefits for the period commencing after the date of this Annual General Meeting to the date of the next Annual General Meeting. 5. To re-appoint Messrs Crowe Horwath as Auditors of the Company for the FY2018 and to authorise the Directors to fix their remuneration. To consider and if thought fit, to pass the following Resolutions: ORDINARY RESOLUTION 1 ORDINARY RESOLUTION 2 ORDINARY RESOLUTION 3 ORDINARY RESOLUTION 4 (See Explanatory Note 2) ORDINARY RESOLUTION 5 ORDINARY RESOLUTION 6. PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTION OF A REVENUE OR TRADING NATURE ( PROPOSED SHAREHOLDERS MANDATE ) ORDINARY RESOLUTION 6 THAT approval be and is hereby given for the Proposed Renewal of the Shareholders Mandate and Proposed New Shareholders Mandate for MB WORLD GROUP BERHAD Group of Companies to enter into the category of recurrent transactions of a revenue or trading nature falling within the nature of transactions set out in the table in Section 2.3 of the Circular to Shareholders dated 27 April 2018 with the related parties falling within the classes of persons set out in Section 2.2 in the Circular, such transactions which are necessary for the Group s day-to-day operations and carried out in the ordinary course of business on terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders. AND THAT the authority conferred by such Mandate shall continue to be in force until: (a) (b) the conclusion of the next Annual General Meeting of the Company, at which time it will lapse, unless by resolution passed at the meeting, the authority is renewed; the expiration of the period within which the next Annual General Meeting is required to be held pursuant to Section 340 of the Companies Act, 2016 (but must not extend to such extension as may be allowed pursuant to Section 340 (4) of the Companies Act, 2016); or 127

110 Notice of 19th Annual General Meeting (c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting; whichever is the earlier. AND THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary to give effect to this Ordinary Resolution. ORDINARY RESOLUTION 7. AUTHORITY TO ALLOT AND ISSUE SHARES PURSUANT TO SECTION 75 AND 76 OF THE COMPANIES ACT, 2016 THAT pursuant to Section 75 and 76 of the Companies Act, 2016, the Directors be and are hereby empowered to allot and issue shares in the Company at any time 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 resolution does not exceed 10% of the issued capital of the Company at any point of time and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company. 8. To transact any other business for which due notice shall have been given in accordance with the Company s Constitution and/or the Companies Act, BY ORDER OF THE BOARD ORDINARY RESOLUTION 7 LEE WEE HEE (MAICSA ) POW JULIET (MAICSA ) Secretaries Date: 27 April 2018 NOTE: 1. This Agenda item is meant for discussion only and do not require a formal approval of the shareholders and hence, is not put forward for voting. 2. Directors Benefits. The Directors Benefits comprise meeting allowance of RM500 per meeting and RM1,000 for outstation travelling expenses payable to each Non-Executive Director, where applicable, for their attendance of Board and Committee meetings. 128

111 Notice of 19th Annual General Meeting PROXY: i. Pursuant to Section 334 of the Companies Act, 2016, a member shall be entitled to appoint another person as his proxy to exercise all or any of his rights to attend, participate, speak and vote in his stead. ii. A member may appoint more than one (1) proxy to attend the meeting provided that the member specifies the proportion of the members shareholdings to be represented by each proxy, failing which, the appointments shall be invalid. iii. Where a Member of the Company is an Authorised Nominee as defined in the Central Depositories Act, it may appoint not more than two (2) proxies in respect of each securities account it holds in ordinary shares of the Company standing to the credit of the said securities account. Where a Member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one (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. iv. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, under its common seal, or the hand of its attorney duly authorised. An instrument appointing a proxy to vote at a meeting shall be deemed to include the power to demand a poll on behalf of the appointer. v. The instrument appointing a proxy together with the power of attorney (if any) shall be left at the office at Suite 5.11 & 5.12, 5th Floor, Menara TJB, No. 9, Jalan Syed Mohd. Mufti, Johor Bahru, Johor at least forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person named in such instrument proposes to vote or in the case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of poll, otherwise the person so named shall not be entitled to vote in respect thereof and in default the instrument of proxy shall not be treated as valid. A Member shall not be precluded from attending and voting in person at any general meeting after lodging the instrument of proxy but such attendance shall automatically revoke the proxy s authority. vi. In respect of deposited securities, only members whose names appear on the Record of Depositors on 21 May 2018, shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his behalf. Statement Regarding Effect of Resolutions under Special Business ix Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate for Recurrent Related Party Transaction of a Revenue or Trading Nature ( Proposed Shareholders Mandate ). The Ordinary Resolution No. 6 proposed in Agenda 6 is to seek a renewal of the Shareholders Mandate and new shareholders Mandate to allow the Company and its subsidiaries to enter into Recurrent Related Party Transactions of a revenue or trading nature and to enable the Company to comply with Paragraph 10.09, Part E of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The mandate will take effect from the date of passing the Ordinary Resolution until the next Annual General Meeting of the Company. x. Authority to Allot and Issue Shares pursuant to Section 75 and 76 of the Companies Act, The Ordinary Resolution No. 7 proposed in Agenda 7 is to seek a renewal of the general mandate to provide flexibility to the Company to issue new securities without the need to convene separate general meeting to obtain its shareholders approval so as to avoid incurring additional cost and time. The purpose of this general mandate is for possible fund raising exercise including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital, repayment of bank borrowings, acquisitions and/or for issuance of shares as settlement of purchase consideration. As at date of the Notice, the Company has not issued any new shares under this general mandate. Voting by Poll Pursuant to Paragraph 8.29A of Bursa Malaysia Securities Berhad s Main Market Listing Requirements, all resolutions set out in this notice is to be voted by poll. 129

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113 Proxy Form I/We (Nric No. ) of (full address) a member / members of MB WORLD GROUP BERHAD hereby appoint Name of Proxy (Full Name) NRIC No. / Passport No. % of Shareholding to be Represented (Refer to Note ii) Address *and/or failing him/her Name of Proxy (Full Name) NRIC No. / Passport No. % of Shareholding to be Represented (Refer to Note ii) Address as *my/our proxy to vote for *me/us and on *my/our behalf at the 19th Annual General Meeting of the Company to be held on Monday, the 28th day of May, 2018 at a.m. held at the Hibiscus Room, Amansari Residence Resort, Jalan Persiaran Seri Alam, Bandar Seri Alam, Johor Bahru, Johor and at every adjournment thereof to vote as indicated below in respect of the following Resolutions:- ORDINARY BUSINESS FOR AGAINST Ordinary Resolution 1 Re-election of MS. CINDI SIM Ordinary Resolution 2 Re-election of MR. CHONG JIUN SHYANG Ordinary Resolution 3 Approval of Directors Fees for Financial Year Ending Ordinary Resolution 4 Approval of Directors Benefits (for the period from 19th AGM to 20th AGM) Ordinary Resolution 5 Re-appointment of Auditors SPECIAL BUSINESS Ordinary Resolution 6 Ordinary Resolution 7 Proposed Renewal of Shareholders Mandate and New Shareholders Mandate for Recurrent Related Party Transaction Authority to allot and issue shares pursuant to Section 75 and 76 of the Companies Act, (Please indicate with a X in the space provided above on how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion.) Dated this day of 2018 No. of shares held: Signature of member/s