annual report 2016 - selangorproperties.com.my · statements of the company are in form and content...

ANNUAL REPORT 2016

PASSION FORexcellence(Co. No. 5199-X)

PASSION FORexcellence

If we are going to do anything, we will put all our passion into making it the very best.

We will always go beyond expectations to deliver premium products and services.

We focus on making a difference in people and community lives.

We will continue striving, because there is always better.

Our seal is a promise that we will deliver.

To be a premium developer which consistently deliver experience that exceeds expectations.

The cover features Selangor Properties Berhad’s latest timeless work of art. Built with distinguished quality and the promise of perfection, AIRA Residence is a

reflection of luxurious modern living situated at the most sought-after address in Kuala Lumpur, Jalan Batai Damansara Heights. AIRA Residence offers the most stunning view of Kuala Lumpur skyline amidst a seamless integration of space

and landscaping that embraces simplicity, tranquility and sophistication. The end product is a reflection of meticulous planning and a combination of elegance with

state of the art equipment. This luxurious development was put together with people and living in mind as they are at the heart of everything we do. What matters most to us, is the people who work, live, play and breathe life into our visions. This

belief is our driving force for our success. We embrace this passion as strongly today as we will in future, with timeless design and superior quality. Our quest for

excellence has never been more evident than in AIRA Residence.

OUR

VISION

OUR

MISSION

CONTENTS02 Group Financial Highlights

04 Corporate Information

05 Directors’ Profile

06 Additional Information

07 Profiles of Senior Management Team

08 Chairperson’s Statement

10 Management Discussion and Analysis

20 Statement on Corporate Governance

35 Report on Audit Committee

37 Statement on Risk Management and Internal Control

40 Statement of Directors’ Responsibility in Relation to the Financial Statements

41 Directors’ Report

46 Statement by Directors

47 Statutory Declaration

48 Independent Auditors’ Report

50 Financial Statements

133 Disclosure of Recurrent Related Party Transactions

134 Analysis of Shareholdings

139 List of Properties

141 Notice of Annual General Meeting

• Proxy Form

2 SELANGOR PROPERTIES BERHAD (5199-X)ANNUAL REPORT 2016

GROUP FINANCIAL HIGHLIGHTS

1 The results prior to FY2013, including Assets & Liabilities, were before classification of Discontinued Operation results pursuant to the disposal of equity interests in HELP International Corporation Berhad.

2 Subject to approval by shareholders at 55th AGM.

Financial year ended 31 October2012

RM’0002013

RM’0002014

RM’0002015

RM’0002016

RM’000

Revenue1 224,470 115,682 101,121 99,491 120,925

Profit Before Tax1 122,136 111,689 214,949 629,055 98,759

Tax1 (46,470) (25,574) (16,369) (35,375) (31,397)

Net Profit1 75,666 86,115 198,580 593,680 67,362

Net Profit attributable to Equity Holders 69,045 96,568 198,053 593,680 67,362

Total Assets1 2,499,831 2,541,613 2,448,115 2,988,801 2,917,446

Total Borrowings1 344,127 318,226 245,602 240,796 243,468

Equity attributable to Equity Holders 1,887,620 1,949,411 2,042,171 2,600,643 2,510,272

Total Equity 1,960,109 2,026,801 2,042,171 2,600,643 2,510,272

Return on Equity 3.9% 4.2% 9.7% 22.8% 2.7%

Return on Total Assets 3.0% 3.4% 8.1% 19.9% 2.3%

Asset Turnover (%) 9.0% 4.6% 4.1% 3.3% 4.2%

Gearing ratio 0.18 0.16 0.12 0.09 0.10

Basic Earnings per Share (RM) 0.20 0.28 0.57 1.73 0.20

Net Tangible Assets per Share (RM) 5.48 5.66 5.94 7.57 7.31

Gross Dividend per Share (RM) 0.10 0.30 0.12 0.50 0.202

Gross Dividend per Share (%) 10.0% 30.0% 12.0% 50.0% 20.0%

Net Dividend per Share (RM) 0.10 0.30 0.12 0.50 0.202

3SELANGOR PROPERTIES BERHAD (5199-X)ANNUAL REPORT 2016

GROUP FINANCIAL HIGHLIGHTS

PROFIT BEFORE TAX(RM’000)

12’ 13’ 14’ 15’ 16’

122,

136

111,

689

214,

949

629,

055

98,759

REVENUE(RM’000)

12’ 13’ 14’ 15’ 16’

224,

470

115,

682

101,

121

99,4

91

120,925

NET PROFIT(RM’000)

12’ 13’ 14’ 15’ 16’

75,6

66 86,1

15 198,

580

593,

680

67,362

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS

(RM’000)

12’ 13’ 14’ 15’ 16’

1,88

7,62

0

1,94

9,41

1

2,04

2,17

1

2,60

0,64

3

2,510,272

TOTAL ASSETS(RM’000)

12’ 13’ 14’ 15’ 16’

2,49

9,83

1

2,54

1,61

3

2,44

8,11

5

2,98

8,80

1

2,917,446


CORPORATE INFORMATION

REGISTRARS

Tricor Investor and Issuing House Services Sdn BhdUnit 32-01, Level 32, Tower AVertical Business Suite, Avenue 3Bangsar South No. 8, Jalan Kerinchi59200 Kuala LumpurTel No. : 03-2783 9299Fax No. : 03-2783 9222

REGISTERED OFFICE

Lot 6.05, Level 6, KPMG Tower8 First Avenue, Bandar Utama47800 Petaling JayaSelangor Darul EhsanTel No. : 03-7720 1188Fax No. : 03-7720 1111

HEAD OFFICE

Level 2, Block DKompleks Pejabat DamansaraJalan DungunDamansara Heights50490 Kuala LumpurTel No. : 03-2094 1122Fax No. : 03-2095 0150

PRINCIPAL BANKERS

HSBC Bank Malaysia Berhad2, Leboh Ampang50100 Kuala Lumpur

CIMB Bank Berhad17th Floor Menara CIMBNo.1 Jalan Stesen Sentral 2Kuala Lumpur Sentral50470 Kuala Lumpur

AUDITORS

Ernst & Young Level 23A, Menara MileniumJalan DamanlelaPusat Bandar Damansara50490 Kuala LumpurTel No. : 03-7495 8000Fax No. : 03-2095 9076

JOINT SECRETARIES

TAI YIT CHAN (MAICSA 7009143)CHOONG LEE WAH (MAICSA 7019418)

STOCK EXCHANGE LISTING

Bursa Malaysia Securities BerhadMain Market Stock Code: 1783

WEBSITE

www.selangorproperties.com.my

PUAN SRI DATIN CHOOK YEW CHONG WEN

MANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER

MR WEN CHIU CHI

MR MICHAEL LIM HEE KIANGIndependent Non-Executive Director

DATO’ ZAIBEDAH BINTI AHMADIndependent Non-Executive Director

MR ONG LIANG WINIndependent Non-Executive Director

DIRECTORS

CHAIRPERSON


DIRECTORS’ PROFILE

DATO’ ZAIBEDAH BINTI AHMAD

Independent Non-Executive Director

Age 77

GenderFEMALE

NationalityMALAYSIAN

She holds a Bachelor of Arts degree from the University of Malaya. She was appointed to the Board on 28 June 2001. Dato’ Zaibedah is the Chairperson of the Nominating Committee and serves as a member of the Audit Committee and Remuneration Committee. She had been in the public service for 32 years and had served as an Ambassador of Malaysia in various countries such as Socialist Federative Republic of Yugoslavia (with concurrent accreditation to Romania), Spain and Republic of Turkey (with concurrent accreditation to Azerbaijan and Turkmenistan).

MR WEN CHIU CHI

Managing DirectorNon-Independent Executive Director

Age 60

GenderMALE


He holds a Bachelor of Commerce degree from the University of Western Australia. He was appointed as a director of the Company on 20 April 1979. He held the position of an Executive Director from 1979 to 2000. In year 2000, he assumed the position of the Managing Director of the Company. He is also a member of the Remuneration Committee.

She graduated from the Columbia University in United States of America with a Master of Arts degree and a Teacher College Professional Diploma in 1949 and 1950 respectively. She is the First Director of the Company and was appointed to the Board on 12 October 1963. She held the position of the Managing Director of the Company from 1963 to 2000. In year 2000, she retired as a Managing Director and assumed the position of the Chairperson of the Company.


ChairpersonNon-Independent Executive Director

Age94

GenderFEMALE


MR ONG LIANG WIN


Age 53

GenderMALE


He is currently the General Manager, Group Finance of Tien Wah Press Holdings Berhad. He holds an Honours degree in Accountancy from Lancaster University, England and is a qualified accountant with the Institute of Chartered Accountants in England and Wales. He was appointed as a Director on 2 November 2001. He is also the Chairman of the Audit Committee and a member of the Nominating Committee and Remuneration Committee. He has a wide experience as an accountant as well as operational experience in property development, construction and manufacturing.

MR MICHAEL LIM HEE KIANG


Age 68

GenderMALE


A lawyer by profession, he was an Advocate and Solicitor practising in Messrs Shearn Delamore & Co. He was a senior partner of the firm and had been a partner of the firm for 33 years. Mr Lim is now a Consultant with the law firm Messrs Jeff Leong, Poon & Wong. He holds a LLB (Hons) and LLM with Distinction from Victoria University of Wellington. He was appointed to the Board on 4 March 1993. Mr Lim is the Chairman of the Remuneration Committee and also serves as a member of the Audit Committee and Nominating Committee. He is also a director of DKSH Holdings (Malaysia) Berhad, Paragon Union Berhad, Sumatec Resources Berhad, Hektar Asset Management Sdn Berhad and Seloga Holdings Berhad.


ADDITIONAL INFORMATION

ADDITIONAL INFORMATION ON THE BOARD OF DIRECTORS

OTHER INFORMATION REQUIRED BY THE MAIN MARKET LISTING REQUIREMENTS (“MMLR”) OF BURSA MALAYSIA SECURITIES BERHAD (“BURSA SECURITIES”)

Family Relationships with any Director and/or Major ShareholderExcept for Puan Sri Datin Chook Yew Chong Wen who is the mother of Mr Wen Chiu Chi, none of the directors have family relationship with any other directors and/or major shareholders of the Company.

Conflict of InterestAll the directors have no conflict of interest with the Company.

Convictions for Offences (within the past 5 years, other than traffic offences)None of the directors have any convictions for offences (other than traffic offence, if any) and have not been imposed of any public sanction or penalty by relevant regulatory bodies during the financial year.

Number of Board Meetings attended in the financial year ended 31 October 2016 (“FY2016”)Please refer to page 31 in the Annual Report for details.

Audit and Non-Audit FeesThe amount of audit fees and non-audit fees paid or payable to the external auditors by the Company and the Group for FY2016 are as follows:-

Group (RM) Company (RM)

Audit Fees 271,000 96,000

Non Audit Fees 32,000 16,000

Total 303,000 112,000

Material ContractsDuring the financial year, there were no material contracts entered into by the Group involving directors’ and/or major shareholders’ interests.

Revaluation PolicyPlease refer to Note 3.2(b) of the financial statements at page 81.

Utilisation of ProceedsThe Company did not implement any fund raising exercise during the financial year.


PROFILES OF SENIOR MANAGEMENT TEAM

Mr Chong Koon San joined the Group as a Corporate Affairs Manager in 2000. He was promoted to the present position as COO in 2012. He is responsible for providing the day to day leadership and management of the Group’s businesses. His responsibilities include establishing and implementing the Group’s business strategies, plans and procedures. Mr Chong also manages the relationship with the customers of the Group and represents the Company with its stakeholders.

He obtained his Bachelor of Laws degree from the University of Malaya in 1991 and was called to the Malaysian Bar as an Advocate and Solicitor of the High Court of Malaya in 1992.

Mr Chong started his career as a litigation lawyer before moving on to banking and thereafter as an in-house legal advisor to corporations in several industries including banking, manufacturing & trading and property development. He had also held the position of a Non-Independent Non-Executive Director of HELP International Corporation Bhd for the period from 2007 to 2014.

Mr Lee Tart Choong joined the Group in 2014. He has overall responsibility of the treasury and cash flow management, risk management, corporate finance, audit and tax compliance, information technology and human resources in addition to the financial reporting requirements of the Group.

He is a chartered accountant by profession and is a member of both the Malaysian Institute of Certified Public Accountants and the Malaysian Institute of Accountants.

Mr Lee has extensive exposure in financial management with his working experience of over 30 years which covers the principal areas of auditing, accounting, corporate affairs, finances, business development and human resources. He started his career as an articled clerk in a Big Four audit firm in Kuala Lumpur and later ventured into commerce to hold various senior positions in accounting and corporate. He was involved in businesses such as manufacturing & trading, investment holding, records & information management, waste management, travel & tours, consulting and property development.

Prior to joining the Group, he held several positions of Chief Financial Officer (CFO) in public listed companies in Malaysia involved in property development. He had also held a regional CFO role for the Asian waste management division of a multinational company listed on the Australian Stock Exchange.

CHONG KOON SAN

Chief Operating Officer (COO)

Age49

GenderMALE


LEE TART CHOONG

Director of Finance

Age54

GenderMALE


The Senior Management team is headed by the Managing Director/Chief Executive Officer (“MD/CEO”), Mr Wen Chiu Chi, whose profile is disclosed in the Directors’ profiles.

He is assisted by other members of the Senior Management team as follows:

Additional Information

(i) Family relationship with any director/major shareholder of the Company - Nil

(ii) Conflict of interest with the Company - Nil

(iii) Convinction for offences over last 5 years (except traffic) - Nil


FINANCIAL PERFORMANCE

The Group achieved a net profit of RM67.4 million for FY2016, which is lower than the prior year of RM593.7 million. The higher profit in the prior year was mainly due to a one-off land sale transaction with a gain of RM404.0 million and foreign exchange gains of RM170.7 million.

For this financial year, I am pleased to report that the Board of Directors has proposed a final single-tier exempt dividend of 12.0 sen per ordinary share of RM1.00 each and a special single-tier exempt dividend of 8.0 sen per ordinary share of RM1.00 each, subject to the approval of our shareholders at the upcoming Annual General Meeting (“AGM”).

OVERVIEW

The local economic conditions had remained challenging throughout the financial year due to the unwavering effects from the global economic slowdown. Malaysia’s Gross Domestic Product (“GDP”) for the year 2016 is anticipated to decline to around 4.0 – 4.5% compared to 5.0% in 2015. The Ringgit’s weakening against major currencies have had a significant impact on local businesses during the year and continues to be of concern.

Over the years, we have developed our business models adopting a disciplined and prudent approach. Coupled with our strong leadership and foresight, the Group’s businesses were able to withstand and endure these challenging times, thus delivering the commendable results for the financial year. The occupancy rates and rental rates

CHAIRPERSON’S STATEMENT

DEAR SHAREHOLDERS,

On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Audited Financial Statements of the Company and the Group for FY2016.



Chairperson19 January 2017

CHAIRPERSON’S STATEMENT

on our investment properties have been maintained at high levels and we will continue our efforts to improve facilities to keep our tenants satisfied. Being conscious of the development surrounding our properties such as the new Mass Rapid Transit (“MRT”) line & stations and on-going property development in Damansara Heights, we constantly explore avenues to develop plans to improve critical facilities with emphasis on connectivity to maintain our properties’ competitiveness. These efforts that we make will also contribute to the appreciation in the asset values of these properties for the benefit of our shareholders.

The AIRA Residence project was successfully launched in October 2016. As we uphold our promise and commitment of a product of premium quality and finishes, we gathered encouraging responses from purchasers despite the subdued property market. We take opportunity of the lull in the current property market to undertake development planning activities on our existing landbanks in Damansara Heights so that these projects can be launched when market conditions improve in the near future.

Our offshore investments and Australian operations have continued to generate good returns to the Group. In addition, as these investments are held in foreign currencies, their results benefitted from foreign exchange gains due to the weakening of the Ringgit.

To further the sustainability of the Group’s business in property development as well as for business growth, we will continue to source for new and suitable land. We will nevertheless be selective in our choice of land due to the need to exercise care and for purpose of risks management.

LOOKING FORWARD

The outlook of the Malaysian economy in 2017 does not appear encouraging as the Government had forecast the GDP to expand marginally by 4.0 – 5.0% in 2017 from the anticipated 2016’s overall GDP of 4.0 – 4.5%. This is in consideration of the weakened global economy due to slowdown and the prevailing low oil prices that are likely to remain unchanged in 2017. Although the tax rate for the Goods and Services Tax had remained unchanged, the retention of the tight control measures affecting properties on bank lending, the Real Property Gains Tax, the high household debts, the continued weakening of the Ringgit and the uncertainty in the economy continue to affect market sentiments in Malaysia.

The sentiments in the Malaysian property market will likely remain subdued with the overhang of office space supply compounded by weak market demand. Property developers have slowed-down or deferred new project launches while they strategize their action in view of the prevailing economic condition.

We expect our investment properties to maintain its performance in 2017 as we believe our tenants, in Malaysia and Australia, will continue to support us with our strong relationship with them. The property development segment is expected to perform well in 2017 as sales of AIRA Residence sets in from 2017 onwards. To maintain the momentum of these activities, we expect to launch more development projects on our existing land banks in the near future. Our overseas investments are expected to maintain their performance in 2017.

ACKNOWLEDGEMENT

I would like to extend my sincere gratitude to my fellow Board members in contributing towards the Group’s continued success in these challenging times. The Group would also like to thank our valued customers and tenants, business associates, partners, bankers, and staff for their invaluable contribution as well as our loyal shareholders.


The Group’s revenue in FY2016 of RM120.9 million recorded an increase of RM21.4 million or 21.5% over preceding year’s RM99.5 million.

GROUP FINANCIAL REVIEW

MANAGEMENT DISCUSSION AND ANALYSIS

The slowdown in the global economy during the financial year continues to present a challenging business environment to the Group’s businesses locally and overseas. For the current financial year, the Group’s operations in investment properties, investment holdings and Australian operations continue to contribute positively to the Group’s results. The property development segment, however, registered losses as it incurred marketing costs and overheads prior to the AIRA Residence project’s sales launch in October 2016.

The Group’s revenue in FY2016 of RM120.9 million recorded an increase of RM21.4 million or 21.5% over preceding year’s RM99.5 million. The improved revenue in the current financial year arose mainly from higher rental yield from its investment properties in Malaysia and higher returns on overseas investment holdings. The sale of the development units of the AIRA Residence project will only be registered after the end of the current financial year and hence, their sale contributions will only commence from the next financial year onwards.

The Group achieved a Profit Before Tax (“PBT”) of RM98.8 million in the current financial year attributable mainly from rental returns of its investment properties in Malaysia and Australian operations which contributed RM47.8 million and RM56.6 million respectively. Included in the results were the fair value gains of investment properties amounting to RM56.4 million. In the prior financial year, the Group registered a significant PBT of RM629.1 million mainly due to a gain on sale of Johar Land of RM404.0 million and foreign exchange gains of RM170.7 million.

GROUP REVENUEResults 2016

+21.5%RM120.9 millionrecorded an increase of RM21.4 million

AIRA Residence


With the exclusion of the financial effects of the gain on sale of Johar Land and foreign exchange gains in prior year, the last financial year’s PBT from operations was RM54.4 million. The current year’s PBT is RM98.8 million, and after taking into account of foreign exchange losses of RM15.8 million, the PBT would be RM114.6 million, thus registering an increase of RM60.2 million over last year’s RM54.4 million mainly due to higher operational profit and higher fair value gains from its investment properties.

The sale of the AIRA Residence project was successfully launched in October 2016. As sales agreements were executed in the following financial year, no revenue contribution from the project has been recorded in the current financial year. Due to marketing costs and project overheads incurred prior to the launch, the property development segment suffered a loss of RM17.6 million in the current financial year.

The Group constantly reviews its investment properties for proper maintenance and upgrade of facilities to maintain their market competitiveness. Undoubtedly, these efforts will be rewarded through the achievement of high occupancy rates and optimal rental rates; these factors will improve the value of the investment properties over time. In FY2015, Plaza Batai underwent a major refurbishment exercise which transformed the sixteen ageing shops into a major attraction in the locality while Menara Milenium’s food court underwent a major renovation with car parking facilities improved.

In FY2016, in the rebranding of Kompleks Pejabat Damansara, a new perimeter wall was constructed to compliment the new MRT station at Semantan. The Group is also in the midst of planning other capex improvements to Menara Milenium over a period of the next few years with the aim to enhance connectivity with the newly opened surrounding buildings as well as to target the achievement as an MSC building.

The Group, together with its partner in Australian operations, expands continuous efforts to build and promote the upmarket status of the property in Claremont Quarter. With its anchor tenants from renown retailers, the shopping mall continues to draw the crowd. Profitable returns from Claremont Quarter’s operations have been re-invested via the Group’s participation in land development projects in Australia.

The investment holding operations in Malaysia, comprising unit trusts placements, contributed a profit of RM11.2 million, while overseas investments netted a profit of RM0.7 million. As the exchange rate for Ringgit at current financial year end strengthened over last financial year end’s, the overseas results took into account a sum of RM15.8 million in foreign exchange losses.

The Group generated a net cash outflow of RM103.2 million for FY2016 against RM73.4 million for the preceding year. The deterioration was due to the higher dividends pay-out of RM171.8 million in April 2016, purchase of land of RM32.2 million in May 2016 and utilisation of funds for development costs of the AIRA Residence project.


Financial gearing of the Group during the financial year remains low at 9.7% mainly due to the existing outstanding loans totalling RM239.5 million (AUD75.0 million) for the purpose of financing the Group’s share in the investment property, Claremont Quarter.

The Group’s shareholders’ equity as at 31 October 2016 stood at RM2,510.3 million while its market capitalisation was RM1,718.1 million based on a closing market price of RM5.00 per share on 31 October 2016. The net tangible assets (“NTA”) per share is RM7.31 against last year’s RM7.57.

A final single-tier exempt dividend of 12.0 sen per share and a special single-tier exempt dividend of 38.0 sen per share approved at the last AGM in March 2016 totalling RM171.8 million was paid out in April 2016. For the current financial year, the Board of Directors proposed a final single-tier exempt dividend of 12.0 sen per share and a special single-tier exempt dividend of 8.0 sen per share totalling RM68.7 million which is subject to the shareholders’ approval at the forthcoming AGM.

The Group has strong financial capabilities to undertake projects on a larger scale in the near future. While continuing efforts to source for new landbanks, the Group is planning to undertake further development of its landbank in Damansara Heights. The AIRA Residence project marks the Group’s embarkation into property development on a grand scale to set the benchmark of the Group’s future developments in terms of product’s quality, finishes and prestige. The Group is poised to undertake developments on a larger scale on its Wisma Damansara site of 7.9 acres in Damansara Heights


where preliminary development planning works are underway currently. The intended project on the site is a mixed high-rise development comprising retail/commercial, corporate offices and residential properties. The processes of development planning and authorities’ approval are expected to materialise in a sales launch in 2018/2019.

As the Group emphasizes high quality in the finishes of its development, it would necessitate that the Group maintains its concentration on only a few projects at any time. It is the Group’s goal to achieve a respectable reputation of a developer for high quality properties. In order to achieve this goal, each development will be carefully planned and executed and the Group will not compromise on delivery times and quality of finishes.

The Group’s principal business segments are property investment, property development, Australian operations and investment holding.

GROUP BUSINESS REVIEW

THE GROUP REVENUE

39.1%PROFIT BEFORE TAX

48.4%

1. PROPERTY INVESTMENT

Property investment remains the core business of the Group and continues to be the key driver in both revenue and segmental operating profit of the Group. For the current financial year, property investment contributed 39.1% of the Group’s revenue and 48.4% of its profit before tax.

The majority of the Group’s investment properties are located mainly in the prime district of Damansara Heights in Kuala Lumpur and comprise the following properties:

a) Menara Milenium, a 25-storey corporate office tower

b) Komplex Pejabat Damansara – 5 blocks of 4-storey office buildings

c) Plaza Batai – 16 double-storey retail shops

d) Taman Tunku Apartments – 85 units of apartment & 9 units of shops

These investment properties are located in prime locations with good potential for growth and capital appreciation.

The Group also has landbanks in the prime vicinity of Damansara Heights area which currently is undergoing rapid developmental activities with the newly completed MRT lines/stations and the on-going construction of a major mixed development with retail, commercial and residential components. This augurs well for the development potential of the Group’s landbank as the Group may be able to leverage on these upcoming developments.


Menara Milenium


The Group anticipates that its growth in this core business will be achieved through two prongs:a) Organic growth from

existing properties: property improvements initiatives to generate better tenancy returns and capital appreciation; and

b) Strategic growth through additions of new properties: development of new properties from existing landbanks in Damansara Heights to increase its portfolio of investment properties.

The Group constantly reviews the market developments surrounding its investment properties and undertake initiatives to enhance the facilities and maintenance of its properties to maintain their competitiveness. In addition, the Group is committed to efforts to enhance facilities through capex improvements to fulfil its tenants’ needs and expectations. By doing so, the Group is able to maintain high occupancy rates and generate respectable rental rates.

In 2014, the Group embarked on the refurbishment of Batai 16 shops which was completed in mid-2015. The Group adopted the new name of Plaza Batai as a re-branding effort to reflect its new image and to have a better appeal to the public. The tenancy mix was re-organized to achieve a retail mix as well as a balanced profile of desirable and highly valued tenants. The refurbishment exercise also resulted in an increased number of carparks at Plaza Batai. The refurbishment exercise was proven successful with the encouraging responses from both tenants and high patronage of Plaza Batai.

In conjunction with the commissioning of the new Semantan MRT station in December 2016, the Group capitalise on the opportunity to undertake an improvement exercise on the frontage of Kompleks Pejabat Damansara (“KPD”) to enhance its visibility as well as appeal to the public. It is also aimed at creating the public knowledge and awareness of


the location of KPD in anticipation of its re-development in the future.

The Group intends to embark on a major renovation exercise of Menara Milenium to improve connectivity with the surrounding newly operational high-rise complexes for the ease of its tenants. The Group also aims to upgrade and incorporate Multimedia Super Corridor (“MSC”) features in Menara Milenium in the next 3 – 5 years in order to qualify as a MSC building to attract the interests of IT-related companies to this building besides enabling Menara Milenium to enjoy tax incentives.

a. Menara Milenium Menara Milenium, as one of

Kuala Lumpur’s most iconic office buildings, is a grade A office building which is 25 storeys high with a total net lettable area of 550,000 square feet. With several reputable firms in its tenancy, Menara Milenium achieved near-full occupancy throughout the financial year, while commanding a respectable rental yield.

The location of the building in the prime sub-urban area of Damansara Heights provides it with a prestigious business address of over 4,000 office staff working for its tenants which majority are renowned multi-national companies. It is a sought after corporate address with high commercial value and is surrounded by affluent neighbourhoods. The new MRT line/station on Johar Land and the future completion of a mixed development surrounding land will potentially enhance the value of this building.

Taman Tunku Apartments


b. Plaza Batai The property is a small commercial

centre which consists of 16 units of double storey terrace shop lots located along Jalan Batai. The shops at Plaza Batai engage in retail businesses such as food and beverage, groceries and health/beauty care which caters to fulfil the daily needs of its surrounding residential neighbourhood as well as the nearby corporate offices.

Each shop unit provides a net lettable area of approximately 1,600 square feet. The centre accommodates 21,760 square feet of shop space on the ground level and 25,400 square feet on the first floor. The centre is almost 100% occupied with a high rental yield.

In the Group’s effort to rejuvenate the centre to enable a refreshing, aesthetical and more pleasant shopping experience, as well as to improve car parking facilities to better fulfil shoppers needs, a refurbishment exercise was undertaken to improve the area. Refurbishment work to the façade commenced in September 2014 and was

completed in March 2015. The centre has been refurbished to carry a modernized design that exudes vibrancy and friendliness for a more holistic shopping and dining experience. A significant amount of green space has been allocated to create a relaxing ambience while car parking facilities were enhanced.

c. Taman Tunku Apartments Located in the tranquil and lush

green residential enclave of Taman Tunku, it consists of 94 units with 85 apartments and 9 retail shops which enjoy near full occupancy. While the branch of a major local bank is the anchor tenant, the other retail shops provides day-to-day amenities to its apartment tenants as well as the surrounding residential neighbourhood. With its strategic location in the city close to the central business district of Kuala Lumpur coupled with its prestigious address, the building attracts a pool of tenants of working professionals which generate a commendable rental yield.

2. PROPERTY DEVELOPMENT

After two years of hard work in development planning and securing authorities’ approvals, the year 2016 saw the culmination of these efforts in the sales launch of the high-end condominium project, AIRA Residence, in October 2016. This represents a major step for the Group which marks the beginning of a new development era for its landbank in Damansara Heights as it elevates the Group’s property development business to include premium grade products besides generating a greater level of activity. The contributions from the project is expected to flow into the results of the Group in the coming years. The Group’s next development on the Wisma Damansara site will add further impetus to the activity level; initial development planning to seek authorities’ approval have just commenced on this site – the sales launch has been targeted in 2018/2019.

The Group is presently undertaking two residential property development projects while planning for a mixed development project as follows:


AIRA Residence, Actual Living Room



a. AIRA Residence AIRA Residence is a freehold

luxury condominium project and prestigiously situated at the top of Jalan Batai in the coveted land of Damansara Heights. The two tower development sits on a 3-acre site which is quiet and tranquil, surrounded by luxurious bungalow houses with a stunning view of Kuala Lumpur City Centre skyline.

Tower A offers 105 units with built-up areas ranging from 2,679 to 7,730 square feet. Conceived by an award-winning design team, all units are designed to incorporate lifestyle needs and desires for the elite – the units are spacious with meticulous attention to detail and fine finishing touches.

As a responsible developer, the Company engaged with the residents on the surrounding bungalow houses in December 2015 to brief the residents about the project as well as to address their concerns.

c. Wisma Damansara The 7.9-acre site is being

planned for mixed development which involves retail, commercial and residential properties. Various factors taken into considerations at the planning stage include the site location, its accessibility to the Semantan MRT station, connectivity to existing road systems, authorities’ requirements and market demand.

Conceptually, the project will emphasis on the need to achieve social, economic and environmental outcomes that are mutually beneficial to the long-term goals of the location. Towards this end, the Group has engaged an internationally renowned architect firm and a project management team to progress the planning works. Preliminary planning work has commenced on the development.

The whole development is expected to be undertaken in two phases and construction work is expected to commence in two years’ time. The sales launch of the first phase of the project is targeted in 2018/2019.

d. Land bank The Group’s land banks

are located in Damansara Heights, Gombak, Selayang and Ulu Langat. Development planning for the Group’s land bank in Damansara Heights are progressing in their various stages as strategical considerations will focus on integration with the surrounding MRT line/station and major mixed/commercial development activities in the area. The Group

During the year, the Company constructed a Marketing Gallery and Show Apartment at Jalan Gelenggang, Damansara Heights to showcase the product design and quality finishes of the development. The sales launch of the properties was successfully held on 11 October 2016 with encouraging responses from prospective purchasers. Meanwhile, construction works on the site had begun since January 2016 and the project is expected to complete and handed over in the year 2020.

b. Bukit Permata Permata Heights is a matured

residential development property in the hills of Gombak. Nestled in a lush, serene and calm vicinity, Permata Heights is a prestigious freehold hillside residential enclave forming part of a 100-acre gentle sloping landscape. It comprises two precincts – The Views and Permata Circuit – both portraying the elegant contemporary lifestyle of a highly coveted neighbourhood.

Phase 4 of Permata Heights has a total of 60 residential property units comprising 36 units of semi-detached houses and 24 units of bungalows. In consideration of the prevalent soft market sentiments, the sales launch has been deferred and is planned for late 2017. Meanwhile, construction works on site has commenced since early 2016 and is expected to complete in 2018.

Development planning on the remaining phases of Permata Heights are in their early stages.

Permata Heights, Artist Impression


anticipates that the development plans will be finalised within the next 3 to 5 years, for execution. The Group adopts a prudent stance in moving carefully with the development of its land bank to deliver product quality and maximise returns while exercising risk management on returns of each project. As such, the Group will limit the number of concurrent projects at any one time.

The Group acknowledges the need to replenish its land banks in order to maintain its presence in the property development industry. The Group’s strategic intention remain focused on property development activities in areas of major economic activities and economic growth in Malaysia such as the Klang Valley. The Group reviewed several land parcels in the Klang Valley during the year but they do not fulfil the Group’s criteria for development potential. Nevertheless, the Group will continue to source and review land on a continuous basis with the intention to acquire to increase the land bank of the Group.

3. AUSTRALIAN OPERATIONS

The Group’s operations in Australia revolves mainly on its involvement in an integrated retail centre in Perth, Australia namely, Claremont Quarter and 7 Bayview Terrace, under a joint-venture arrangement with an Australian state investment corporation. The properties comprise the following:

a. Claremont Quarter The retail centre is a prominent

regional retail centre well located within the affluent western suburb of Claremont about 10km away from Perth’s central business district. This freehold development sits on a 6.4-acre land with a net lettable area of 311,869 square feet spanning 2 levels and is currently fully tenanted. Claremont Quarter enjoys a broad tenancy profile with two anchor tenants of national and chain retailers, David Jones and Coles, dominating the specialty mix.

b. 7 Bayview Terrace The two-storey shop is located

within the retail hub of Claremont’s town centre and is located beside one of the main entrances of Claremont Quarter with a total area of approximately 2,863.2 square feet. The terrace comprises two levels with a lettable area of 3,035 square feet.

The Group finances its share of the acquisition costs on Claremont Quarter through two loan facilities totalling AUD80.0 million from two Australian banks. As at the end of the financial year, the total loans outstanding stood at AUD75.0 million.


From the profitable returns generated from the joint-venture operations of Claremont Quarter, the Group re-invested these returns in small land development opportunities in Australia.

The Group’s operations are managed by an Australian company, Hawaiian Pty. Ltd. which is a related party of the Group.

4. INVESTMENT HOLDINGS

Investment holdings in Malaysia are financial assets in the form of placements of short-term funds in unit trusts which generate tax-exempt interests in the form of dividends or capital gains. The Group adopts a policy of placing funds in the top performing trust funds in Malaysia which invest only in cash fund instruments such as fixed deposits and which returns qualify for tax exemption. During the financial year, yields achieved from unit trust funds varied between 3.70% to 4.00%.

In October 2015, the Group received a sum of RM405.0 million representing the balance payment sum on a sale and purchase agreement (SPA) with a third party entered on 30 September 2014 for the sale of Johar Land in Damansara Heights for a total cash consideration of RM450.0 million. The proceeds from this sale made up the bulk of the short-term funds of the Group at the beginning of the financial year. These short-term funds were intended to provide working capital for the Group for the purpose of capex improvements in investment properties, financing of preliminary property development activities and initial capital for land acquisition and payment of dividends.

Claremont Quarter



Investments outside Malaysia comprise investments in equity funds, real estate funds, hedge funds and fixed deposits. These investments are denominated in a few foreign currencies and hence, are subject to movements in foreign exchange. These funds are placements for long-term until such time they are required to be liquidated to provide the necessary capital for any suitable business opportunity that may arise in Malaysia or overseas.

SUSTAINABILITY AND CORPORATE RESPONSIBILITY

The Group constantly embraces sustainability principles when it formulates and implements its business strategies based on the Company’s vision of sustainable long-term growth. Through this means, the Group targets to excel in its performance, develop people, strengthen relationships with stakeholders and contribute to the nation’s progress with care for the society’s well-being and the environment in which it operates.

The Group is conscious that the sustainability of its business and growth of the Group’s businesses is dependent on the sustainability of our economy, environment and society as an integrated unit. The Group embraces the values of “Principled, Passionate and Personable” to achieve its corporate mission and objectives. It is the Group’s objective to create a culture of sustainability within the Group, and the community, with an emphasis on integrating the environmental, social and governance considerations into its decision making and the delivery of outcomes arising from its decisions and action.

2. Environmental Sustainability The Group is committed to

identify, manage and minimise the environmental impact of business operations in the following manner:• To reduce consumption

of non-renewable, non-recycled materials;

• To pursue and encourage the use of renewable resources;

• To minimise the level of pollutants entering into the air and water from daily business operations;

• To comply with environmental regulatory and legal requirements;

• To create an ever-increasing awareness of this policy within the Group and stakeholders.

The Group incorporates sustainable green features and technology into its architectural concepts and design principles, aimed at creating unique signature developments that harnesses natural light and air, reduces energy consumption and carbon footprint; and encourages sustainable lifestyles amongst the occupants of its developments in line with its efforts in building sustainable living for the community.

These sustainable features have been incorporated within our recent development in AIRA Residence project and will also be built into our future development in the Wisma Damansara site.

SUSTAINABILITY POLICY AND PRINCIPLES

1. Social Sustainability The Group focuses its social

sustainability efforts on the development of programs and processes that promote social interaction and cultural enrichment. It emphasizes on protecting the vulnerable, respecting social diversity and ensuring that the Group put priority on social capital to achieve the following objectives:• To maintain a safe and

healthy workforce;• To recruit and retain high

potential and high performing employees;

• To use training and development as a strategic investment and a way of shaping culture and behaviour in the Group;

• To enable employees to further develop their professional and personal skills;

• To promote racial harmony and prevent racial discrimination;

• To prevent sexual harassment and other forms of violence against women;

• To be recognised as a good corporate citizen;

• To align our charitable giving with the Group’s activities;

• To actively encourage our people to get involved in charity work;

• To respond in a professional and timely manner to public enquiries;

• To continue improve public perception and experience of the Group; and

• To support and encourage community development.


3. Governance Sustainability Governance sustainability

is becoming more essential in gaining the confidence of investors, other stakeholders and the public. The Group recognises the importance of governance sustainability and incorporates it into all functions and processes, which include strategic planning, accountability, sustainable planning and development, as follows:• To ensure sustainability

forms an integral part of the Strategic Planning;

• To enhance sustainability through regular updates of strategies, policies, procedures and provide relevant training;

• To establish and continue to improve appropriate governance structures and processes;

• To assess the impacts and outcome of sustainability; and

• To plan for long term resources including human and financial.

OUR COMMUNITY & HUMAN CAPITAL DEVELOPMENT

1. Enriching our Communities It is the Group’s view that social

sustainability necessitates the development of programmes and processes that promote social interaction, cultural enrichment and integration. It emphasises protecting the vulnerable, respecting social diversity and ensuring that the Group places priority on social capital.


Social capital is generated upon completion of a development – over the years, our community grows and we work with them to develop a sense of togetherness and build community identity as well as spirit.

During the early phases of our projects leading up to and including construction, we interact with representatives from the surrounding community to ensure that our proposals and activities are aligned with the needs and desires of the people living in the area.

2. Affordable Housing Affordable housing projects are close to our hearts. Through them we are

able to extend our quality products to segments of the community that would otherwise not have access to high quality homes. This segment of the community is already cost-burdened and has difficulties in affording basic necessities such as food, clothing, transportation and medical care. Through our projects, many now have comfortable, well-built homes. To date, SPB has finished 744 affordable housing developments in Selayang.

3. Education Selayang Mulia Low Cost (SMLC) Housing – Tuition centre

SMLC comprising 744 units of flats and 44 units of shoplots were completed and handed over to purchasers in 2008. The Group believes that education plays an integral part in developing the young and shaping one’s future for a better life and in view of this, an education centre was set up to cater to students sitting for major examinations in 2016.

Selayang Mulia Low Cost (SMLC) Housing – Tuition Centre



Experienced teachers were invited to tutor the students. The staff of the Group also contributed by raising funds to purchase stationery sets, folders and workbooks as a token of encouragement for the students. There are presently 40 students attending tuition classes at the centre. In the pipeline for the SMLC are plans to organise youth programs and the introduction of vocational centres for women to enhance their skills.

4. Arts SPB-DAMA Young Artists

Programme

In 2013, we embarked on a three-year project with DAMA Music Theatre by contributing RM1 million over three consequent years to the SPB-DAMA Young

Artists Programme. The objective of the programme is to provide a platform for young actors, singers and musicians who aspire to experience and engage in stage performances at a professional level. This programme has three modules - acting, singing and musical theatre performance. It is conducted by experienced local and foreign theatre practitioners and includes lectures, workshops, master classes, showcase projects and a graduation production. To date, more than 100 aspiring young artists have successfully completed the SPB-DAMA Young Artists Programme. Many of them continue to be involved in musical productions and theatre performances and have even pursued performing arts professionally.

CONCLUSION

The Group integrates sustainability and social well-being into every aspect of its operations and work culture. The Group undertakes sustainability and Corporate Social Responsibility (“CSR”) initiatives to uphold its Core Values of “Principled, Passionate and Personable”. Moving towards the future, the Group will continue to enhance its sustainability and CSR efforts for the benefit of future generations; it will continue to emphasize on adopting responsible and sustainable practices in business operations, and in the course of doing so, enhances value creation to its stakeholders.

SPB-Dama Young Artists Performers


STATEMENT ON CORPORATE GOVERNANCE

PRINCIPLE 1 –

ESTABLISH CLEAR ROLES AND RESPONSIBILITIES FOR THE BOARD AND MANAGEMENT

The Board is guided by a Board Charter which sets out the duties and responsibilities of the Board. The Board Charter further defines the respective roles of the Chairman of the Board, the MD/CEO and the Non-Executive Directors. The Board Charter is available for reference at the Company’s website at www.selangorproperties.com.my.

The Board Charter has been established to promote high standards of corporate governance and is designed to provide guidance and clarity for Directors and Management with regard to the role of the Board and its committees. The Board Charter does not overrule or pre-empt the statutory requirements and other relevant statutes. The Board Charter is reviewed annually to ensure it complies with legislation and best practices, and remains relevant and effective in light of the Board’s objectives.

The Board has on 23 September 2016 reviewed and approved certain revision to the Board Charter to be in line with the MMLR. The Board has also established a formal schedule of matters reserved for collective Board’s decision as follows:

Conduct of the Board1. Appointment and recommendation for the removal of Directors.2. Appointment and removal of Company Secretaries.3. Appointment of Board committees and members.4. Approval of terms of reference of Board committees and amendments to such terms.5. Appointment of senior executive positions, including that of the Managing Director, Chief Executive Officer and

Executive Directors of the Company and their duties and the continuation (or not) of their service.

Remuneration1. Approval/recommendation of the Directors’ fee/remuneration arrangements for Non-Executive Directors.2. Approval of the remuneration structure and policy for the Managing Director, Chief Executive Officer and

Executive Directors.3. Approval of the remuneration packages of the Managing Director, Chief Executive Officer and Executive

Directors.4. Approval of any proposed employees’ share option scheme and/or amendments to the scheme, subject to other

relevant approvals that may be required by law or regulations.

The Board of Directors recognizes the importance of corporate governance and is committed to ensure the sustainability of the Company’s businesses and operations through the implementation and observation of the Principles and Recommendations as promulgated by the new Malaysian Code on Corporate Governance 2012 (“MCCG 2012”).

This Statement outlines the principles and recommendations which the Company has adopted and applied, and where there are gaps in the Company’s observation of any of the recommendations, they are disclosed herein with explanations.



Operational1. Approval of Group’s business strategy and

operational plan and annual budget.2. Review of operational performance against Group’s

business strategy and operational plan, including monitoring of key risks and risk management policies and actions.

3. Approval of the Limits of Authority for the Company.4. Approval of capital expenditure where such amounts

exceed the Management’s limits of authority.5. Approval of bad debts write-off where such amounts

exceed the Management’s limits of authority.6. Approval of investment or divestment in a company/

business/property/undertaking.7. Approval of investment or divestment of a capital

project which represents a significant diversification from the existing business activities.

8. Approval of changes in the major activities of the Company or Group.

9. Approval of treasury policies and bank mandate. Financial1. Approval of interim and annual financial statements.2. Approval for the release of financial announcements.3. Approval of the annual Directors’ Report, Annual

Report and Statutory Audited Accounts.4. Approval of interim dividends, the recommendation

of final dividends and the making of any other distribution.

5. Adoption of accounting policies.6. Review the effectiveness of the Group’s system

of internal control (which is delegated to the Audit Committee which in turn reports to the Board on its findings).

7. Approval of financing facilities and arrangements.

Other Matters1. The granting of powers of attorney by the Company.2. The entering into of any indemnity or guarantee by

the Company.

The Board shall comprise of at least two (2) Directors or one-third (1/3), whichever is higher, of the Board of Directors who are Independent Directors. To assist in the discharge of its responsibilities, the Board has established the following Board Committees to perform certain of its functions and to provide it with recommendations and advice:• Nominating Committee• Remuneration Committee• Audit Committee

Each committee operates its functions within their approved terms of reference by the Board which are periodically reviewed by the Board. The Board also appoints the Chairman and members of each committee.

The Board has primary responsibility to shareholders for the welfare of the Company. The Board is responsible for guiding and monitoring the business and the affairs of the Company and its subsidiaries (the “Group”). The Company recognizes the importance of the Board in providing a sound base for good corporate governance in the operations of the Group.

The Board recognizes the importance of having a clearly accepted division of power and responsibilities at the head of the Company to ensure a balance of power and authority. The roles of the Chairperson and the MD/CEO are distinct and separate to engender accountability and facilitate a clear division of responsibilities to ensure there is a balance of power and authority in the Company. The Chairperson is responsible for the leadership, effectiveness, conduct and governance of the Board. The MD/CEO, supported by the Senior Management team, implements the Group’s strategic plan, policies and decisions adopted by the Board and oversees the operations and business development of the Group.

In overseeing the conduct of the Group’s businesses, the Board shall ensure that an appropriate financial planning, operating and reporting framework as well as an embedded risk management framework is established.

The Board is responsible for the effective control of the Group and has adopted the following responsibilities for the effective discharge of its functions as set out in its Board Charter:

• reviewing and adopting a strategic plan for the Group; - The Board plays an active role in the development

of the Group’s business strategy. It has in place an annual strategy planning process, whereby Management presents to the Board its recommended strategy and proposed business plans for the following years. The Board reviews and deliberates upon both Management’s and its own perspectives, as well as challenges the Management’s views and assumptions, to deliver


the best outcomes. The Board also reviews and approves the annual budget for the coming year including major capital commitments and capital expenditure. The strategy planning process for FY2017 began at a Management meeting held in July 2016, where Management deliberated the proposed FY2017 - FY2020 strategy and framework. The Management prepared and presented the FY2017 - FY2020 Business and Strategic Plans (“BSP”) and the FY2017 Budget for the Board’s review at a Board meeting in September 2016. The BSP and FY2017 Budget, including the FY2017 Key Action Plan, were approved by the Board at this meeting.

- The Board conducted quarterly reviews of the FY2016 BSP where the targets set by the Board were compared against the actual performance for the quarter and year to date. The Board reviewed the sustainability, effectiveness and implementation status of the FY2016 BSP, and provided guidance and input to Management, taking into consideration the developments in the market and economy. In its review, the Board also discussed strategy implementation processes, identifying the internal and external factors which had supported various achievements in the past, or will constitute future challenges for Management. The Board also gave its feedback on focus areas, key initiatives and roadmap in planning for the following year’s budget.

• overseeing the conduct of the Group’s businesses to evaluate whether the businesses are being properly managed;

The MD/CEO is responsible for the day-to-day management of the business and operations of the Group. He is supported by the Management Committee and other committees established under the Group’s Corporate Governance Framework. The Board’s approval is sought for the following:- corporate/strategic directions/plans and

programmes;- annual budgets, including major capital

commitments and capital expenditure budgets;- new business ventures;


- material acquisitions and disposals of undertakings and properties;

- changes to Group’s corporate structure including material acquisitions and disposals of undertakings and properties;

- changes to management and control structure within the Company and its subsidiaries; and

- transactions exceeding the approved delegated limits of authority of the MD/CEO

Management’s performance, under the leadership of the MD/CEO, is assessed by the Board through a status report, which is tabled to the Board and includes a comprehensive summary of the Company’s operating drivers and financial performance during each reporting period.

The Board is also kept informed of key strategic initiatives, significant operational issues and the Company’s performance ensuring that the Company’s financial statements are true and fair and conform with the accounting standards.

The Board has formally endorsed an on-going risk management and internal control framework which includes the following key elements:- The guiding principles of the risk management

framework;- The underlying approach to risk management; - The underlying approach in reviewing and

monitoring any significant risk;- Regular review of the effectiveness of internal

control;- The framework is applied continuously throughout

the financial year to determine, evaluate and manage the significant risks of the Group. This is further assured by the implementation of an internal control system that has been integrated in the Group’s operations and working culture. Therefore, any significant risk arising from factors within the Group and from changes in business environment can be addressed on a timely basis.


• ensuring succession plan is in place; - A primary responsibility of the Board is planning

for MD/CEO succession and overseeing the identification and development of executive talent. The Board, with the assistance of the Nominating Committee and working with the MD/CEO and Human Resources department, oversees executive officer development and corporate succession plans for the MD/CEO and other executive officers to provide for continuity in senior management. The Board works with the MD/CEO to plan for MD/CEO succession. The succession plan covers identification of internal candidates, development plans for internal candidates, and appropriate identification of external candidates. The criteria used to assess potential MD/CEO candidates are formulated based on the Company’s business strategies, and include strategic vision, leadership, and operational execution. The Board may review development and succession planning when needs arise. The Board, the MD/CEO and Senior Management support the succession planning process which will give all employees an understanding and emphasis on the importance of succession planning to the Company. Adequate time will be provided to the selected employees for development and mentoring. The succession plan is regularly reviewed and updated to ensure the Company re-assess the hiring needs and determine the development progress of the selected candidates.

• Overseeing the development and implementation of a shareholder communications policy for the company- The Company has established an Investor

Relations (“IR”) structure and responsibility for the implementation of IR programme and strategy. The MD/CEO, Chief Operating Officer and Director of Finance have been appointed to communicate with audience constituents and respond to questions in relation to the corporate vision, strategies, developments, future prospects, financial results and plans, operation matters, etc. The Company makes use of a broad range of communication channels to disseminate information regarding the Company. These would include:


1. Electronic facilities provided by Bursa Securities;

2. Press releases;3. Corporate website;4. Emails;5. Road shows or events; and6. AGM/Extraordinary General Meetings

• reviewing the adequacy and the integrity of the Group’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines; - The internal audit function of the Group which

has been outsourced, reports directly to the Audit Committee. The role of the internal auditor is to review the adequacy, integrity and effectiveness of the Group’s system of risk management and internal controls to mitigate the risks of the Group including financial, operational and compliance risks;

- The internal auditor performs regular and systematic review of the internal controls to assess on the effectiveness of the systems of internal control and to highlight significant risks impacting the Group with recommendation for improvement;

- The Audit Committee regularly reviews and scrutinises the audit report by the internal auditor and conducts annual assessment on the adequacy of the internal auditor’s scope of work and resources;

- The Audit Committee discussed on the summary of internal auditor’s findings together with the Management’s responses to ensure that Management undertakes the agreed remedial actions recommended by the internal auditor within the agreed timelines; and

- The Board meets at least quarterly and has set a schedule of matters which is required to be brought to its attention for discussion, thus ensuring that it maintains full and effective supervision over appropriate controls. The MD/CEO provides explanation to the Board on pertinent issues. In addition, the Board is kept updated on the Group’s activities and its operations on a regular basis.



• monitoring and reviewing management processes aimed at ensuring the integrity of financial and other reporting.- The integrity of the Company’s financial

statements is safeguarded through the established processes governed by the Audit Committee (please refer Report on Audit Committee) as well as internal controls as reported in the Statement on Risk Management and Internal Control.

• ensuring that the Company adheres to high standards of ethics and corporate behavior. - The Company has adopted the Code of Conduct

(the “Code”) for Directors, Management and Officers of the Company and its subsidiaries which is displayed on the Company’s website. This Code is established to promote the corporate culture which engenders ethical conduct that permeates throughout the Group.

The Code includes appropriate communication and feedback channels which facilitate whistleblowing. The whistle-blowing policy of the Group encourages all Directors, Management, Officers or employees of the Group to raise genuine concern about impropriety at the earliest opportunity, and in an appropriate way. Conduct becomes reportable when it happens or when it is reasonably likely to occur.

The Company’s core values under the caption

of “Principled, Passionate and Personable” encapsulates the corporate culture and values and which the Group promotes in the conduct of its ordinary course of business and the Group’s staff are obliged to observe and comply in all their dealings with customers, business associates and other stakeholders. The Vision Statement, Mission Statement, Core Values and Code of Conduct are displayed in the Company’s website (www.selangorproperties.com.my).

The other key features of the Group’s internal control system include the following:

m An organization structure with defined lines of responsibility and appropriate reporting structure including proper approval and authorisation limits for approving capital expenditure and expenses within the Group;

m Internal policies and procedures are documented through a series of manuals for all major operations of the Group;

m Strategic planning and annual budgeting are undertaken for the key business units and consolidated at Group level. Senior Management closely monitors the key performance indicators and financial and operating results against budget to identify and where appropriate, to address significant variances;

m Identifying principal risks and ensuring the implementation of appropriate systems to manage these risks;

m The Audit Committee, assisted by reporting by the internal auditors, reviews the adequacy and effectiveness of the Group’s framework in risk management, internal control and governance processes within the Company and assess the resources and knowledge of the Management and employees in the processes.

Details of the Risk Management Process of

the Group is set out in the Statement of Risk Management and Internal Control in Page 35 to 37 of the Annual Report.

3

3

3

3

3



For day-to-day operations, the Board has delegated authorities and power to some level of Management including the MD/CEO. The Board has adopted a Discretionary Authority Limit which further detailed the authorization limits of management levels within the Group. The position of the MD/CEO in essence is to ensure the effective implementation of the Group’s Business Plan and policies established by the Board as well as to manage the daily conduct of the business and affairs to ensure its smooth operation.

The MD/CEO is responsible to the Board for the following:- executive management of the Group’s business

covering, inter alia, the development of a strategic plan, annual operating plan and budget;

- performance benchmarks to gauge Management’s performance and the analysis of management reports;

- developing long-term strategic and short-term profit plans;

- set, review and ensure compliance with the Company’s value;

- directing and controlling all aspects of the business operations;

- effectively oversee the human resources of the Group with respect to key positions in the Group’s hierarchy;

- ensures that the Group’s financial reports present a true and fair view of the Group’s financial condition and operational results and are in accordance with the relevant accounting standards;

- assures the Company’s corporate identity, products and services are of high standards and are reflective of the market environment;

- be the official spokesman for the Group and responsible for regulatory, governmental and business relationships;

- ensures compliance with governmental procedures and regulations;

- coordinates business plans with the businesses heads, coordinates management issues through the Board, and oversees divisional function groups and cost containment process in consultation with the Chief Operating Officer and the Director of Finance;

- maintains and facilitates a positive working environment and good employee relations;

- assists the Chairperson in organizing information necessary for the Board to deal with the agenda and to provide this information to Directors on a timely basis; and

- In discharging the above responsibilities, the MD/CEO can delegate appropriate functions to the Senior Management, who shall report to the MD/CEO.

SUSTAINABILITY OF BUSINESS

The Board is mindful of the importance of business sustainability and, the Group has a Sustainability Policy which can be found in the Company’s website (www.selangorproperties.com.my) in line with its mission to create enduring value, connect and collaborate with all stakeholders and create thriving communities through property development and investments.

The Board promotes good corporate governance through sustainability practices which are believed to translate into better corporate performance throughout the Group. A summary of these practices which demonstrates the Company’s commitment to the evolving global environmental, social, governance and sustainability agenda can be found in the Sustainability Policy.

The Group has established a Corporate Social Responsibility guidelines which focus on giving back to the community by supporting projects that have a powerful and positive impact on society as a whole as well as those who are in need. The Group currently provides support, amongst others, to the following set-ups:• SPB-DAMA Young Artists Programme in Kuala

Lumpur• Kassim Chin Humanity Foundation • Persatuan Dialisis Kurnia Petaling Jaya• Tadika Fatima, a kindergarten and nursery managed

by Sister Letitsha in Selangor• Malaysian Public Library• Board of Managers Chong Kwo School• Women’s Aid Organization

SUPPLY AND ACCESS TO INFORMATION

The Board is supplied with relevant information and reports on financial, operational, corporate, regulatory, business development and audit matters, by way of Board reports or upon specific requests, for informed decision making and effective discharge of the Board’s responsibilities.


The notice of a Directors’ meeting is given in writing at least seven (7) days prior to the meeting. The agenda has included, amongst others, matters specifically reserved for the Board’s decision. The Board’s deliberation, in terms of the issues discussed, and the conclusions thereof in discharging its duties and responsibilities were minuted by the Company Secretary. Board papers and agenda items are to be circulated at least three (3) days prior to the meeting. The minutes of Board meetings are to be prepared within fourteen (14) days following a Board meeting. The draft minutes are to be circulated together with the Board papers at the following Board meeting. If one or more Directors request their opinion to be noted, the Company Secretary shall comply with the request.

The key roles of the Company Secretaries are to provide unhindered advice and services to the Directors, as and when the need arises to enhance the effective functioning of the Board and to ensure regulatory compliance.

The current Company Secretaries are suitably qualified, competent; and are capable of carrying out their duties required by their role. They have also attended training and seminars conducted by the Companies Commission of Malaysia, the Malaysian Institute of Chartered Secretaries and Administrators and Bursa Securities to keep abreast with the relevant updates on statutory and regulatory requirements such as updates on the MMLR of Bursa Securities, compliance with the Capital Markets and Services Act 2007, Companies Act 1965 and to ensure the Company’s adherence to the MCCG 2012. The Directors have access to all information within the Company and to the advice and services of the Company Secretaries.

The Directors are entitled to obtain independent professional advice in the course of discharging their duties at the Company’s expense.

PRINCIPLE 2 –

STRENGTHEN COMPOSITION OF THE BOARD

The Board has five (5) members comprising two (2) Executive Directors and three (3) Non-Executive Directors who are independent. The composition fulfills the requirements as set out under the MMLR of Bursa Securities which stipulates that at least two (2) directors or one-third of the Board, whichever is higher, must be independent. The profile of each Director is set out in page 5 of this Annual Report.

Dato’ Zaibedah Binti Ahmad is the Senior Independent Non-Executive Director of the Company and deals with issues in situation where such issues could be inappropriate for the Chairperson and the MD/CEO to deal with and ensures that all issues are discussed openly in the Board.

NOMINATING COMMITTEE

The Nominating Committee consists of the following members:

Name DesignationDato’ Zaibedah Binti Ahmad

Chairperson of the Committee(Independent Non-Executive Director)

Mr Michael Lim Hee Kiang

Member(Independent Non-Executive Director)

Mr Ong Liang Win Member(Independent Non-Executive Director)

The Nominating Committee’s function, amongst others, is to recommend to the Board, candidates for directorship to be filled. In proposing its recommendation, the Nominating Committee will consider and evaluate the candidates’ required skills, knowledge, expertise and experience, professionalism and integrity and in the case of candidates for the position of independent non-executive directors, their ability to discharge responsibilities/functions as expected from independent non-executive directors. In evaluating the suitability of candidates, the Nominating Committee considers, inter-alia, the competency, character, integrity, experience, commitment (including time commitment), contribution and performance of the candidates, including, where appropriate, the criteria on assessing the independence of candidates’ appointment as non-executive directors.



Induction of Directors may include, but not limited to, the following:• furnishing of a copy of the previous board minutes

for at least the past six (6) months; the Business/strategic plan, pertinent Management reports;

• profile of key competitors and significant reports by management consultants on areas of board responsibilities;

• visits to key sites; and• a formal one (1) to two (2) days induction programme,

including the elements above, and also presentations from various divisions on their strengths, weaknesses and ambitions.

The Board, via the Nominating Committee, continues to identify and attend appropriate briefings, seminars, conferences and courses to keep abreast of changes in legislations and regulations affecting the Company. No new member was nominated/elected during the financial year.

To ensure the Board has an appropriate balance of expertise and ability, the Nominating Committee carry out an annual review for assessing the effectiveness of the Board as a whole and the contribution of each individual Director, including Independent Non-Executive Directors as well as its MD/CEO.

The Board evaluation comprised the followings:(a) annual assessment on effectiveness of the Board

and its Committees as a whole has been conducted based on specific criteria, covering areas such as Board structure and operation, the required mix of skills and experience of the Directors and Board Committees, principle responsibilities of the Board and Board Committees, size of non-executive particpation and Board governance.

(b) annual assessment on contribution of individual Director and Committee member has been conducted based on specific criteria include contribution to interaction, role and duties, knowledge, expertise, integrity, time committment, assessment of independence and training programs in areas which the Director could improve on.


In carrying out its recent annual review, the Nominating Committee is satisfied that the size of the Board is optimum and that there is appropriate mix of knowledge, skills, attributes and core competencies in the composition of the Board. All assessments and evaluations carried out by the Nominating Committee in the discharge of all its functions were properly documented.

The Board adopts a Diversity Policy which formalizes all appointments of the Board and the staff workforce of the Group. The Policy emphasizes the need for diversity amongst its workforce, amongst others, include race, ethnicity, age, gender, skills and competencies.

The Board is committed to provide fair and equal opportunities and nurturing diversity within the Group with due consideration on skills, industry experience, background, age, race, gender and other qualities in determining the optimum composition of the Board. The Board does not have a specific policy on setting targets for female candidates. Currently, there are two (2) female directors on board – Puan Sri Datin Chook Yew Chong Wen and Dato’ Zaibedah Binti Ahmad.

REMUNERATION COMMITTEE

The Remuneration Committee consists of the following members:

Name Designation


Chairman of the Committee(Independent Non-Executive Director)

Dato’ Zaibedah Binti Ahmad

Member (Independent Non-Executive Director)

Mr Ong Liang Win Member (Independent Non-Executive Director)

Mr Wen Chiu Chi Member (MD/CEO)


Company

ExecutiveDirectorsRM’000

Non-Executive DirectorsRM’000

Fees - 198

Salaries & Bonus 2,497 -

Benefits-in-kind 5 -

Total 2,502 198

Group

ExecutiveDirectorsRM’000

Non-Executive DirectorsRM’000

Fees - 198

Salaries & Bonus 2,976 -

Benefits-in-kind 5 -

Total 2,981 198

The number of Directors of the Company in each remuneration band is as follows:

ExecutiveDirectors

Non-ExecutiveDirectors

Below 50,000 1 -

RM50,001 - RM100,000

- 3

RM2,950,001 - RM3,000,000

1 -

Total 2 3

The Board has chosen to disclose the remuneration bands pursuant to the MMLR of Bursa Securities and is of the opinion that detailed disclosure of individual Directors’ remuneration will not add significantly to the understanding and evaluation of the Company’s governance.

The Remuneration Committee is responsible for setting the policy, framework and reviews of remuneration of Directors so as to ensure that the Company is able to attract, retain and motivate its Directors needed to run the Group successfully. Hence, the Board has established formal and transparent remuneration policy for the Directors. The Directors’ remuneration policy is designed to:1. Determine the level of remuneration package of

Directors;2. Attract, develop and retain high performing and

motivated Directors with a competitive remuneration package;

3. Provide a remuneration such that the Directors are paid a remuneration commensurate with the responsibilities of their position; and

4. Encourage value creation for the Company and its stakeholders

Except for Puan Sri Datin Chook Yew Chong Wen who chose to only accept a nominal remuneration, the MD/CEO’s remuneration is structured to link rewards to corporate and individual performance. In the case of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken.

The Remuneration Committee reviews and recommends to the Board the remuneration of the Executive Directors and the Directors’ fees of the Non-Executive Directors. The determination of remuneration of Non-Executive Directors is a matter for the Board as a whole. The respective Director will play no part in the decisions concerning his or her own remuneration.

During the financial year under review, the Remuneration Committee had convened one (1) meeting on 23 September 2016 which was attended by all its members. The Remuneration Committee reviewed and recommended the remuneration of the Chairperson and MD/CEO of the Company to the Board for its approval. The Remuneration Committee further recommended the Non-Executive Directors’ fees to the Board for shareholders’ approval at the Company’s forthcoming AGM.

The details of the total remuneration of the Executive Directors and Non-Executive Directors of the Company (both the Company and the Group) for FY2016 are as follows:




PRINCIPLE 3 –

REINFORCE INDEPENDENCE OF THE BOARD

The Nominating Committee has developed the following criteria to be used in the assessment of Directors:1. Strategic, character, experience, integrity, ethical

and value-driven, competence, capability, commitment including time commitment; and

2. Any other criteria contained in the Board Charter and the Board Committees’ Terms of Reference.

3. The Independent Director is subjected to the following criteria:• Should comply with the definition of Independent

Director under Paragraph 1.01 of the MMLR of Bursa Securities and any other criteria determined by the Nominating Committee.

• The tenure of an Independent Director should not exceed a consecutive period of nine years or a cumulative period of nine years with intervals. The Board may, in exceptional cases and subject to the assessment of the Nominating Committee on an annual basis, recommend for an Independent Director who has served a consecutive or cumulative term of nine years to remain as an Independent Director subject to shareholders’ approval.

The Board’s performance assessment is carried out as follows: • The Nominating Committee seeks input from

each Director separately in relation to:- the performance of the Board, Board

Committees, Chairman of the Board and other Directors;

- the performance of the MD/CEO and Senior Management; and

- the assessment of their own performance.• Such performance assessment should consider

both quantitative and qualitative parameters against the criteria set in this policy;

• The Chairperson of Board and Nominating Committee should collect and collate the inputs received and provide an overview report for discussion by the Board; and

• The Board’s performance assessment should be conducted on an annual basis and the results of the performance assessment should be documented.

The Nominating Committee has adopted the Directors’ Assessment Policy and developed criterion as set out in the said policy to be used in the assessment of the Board and Board Committees.

The Nominating Committee meets at least once a year with additional meetings to be convened, if necessary. During the financial year under review, the Nominating Committee had convened one (1) meeting on 23 September 2016 which was attended by all its members. The Nominating Committee reviewed and assessed:• the effectiveness of the Board as a whole and

the Committees of the Board; • the character, experience, integrity, competence

and time commitment of each Director, MD/CEO and Director of Finance;

• the mix of skills and experience of each individual Director including the core competencies of the Non-Executive Directors;

• the level of independence of Directors;• the term of office and performance of the Audit

Committee and each of its members;• recommended to the Board for its approval, the

re-election and re-appointment of Directors at the forthcoming AGM;

• recommended to the Board for its approval, the continuity of Dato’ Zaibedah Binti Ahmad, Mr Ong Liang Win and Mr Michael Lim Hee Kiang to act as Independent Directors; and

• recommended to the Board for its approval, the revised Term of Reference of the Nominating Committee in compliance with the latest amendments to the MMLR.

The Independent Directors play a key role in corporate accountability and provide unbiased views and impartiality to the Board’s deliberations and decision-making process. In addition, the Independent Directors ensure that matters and issues brought to the Board are given due consideration, fully discussed and examined, taking into account the interest of all stakeholders in the Group. The Board, via the Nominating Committee, assesses each Director’s independence to ensure on-going compliance with this requirement annually. The Nominating Committee is satisfied that they are independent of management and free from any business on other relationships which could interfere with the exercise of independent judgment, objectivity on the ability to act in the best interest of the Company.


Although the Chairperson is not an Independent Non-Executive Director, she is the founding member of the Group and has vast knowledge and experience in the industry. The Board comprise a majority of independent directors, out of which there is a Senior Independent Director. The Board members who consist of persons of various professional skills and of various business and commercial experience, enables the Board to provide clear and effective leadership to the Group. The Board considers the number of board members adequate for its effectiveness and the Independent Non-Executive Directors fairly represent the interest of public shareholders. There is no individual Director or group of Directors who dominate the Board’s decision making.

Where areas of conflict of interest arise, the Director concerned will have to declare his/her interest and abstain from participating in the decision making process.

Under the MCCG 2012, it is recommended that the tenure of Independent Director should not exceed a cumulative term of nine years and upon completion of the nine years, an independent director may continue to serve on the Board subject to the Director’s re-designation as non-independent director.

The Board is of the view that the independence of a director is more of a state of mind and action rather than tenure of office. The Independent Directors, namely Dato’ Zaibedah binti Ahmad, Mr Michael Lim Hee Kiang and Mr Ong Liang Win have all served the Company as Independent Directors for a cumulative term of more than nine years. The Board has via the Nominating Committee conducted an annual performance evaluation and assessment on the Independent Directors and is of the opinion that they remain objective and independent in expressing their views. The Board will be seeking the shareholders’ approval in the forthcoming AGM for Dato’ Zaibedah Binti Ahmad, Mr Michael Lim Hee Kiang and Mr Ong Liang Win to continue as Independent Directors of the Company. The justifications for their continuation as Independent Directors are disclosed in the Notice of the AGM.

All Directors are subject to retirement by rotation and in ascertaining the number of directors to retire, the Company shall ensure all Directors shall retire from office at least once in every 3 years but shall be eligible for re-election. The Board, therefore, recommends and supports their proposed re-appointment/re-election of Puan Sri Datin Chook Yew Chong Wen and Dato’ Zaibedah Binti Ahmad in accordance with S129(6) of the Companies Act, 1965 and Mr Ong Liang Win under Article 127 of the Company’s Articles of Association.

PRINCIPLE 4 –

FOSTER COMMITMENT

The Board meets at least five (5) times a year, at quarterly intervals which are scheduled at the onset of the financial year to help facilitate the Directors in planning their meeting schedule for the year. Additional meetings are convened where necessary to deal with urgent and important matters that require attention of the Board. All Board meetings are furnished with proper agendas with due notice issued and board papers and reports are prepared by the Management which provides updates on financial, operational, legal and circulated prior to the meetings to all Directors with sufficient time to review them for effective discussions and decision-making during the meetings.

All pertinent issues discussed at the Board meetings in arriving at the decisions and conclusions are properly recorded by the Company Secretaries.



The Board met five times during the FY2016. The attendance of each Director at the Board Meeting held during FY2016 is as follows:-

NameNumber of Meetings

Attended by Directors during their Tenure in Office %

Puan Sri Datin Chook Yew Chong Wen 5/5 100

Mr Wen Chiu Chi 5/5 100

Dato’ Zaibedah Binti Ahmad 5/5 100

Mr Michael Lim Hee Kiang 5/5 100

Mr Ong Liang Win 5/5 100

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling the roles and responsibilities which is evident by the satisfactory attendance record of the Directors at Board meetings.

It is the Board’s policy for Directors to notify the Chairperson before accepting any new directorship notwithstanding that the MMLR allow a Director to sit on the board of five listed issuers. Such notification is expected to include an indication of time that will be spent on the new appointment.

Directors’ TrainingThe Board, via the Nominating Committee, continues to identify and attend appropriate briefings, seminars, conferences and courses to keep abreast of changes in legislations and regulations affecting the Company.

All Directors have completed the Mandatory Accreditation Programme. The Directors are mindful that they continue to enhance their skills and knowledge to maximize their effectiveness as Directors during their tenure. Throughout their period in office, the Directors are continually updated on the Company’s business and the regulatory requirements.

The Directors have attended various training programmes and briefings as follows:

Directors List of training/seminar/conference/workshop attended

Puan Sri Datin Chook Yew Chong Wen

1. Understanding & Integrating Sustainability into Business Operations2. Updates on the Companies Bill 2015, proposed Malaysian Code on

Corporate Governance 2016, MMLR of Bursa Securities - Impact to Board & Audit Committee and Disclosure in Annual Report & Announcements

Wen Chiu Chi 1. Understanding & Integrating Sustainability into Business Operations2. Updates on the Companies Bill 2015, proposed Malaysian Code on


Michael Lim Hee Kiang 1. Understanding & Integrating Sustainability into Business Operations2. Updates on the Companies Bill 2015, proposed Malaysian Code on




The Company Secretaries highlight the relevant guidelines on statutory and regulatory requirements from time to time to the Board. The External Auditors also briefed the Board on any changes to the Malaysian Financial Reporting Standards that affect the Group’s financial statements during the year.

PRINCIPLE 5 –

UPHOLD INTEGRITY IN FINANCIAL REPORTING

The Audit Committee comprises three (3) members, all of whom are Independent Non-Executive Directors. The composition of the Audit Committee, including its roles and responsibilities are set out in pages 35 to 36 under the Audit Committee Report in this Annual Report.

The Board upholds the integrity of financial reporting. The Audit Committee is entrusted to provide advice and assistance to the Board in fulfilling its statutory and fiduciary responsibilities relating to the Company’s internal and external audit functions, risk management and compliance systems and practice, financial statements, accounting and control systems and matters that may significantly impact the financial condition or affairs of the business. The Audit Committee is also responsible in ensuring that the financial statements of the Company comply with the applicable financial standards in Malaysia.

The Audit Committee members reviewed the Company’s quarterly and year-end financial statements of the Group before submission to the Board, focusing particularly on:• any changes in accounting policies and practices;• significant audit issues and adjustments arising from audit;• going concern assumption;• compliance with the applicable approved accounting standards and regulatory requirements; and• compliance with the MMLR of Bursa Securities and other legal requirements.


Directors List of training/seminar/conference/workshop attended

Dato’ Zaibedah Binti Ahmad 1. Understanding & Integrating Sustainability into Business Operations2. Updates on the Companies Bill 2015, proposed Malaysian Code

on Corporate Governance 2016, MMLR of Bursa Malaysia - Impact to Board & Audit Committee and Disclosure in Annual Report & Announcements

3. Mandatory Accreditation Programme (MAP)4. The Malaysian Property Market: Opportunities Amidst Uncertainties

Ong Liang Win 1. Understanding & Integrating Sustainability into Business Operations2. Updates on the Companies Bill 2015, proposed Malaysian Code on


3. Independent Directors Programme - The essence of independence4. Fraud Risk Management Workshop5. MFRS Updates, MFRS 10 & 116. Sustainability Engagement Series for Directors/CEOs7. Audit Committee Workshop - Fraud Risk Management8. Dialogue Session on MFRS 9 Financial Instruments with the IASB9. MFRS/FRS Updates 2016/2017 Seminar10. Companies Act 2016 – Key Changes & Action To Be Taken


The Board recognized the value of an effective Audit Committee in ensuring that the Company’s financial statements are reliable source of financial information by establishing procedures, via the Audit Committee.

In safeguarding and supporting External Auditors’ independence and objectivity, the Company has established an External Auditors Policy to spell out the selection process of new external auditors, basic principles on the prohibition of non-audits services and the approval process for the provision of non-audit services.

The Audit Committee carried out an annual assessment on the performance, suitability and independence of the External Auditors based on the following four (4) key areas:i) quality of service;ii) sufficiency of resources;iii) communication and interaction; andiv) independence, objectivity and professional

skepticism.

The Board was of view that the objectivity and independence of the External Auditors are not in any way impaired by reason of the non-audit services provided to the Group.

The External Auditors has confirmed in writing that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the Malaysian Institute of Accountants.

PRINCIPLE 6 –

RECOGNIZE AND MANAGE RISKS

The Board has ultimate responsibility for reviewing the Company’s risks, approving the risk management framework policy and overseeing the Company’s strategic risk management and internal control framework.

The Audit Committee assists the Board in discharging these responsibilities by overseeing and reviewing the risk management framework and the effectiveness of risk management of the Company. The Audit Committee processes are designed to establish a proactive framework and dialogue in which the Audit Committee, the Management and External and Internal Auditors review and assess the risk management framework. The Company’s Risk Management Committee reports to the Audit Committee at least two times a year or other higher frequency where required.

The Audit Committee met with External Auditors twice a year without the presence of the Management during the financial year to allow discussion of any issues arising from the audit exercise or any other matters, which the External Auditors wished to raise.

The Board has established an independent internal audit function previously that reports directly to the Audit Committee. The scope of work covered by the internal audit function during the financial year under review, including its observations and recommendations, is provided in the Statement on Risk Management and Internal Control of the Company set out on pages 37 to 39 of this Annual Report.

PRINCIPLE 7 –

ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

The Board has formalized a pertinent corporate disclosure policies and procedures to enable comprehensive, accurate and timely disclosures relating to the Company to the regulators, shareholders and stakeholders not only to comply with the disclosure requirements as stipulated in the MMLR, but also setting out the persons authorized and responsible to approve and disclose material information to shareholders and stakeholders in compliance with the MMLR of Bursa Securities. In formulating these policies and procedures, the Board is also guided by the best policies and practices adopted by the market.



It also serves to enhance awareness by corporate disclosure requirements among employees. Clear roles and responsibilities of Directors, Management and employees are provided together with the levels of authority to be accorded to “designated person (s)”, spokespersons and committees in the handling and disclosure of material information. The persons responsible for preparing the disclosure will conduct due diligence and proper verification, and coordinate the timely disclosure of material information to the investing public. The Company has put in place an internal policy on confidentiality to ensure that confidential information is handled properly by Directors, employees and other relevant parties to avoid leakage and improper use of such information. The Board is mindful that information which is expected to be material must be announced immediately.

The Board has established a dedicated section for corporate information on the Company’s website (www.selangorproperties.com.my) where information on the Company’s announcements, business, corporate, financial information, and annual reports may be accessed.

PRINCIPLE 8 –

STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

The AGM, which is the principal forum for shareholders dialogue, allows shareholders to review the Group’s performance via the Company’s Annual Report and pose questions to the Board for clarification. The Annual Report is circulated at least twenty one (21) clear days before the date of the meeting to provide shareholders sufficient time to go through the Annual Report.


The Board encourages participation from the shareholders by having a question and answer session during the AGM. Effective 1st July 2016, Paragraph 8.29A of the MMLR provides that any resolution set out in the notice of any general meeting, or in any notice of resolution which may properly be moved and is intended to be moved at any general meeting, shall be voted by poll. Also, at least one (1) scrutineer will be appointed to validate the votes cast at the General Meeting who must not be an officer of the Company or its related corporation, and must be independent of the person undertaking the polling process.

During the last AGM, the MD/CEO provided shareholders with a brief review of the Company financial year’s performance and operations. The MD/CEO also shared with the shareholders the responses to questions submitted in advance by the Minority Shareholder Watchdog Group. The Directors, MD/CEO, Management and External Auditors were also in attendance to respond to the shareholders’ queries. The Management of the Company was also present to handle other face-to-face enquiries from shareholders.

The Company dispatches notices of its AGM at least 21 days before the AGM date in accordance with the Companies Act 1965 and Bursa Securities’ MMLR. This affords sufficient time for the shareholders to make the necessary arrangement to attend and participate in person or by its proxies.

The Company distributes its Annual Report together with all relevant information supporting each proposed resolution to enable the shareholders to evaluate in order to vote accordingly. In addition, the Company also provides detailed information in Circulars for the purposes of Special Resolutions to be tabled.

The Company has set up an Investors Relations page on its website (www.selangorproperties.com.my) where enquiries may be posed to the Company’s Management. The Company has also appointed spokespersons to attend or respond to shareholders/investors’ enquiries from time to time.


REPORT ON AUDIT COMMITTEE

MEETINGS

The Audit Committee met five times during FY2016. The attendance of the Audit Committee members for the five meetings are as follows:

Names

Number of Meetings Attended by the Member during Their Tenure

in Office %

Mr Ong Liang Win (Chairman)

5 100


5 100

Dato’ Zaibedah Binti Ahmad

5 100

The MD/CEO, the COO, the Director of Finance, a representative of the Internal Auditors and a representative of the External Auditors normally attend the meetings. Other members of the Board and Senior Management may attend the meetings upon invitation. The Audit Committee also meet with the External Auditors at least twice a year and Internal Auditors once a year without executive board members’ and management’s presence. ACTIVITIES

The work of the Audit Committee during FY2016 can be summarized as follows:

a) reviewed the quarterly financial statements and the final audited financial statements before recommending to the Board for approval and release to Bursa Securities;

b) reviewed the Audit Planning Memorandum with the External Auditors;

DATO’ ZAIBEDAH BINTI AHMADIndependent Non-Executive

Director

MEMBERSMR ONG LIANG WIN

(Chairman) Independent Non-Executive Director

MR MICHAEL LIM HEE KIANGIndependent Non-Executive

Director

c) reviewed the External Auditors’ reports in relation to audit and accounting issues arising from the audit and the Management’s response;

d) reviewed the independence, objectivity and effectiveness of the External Auditors and the services provided, including non-audit services and corresponding fees;

e) reviewed and recommended the re-appointment of External Auditors and the Audit Fees to the Board for its approval;

f) reviewed the annual Statement on Risk Management and Internal Control to be published in the Annual Report;

g) considered and reviewed the business processes presented by the internal audit team to assess the effectiveness of the internal control system;

h) discussed and adopted the internal audit plan;

i) examined findings made by Internal Auditors and Management’s response;

j) reviewed the adequacy of the scope, function, competency and resources of the internal audit functions;

k) reviewed and examined findings in reports on investigation performed on complaints received under the whistle blowing channels;

l) reviewed and considered the rationale, including the commercial terms, for the acquisition of four parcels of land at Damansara Heights, Kuala Lumpur from a related party;

m) reviewed the related party transactions entered into by the Company and the disclosure of such transaction in the Annual Report of the Company;

n) reviewed the report on enterprise risk management of the Company and the Group; and

o) reviewed the Terms of Reference of the Audit Committee prior to the recommendation to the Board of Directors for adoption.


INTERNAL AUDIT FUNCTION

The Company outsourced its internal audit function to a third party service provider, which assists the Audit Committee in discharging its duties and responsibilities. The third party service provider acts independently with impartiality, proficiency and due professional care and reports directly to the Audit Committee. The total cost paid by the Group to the third party provider amounted to RM60,000 for financial year 2016.

In accordance with the annual internal audit plan which had been approved by the Audit Committee, the Internal Auditors conducted regular reviews of the governance and internal controls processes within the Group. The audits were performed using a risk based approach and is consistent with the Group’s established framework in designing, implementing and monitoring of its control systems. The Internal Auditors had regular interactions with members of the Audit Committee, Senior Management, the External Auditors and Group Risk Management.

The work of the internal audit function for FY2016 covered the areas regarding compliance on project management, marketing and business management, recurrent related party transactions (RRPT) and procurement of repairs and maintenance with regards to:

REPORT ON AUDIT COMMITTEE

• established policies, procedures and controls for project management in respect of monitoring consultants and sub-contractors performance, monitoring project progress and reporting, project budget management, processing progress claims and payments, accountability for variances between project budget and actual costs, and project accounting;

• relevance and adequacy of sales and pricing strategies, product brief and product awareness, advertising and promotion tools/channel and the monitoring of budgets for advertising and promotion against actual costs;

• validity and completeness of recording of RRPT, arm’s length criteria, transfer pricing formulation and approval, RRPT disclosure and mandate from shareholders; and

• pre-appointment evaluation and selection of new vendor, procurement processing and monitoring, and evaluation of vendor’s performance/service.

The internal audit function also performed the follow-up on the status of implementation of recommendations made for reporting to the Audit Committee and Management on a quarterly basis.


THE BOARD’S RESPONSIBILITIES

The Board of Directors (“Board”) of the Group acknowledges its overall responsibility in maintaining a sound system of internal control and risk management practices of the Group and for reviewing the adequacy and integrity of the system periodically to safeguard the interest of the Company’s shareholders and the Group’s assets.

The system of risk management and internal control is designed to manage rather than to eliminate the risk of failure in achieving the Group’s corporate objectives and can only provide reasonable but not absolute assurance against any material misstatement or loss.

THE RISK MANAGEMENT PROCESS

The Group has in place a risk management framework which includes the following key elements:

• Guiding principles of the risk management framework;

• Approach to risk management;

• Approach in reviewing and monitoring significant risks;

• Regular review of the effectiveness of internal control.

The framework is applied continuously throughout the financial year to determine, evaluate and manage the significant risks of the Group. This is further assured by the implementation of an internal control system that has been integrated in the Group’s operations and working culture. Therefore, any significant risk arising from factors within the Group and from changes in business environment can be addressed on a timely basis.

The Group Risk Management Framework (“GRMF”) is designed to provide consistency in the management of risks across the various business divisions of the Group. The GRMF is embedded into the corporate culture, processes and structures of the Group. It defines the standard conditions as well as minimum requirements for risk management of the Group and addresses the following key areas:

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

1. RISK MANAGEMENT

a. Roles and Responsibilities

The Board is primarily responsible for strategic risks management while the responsibility to address all risks associated with the business operations rests with Management.

In providing oversight of risk management framework and policies in the Group, the Board is assisted by the Risk Management Committee (“RMC”) to:

• ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ investments and the Group’s assets; and

• determine the nature and extent of significant risks which the Group is willing to take in achieving its strategic objectives.

The RMC Policy states, amongst others, that the RMC also maintains a close relationship with Audit Committee to minimise and/or prevent any overlapping of functions with the Audit Committee, which include the review of the adequacy and effectiveness of internal controls systems, including financial, operational, compliance and information technology controls.

During the year, RMC convened two (2) meetings to review the execution of the risk management framework as well as to deliberate on the top business risks and the actions to be taken to mitigate the risks identified. The responsibility for day to day risk management resides with the Management and they are accountable for the risks identified and assessed. In managing the risks of the Group, Management works closely with the risk coordinators to ascertain that there is on-going monitoring and review of risks and related controls and that action plans are developed and implemented to manage these risks. The Risk Officer, supported by key management personnel, reviews and discuss risks in monthly management meetings to update risks status and ensure that the management of risks faced by the divisions are conducted within the boundaries set by the GRMF, prior to escalation to the RMC. The RMC will update the Audit Committee about the levels of the Group’s risks exposure at least two (2) times a year or other higher frequency where required.



The RMC had during the year reviewed the reports on investigation into two (2) complaints received by the Audit Committee through the whistle blowing channel. The RMC was satisfied with the outcome of the investigation performed and reported accordingly to the Audit Committee.

b. Risk Identification and Assessment

As part of the GRMF, a risk management methodology and approach are applied across the Group to facilitate risk identification, assessment, reporting, review and mitigation, as described below:

• A consistent risk likelihood and risk impact criteria are applied across the Group, reflecting the acceptable risk appetite as approved by the Board.

• Risks are identified based on risk categories to ensure a uniform and comprehensive risk identification approach.

• Risks identified are assessed to determine their impact on the relevant business strategies/ objectives and their likelihood of occurrence.

The outcome of the risk assessment process at respective business divisions will then be consolidated at the Group level in a Corporate Risk Scorecard which enables all divisions within the Group to report risks and risk status using a common platform.

During the year, in an effort to improve the risk reporting process to better manage risks, the Group engaged a third party professional firm to undertake a study on the existing risk reporting framework and to implement an integrated risks reporting system in the Group.

2. INTERNAL CONTROLS

a. The Internal Control Process

The other key features of the Group’s internal control system include the following:

• An organisation structure with defined lines of responsibility and appropriate reporting structure including proper approval and authorisation limits for approving capital expenditure and expenses within the Group;

• Internal policies and procedures are documented through a series of manuals for all major operations of the Group;

• Strategic planning and annual budgeting are undertaken for the key business units and consolidated at Group level. Senior Management closely monitors the key performance indicators and financial and operating results against budget to identify and where appropriate, to address significant variances;

• The internal auditor will perform regular and systematic review of the internal controls to assess on the effectiveness of the systems of internal control and to highlight significant risks impacting the Group with recommendation for improvement;

• The Audit Committee regularly reviews and scrutinises the audit report by the Outsourced Internal Auditors (“OIA”) and conducts annual assessment on the adequacy of the Internal Audit scope of work and resources; and

• The Board meets at least quarterly and has set a schedule of matters which is required to be brought to its attention for discussion, thus ensuring that it maintains full and effective supervision over appropriate controls. The MD/CEO provides explanation to the board papers on pertinent issues. In addition, the Board is kept updated on the Group’s activities and its operations on a regular basis.

The OIA for the Group reports directly to the Audit Committee. The role of the OIA is to review the adequacy, integrity and effectiveness of the Group’s system of risk management and internal controls to mitigate the risks of the Group including financial, operational and compliance risks. During the year, the Audit Committee has also reviewed and amended the Internal Audit plans and also engaged special Internal Audit work to report on the level of Corporate Governance.



b. Monitoring process

The Audit Committee has full and direct access to the OIA and reviews reports on all internal audits performed. The OIA continues to independently and objectively monitor compliance with regard to policies and procedures, and the effectiveness of the internal control systems. Significant findings and recommendations for improvement are highlighted to the Management and the Audit Committee, with periodic follow-up of the implementation of action plans. The Management is responsible for ensuring that corrective actions were implemented accordingly.

Based on the reports from OIA for FY2016, some findings and areas for process or internal control improvements were identified. The Audit Committee and the Management view such findings seriously, and have been or are currently taking measures to address them. None of these findings has resulted in any material losses, contingencies or uncertainties that would require disclosure in the Annual Report.

CONCLUSION

The system of risk management and internal control comprising the respective framework, management processes, monitoring processes described in this Statement are considered appropriate. While the Board acknowledges that the system of risk management and internal control does not eliminate the possibility of collusion or deliberate circumvention of procedures by employees, human errors and/or other unforeseen circumstances that result in poor judgment, it has nonetheless received assurance from the Managing Director/Chief Executive Officer and the Director of Finance that the Company’s risk management and internal control system is operating adequately and effectively.

The Group continues to take measures to enhance and strengthen the internal control environment.

Review of the Statement by External Auditors

The MD/CEO and the Director of Finance have provided the Board with assurance that the Group risk management and internal control system is operating adequately and effectively. All internal control weaknesses identified during the period under review have been or are being addressed. The External Auditors have performed limited assurance procedures on the Statement in accordance with Malaysian Approved Standard on Assurance Engagements, International Standard on Assurance Engagement (“ISAE”) 3000, ‘Assurance Engagements Other Than Audits or Reviews of Historical Financial Information’ and Recommended Practice Guide 5 (Revised), ‘Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in Annual Report’. They have reported to the Board that nothing has come to their attention that causes them to believe that the Statement intended to be included in the Annual Report is not prepared, in material respects, in accordance with the disclosures required by Paragraph 41 and 42 of the Statement on Risk Management and Internal Control: Guidance for Directors of Listed Issuers, nor is the Statement factually inaccurate.

This Statement is made in accordance with a resolution of the Directors dated 19 January 2017.


STATEMENT OF DIRECTORS’ RESPONSIBILITY IN RELATION TO THE FINANCIAL STATEMENTSThis statement is prepared as required by the Main Market Listing Requirements of Bursa Securities.

The Directors are required to prepare financial statements which give a true and fair view of the state of affairs of the Group and the Company as at the end of each financial year and of their results and their cash flow for that year then ended.

The Directors consider that in preparing the financial statements,

- the Group and the Company have used appropriate accounting policies and are consistently applied;

- reasonable and prudent judgments and estimates were made; and

- all applicable approved accounting standards in Malaysia have been followed.

The Directors are responsible for ensuring that the Company maintains accounting records that disclose with reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 1965.

The Directors have general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 October 2016.

PRINCIPAL ACTIVITIES

The principal activities of the Company are property investment and the provision of related services and investment holding.

The principal activities of the subsidiaries are described in Note 7 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

RESULTS

GroupRM’000

CompanyRM’000

Net profit for the year 67,362 6,621

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

DIVIDENDS

The amount of dividends paid by the Company since 31 October 2015 were as follows:

RM’000

In respect of the financial year ended 31 October 2015 as reported in the Directors’ report of that year:

Final tax exempt (single-tier) dividend of 12.0 sen and a special tax exempt (single-tier) dividend of 38.0 sen on 343,616,761 ordinary shares, approved on 24 March 2016 and paid on 15 April 2016 171,808

41Directors’

Report

46Statement

by Directors

47Statutory

Declaration

48Independent

Auditors’ Report

50Statements of

Financial Position

52Statements of

Comprehensive Income

54Statements of

Changes in Equity

57Statements of

Cash Flows

59Notes to the

Financial Statements

132Supplementary

Information - Breakdown of Retained earnings into Realised and Unrealised

FINANCIALSTATEMENTS

41

DIRECTORS’ REPORT

SELANGOR PROPERTIES BERHAD (5199-X)ANNUAL REPORT 2016


DIVIDENDS (CONT’D.)

At the forthcoming Annual General Meeting, a final single-tier exempt dividend of RM68,723,352 in respect of the financial year ended 31 October 2016, which comprise 12.0 sen single-tier exempt dividend per ordinary share of RM41,234,011 and a special single-tier exempt dividend of 8.0 sen per ordinary share of RM27,489,341 on 343,616,761 ordinary shares will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend of RM68,723,352. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 October 2017.

DIRECTORS

The names of the Directors of the Company in office since the date of the last report and at the date of this report are:

Puan Sri Datin Chook Yew Chong WenWen Chiu ChiMichael Lim Hee KiangDato’ Zaibedah Binti Ahmad Ong Liang Win

DIRECTORS’ BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company or its subsidiaries was a party, whereby the Directors might acquire benefits by means of acquisition of shares in the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments or fees received or due and receivable by the Directors or the fixed salary of a full-time employee of the Company and its related corporations as shown in Notes 26, 27, 28 and 33 to the financial statements) by reason of a contract made by the Company or a related corporation with any 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 as disclosed in Note 33 to the financial statements.

DIRECTORS’ REPORT


DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings, the interests of Directors in office at the end of the financial year in shares in the Company, its ultimate holding company, Kayin (M) Sdn. Bhd. and its holding company, Kayin Holdings Sdn. Berhad during the financial year were as follows:

Number of ordinary shares of RM1 each

1 November 2015 Bought Sold

31 October 2016

The Company

Direct interest:

Wen Chiu Chi 71,247 - - 71,247

Michael Lim Hee Kiang 1,000 - - 1,000

*Indirect interest:

Puan Sri Datin Chook Yew Chong Wen 234,447,236 - - 234,447,236

Ultimate holding company Kayin (M) Sdn. Bhd.

Indirect interest:

Puan Sri Datin Chook Yew Chong Wen 2,000 - - 2,000

Holding company Kayin Holdings Sdn. Berhad

Indirect interest:

Puan Sri Datin Chook Yew Chong Wen 20,220,000 - - 20,220,000

Puan Sri Datin Chook Yew Chong Wen by virtue of her interest in shares in the Company is also deemed interested in shares of the Company’s subsidiaries to the extent the Company has an interest.

* Deemed interested by virtue of her interests in Kayin Holdings Sdn. Berhad, the holding company of the Company, via Kayin (M) Sdn. Bhd., which holds 100% of the shares in Kayin Holdings Sdn. Berhad. The entire paid up share capital of Kayin (M) Sdn. Bhd. are collectively controlled by trusts set up by Puan Sri Datin Chook Yew Chong Wen for herself being the primary beneficiary and for her family members. As such, Kayin Holdings Sdn. Berhad and Kayin (M) Sdn. Bhd. are also deemed as corporations connected to Puan Sri Datin Chook Yew Chong Wen.

Save as disclosed above, none of the other Directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.

DIRECTORS’ REPORT


DIRECTORS’ REPORT

OTHER STATUTORY INFORMATION

(a) Before the statements of financial position and statements of comprehensive income of the Group and of the Company were made out, the Directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that there were no known bad debts and that adequate provision had been made for doubtful debts in the financial statements of the Group. The Directors also satisfied themselves that there were no known bad debts and that provision for doubtful debts was necessary in the financial statements of the Company; and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the Directors are not aware of any circumstances which would render:

(i) it necessary to write off any bad debts or the amount of the provision for doubtful debts in the financial statements of the Group inadequate to any substantial extent or it is necessary to write off any bad debts or to make any provision for doubtful debts in respect of the financial statements of the Company; and

(ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

(e) At the date of this report, there does not exist:

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.


OTHER STATUTORY INFORMATION (CONT’D.)

(f) In the opinion of the Directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations as and when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of

the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

AUDITORS The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 19 January 2017.

PUAN SRI DATIN CHOOK YEW CHONG WEN WEN CHIU CHI

DIRECTORS’ REPORT


STATEMENT BY DIRECTORS

STATEMENT BY DIRECTORSPURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

We, Puan Sri Datin Chook Yew Chong Wen and Wen Chiu Chi, being two of the Directors of Selangor Properties Berhad, do hereby state that, in the opinion of the Directors, the accompanying financial statements set out on pages 50 to 131 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 October 2016 and of their financial performance and cash flows for the year then ended.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 42 to the financial statements have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 19 January 2017.

PUAN SRI DATIN CHOOK YEW CHONG WEN WEN CHIU CHI


STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

I, Lee Tart Choong, being the officer primarily responsible for the financial management of Selangor Properties Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 50 to 131 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Lee Tart Choong atKuala Lumpur in the Federal Territoryon 19 January 2017 LEE TART CHOONG

Before me,

Mohd Ibrahim Bin Yaakob (No. W641)Pesuruhjaya SumpahKuala Lumpur

STATUTORY DECLARATION


INDEPENDENT AUDITORS’ REPORTto the members of Selangor Properties Berhad (Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Selangor Properties Berhad, which comprise the statements of financial position as at 31 October 2016 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 50 to 131.

Directors’ responsibility for the financial statements

The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 October 2016 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.


REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 7 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 42 on page 132 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

ERNST & YOUNG LOKE SIEW HENGAF: 0039 NO. 2871/07/17(J) CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT Kuala Lumpur, Malaysia19 January 2017

INDEPENDENT AUDITORS’ REPORTto the members of Selangor Properties Berhad (Incorporated in Malaysia)


Group Company

Note 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

(Restated) (Restated)

Assets

Non-current assets

Property, plant and equipment 4 55,530 3,465 18,113 183

Land held for property development 5(a) 421,447 384,425 33,165 -

Investment properties 6 1,245,520 1,191,954 30,624 30,948

Investments in subsidiaries 7 - - 835,144 835,144

Financial assets available for sale (“AFS”) 8 24,417 16,268 - -

Other receivables 11 20,361 16,788 - -

Deferred tax assets 20 3,622 10,480 - -

Total non-current assets 1,770,897 1,623,380 917,046 866,275

Current assets

Property development costs 5(b) 115,144 84,730 87,648 57,576

Inventories 9 837 1,225 - -

Trade receivables 10 1,473 1,818 16 20

Other receivables 11 5,430 4,298 61,943 48,150

Tax recoverable 5,363 4,603 3,906 3,600

Financial assets at fair value through profit or loss (“FVTPL”) 12 785,182 929,528 161,020 417,592

Cash and bank balances 13 233,120 339,219 3,462 2,798

Total current assets 1,146,549 1,365,421 317,995 529,736

Total assets 2,917,446 2,988,801 1,235,041 1,396,011

STATEMENTS OF FINANCIAL POSITION as at 31 October 2016


Group Company

Note 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

(Restated) (Restated)

Equity and liabilities

Equity attributable to owners of the parent

Share capital 15 343,617 343,617 343,617 343,617

Reserves 16 283,913 269,838 201,754 201,754

Retained earnings 17 1,882,742 1,987,188 647,518 812,705

Total equity 2,510,272 2,600,643 1,192,889 1,358,076

Liabilities

Non-current liabilities

Borrowings 18 239,468 228,780 - -

Cash flow hedge instrument 19 213 1,067 - -

Deferred tax liabilities 20 125,183 103,376 - -

Total non-current liabilities 364,864 333,223 - -

Current liabilities

Borrowings 18 4,000 12,016 4,000 12,016

Cash flow hedge instrument 19 1,140 1,177 - -

Trade payables 21 4,758 198 2,231 -

Other payables 22 24,149 15,093 34,014 24,297

Provisions 23 7,984 16,828 1,907 1,622

Tax payable 279 9,623 - -

Total current liabilities 42,310 54,935 42,152 37,935

Total liabilities 407,174 388,158 42,152 37,935

Total equity and liabilities 2,917,446 2,988,801 1,235,041 1,396,011

Net tangible assets per share (RM) 7.31 7.57

STATEMENTS OF FINANCIAL POSITIONas at 31 October 2016

The accompanying accounting policies and explanatory information form an integral part of the financial statements.


Group Company

Note 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Revenue

Revenue 24 120,925 99,491 22,366 338,640

Cost of sales 25 (480) (4,811) - -

Gross profit 120,445 94,680 22,366 338,640

Other income 82,799 638,830 2,910 2,171

Administration expenses (16,562) (14,628) (7,819) (5,669)

Other operating expenses (74,427) (76,645) (9,257) (2,823)

Operating profit 26 112,255 642,237 8,200 332,319

Finance costs 29 (13,496) (13,182) (1,368) (508)

Profit before tax 98,759 629,055 6,832 331,811

Income tax expense 30 (31,397) (35,375) (211) (134)

Net profit for the year 67,362 593,680 6,621 331,677

STATEMENTS OF COMPREHENSIVE INCOME for the year ended 31 October 2016


STATEMENTS OF COMPREHENSIVE INCOMEfor the year ended 31 October 2016

Group Company

Note 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Net profit for the year 67,362 593,680 6,621 331,677

Other comprehensive income

Items that may be reclassified to profit or loss in subsequent periods:

- Foreign currency translation 13,452 7,050 - -

- Net gain/(loss) on cash flow hedge 19 623 (1,024) - -

Total other comprehensive income to be reclassified to profit or loss in subsequent periods for the year, net of tax 14,075 6,026 - -

Total comprehensive income for the year 81,437 599,706 6,621 331,677

Profit attributable to owners of the parent 67,362 593,680

Total comprehensive income attributable to owners of the parent 81,437 599,706

Earnings per share attributable to owners of the parent (sen per share)

Basic 31 19.6 172.8

Diluted 31 19.6 172.8



STATEMENTS OF CHANGES IN EQUITYfor the year ended 31 October 2016

Att

rib

utab

le t

o o

wne

rs o

f th

e p

aren

t

No

n-d

istr

ibut

able

D

istr

ibut

able

Fo

reig

n

Sha

re

cur

renc

y

Sha

re

pre

miu

m

Cap

ital

t

rans

lati

on

Hed

gin

g

To

tal

Ret

aine

d

To

tal

cap

ital

r

eser

ve

res

erve

r

eser

ve

res

erve

r

eser

ves

ear

ning

s e

qui

ty

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

(No

te 1

5)

(No

te 1

6)

(No

te 1

6)

(No

te 1

6)

(No

te 1

6)

(N

ote

17)

Gro

up

At

1 N

ove

mb

er 2

015

343

,617

2

01,7

54

70,

870

(1,2

16)

(1,5

70)

269

,838

1

,987

,188

2

,600

,643

Tota

l com

pre

hens

ive

inco

me

fo

r th

e ye

ar -

-

-

1

3,45

2 6

23

14,

075

67,

362

81,

437

343

,617

2

01,7

54

70,

870

12,

236

(947

) 2

83,9

13

2,0

54,5

50

2,6

82,0

80

Tran

sact

ions

wit

h o

wne

rs

Div

iden

ds

on o

rdin

ary

shar

es

(Not

e 32

) -

-

-

-

-

-

(1

71,8

08)

(171

,808

)

At

31 O

cto

ber

201

6 3

43,6

17

201

,754

7

0,87

0 1

2,23

6 (9

47)

283

,913

1

,882

,742

2

,510

,272


Att

rib

utab

le t

o o

wne

rs o

f th

e p

aren

t

No

n-d

istr

ibut

able

D

istr

ibut

able

Fo

reig

n

Sha

re

cur

renc

y

Sha

re

pre

miu

m

Cap

ital

t

rans

lati

on

Hed

gin

g

To

tal

Ret

aine

d

To

tal

cap

ital

r

eser

ve

res

erve

r

eser

ve

res

erve

r

eser

ves

ear

ning

s e

qui

ty

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

(No

te 1

5)

(No

te 1

6)

(No

te 1

6)

(No

te 1

6)

(No

te 1

6)

(N

ote

17)

Gro

up

At

1 N

ove

mb

er 2

014

343

,617

2

01,7

54

70,

870

(8,2

66)

(546

) 2

63,8

12

1,4

34,7

42

2,0

42,1

71

Tota

l com

pre

hens

ive

inco

me

fo

r th

e ye

ar -

-

-

7

,050

(1

,024

) 6

,026

5

93,6

80

599

,706

343

,617

2

01,7

54

70,

870

(1,2

16)

(1,5

70)

269

,838

2

,028

,422

2

,641

,877

Tran

sact

ions

wit

h o

wne

rs

Div

iden

ds

on o

rdin

ary

shar

es

(Not

e 32

) -

-

-

-

-

-

(4

1,23

4) (4

1,23

4)

At

31 O

cto

ber

201

5 3

43,6

17

201

,754

7

0,87

0 (1

,216

) (1

,570

) 2

69,8

38

1,9

87,1

88

2,6

00,6

43


The

acco

mp

anyi

ng a

ccou

ntin

g p

olic

ies

and

exp

lana

tory

info

rmat

ion

form

an

inte

gral

par

t of

the

fina

ncia

l sta

tem

ents

.


Non-distributable Distributable

Share

Share premium Retained

capital reserve earnings Total

RM’000 RM’000 RM’000 RM’000

(Note 15) (Note 16) (Note 17)

Company

At 1 November 2015 343,617 201,754 812,705 1,358,076

Total comprehensive income for the year - - 6,621 6,621

Dividends (Note 32) - - (171,808) (171,808)

At 31 October 2016 343,617 201,754 647,518 1,192,889

At 1 November 2014 343,617 201,754 522,262 1,067,633

Total comprehensive income for the year - - 331,677 331,677

Dividends (Note 32) - - (41,234) (41,234)

At 31 October 2015 343,617 201,754 812,705 1,358,076




Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

Profit before tax 98,759 629,055 6,832 331,811

Adjustments for:

Unrealised foreign exchange losses/(gain) 12,676 (163,916) - -

Interest expense 13,496 13,182 1,368 508

Interest income (14,836) (10,496) (2,220) (1,152)

Depreciation 1,288 723 509 62

(Reversal of)/provision for foreseeable losses (688) 7,915 - -

Impairment of receivables 1,472 75 - -

Dividend income

- Subsidiaries - - (11,800) (336,768)

- Financial assets at FVTPL (11,501) (5,424) - -

Gain on disposal

- Investment properties - (8,750) - -

- Financial assets at FVTPL (6,336) (2,676) - -

- Non-current assets held for sale - (403,976) - -

Net fair values changes

- Financial assets at FVTPL 8,964 12,687 (644) (369)

- Non-current receivables (836) 2,097 - -

- Investment properties (56,380) (34,988) 324 (480)

Distribution income from investments (10,551) (1,623) (10,551) (1,623)

Operating profit/(loss) before working capital changes 35,527 33,885 (16,182) (8,011)

(Increase)/decrease in receivables (3,145) 19,202 (11,931) (29,524)

Decrease in inventories 480 4,553 - -

Increase in development properties (67,528) (22,555) (63,237) (11,059)

Increase/(decrease) in payables 5,090 (4,606) 10,375 (164)

Net cash (used in)/generated from operations (29,576) 30,479 (80,975) (48,758)

Interest received 9,233 10,496 2,220 -

Taxes paid (16,103) (16,322) (517) (600)

Net cash (used in)/generated from operating activities (36,446) 24,653 (79,272) (49,358)

STATEMENTS OF CASH FLOWSfor the year ended 31 October 2016


STATEMENTS OF CASH FLOWSfor the year ended 31 October 2016

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Cash flows from investing activities

Additions or purchases during the year

- Investment properties (5,836) (7,328) - -

- Property, plant and equipment (19,353) (1,368) (18,439) -

- Financial assets at FVTPL (340,221) (545,836) (42,200) (353,785)

- AFS financial assets (9,083) (6,862) - -

Proceeds from disposal of

- Financial assets at FVTPL 482,283 106,158 309,967 -

- Investment properties - 17,596 - -

- Non-current assets held for sale - 405,000 - -

Proceeds from redemption of convertible redeemable preference shares by a subsidiary - - - 107,760

Interest received - - - 106

Dividends received

- Subsidiaries - - 11,800 336,768

- Financial assets at FVTPL 11,501 5,424 - -

Return on capital from AFS financial assets 1,718 - - -

Changes in fixed deposits with maturity of more than 3 months 585 2,542 - -

Net cash generated from/(used in) investing activities 121,594 (24,674) 261,128 90,849

Cash flows from financing activities

(Repayment of)/proceeds from borrowings, net (8,016) (18,210) (8,016) 990

Dividends paid (171,808) (41,234) (171,808) (41,234)

Interest paid (8,488) (13,964) (1,368) (508)

Net cash used in financing activities (188,312) (73,408) (181,192) (40,752)

Net (decrease)/increase in cash and cash equivalents (103,164) (73,429) 664 739

Effects of exchange rate changes (2,350) 64,878 - -

Cash and cash equivalents at beginning of year 338,634 347,185 2,798 2,059

Cash and cash equivalents at end of year (Note 13) 233,120 338,634 3,462 2,798



1. CORPORATE INFORMATION

The principal activities of the Company are property investment and the provision of related services and investment holding. The principal activities of the subsidiaries are described in Note 7. There have been no significant changes in the nature of these activities during the financial year.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The principal place of business of the Company is located at Level 2, Block D, Kompleks Pejabat Damansara, Jalan Dungun, Damansara Heights, 50490 Kuala Lumpur.

The holding and ultimate holding companies of the Company are Kayin Holdings Sdn. Berhad and Kayin (M) Sdn. Bhd. respectively and both these companies are incorporated in Malaysia.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 19 January 2017.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements of the Group and of the Company comply with the provisions of Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements have been prepared on a historical cost basis unless otherwise disclosed in the respective accounting policies note.

The financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency and all values are rounded to the nearest thousand (“RM’000”) except when otherwise indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year.

2.3 Standards and amendments to standards issued but not yet effective

The standards and amendments to standards that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.

NOTES TO THE FINANCIAL STATEMENTS31 October 2016

60



2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)

2.3 Standards and interpretations issued but not yet effective (cont’d.)

Effective for annual financial periods beginning on or after 1 January 2016

MFRS 14 Regulatory Deferral Accounts

Annual Improvements to MFRSs 2012 - 2014 Cycle

MFRS 116 and MFRS 138 Clarification of Acceptable Methods of Depreciation and Amortisation

MFRS 116 and MFRS 141 Agriculture: Bearer Plants

Amendments to MFRS 11 Accounting for Acquisitions of Interests in Joint Operations

Amendments to MFRS 127 Equity Method in Separate Financial Statements

Amendments to MFRS 101 Disclosure Initiatives

MFRS 10, MFRS 12, and MFRS 128 Investment Entities: Applying the Consolidation Exception


MFRS 107 Disclosures Initiatives

MFRS 112 Recognition of Deferred Tax for Unrealised Losses


MFRS 15 Revenue from Contracts with Customers

MFRS 9 Financial Instruments

MFRS 2 Classification and Measurement of Share-based Payment Transactions


MFRS 16 Leases

Deferred

MFRS 10 and MFRS 128 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The Directors expect that the adoption of the standards and amendments to standards above will have no material impact on the financial statements in the period of initial application, except as disclosed below:

61





MFRS 9: Financial Instruments In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all

phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but no impact on the classification and measurement of the Group’s financial liabilities.

MFRS 15 Revenue from Contracts with Customers MFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers.

MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective.

The core principle of MFRS 15 is that an entity should recognise revenue which depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e when “control” of the goods or services underlying the particular performance obligation is transferred to the customer.

Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The Group is currently assessing the impact of MFRS 15 and plans to adopt the new standard on the required effective date.

MFRS 16 Leases

MFRS 16 will replace MFRS 117 Leases, IC Interpretation 4 Determining whether an Arrangement contains a Lease, IC Interpretation 115 Operating Lease-Incentives and IC Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under MFRS 117.

At the commencement date of a lease, a lessee will recognise a liability to make lease payments and an

asset representing the right to use the underlying asset during the lease term. Lessees will be required to recognise interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessor accounting under MFRS 16 is substantially the same as the accounting under MFRS 117. Lessors will continue to classify all leases using the same classification principle as in MFRS 117 and distinguish between two types of leases: operating and finance leases.

62





MFRS 16 Leases (cont’d.)

MFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted but not before an entity applies MFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The Group is in the process of making assessment of the impact of MFRS 16 and plans to adopted the new standard on the required effective date.

2.4 Summary of significant accounting policies

(a) Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

(b) Basis of consolidation and business combination

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

The Company controls an investee if and only if the Company has all the following:

• Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

• Exposure, or rights, to variable returns from its investment with the investee; and • The ability to use its power over the investee to affect its returns.

When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee:

• The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

• Potential voting rights held by the Company, other vote holders or other parties;• Rights arising from other contractual arrangements; and • Any additional facts and circumstances that indicate that the Company has, or does not have, the

current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

63




2.4 Summary of significant accounting policies (cont’d.)

(b) Basis of consolidation and business combination (cont’d.)

Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, any previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of MFRS 139 Financial Instruments: Recognition and Measurement, is measured at fair value with changes in fair value recognised either in either profit or loss or as a change to other comprehensive income. If the contingent consideration is not within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

(c) Transactions with non-controlling interests

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in profit or loss of the Group and within equity in the consolidated statements of financial position, separately from parent shareholders’ equity. Transactions with non-controlling interests are accounted for using the entity concept method, whereby, transactions with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interests, the difference between the consideration and book value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly in equity.

64





(d) Investments in joint operations

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Group as a joint operator recognises in relation to its interest in a joint operation:

(i) its assets, including its share of any assets held jointly; (ii) its liabilities, including its share of any liabilities incurred jointly; (iii) its revenue from the sale of its share of the output arising from the joint operation; (iv) its share of the revenue from the sale of the output by the joint operation; and (v) its expenses, including its share of any expenses incurred jointly.

The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the MFRSs applicable to the particular assets, liabilities, revenues and expenses.

Profits and losses resulting from transactions between the Group and its joint operation are recognised in the Group’s consolidated financial statements only to the extent of unrelated investors’ interests in the joint operation.

(e) Property, plant and equipment and depreciation

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, plant and equipment and furniture and fixtures are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

65





(e) Property, plant and equipment and depreciation (cont’d.)

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation on assets under construction will commence when the assets are ready for their intended use. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Building 25%

Plant and equipment 7.5% - 33.3%

Office and computer equipment 20% - 50%

Renovation, furniture, fittings and motor vehicles 10% - 33.3%

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic

benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised

(f) Investment properties

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value which reflects market conditions at the reporting date. Fair value is determined by the Directors with reference to market evidence of transaction prices for similar properties, and valuations performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued on a yearly basis. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.4(e) up to the date of change in use.

66





(g) Land held for property development and property development costs

(i) Land held for property development

Land held for property development consists of land 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 2.4(i).

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.

(ii) Property development costs

Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.

Where the financial outcome of a development activity can be estimated reliably, property development revenue and expenses are recognised in profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

Where the financial outcome of a development activity cannot be estimated reliably, property development revenue is recognised only to the extent of property development costs incurred that are likely to be recoverable. Property development costs are recognised as expenses in the period in which they are incurred.

Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately.

Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower of cost and net realisable value.

The excess of revenue recognised in profit or loss over billings to purchasers is classified as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in profit or loss is classified as progress billings within trade payables.

(h) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost of inventories are accounted for using the weighted average cost method. The cost of raw materials

includes the cost of purchase and other direct charges. The cost of finished goods and work-in-progress comprise raw materials, direct labour, other direct costs and appropriate proportions of production overheads. The cost of unsold properties comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs.

Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

67





(i) Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired.

If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss. Impairment loss on goodwill is not reversed in a subsequent period.

(j) Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, and available-for-sale financial assets.

(i) Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term. The Group’s and the Company’s financial assets at fair value through profit or loss are as set out in Note 12.

68





(j) Financial assets (cont’d.)

(i) Financial assets at fair value through profit or loss (cont’d.)

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest, dividend and distribution income. Interest, dividend and distribution income on financial assets at fair value through profit or loss are recognised in profit or loss as revenue, whereas exchange differences are recognised separately in profit or loss as part of other losses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date.

(ii) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. The Group’s and the Company’s loans and receivables include trade receivables, other receivables and cash and bank balances.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

(iii) Available-for-sale financial assets

Available-for-sale are financial assets that are designated as available for sale or are not classified in any of the other financial assets’ categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group’s and the Company’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

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.

The Group had classified its investments in unquoted shares outside Malaysia as available-for-sale financial assets.

69





(j) Financial assets (cont’d.)

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e. the date the Group and the Company commit to purchase or sell the asset.

(k) Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. (i) Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss 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. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of receivables, where the carrying amount is reduced through the use of an allowance account. When a receivable becomes uncollectible, it is written off against the allowance account.

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 to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

70





(k) Impairment of financial assets (con’td.)

(ii) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income.

(l) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, and deposits with licensed banks or financial institutions that are readily convertible to known amount of cash and which are subject to insignificant risk of changes in value.

(m) Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as other financial liabilities.

The Group’s and the Company’s other financial liabilities include trade payables, other payables and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings 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.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

71





(m) Financial liabilities (cont’d.)

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(n) Share capital

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

(o) Income tax

(i) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes 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.

(ii) Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date

between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

• where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

72





(o) Income tax (cont’d.)

(ii) Deferred tax (cont’d.)

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

• where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(p) Leases

(i) As lessee

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

73





(p) Leases (cont’d.)

(ii) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.4(t)(ii).

(q) Employee benefits

(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year

in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employee Provident Fund (‘’EPF’’) in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

(r) Foreign currencies (i) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency

of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.

(ii) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

74





(r) Foreign currencies (cont’d.)

(ii) Foreign currency transactions (cont’d.)

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(iii) Foreign operations

The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.

Goodwill and fair value adjustments arising on 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 reporting date.

The principal exchange rates used for every unit of foreign currency ruling at the reporting date are as follows:

2016 2015 RM RM

1 Singapore Dollar 3.01 3.07 1 United States Dollar 4.20 4.30 1 Australian Dollar 3.19 3.05 1 Euro 4.60 4.73

(s) Borrowing costs Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to

the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs

consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

75





(t) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group

and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(i) Sale of properties

Revenue from sale of properties is recognised in the profit or loss when the significant risks and rewards of ownership of the properties have been transferred to the buyer.

(ii) Rental income

Rental income from investment property is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

(iii) Dividend and distribution income

Dividend and distribution income is recognised when the Group’s right to receive payment is established.

(iv) Interest income

Interest income is recognised on an accrual basis using the effective interest rate method, except to the extent where there are significant uncertainties regarding recovery of the amount, in which case it is recognised upon receipt.

(v) Investment income

The difference between net disposal proceeds from disposal of other investments and the carrying amount of the investments is recognised in profit or loss.

(u) Derivative financial instruments and cash flow hedge The Group uses derivative financial instruments, such as interest swaps to hedge its interest rate. Such

derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognised in other comprehensive income and later reclassified to profit or loss when the hedge item affects profit or loss.

For the purpose of hedge accounting, hedging relationship is classified as cash flow hedge, when

hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment.

76





(u) Derivative financial instruments and cash flow hedge (cont’d.)

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

Cash flow hedges which meet the strict criteria for hedge accounting are accounted for as follows:

• The effective portion of the gain or loss on the hedging instrument is recognised directly in other comprehensive income into cash flow hedge reserve, while any ineffective portion is recognised immediately in profit or loss as other operating expenses.

• Amounts recognised in other comprehensive income previously are reclassified from equity to profit or loss when the hedged transaction affects profit or loss, such as when the hedged interest income or interest expense is recognised or when a forecast sale occurs. Where the hedged item is a non-financial asset or a non-financial liability, the amounts recognised previously in other comprehensive income are removed and included in the initial carrying amount of the non-financial asset or liability. The Group has elected not to apply basis adjustments to hedges of forecast transactions that result in the recognition of a non-financial asset or a non-financial liability.

• If the forecast transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss previously recognised in other comprehensive income remain in equity until the forecast transaction or firm commitment affects profit or loss.

The Group uses interest rate swap contracts as hedges of its exposure to interest rate risk in forecasted transactions and firm commitments.

77





(v) Segment reporting

The Group is organised into operating segments based on geographical areas in which the Group operates. For Malaysian operations, the business is managed by the respective segment managers responsible for the performance of its three core businesses, being:

• property investment; • property development; and • investment holding For overseas operations, the two operating segments are other investment holding and Australian

operations.

The segment managers report directly to the Management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 40, including the factors used to identify the reportable segments and the measurement basis of segment information.

(w) Fair value measurements The Group measures financial instruments, such as, derivatives, and non-financial assets such as

investment properties, at fair value at each reporting date. Also, fair values of financial instruments are disclosed in Note 37.

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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability; or • In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group and the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset 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.

The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

78




2.4 Summary of significant accounting policies (cont’d.) (w) Fair value measurements (cont’d.)

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Company determine whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Board of Directors (“the Board”) determines the policies and procedures for both recurring fair

value measurement. External valuers are involved for valuation of significant assets, such as investment properties. Involvement of external valuers is decided upon annually by the Board and selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.

At each reporting date, the management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s accounting policies. For this analysis, the management verifies inputs applied in the latest valuation and verified by agreeing the information in the valuation computation to contracts and other relevant documents which also includes comparison with other relevant external sources to determine if any change is reasonable.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

(x) Non-current assets held for sale The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts

will be recovered principally through a sale rather than through continuing use. Such non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

The criteria for held for sale is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the sale will be withdrawn.

79





(x) Non-current assets held for sale (cont’d.)

Management must be committed to the sale expected within one year from the date of the classification. Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.

Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial position.

A disposal group qualifies as discontinued operation if it is: • A component of the Group that is a CGU or a group of CGUs; • Classified as held for sale or distribution or already disposed in such a way; or • A major line of business or major geographical area. (y) Discontinued operation A component of the Group is classified as a “discontinued operation” when the criteria to be classified

as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations or is part of a single coordinated major line of business or geographical area of operations. A component is deemed to be held for sale if its carrying amounts will be recovered principally through a sale transaction rather than through continuing use.

Upon classification as held for sale, non-current assets and disposal groups are not depreciated and are measured at the lower of carrying amount and fair value less costs to sell. Any differences are recognised in profit or loss.

(z) Goods and Services Tax (“GST”) Revenues, expenses and assets are recognised net of the amount of GST except where the amount of

GST incurred is not recoverable from the authority, in which case it is recognised as part of the cost of acquisition of an asset or as part of an item of expense.

Receivables and payables are recognised inclusive of GST. The net amount of GST being the difference between output and input of GST, payable to or receivables

from the authority at the reporting date, is included in other payables or other receivables in the statements of financial position.

80



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES The preparation of the Group’s and the Company’s financial statements requires management to make

judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

3.1 Judgements made in applying accounting policies

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

(a) Classification between investment properties and property, plant and equipment

The Group has developed certain criteria based on MFRS 140 in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group would account for the portions separately. Judgement is made to determine the apportionment of value between investment property and property, plant and equipment.

3.2 Key sources of estimation uncertainty The key assumptions 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 are discussed below.

(a) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses, unabsorbed capital allowances and unutilised investment tax allowances to the extent that it is probable that taxable profit will be available against which the tax losses and allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits together with future tax planning strategies. The total carrying value of recognised and unrecognised tax losses and allowances of the Group and of the Company are as follows:

Group Company 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Recognised tax losses and allowances 61,958 93,723 - -

Unrecognised tax losses and allowances 32,680 28,082 730 2,080

81



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (CONT’D.)

3.2 Key sources of estimation uncertainty (cont’d.)

(b) Investment properties The Group carries its investment properties at fair value, with changes in fair value being recognised in

the statement of comprehensive income. The investment properties of the Group are held to earn rental income or for capital appreciation or both. Fair value is determined by the Directors with reference to market evidence of transaction prices for similar properties, and valuations performed by registered independent valuers. The fair value is determined primarily using the comparison method of valuation, which entails comparing recorded transactions of similar properties in the vicinity and/or the investment method of valuation, which entails the capitalisation of the net income of the property.

(c) Fair value estimation of financial instruments classified as FVTPL The Group’s investments in funds that are not publicly traded of 21% (2015: 16%) as at the reporting

date are subject to the terms and conditions of the respective fund’s offering documentation. The investments in these funds are valued based on the latest available redemption price of such units for each funds, as determined by the funds’ administrators. Group reviews the details of the reported information obtained through the portfolio managers and if necessary, the Group may make adjustments to the reported net asset value (“NAV”) of various funds based on consideration such as:

• the liquidity of the funds and its underlying investments;• the value date of the NAV provided;• any restrictions on redemptions; and• the basis of accounting and, in instances where basis of accounting is other than fair value, fair

valuation information provided by fund’s advisors.

The models used to determine fair values are validated and periodically reviewed by the portfolio managers and the Group. Judgements on the consideration for the above inputs may result in the carrying values of the investments in the funds to be materially different to the values ultimately realised upon redemption.

82



4. PROPERTY, PLANT AND EQUIPMENT

Freeholdland

RM’000Building RM’000

Plant and

equipment RM’000

Office and computerequipment

RM’000

Renovation,furniture,

fittings and motor

vehicles RM’000

Assets under

construction RM’000

Total RM’000

Group

At 31 October 2016

Cost

At beginning of year - - 45,280 1,341 8,150 - 54,771

Additions - 15,000 50 282 3,596 425 19,353

Reclassified from investment properties (Note 6) 34,000 - - - - - 34,000

At end of year 34,000 15,000 45,330 1,623 11,746 425 108,124

Accumulated depreciation

At beginning of year - - 43,519 1,207 6,580 - 51,306

Charge for the year (Note 26) - 313 331 54 590 - 1,288

At end of year - 313 43,850 1,261 7,170 - 52,594

Net carrying amount 34,000 14,687 1,480 362 4,576 425 55,530

83



4. PROPERTY, PLANT AND EQUIPMENT (CONT’D.)

Renovation,

furniture,

Office and fittings and Assets

Plant and computer motor under

equipment equipment vehicles construction Total

RM’000 RM’000 RM’000 RM’000 RM’000

Group

At 31 October 2015

Cost

At beginning of year 44,029 1,306 7,383 685 53,403

Additions 930 35 403 - 1,368

Reclassification 321 - 364 (685) -

At end of year 45,280 1,341 8,150 - 54,771


At beginning of year 43,275 1,176 6,132 - 50,583

Charge for the year (Note 26) 244 31 448 - 723

At end of year 43,519 1,207 6,580 - 51,306

Net carrying amount 1,761 134 1,570 - 3,465

84



4. PROPERTY, PLANT AND EQUIPMENT (CONT’D.)

Furniture,

Plant and fittings and Motor

Building equipment computers vehicles Total

RM’000 RM’000 RM’000 RM’000 RM’000

Company

At 31 October 2016

Cost

At beginning of year - 1,967 1,416 594 3,977

Additions 15,000 - 2,035 1,404 18,439

At end of year 15,000 1,967 3,451 1,998 22,416



Charge for the year (Note 26) 313 - 35 161 509

At end of year 313 1,967 1,444 579 4,303

Net carrying amount 14,687 - 2,007 1,419 18,113

At 31 October 2015

Cost

At beginning/end of year - 1,967 1,416 594 3,977



Charge for the year (Note 26) - 10 - 52 62

At end of year - 1,967 1,409 418 3,794

Net carrying amount - - 7 176 183

85



5. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS

(a) Land held for property development

Long term

Freehold leasehold Development

land land expenditure Total

RM’000 RM’000 RM’000 RM’000

Group

Cost

At 31 October 2016

At beginning of year 289,146 13,873 81,406 384,425

Additions 33,142 - 3,880 37,022

At end of year 322,288 13,873 85,286 421,447

At 31 October 2015

At beginning of year 292,025 13,873 85,647 391,545

Additions - - 4,035 4,035

Charged to cost of sales (155) - (154) (309)

Reclassified from non-current assets held for sale (Note 14) 4,227 - - 4,227

Reclassified to property development costs (Note 5(b)) (6,951) - (8,122) (15,073)

At end of year 289,146 13,873 81,406 384,425

Company

Cost

At 31 October 2016

Additions/at end of year 33,142 - 23 33,165

During the year, the Company entered into a Sale and Purchase Agreement with a related party, Chong Khoon Lin Sdn Berhad, to acquire four adjoining parcels of freehold land identified as HS(D) 32527 PT No. 1325, HS(D) 32528 PT No. 1326, HS(D) 32529 PT No. 1327, and HS(D) 32530 PT No. 1328, in Mukim Kuala Lumpur, measuring in total 5,252 square metres. The transaction has been completed on 29 April 2016.

86



5. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (CONT’D.)

b) Property development cost

Freehold land

RM’000

Developmentexpenditure

RM’000Total

RM’000

Group

Cost

At 31 October 2016

At beginning of year 37,351 47,379 84,730

Additions - 30,414 30,414

At end of year 37,351 77,793 115,144

At 31 October 2015 (Restated)


Additions - 23,139 23,139

Reclassified from land held for property development (Note 5(a)) 6,951 8,122 15,073

At end of year 37,351 47,379 84,730

Company

Cost

At 31 October 2016


Additions - 30,072 30,072

At end of year 30,400 57,248 87,648

At 31 October 2015 (Restated)


Additions - 11,058 11,058

At end of year 30,400 27,176 57,576

87



6. INVESTMENT PROPERTIES

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

At beginning of year 1,191,954 1,138,403 30,948 30,468

Fair value adjustment (Note 26) 56,380 34,988 (324) 480

Additions 5,836 7,328 - -

Disposal - (8,846) - -

Reclassified to property, plant and equipment (Note 4) (34,000) - - -

Foreign exchange differences 25,350 20,081 - -

At end of year 1,245,520 1,191,954 30,624 30,948

During the year, two parcels of freehold land of the Group measuring 45,194 sq ft on which a marketing gallery and show apartment were constructed, were reclassified to property, plant and equipment. The fair value of the said land amounted to RM34,000,000.

Investment properties of the Group with carrying value of RM953,669,000 (2015: RM533,820,000) are pledged to financial institutions for a local and foreign currency term loans granted as referred to Note 18.

Investment properties in Malaysia were revalued by a registered member of the Board of International Property Consultants, Valuers & Estate Agents. Valuations were made on 31 October 2016 based on open market values of the subject properties using the comparison method, and free from all encumbrances and with vacant possession, which is detailed in Note 37(a).

Investment properties in Australia were revalued by an accredited independent valuer. Valuation made on 31 October 2016 based on the investment method, which uses capitalisation approach, which is detailed in Note 37(a).

7. INVESTMENTS IN SUBSIDIARIES

Company

2016 2015

RM’000 RM’000

Unquoted shares at cost

At beginning of year 835,144 942,904

Redemption of convertible redeemable preference shares (“CRPS”) (Note 33) - (107,760)

At end of year 835,144 835,144

In the previous financial year, a wholly owned subsidiary, Sagu Mestika Sdn. Bhd., redeemed 107,760,000 CRPS of RM0.01 each held by the Company at a premium of RM0.99 each for a cash consideration of RM107,760,000.

88



7. INVESTMENTS IN SUBSIDIARIES (CONT’D.)

Details of the subsidiaries are as follows:

Country of Proportion ofName of subsidiaries incorporation Principal activities ownership interest

2016 2015 % %

Held by the Company:

Bungsar Hill Holdings Sdn. Bhd. Malaysia Property investment and investment holding

100 100

Chong Chook Yew Sdn. Berhad Malaysia Property investment and investment holding

100 100

Friendly Target Sdn. Bhd. Malaysia Investment holding 100 100

Keruan Jaya Sdn. Bhd. Malaysia Property development 100 100

Sabaran (Malaysia) Sdn. Bhd. Malaysia Property development 100 100

Sagu Mestika Sdn. Bhd. Malaysia Investment holding 100 100

T.K. Wen & Company Sdn. Berhad Malaysia Property investment 100 100

Wenworth Hotel (K.L.) Sdn. Bhd. Malaysia Property investment 100 100

Wenworth Hotel Sdn. Bhd. Malaysia Dormant 100 100

Yondbe Corporation Sdn. Bhd.# Malaysia Striking-off 100 100

Held through Chong Chook Yew Sdn. Berhad

Damansara Developments Sdn. Berhad Malaysia Property investment 100 100

Held through Sagu Mestika Sdn. Bhd.

Orisix Sdn. Bhd. Malaysia Property investment 100 100

Oriseven Sdn. Bhd. Malaysia Ceased operations during the year

100 100

Orieight Sdn. Bhd. Malaysia Ceased operations during the year

100 100

89




Details of the subsidiaries are as follows: (cont’d.)

Country of Proportion ofName of subsidiaries incorporation Principal activities ownership interest

2016 2015 % %

Held through Sagu Mestika Sdn. Bhd. (cont’d.)

Orinine Sdn. Bhd. Malaysia Property investment 100 100

Oriland Sdn. Bhd. Malaysia Property investment 100 100

Selayang Mulia Sdn. Bhd. Malaysia Property development 100 100

Held through T.K. Wen & Company Sdn. Berhad

Affluent Achievers Sdn. Bhd.# Malaysia Striking-off 100 100

Pillargraf Sdn. Bhd.# Malaysia Striking-off 100 100

Held through Friendly Target Sdn. Bhd.

SPB (Australia) Pty. Ltd.* Australia Investment holding 100 100

Allied Provincial Investments Inc. The British Virgin Islands

Investment holding 100 100

SPB International Holdings Ltd. The British Virgin Islands


Held through Allied Provincial Investments Inc.

Allied Provincial Invest Ltd. The British Virgin Islands


Held through SPB International

Holdings Ltd.

SPB Development Pty. Ltd.* Australia Investment holding 100 100

90




Details of the subsidiaries are as follows: (cont’d.)

Country of Proportion of

Name of subsidiaries incorporation Principal activities ownership interest

2016 2015

% %

Held through SPB Development Pty. Ltd.

SPB Investments (Australia) Pty. Ltd.* Australia Investment holding 100 100

Held through Bungsar Hill Holdings Sdn. Bhd.

Editry Sdn. Bhd. Malaysia Dormant 59 59

Pusat Bandar Damansara Sdn. Bhd. Malaysia Property investment 100 100

Held through Damansara Developments Sdn. Berhad

Jupiter Midas Sdn. Bhd.^ Malaysia Dissolved - 100

Puncak Madu Sdn. Bhd. Malaysia Property development 100 100

* Audited by affiliates of Ernst & Young.^ On 29 March 2016, Jupiter Midas Sdn. Bhd., a wholly owned subsidiary of the Group, completed its members

voluntary liquidation pursuant to the Companies Act, 1965.# On 26 September 2016, these subsidiaries applied to Companies Commission of Malaysia for striking off

pursuant to Section 308 of the Companies Act, 1965.

91



8. FINANCIAL ASSETS AVAILABLE FOR SALE (“AFS”)

Group

2016 2015 RM’000 RM’000

(Restated)

Investment in unquoted shares outside Malaysia, at cost 24,417 16,268

9. INVENTORIES

Group 2016 2015

RM’000 RM’000 (Restated)

At cost:Developed properties held for sale 117 25

At net realisable value:Developed properties held for sale 720 1,200

837 1,225

Cost of inventories recognised as an expense during the financial year amounted to RM480,000 (2015: RM4,811,000).

10. TRADE RECEIVABLES

Group Company 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Trade receivables 1,548 1,893 16 20 Less: Allowance for impairment (75) (75) - -

Trade receivables, net 1,473 1,818 16 20

The Group’s normal trade credit term ranges from 1 to 60 days (2015: 1 to 60 days). Other credit terms are assessed and approved on a case-by-case basis.

The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors.

92



10. TRADE RECEIVABLES (CONT’D.)

Ageing analysis of trade receivables The ageing analysis of the Group’s and the Company’s trade receivables is as follows:

Group Company 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Neither past due nor impaired 576 789 - - Past due but not impaired 1 to 30 days past due but not impaired 198 248 - - 31 to 60 days past due but not impaired 94 82 - - 61 to 90 days past due but not impaired 73 86 - - 91 to 120 days past due but not impaired 4 26 - - More than 120 days past due not impaired 528 587 16 20

897 1,029 16 20 Impaired 75 75 - -

1,548 1,893 16 20

Receivables that are neither past due nor impaired

Receivables that are neither past due nor impaired are creditworthy debtors with good payment records.

Receivables that are past due but not impaired

These relate to customers that have a good track record with the Group and the Company. Based on past experience, the Directors of the Group and the Company are of the opinion that no allowance for impairment is necessary in respect of these balances as there have not been a significant change in credit quality and the balances are still considered fully recoverable. The receivables that are past due not impaired are unsecured in nature.

Receivables that are impaired The trade receivables of the Group that are individually impaired at the reporting date and the movement in

allowance for impairment of trade receivables are as follows:

Group 2016 2015

RM’000 RM’000

Trade receivables 75 75 Less: Allowance for impairment losses (75) (75)

- -

Movement in allowance accounts:At beginning of year 75 - Allowance for impairment losses (Note 26) - 75 At end of year 75 75

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

There is no impairment loss arising from receivables that have been collectively assessed for impairment.

93



11. OTHER RECEIVABLES

Group Company 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

(Restated)

Non-currentSundry receivables - Mezzanine loans 20,361 16,788 - -

CurrentDue from subsidiaries - - 60,806 47,823 Deposits 2,540 1,835 1,004 194 Prepayments 490 501 - - Sundry receivables 3,872 1,962 133 133

6,902 4,298 61,943 48,150 Less: Allowance for impairment (1,472) - - -

5,430 4,298 61,943 48,150

The amounts due from subsidiaries are unsecured, repayable on demand and bear interest ranging from 3.94% to 4.24% (2015: ranging from 3.25% to 3.30%) per annum.

The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors other than the Mezzanine loans advanced to third parties for development projects amounting to AUD6,377,000 (2015: AUD5,503,000) or RM20,361,000 (2015: RM16,788,000) equivalent. The receivables are neither past due nor impaired.

Ageing analysis of sundry receivables The ageing analysis of the Group’s and Company’s current other receivables (excluding deposits, prepayments

and retention sum) is as follows:

Group Company 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Neither past due nor impaired 2,845 1,829 60,806 47,823 Past due but not impaired More than 121 days past due not impaired 133 133 133 133

Impaired 894 - - - 3,872 1,962 60,939 47,956

Receivables that are neither past due nor impaired Other receivables (excluding deposits, prepayments and retention sum) that are neither past due nor impaired

are creditworthy debtors with good payment records.

94



11. OTHER RECEIVABLES (CONT’D.) Receivables that are past due but not impaired The Group’s other receivables (excluding deposits, prepayments and retention sum) that are past due but not

impaired are unsecured.

Receivables that are impaired The other receivables of the Group that are individually impaired at the reporting date and the movement in

allowance accounts are as follows:

Group 2016 2015

RM’000 RM’000

Deposits 578 -Sundry receivables 894 -

1,472 -Less: Allowance for impairment loss (1,472) -

- -

Movement in allowance accounts:At beginning of year - -Allowance for impairment loss (Note 26) 1,472 - At end of year 1,472 -

Other receivables (excluding deposits and prepayments) that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

There is no impairment loss arising from receivables that have been collectively assessed for impairment.

12. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (“FVTPL”)

Group Company 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

In Malaysia:Unit trust funds 161,020 417,592 161,020 417,592

Outside Malaysia:Equity funds and real estate funds 63,477 51,941 - - Hedge funds 16,020 8,213 - - Fixed income investments funds 460,035 359,445 - - Other unquoted investment funds 84,630 92,337 - -

624,162 511,936 - -

785,182 929,528 161,020 417,592

95



13. CASH AND BANK BALANCES

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Cash at banks and on hand 76,925 133,172 3,462 2,798Deposits with: Tenures of 3 months or less

- Local licensed banks - 2,105 - - - Foreign licensed banks 156,195 203,357 - -Tenures of more than 3 months

but less than 1 year - Foreign licensed banks - 585 - -

Total cash and bank balances 233,120 339,219 3,462 2,798

Included in cash at banks of the Group is an amount of RM2,479,000 (2015: RM953,000) held pursuant to Section 7A of the Housing Development (Control and Licensing) Act, 1966 which is restricted from use in other operations.

For the purpose of statements of cash flows, cash and cash equivalents comprise the following as at reporting date:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Total cash and bank balances 233,120 339,219 3,462 2,798

Less: Deposits with tenures of more than 3 months - (585) - -

Total cash and cash equivalents 233,120 338,634 3,462 2,798

The range of interest rates per annum and maturities of deposits as at reporting date were as follows:

Group Group 2016 2015 2016 2015

Interest rates (%) Maturities (days)

Tenures of 3 months or less - Local licensed banks - 3.15% -

3.25% - 30

- Foreign licensed banks 0.01% -0.52%

0.01% - 0.75%

1 1

Tenures of more than 3 months but less than 1 year

- Foreign licensed banks - 3.30% - 300

Cash and cash equivalents are placed with reputable financial institutions with good ratings.

96



14. NON-CURRENT ASSETS HELD FOR SALE

Group 2016 2015

RM’000 RM’000

At beginning of year - 50,251 Transfer to land held for property development (Note 5(a)) - (4,227)Disposal during the year - (46,024)At end of year - -

In previous financial year, certain subsidiaries of the Group had entered into a sale and purchase agreement (“SPA”) with a third-party on 30 September 2014 to dispose of a parcel of freehold land measuring 25,686 square meters held under Geran 70133, Lot 56495 Mukim/Daerah Kuala Lumpur, Negeri Wilayah Persekutuan. The disposal was completed on 30 September 2015, upon satisfaction of all conditions precedent in the SPA.

15. SHARE CAPITAL

Number of ordinary shares of RM1 each Amount

2016 2015 2016 2015 ’000 ’000 RM’000 RM’000

Authorised

At beginning/end of year 1,000,000 1,000,000 1,000,000 1,000,000

Issued and fully paid

At beginning/end of year 343,617 343,617 343,617 343,617

97



16. RESERVES

Group Company 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

(i) Share premium

At beginning/end of year 201,754 201,754 201,754 201,754

(ii) Capital reserve * At beginning/end of year 70,870 70,870 - -

(iii) Foreign currency translation reserves At beginning of year (1,216) (8,266) - - Foreign currency translation 13,452 7,050 - - At end of year 12,236 (1,216) - -

(iv) Cash flow hedge reserve #

At beginning of year (1,570) (546) - - Net gain/(loss) on cash flow hedges

(Note 19) 623 (1,024) - -

At end of year (947) (1,570) - -

Total reserves 283,913 269,838 201,754 201,754 * Capital reserve comprises gain on disposal of properties in prior years and the capitalisation of retained

earnings for bonus issue by a subsidiary.

# The cash flow hedge reserve represents the effective portion of the cash flow hedge relationships incurred as at the reporting date.

17. RETAINED EARNINGS The Company may distribute dividends out of its entire retained earnings under the single-tier system.

98



18. BORROWINGS

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Short term

Unsecured

Revolving credits 4,000 12,016 4,000 12,016

Long term

Secured

Foreign term loan 1 111,752 106,764 - -


239,468 228,780 - -

Total borrowings

Revolving credits 4,000 12,016 4,000 12,016



243,468 240,796 4,000 12,016

Maturity of borrowings:

Within one year 4,000 12,016 4,000 12,016

More than 2 years but not more than 5 years 239,468 228,780 - -

243,468 240,796 4,000 12,016

The weighted average effective interest rates (% per annum) of borrowings at the reporting date were as follows:

Group Company

2016 2015 2016 2015

% % % %

Revolving credits 4.47 4.44 4.47 4.44

Foreign term loan 1 4.00 4.17 - -

Foreign term loan 2 4.03 3.78 - -

99



18. BORROWINGS (CONT’D.) Revolving credits of the Company The revolving credits of the Group and of the Company bear interest of 3.36% to 4.53% (2015: 4.01% to 4.58%)

per annum and are secured by a negative pledge over the Company’s assets both present and future in the form and substance acceptable to the financial institutions.

Foreign currency term loans of a subsidiary The two foreign term loans are with the following maturity dates:

Maturity dates

Foreign term loan 1 1 November 2017

Foreign term loan 2 28 February 2018

The foreign term loans are secured by investment properties of the Group, as disclosed in Note 6.

Term loan facility of the Company

During the year, the Company obtained Commodity Murabahah Financing-i (“Islamic term loan”) and bank guarantee facilities of RM160,000,000 and RM18,000,000, respectively. These facilities are secured as follows:

• by way of third-party first legal charge over and investment property of a subsidiary as disclosed in Note 6; and

• corporate guarantee of RM178,000,000 by a subsidiary, Oriland Sdn. Bhd. These facilities are obtained to finance a development project of the Company. As at reporting date, the Islamic

term loan facility has not been drawndown by the Company.

19. CASH FLOW HEDGE INSTRUMENT

Group

2016 2015

RM’000 RM’000

Current

Interest rate swap 1,140 1,177

Non-current

Interest rate swap 213 1,067

1,353 2,244

Fair value gain/(loss) 623 (1,024)

100



19. CASH FLOW HEDGE INSTRUMENT (CONT’D.) For the financial year end 2016 and 2015

Notional amount Terms Maturity period

AUD25,000,000 Pays fixed interest rate of 3.1075% per annum and receives a variable rate equal to the average bank bill swap bid rate (“BBSY”) per annum on the notional amount.

28 May 2014 to 29 May 2017

AUD30,000,000 Pays fixed interest rate of 2.345% per annum and receives a variable rate equal to the average bank bill swap bid rate (“BBSY”) per annum on the notional amount.

27 February 2015 to 27 February 2018

The interest rate swap is being used to hedge the exposure to changes in cash flow of the floating rate secured term loans amounting to AUD75,000,000, equivalent to RM239,468,000 (2015: AUD75,000,000, equivalent to RM228,780,000) as disclosed in Note 18.

The increase in fair value of the interest rate swap of RM623,000 (2015: decrease of RM1,024,000) has been recognised in other comprehensive income as net gain on cash flow hedge to reflect the year-end hedging reserve amounting to RM947,000 (2015: RM1,570,000).

20. DEFERRED TAXATION

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

At beginning of year 92,896 79,015 - 129

Recognised in profit or loss (Note 30) 25,400 11,128 - (129)

Exchange differences 3,265 2,753 - -

At end of year 121,561 92,896 - -

Presented after appropriate offsetting as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Deferred tax assets (3,622) (10,480) - -

Deferred tax liabilities 125,183 103,376 - -

121,561 92,896 - -

101



20. DEFERRED TAXATION (CONT’D.) The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting

are as follows:

Deferred tax liabilities of the Group:

Property,

Property plant and Investment

development equipment properties Others Total

RM’000 RM’000 RM’000 RM’000 RM’000

2016

At beginning of year 1,103 153 110,990 7,586 119,832

Recognised in profit or loss (7) 210 16,778 (181) 16,800

Exchange differences - - 3,708 - 3,708

1,096 363 131,476 7,405 140,340

Set off with deferred tax assets (15,157)

At end of year 125,183

2015

At beginning of year 1,103 139 95,583 7,586 104,411

Recognised in profit or loss - 14 11,440 - 11,454

Exchange differences - - 3,967 - 3,967

1,103 153 110,990 7,586 119,832

Set off with deferred tax assets (16,456)

At end of year 103,376

102



20. DEFERRED TAXATION (CONT’D.) Deferred tax assets of the Group:

Unused tax

losses and

unabsorbed

capital

allowances Others Total

RM’000 RM’000 RM’000

2016

At beginning of year (25,478) (1,458) (26,936)

Recognised in profit or loss 8,488 112 8,600

Exchange differences (692) 249 (443)

(17,682) (1,097) (18,779)

Set off with deferred tax liabilities 15,157

At end of year (3,622)

2015

At beginning of year (24,577) (819) (25,396)

Recognised in profit or loss (146) (180) (326)

Exchange differences (755) (459) (1,214)

(25,478) (1,458) (26,936)

Set off with deferred tax liabilities 16,456

At end of year (10,480)

103



20. DEFERRED TAXATION (CONT’D.) Deferred tax (assets)/liabilities of the Company:

Unused tax

losses and

unabsorbed Property,

Investment capital plant and

property Provision allowances equipment Total

RM’000 RM’000 RM’000 RM’000 RM’000

2015

At beginning of year 186 (57) (10) 10 129

Recognised in profit or loss (186) 57 10 (10) (129)

At end of year - - - - -

Deferred tax assets have not been recognised in respect of the following items:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Unused tax losses 24,081 18,163 - -

Unabsorbed capital allowances 931 2,251 730 2,080

Unutilised investment tax allowances 7,668 7,668 - -

32,680 28,082 730 2,080

The unused tax losses and unabsorbed capital allowances of the Group and the Company are available indefinitely for offsetting against future taxable profits of the respective entities within the Group, subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority.

Deferred tax assets of the Group have not been recognised in respect of unutilised investment tax allowances amounting to RM7,668,000 (2015: RM7,668,000). This incentive is in respect of Wenworth Hotel (K.L.) Sdn. Bhd.’s business as a hotelier which has temporarily ceased in year of assessment 2001 and may not be able to offset taxable profits arising from other businesses.

104



21. TRADE PAYABLES

Group Company 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Trade payables 4,758 198 2,231 -

The normal trade credit terms granted to the Group and the Company range from 1 to 60 days (2015: 1 to 60 days).

22. OTHER PAYABLES

Group Company 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000 (Restated)

Due to subsidiaries - - 25,272 23,363 Refundable deposits 310 296 - - Tenants’ deposits 11,798 11,065 524 519 Accruals 10,168 1,521 8,177 415Sundry payables 1,873 2,211 41 -

24,149 15,093 34,014 24,297 Sundry payables are unsecured, non-interest bearing and normally settled on an average term of two months

(2015: average term of two months).

The amount due to subsidiaries is unsecured and repayable on demand. The interest rate of outstandings were 3.94% to 4.24% (2015: 3.25% to 3.30%) per annum.

105



23. PROVISIONS

Group Company

2016 RM’000

2015 RM’000

2016 RM’000

015 RM’000

(Restated)

Subsidy for low cost project 1,470 1,470 - -

Provision for foreseeable losses 1,080 7,915 - -

Provision for development expenses 1,610 1,863 - -

Provision for employee benefits 3,723 3,597 1,806 1,622

Others 101 1,983 101 -

7,984 16,828 1,907 1,622

24. REVENUE

Group Company 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Rental income 87,658 81,883 15 249 Interest income from deposits 10,735 4,944 - - Proceeds from sale of development properties 480 5,617 - - Dividend income

- financial assets at FVTPL 11,501 5,424 - - - subsidiaries - - 11,800 336,768

Distribution income from unit trusts 10,551 1,623 10,551 1,623 120,925 99,491 22,366 338,640

25. COST OF SALES Cost of sales relates to cost of land and inventories sold amounting to RM480,000 (2015: RM4,811,000).

106



26. OPERATING PROFIT The following amounts have been charged/(credited) in arriving at the operating profit:

Group Company

2016 2015 2016 2015

Note RM’000 RM’000 RM’000 RM’000

Staff costs 27 15,274 13,904 7,310 5,607

Non-Executive Directors’ remuneration 28 261 280 261 280

Auditors’ remuneration

- Statutory audit 271 240 96 86

- Other services 32 8 16 8

Depreciation 4 1,288 723 509 62

(Reversal of)/provision for foreseeable losses (688) 7,915 - -

Net impairment of

- Trade receivables 10 - 75 - -

- Other receivables and deposits receivables 11 1,472 - - -

Direct operating expenses of investment properties that are revenue generating during the year 23,908 22,420 871 875

Loss/(gain) on fair value changes

- FVTPL financial assets 8,964 12,687 (644) (369)

- Non-current receivables (836) 2,097 - -

Fair value (gain)/loss of investment properties 6 (56,380) (34,988) 324 (480)

Gain on disposal of

- FVTPL financial assets (6,336) (2,676) - -

- Non-current asset held for sale - (403,976) - -

- Investment properties - (8,750) - -

Foreign exchange loss/(gain)

- Realised 3,088 (6,771) - -

- Unrealised 12,676 (163,916) - -

Interest income from

- Third parties (4,101) (5,552) (154) (106)

- Subsidiaries - - (2,066) (1,046)

107



27. STAFF COSTS

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Wages and salaries 13,192 11,208 6,350 4,577

Employees Provident Fund (“EPF”) 1,525 1,900 782 971

Social security costs 34 28 9 3

Other staff related expenses 523 768 169 56

15,274 13,904 7,310 5,607

Included in staff costs of the Group and of the Company are Executive Directors’ remuneration amounting to RM2,976,000 (2015: RM4,457,000) and RM2,497,000 (2015: RM4,022,000) respectively as further disclosed in Note 28.

28. DIRECTORS’ REMUNERATION The details of remuneration receivable by Directors of the Company and its subsidiaries during the year are as

follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Executive Directors’ remuneration (Note 27):

Fees 479 435 - -

Salaries and other emoluments 2,497 4,022 2,497 4,022

2,976 4,457 2,497 4,022

Non-executive Directors’ remuneration (Note 26):

Fees 198 198 198 198

Other emoluments 63 82 63 82

261 280 261 280

Total Directors’ remuneration 3,237 4,737 2,758 4,302

Estimated money value of benefits-in-kind 5 5 5 5

Total Directors’ remuneration including benefits-in-kind 3,242 4,742 2,763 4,307

108



28. DIRECTORS’ REMUNERATION (CONT’D.) The details of remuneration receivable by Directors of the Company during the year are as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Executive:

Salaries and other emoluments 1,554 1,297 1,554 1,297

Fees 479 435 - -

Bonus 529 2,057 529 2,057

Employees Provident Fund (“EPF”) 414 668 414 668

Estimated money value of benefits-in-kind 5 5 5 5

2,981 4,462 2,502 4,027

Non-Executive:

Fees 198 198 198 198

Other emoluments 63 82 63 82

3,242 4,742 2,763 4,307

The number of Directors of the Company whose total remuneration for the Group during the financial year fell within the following bands is analysed below:

Number of Directors

2016 2015

Executive Directors:

Below RM50,000 1 1

RM2,950,001 - RM3,000,000 1 -

RM4,400,001 - RM4,450,000 - 1

Non-Executive Directors:

RM50,001 - RM100,000 3 3

109



29. FINANCE COSTS

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Interest expense on:

Inter-company advances - - 1,118 -

Bank borrowings 13,496 13,182 250 508

13,496 13,182 1,368 508

30. INCOME TAX EXPENSE

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Malaysian income tax:

Tax expense for the year 6,310 6,288 270 260

Real property gains tax (“RPGT”) - 17,384 - -

(Over)/under provided in prior years (313) 575 (59) 3

5,997 24,247 211 263

Deferred tax (Note 20):

Relating to origination and reversal of temporary differences 25,652 12,301 - (129)

Over provided in prior years (252) - - -

Effect of change in tax rate - (1,173) - -

25,400 11,128 - (129)

31,397 35,375 211 134 Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) of the estimated

assessable profit for the year.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. Foreign income tax for subsidiaries incorporated in Australia is calculated at the Australian statutory tax rate of 30% (2015: 30%). Income derived from subsidiaries incorporated in the British Virgin Islands are not taxable.

110



30. INCOME TAX EXPENSE (CONT’D.) A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income

tax expense at the effective income tax rate of the Group and of the Company is as follows:

2016 2015

RM’000 RM’000

Group

Profit before tax 98,759 629,055

Tax at Malaysian statutory tax rate of 24% (2015: 25%) 23,702 157,264

Effects of different tax rates in other countries 3,145 2,089

Effect of RPGT (5%) (2,679) (70,268)

Effect of income not subject to tax (10,763) (60,424)

Effect of expenses not deductible for tax purposes 13,909 7,369

Utilisation of previously unrecognised tax losses (1,954) (207)

Deferred tax assets not recognised in respect of unused tax losses and unabsorbed capital allowance 6,602 150

Over provision of deferred tax in prior years (252) -

(Over)/under provision of tax expense in prior years (313) 575

Effect of change in tax rate - (1,173)

Tax expense for the year 31,397 35,375

Company


Tax at Malaysian statutory tax rate of 24% (2015: 25%) 1,640 82,953

Effect of RPGT (5%) 61 (96)

Effect of income not subject to tax (5,364) (84,716)

Effect of expenses not deductible for tax purposes 3,931 1,985

Deferred tax assets not recognised in respect of unabsorbed capital allowance 2 5

(Over)/Under provision of tax expense in prior years (59) 3

Tax expense for the year 211 134

111



31. EARNINGS PER SHARE The basic and diluted earnings per share is calculated by dividing profit for the year attributable to ordinary

equity holders of the Company by the number of ordinary shares in issue during the financial year.

Group

2016 2015

RM’000 RM’000

Profit attributable to owners of the parent (RM’000) 67,362 593,680

Number of ordinary shares in issue (‘000) 343,617 343,617

Basic earnings per share (sen) 19.6 172.8

Diluted earnings per share (sen) 19.6 172.8

32. DIVIDENDS

Dividend

recognised in year

2016 2015

RM’000 RM’000

Group and Company

Dividend on 343,616,761 ordinary shares

- in respect of financial year 2015

• Final 12.0 sen single-tier exempt dividend 41,234 -

• Special 38.0 sen single-tier exempt dividend 130,574 -

- in respect of financial year 2014

• First and final 12.0 sen single-tier exempt dividend - 41,234

171,808 41,234

At the forthcoming Annual General Meeting, a final dividend of RM68,723,352 in respect of the financial year ended 31 October 2016, which comprise 12.0 sen single-tier exempt dividend per ordinary share of RM41,234,011 and a special single-tier exempt dividend of 8.0 sen per ordinary share of RM27,489,341 on 343,616,761 ordinary shares will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend of RM68,723,352. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 October 2017.

112



33. RELATED PARTY DISCLOSURES

(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year.

Group Company 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Acquisition of four adjoining parcels of freehold land held for development from Directors’ related company, Chong Khoon Lin Sdn Berhad (Note 5) 32,200 - 32,200 -

Rental and utilities deposits paid to a subsidiary - - 150 -

Redemption of CRPS from a subsidiary (Note 7) - - - 107,760

(Expense)/income:

Provision of property management services in respect of the Group’s properties in Australia, payable to a Director’s related company, Hawaiian Pty. Ltd. (4,279) (3,924) - -

Interest income from subsidiaries - - 2,066 1,046

Interest expense to subsidiaries - - (1,118) -

Building management fees from a subsidiary - - - 100

Rental expense to a subsidiary - - (600) -

Dividend income from subsidiaries - - 11,800 336,768

Information regarding related party balances as at end of the financial year are disclosed in Note 11 and Note 22.

The Directors are of the opinion that the transactions above, except for the dividend income from subsidiaries

and redemption of CRPS from a subsidiary, have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.

113



33. RELATED PARTY DISCLOSURES (CONT’D.) (b) Compensation of key management personnel

The remuneration of Directors and other members of key management during the year were as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Executive Directors and key management personnel

Short-term employee benefits 3,219 6,013 3,219 3,354

Employees Provident Fund (‘‘EPF’’) 609 1,053 609 668

Benefits-in-kind 31 30 31 5

3,859 7,096 3,859 4,027

Non-Executive Directors

Directors Fees 261 280 261 280

4,120 7,376 4,120 4,307

34. INTEREST IN JOINT OPERATION ARRANGEMENTS The Group, via its Australian subsidiaries has interests in the following joint operation arrangements as at the

following reporting dates:

Interests

2016 2015

Joint operation arrangements:

Outside Malaysia

Claremont Quarter 50% 50%

7 Bayview Terrace 50% 50%

114



34. INTEREST IN JOINT OPERATION ARRANGEMENTS (CONT’D.) The proportionate share of assets and liabilities of the above joint operation arrangements which are

included in the Group’s financial statements are as follows:

Group

2016 2015

RM’000 RM’000

Assets

Non-current assets

Investment properties 607,942 542,679

Current assets

Cash and bank balances 156 161

Share of assets employed in joint operation arrangements 608,098 542,840

Liabilities

Non-current liabilities

Deferred tax liabilities 101,803 79,445

Share of liabilities in joint operation arrangements 101,803 79,445

The proportionate share of income and expenses of the joint operation arrangements included in the Group’s statements of comprehensive income are as follows:

Group

2016 2015

RM’000 RM’000

Income 88,427 65,293

Expenses (18,471) (14,644)


35. CAPITAL COMMITMENTS

Group

2016 2015

RM’000 RM’000

Approved and contracted for:

Improvements for investments properties 3,285 -

115



36. OPERATING LEASE ARRANGEMENTS The Group as lessor The Group has entered into rental lease agreements on its portfolio of investment properties. These leases

have remaining lease terms of between 1 and 14 years. Certain contracts include a clause to enable revision of rental charge based on prevailing market conditions upon renewal. All lease contracts entered into are for fixed amounts.

The future minimum lease payments receivable under non-cancellable operating leases contracted for as at the balance sheet date but not recognised as receivables, are as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Not later than 1 year 93,184 99,903 - 7

Later than 1 year and not later than 5 years 185,667 201,049 - -

Later than 5 years 18,558 97,934 - -

297,409 398,886 - 7

Investment property rental income recognised in profit or loss during the financial year is disclosed in Note 24.

37. FAIR VALUE OF ASSETS AND LIABILITIES The carrying amounts of assets and liabilities of the Group and of the Company that are classified as current

are reasonable approximations of fair values due to their short-term nature. The long term borrowings of the Group is a floating rate instrument that are re-priced to market interest rates on or near the reporting date. The non-current portion of other payable in previous years and other receivables of the Group are reasonable approximations of fair values due to the insignificant impact of discounting.

Fair value hierarchy The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the

inputs used in making the measurements. The fair value hierarchy has the following levels:

- Level 1 – Quoted prices in active markets for identical assets or liabilities.- Level 2 – Inputs, other than quoted prices included within Level 1 that are observable for the asset or

liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).- Level 3 – Inputs for the asset or liability that are not based on observable market data such as prices based on

internal models or other valuation methods.

116



37. FAIR VALUE OF ASSETS AND LIABILITIES (CONT’D.) Fair value hierarchy (cont’d.)

The following tables show the carrying amounts and fair value of assets and liabilities, including their levels in the fair value hierarchy. It does not include fair value information for assets and liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

(a) Non-financial assets measured at fair value

The fair value of the Group’s and of the Company’s investment properties of RM1,245,520,000 (2015: RM1,191,954,000) and RM30,624,000 (2015: RM30,948,000), respectively has been categorised under Level 3 of the fair value hierarchy, based on the inputs to the valuation technique used.

As described in Note 6, the methods used by the valuers are the comparison method and investment method below:

Valuation techniqueSignificant unobservable inputs

Inter-relationship between key unobservable inputs and fair value measurement

Market comparison technique:

Entails analysis on recent transactions and asking prices of similar properties in and around the locality for comparison to derive adjusted properties for location, quality and finishing of the building, design and size of the building, size, shape of land, tenure and title restrictions and other relevant characteristics to arrive at the market value.

• Estimated basic area value per square foot

• Risk adjusted discount rate

The estimated fair value would increase/(decrease) if:• the estimated basic area value per

square foot were higher/(lower)• the risk-adjusted discount rates were

lower/(higher)

Income capitalisation method:

Under the income capitalisation method, a property’s fair value is estimated based on the normalised net operating income generated by the property (as those for the discounted cash flows method), which is divided by the capitalisation rate (the investor’s rate of return).

• Capitalisation rate• Passing rent• Outgoings and capital

adjustments

The estimated fair value would increase/(decrease) if:• capitalisation rate were lower/(higher);• passing rent was higher/(lower); or• outgoings and capital adjustments

were lower/(higher)

The reconciliation from beginning to ending balances for investment properties which are classified under Level 3 of the fair value hierarchy is as provided in Note 6.

117



. FA

IR V

ALUE

OF

ASSE

TS A

ND L

IABI

LITI

ES (C

ONT’

D.)

(b

) Fi

nanc

ial a

sset

s an

d lia

bilit

ies

G

roup

Car

ryin

g a

mo

unt

Fair

val

ue h

iera

rchy

At 3

1 O

ctob

er 2

016

Not

e

Des

igna

ted

at f

air

val

ue

RM

’000

Ava

ilabl

e-

for-

sale

R

M’0

00

Fair

valu

e -

hedg

ing

inst

rum

ents

R

M’0

00

Oth

er

fina

ncia

l li

abili

ties

RM

’000

Loa

ns a

nd

rece

ivab

les

RM

’000

T

otal

R

M’0

00

Lev

el 1

R

M’0

00

Lev

el 2

R

M’0

00

Lev

el 3

R

M’0

00

Tot

al

RM

’000

Fina

ncia

l ass

ets

mea

sure

d at

fair

val

ue

Uni

t tr

ust

fund

s12

161

,020

-

-

-

-

1

61,0

20

161

,020

-

-

1

61,0

20

Eq

uity

fund

s an

d r

eal e

stat

e fu

nds

12 6

3,47

7 -

-

-

-

6

3,47

7 -

-

63,4

77 6

3,47

7

Hed

ge fu

nds

12 1

6,02

0 -

-

-

-

1

6,02

0 -

-

16,

020

16,

020

Fixe

d in

com

e in

vest

men

ts fu

nds

12 4

60,0

35

-

-

-

-

460

,035

-

4

60,0

35

-

460

,035

Oth

er u

nquo

ted

inve

stm

ents

fund

s12

84,

630

-

-

-

-

84,

630

- -

84,6

30 8

4,63

0

785

,182

-

-

- -

7

85,1

82 1

61,0

2046

0,03

516

4,12

7 7

85,1

82

Fina

ncia

l lia

bilit

ies

mea

sure

d at

fair

valu

e

Inte

rest

rat

e sw

ap19

--

1,3

53

- -

1

,353

- 1

,353

-

1,3

53

Fina

ncia

l ass

ets

not m

easu

red

at

fair

valu

e

Unq

uote

d s

hare

s ou

tsid

e M

alay

sia^

^8

-

24,4

17 -

-

-

24

,417

Trad

e re

ceiv

able

s^10

-

-

-

-

1,4

73

1,4

73

Oth

er r

ecei

vab

les^

11 -

-

-

-

5,

430

5,43

0

Mez

zani

ne lo

ans^

11 -

-

-

-

2

0,36

1 2

0,36

1

Cas

h an

d b

ank

bal

ance

s^13

-

-

-

-

233

,120

2

33,1

20

-

24

,417

-

-

260,

384

284,

801

Fina

ncia

l lia

bilit

ies

not m

easu

red

at

fair

valu

e

Bor

row

ings

^18

-

-

-

243

,468

-

2

43,4

68

Trad

e p

ayab

les^

21 -

-

-

4

,758

-

4

,758

Oth

er p

ayab

les^

22 -

-

-

24

,149

-

24,1

49

-

-

-

27

2,37

5-

272,

375

^

The

Gro

up h

as n

ot d

iscl

osed

the

fai

r va

lues

for

the

se fi

nanc

ial i

nstr

umen

ts b

ecau

se t

heir

carr

ying

am

ount

s ar

e re

ason

able

ap

pro

xim

atio

ns o

f fa

ir va

lues

, or

the

imp

act

of

dis

coun

ting

is im

mat

eria

l.^

^

Unq

uote

d s

hare

s ou

tsid

e M

alay

sia

are

carr

ied

at

cost

bec

ause

fai

r va

lue

cann

ot b

e m

easu

red

rel

iab

ly.

Thes

e in

vest

men

ts d

o no

t ha

ve a

ny c

omp

arab

le i

ndus

try

pee

r. A

ccor

din

gly,

the

var

iab

ility

in r

ange

of r

easo

nab

le fa

ir va

lue

estim

ates

der

ived

sho

uld

val

uatio

n te

chni

que

s b

e us

ed, m

ay b

e si

gnifi

cant

.

118



37.

FAIR

VAL

UE O

F AS

SETS

AND

LIA

BILI

TIES

(CON

T’D.

)

(b)

Fina

ncia

l ass

ets

and

liabi

litie

s (c

ont’d

.)

Gro

up (c

ont’d

.)

Car

ryin

g am

ount

Fa

ir v

alue

hie

rarc

hy

At 3

1 O

ctob

er 2

015

Not

e

Des

igna

ted

a

t fai

r v

alue

R

M’0

00

Ava

ilabl

e-

for-

sale

R

M’0

00

Fair

val

ue

- he

dgin

g

inst

rum

ents

R

M’0

00

Oth

er

fina

ncia

l li

abili

ties

RM

’000

Loa

ns a

nd

rece

ivab

les

RM

’000

T

otal

R

M’0

00

Lev

el 1

R

M’0

00

Lev

el 2

R

M’0

00

Lev

el 3

R

M’0

00

Tot

al

RM

’000

(Res

tate

d)(R

esta

ted)

Fina

ncia

l ass

ets

mea

sure

d at

fair

val

ue

Uni

t tr

ust

fund

s12

417

,592

-

-

-

-

4

17,5

92

417

,592

-

-

4

17,5

92

Eq

uity

fund

s an

d r

eal e

stat

e fu

nds

12 5

1,94

1 -

-

-

-

5

1,94

1 -

-

51,9

41 5

1,94

1

Hed

ge fu

nds

12 8

,213

-

-

-

-

8

,213

-

-

8,2

13

8,2

13

Fixe

d in

com

e in

vest

men

ts fu

nds

12 3

59,4

45

-

-

-

-

359

,445

-

3

59,4

45

-

359

,445

Oth

er u

nquo

ted

inve

stm

ents

fund

s12

92,

337

-

-

-

-

92,

337

-

-92

,337

92,

337

929

,528

-

-

-

9

29,5

28

417

,592

35

9,44

515

2,49

1 9

29,5

28

Fina

ncia

l lia

bilit

ies

mea

sure

d at

fa

ir v

alue

Inte

rest

rat

e sw

ap19

-

- 2

,244

--

2,2

44 -

2

,244

-

2,2

44

Fina

ncia

l ass

ets

not

mea

sure

d a

t

fair

val

ue

Unq

uote

d s

hare

s ou

tsid

e M

alay

sia^

^8

-

16,2

68 -

-

-

16

,268

Trad

e re

ceiv

able

s^10

-

-

-

-

1,8

18

1,8

18

Oth

er r

ecei

vab

les^

11 -

-

-

-

4

,298

4

,298

Mez

zani

ne lo

ans^

11 -

-

-

-

16

,788

16,7

88

Cas

h an

d b

ank

bal

ance

s^13

-

-

-

-

339

,219

3

39,2

19

-

16,2

68 -

-

362,

123

378

,391

Fina

ncia

l lia

bilit

ies

not m

easu

red

at

fair

val

ue

Bor

row

ings

^18

-

-

-

240

,796

-

2

40,7

96

Trad

e p

ayab

les^

21 -

-

-

1

98

-

198

Oth

er p

ayab

les^

22 -

-

-

15

,093

-

15,0

93

-

- -

25

6,08

7 -

256,

087

^

The

Gro

up h

as n

ot d

iscl

osed

the

fai

r va

lues

for

the

se fi

nanc

ial i

nstr

umen

ts b

ecau

se t

heir

carr

ying

am

ount

s ar

e re

ason

able

ap

pro

xim

atio

ns o

f fa

ir va

lues

, or

the

imp

act

of

dis

coun

ting

is im

mat

eria

l.^

^

Unq

uote

d s

hare

s ou

tsid

e M

alay

sia

are

carr

ied

at

cost

bec

ause

fai

r va

lue

cann

ot b

e m

easu

red

rel

iab

ly.

Thes

e in

vest

men

ts d

o no

t ha

ve a

ny c

omp

arab

le i

ndus

try

pee

r. A

ccor

din

gly,

the

var

iab

ility

in r

ange

of r

easo

nab

le fa

ir va

lue

estim

ates

der

ived

sho

uld

val

uatio

n te

chni

que

s b

e us

ed, m

ay b

e si

gnifi

cant

.

119



. FA

IR V

ALUE

OF

ASSE

TS A

ND L

IABI

LITI

ES (C

ONT’

D.)

(b

) Fi

nanc

ial a

sset

s an

d lia

bilit

ies

(con

t’d.)

Company

Car

ryin

g am

ount

Fa

ir v

alue

hie

rarc

hy

At 3

1 O

ctob

er 2

016

Not

e

Des

igna

ted

at f

air

val

ue

RM

’000

Ava

ilabl

e-

for-

sale

R

M’0

00

Fair

val

ue

- he

dgin

g

inst

rum

ents

R

M’0

00

Oth

er

fina

ncia

l li

abili

ties

RM

’000

Loa

ns a

nd

rece

ivab

les

RM

’000

T

otal

R

M’0

00

Lev

el 1

R

M’0

00

Lev

el 2

R

M’0

00

Lev

el 3

R

M’0

00

Tot

al

RM

’000

Fina

ncia

l ass

ets

mea

sure

d at

fair

val

ueU

nit

trus

t fu

nds

1216

1,02

0 -

-

--

161

,020

1

61,0

20

--

161

,020

Fina

ncia

l ass

ets

not

mea

sure

d a

t

fair

val

ueTr

ade

rece

ivab

les^

10 -

-

-

-

1

6 1

6

Oth

er r

ecei

vab

les^

11 -

-

-

-

6

1,94

3 6

1,94

3

Cas

h an

d b

ank

bal

ance

s^13

-

-

-

-

3,4

62

3,4

62

-

-

- -

6

5,42

1 6

5,42

1

Fina

ncia

l lia

bilit

ies

not m

easu

red

at

fair

val

ue^

Bor

row

ings

^18

-

-

-

4,0

00

-

4,0

00

Trad

e P

ayab

les

21-

--

2,23

1-

2,23

1

Oth

er p

ayab

les^

22 -

-

-

3

4,01

4 -

3

4,01

4

-

- -

40,2

45-

40,2

45

At 3

1 O

ctob

er 2

015

Fina

ncia

l ass

ets

mea

sure

d at

fair

valu

eU

nit

trus

t fu

nds

1241

7,59

2-

-

--

417

,592

41

7,59

2 -

- 4

17,5

92

Fina

ncia

l ass

ets

not m

easu

red

at

fair

val

ueTr

ade

rece

ivab

les^

10 -

-

-

-

2

0 20

Oth

er r

ecei

vab

les^

11 -

-

-

-

4

8,15

0 48

,150

Cas

h an

d b

ank

bal

ance

s^13

-

-

-

-

2,7

98

2,79

8

-

- -

-

50,

968

50,

968

Fina

ncia

l lia

bilit

ies

not m

easu

red

at

fair

val

ue^

Bor

row

ings

^18

-

-

-

12,

016

- 1

2,01

6

Oth

er p

ayab

les^

22 -

-

-

24

,297

-24

,297

-

-

- 36

,313

-36

,313

-

^

The

Com

pan

y ha

s no

t d

iscl

osed

the

fai

r va

lues

for

the

se fi

nanc

ial i

nstr

umen

ts b

ecau

se t

heir

carr

ying

am

ount

s ar

e re

ason

able

ap

pro

xim

atio

ns o

f fa

ir va

lues

, or

the

imp

act

of d

isco

untin

g is

imm

ater

ial.

120



37. FAIR VALUE OF ASSETS AND LIABILITIES (CONT’D.) (b) Financial assets and liabilities (cont’d.)

The following table shows the valuation techniques used in measuring Level 3 and Level 2 fair values, as well as the significant unobservables inputs used:

Type of assets of liabilities

Valuation techniques Significant unobservable inputs

Inter-relationship between significant unobservable inputs and fair value measurement

Level 3

Equity funds and real estate funds

Hedge fundsOther unquoted

investment funds

Market comparison technique:The fair values are based on fund managers’ statements at the value date of the funds which is quarterly, plus any interim capital calls and less any distributions made to 31 October, without adjustments.

Capital called/(distributed) from value date to 31 October.

Additional capital called/(distributed) capital called to 31 October will have higher/(lower) fair value.

Level 2

Equity funds and real estate funds

Fixed income investments funds

Market comparison technique:The fair values are determined based on the statements of account as at 31 October received from the fund managers.

Not applicable Not applicable

Interest rate swap Discounted cash flows:The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable market data.

Not applicable Not applicable

Transfers between Level 1 and Level 2 Group In the previous financial year, financial assets of RM243,955,000 were transferred from fair value hierarchy

Level 1 to Level 2 to reflect the nature of the assets which are valued by reference to financial information provided by the fund managers.

Transfers to Level 3 Group In the previous financial year, financial assets of RM95,934,000 were transferred into Level 3 to reflect the

nature of the inputs used in the valuation methodologies for such assets.

121



37. FAIR VALUE OF ASSETS AND LIABILITIES (CONT’D.) (b) Financial assets and liabilities (cont’d.)

The reconciliation from beginning to ending balances for financial assets classified under Level 3 of the fair value hierarchy are as follows:

Fair value measurement at end of the reporting

date using Level 3:

2016 2015

Group RM’000 RM’000

Financial assets designated at fair value (“FVTPL”)

At beginning of year 152,491 10,872

Transfers into Level 3 - 95,934

Additions 37,677 44,937

Disposals (22,002) (22,433)

Loss on fair value changes (385) (12,017)

Foreign exchange (loss)/gain (3,654) 35,198

At end of year 164,127 152,491

The fair value assets under Level 3 of the hierarchy were derived from third-party pricing information, without adjustments.

It is not expected that a reasonably possible change in unobservable inputs will result in the fair value of the assets carried under Level 3 of the fair value hierarchy to change significantly.

122



38. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group and the Company are exposed to financial risks arising from their operations and the use of financial

instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Director of Finance. The audit committee provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous financial years, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group applies hedge accounting.

The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(i) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s exposure to credit risk arises primarily from trade and sundry receivables while the Company’s exposure to credit arises primarily from trade and sundry receivables and amount due from subsidiaries. For other financial assets (including investment securities, cash and cash equivalents and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties and reputable financial institutions.

The Group’s objective is to seek continued revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. In addition, receivable balances are monitored on an ongoing basis.

The Group does not have any significant exposure to any individual customer nor does it have any major concentration of credit risk related to any financial instrument other than those described in Note 10 and Note 11.

(ii) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group actively manages operating cash flows so as to ensure that all funding needs are met. As part

of overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet working capital requirements.

123



38. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D.)

(ii) Liquidity risk (cont’d)

Analysis of financial liabilities by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and of the Company’s liabilities at the reporting date based on contractual repayment obligations:

Group Company

On demand or within one year RM’000

One to five years

RM’000 Total

RM’000

On demand or within one year RM’000

Financial liabilities:

31 October 2016

Trade payables 4,758 - 4,758 2,231

Accruals and sundry payables 12,041 - 12,041 8,218

Amount due to subsidiaries - - - 25,272

Borrowings 4,000 239,468 243,468 4,000

Total undiscounted financial liabilities 20,799 239,468 260,267 39,721

31 October 2015

Trade payables 198 - 198 -

Accruals and sundry payables 3,732 - 3,732 415

Amount due to subsidiaries - - - 23,363

Borrowings 12,016 228,780 240,796 12,016

Total undiscounted financial liabilities 15,946 228,780 244,726 35,794

(iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and of the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group hedges its floating rate foreign currency term loans with interest rate swap. The Group’s policy is to manage interest cost using a mix of fixed and floating rate debts. At the reporting

date, after taking into account the effect of interest rate swap, approximately 72% (2015: 70%) of the Group’s borrowings are at fixed rates of interest.

124



38. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D.) (iii) Interest rate risk (cont’d.)

Sensitivity analysis of interest rate risk At the reporting date, if interest rates had been 75 basis points higher (2015: 75 basis points higher), with all

other variables held constant, the Group’s and the Company’s profit net of tax and equity would have been lower by RM1,280,000 (2015: RM1,269,000) and RM23,000 (2015: RM68,000) respectively, arising mainly as a result of higher interest expense on floating rate borrowings in Australia. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment in Australia.

(iv) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group does not have any significant financial liabilities denominated in foreign currencies as at the reporting date. The Group’s exposure to foreign currency risk mainly arises from its financial assets which are denominated in Singapore Dollar (“SGD”), United States Dollar (“USD”), Australian Dollar (“AUD”) and Euro. The following table indicates the currencies to which the Group had significant exposure at the reporting date.

RM’000

SGD USD AUD Euro Total

31 October 2016

Financial assets at FVTPL 282,286 336,345 - 5,531 624,162

Non-current other receivables - - 20,361 - 20,361

Cash and cash equivalents 159,659 31,468 2,861 8,992 202,980

Other payables - - (26) - (26)

441,945 367,813 23,196 14,523 847,477

31 October 2015

Financial assets at FVTPL 297,868 207,478 - 6,590 511,936

Non-current other receivables - - 16,788 - 16,788

Cash and cash equivalents 142,192 165,064 497 6,488 314,241

Other payables - - (24) - (24)

440,060 372,542 17,261 13,078 842,941

125



38. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D.) (iv) Foreign currency risk (cont’d)

Sensitivity analysis for foreign currency risk The following tables demonstrate the sensitivity of the Group’s profit net of tax and equity to a reasonably

possible change in the SGD, USD, AUD and Euro exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

Increase

31 October 2016 RM’000

SGD strengthen 1% 4,419

USD strengthen 1% 3,678

AUD strengthen 1% 236

Euro strengthen 1% 145

Increase

31 October 2015 RM’000

SGD strengthen 1% 4,401

USD strengthen 1% 3,725

AUD strengthen 1% 241

Euro strengthen 1% 131

Weakening of the above foreign currency rates will result in an equal but opposite effect on the profit net of tax and equity of the Group.

(v) Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group is exposed to market price risk arising from its investments in unquoted investment funds. These instruments are classified as held for trading.

Sensitivity analysis for price risk

At the reporting date, if the market price had been 1% higher/lower (2015: 1% higher/lower), with all other variables held constant, the Group’s profit net of tax and equity would have been RM7,852,000 (2015: RM9,295,000) higher/lower, arising as a result of higher/lower fair value changes on financial assets at FVTPL.

126



39. CAPITAL MANAGEMENT The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating

and healthy capital ratios in order to support its business and maximise shareholder value. To achieve this, the Company takes into consideration the sufficiency of funds for operations, risk management and development.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. No changes were made to the capital management objectives, policies or processes during the years ended 31 October 2016 and 31 October 2015.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, borrowings, trade and other payables, less cash and bank balances and unit trust funds. Capital includes equity attributable to the owners of the parent.

Group Company

2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000

Borrowings 243,468 240,796 4,000 12,016 Trade payables 4,758 198 2,231 - Other payables 24,149 18,690 34,014 25,919 Less: Cash and cash equivalents (233,120) (339,219) (3,462) (2,798) Short term deposits - (585) - - Unit trust funds (161,020) (417,592) (161,020) (417,592)Net (cash)/debt (121,765) (497,712) (124,237) (382,455)

Equity attributable to the owners of the parent, representing total capital 2,510,272 2,600,643 1,192,889 1,358,076

Capital and net debt 2,388,507 2,102,931 1,068,652 975,621 Gearing ratio -5.1% -23.7% -11.6% -39.2%

40. SEGMENTAL REPORTING The Group is organised into operating segments based on geographical areas in which the Group operates.

For Malaysian operations, the business is managed by the respective segment managers responsible for the performance of its three core businesses, being:

• Property investment; • Property development; and • Investment holding For overseas operations, the two operating segments are other investment holding and the Australian operations.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss. Group income taxes are managed on a group basis and are not allocated to operating segments.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

127



40. SEGMENTAL REPORTING (CONT’D.) At 31 October 2016

In Malaysia Outside Malaysia

Other

Property Property Investment investment Australian

investment development holding holding operations Eliminations Consolidated

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Notes RM’000

Revenue

External sales 47,339 480 10,551 22,236 40,319 - 120,925

Inter-segment sales 600 - - - - (600) A -

Total revenue 47,939 480 10,551 22,236 40,319 (600) 120,925

Results

Interest income 226 58 - - 3,817 - 4,101

Fair value gains on investment properties 20,737 - - - 35,643 - 56,380

Depreciation 696 592 - - - - 1,288

Unrealised foreign exchange loss - - - 12,676 - - 12,676

Finance costs 186 63 - - 13,247 - 13,496

Segment profit/(loss) 47,807 (17,567) 11,196 686 56,637 - B 98,759

Assets

Additions to non-current assets:

Property, plant and equipment 914 18,439 - - - - 19,353

Land held for property development - 37,022 - - - - 37,022

Segment assets 649,402 764,639 161,020 665,986 676,399 - C 2,917,446

Segment liabilities 51,914 30,927 - 33 324,300 D 407,174

128



40. SEGMENTAL REPORTING (CONT’D.) At 31 October 2015

In Malaysia Outside Malaysia

Other

Property Property Investment investment Australian

investment development holding holding operations Eliminations Consolidated

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Notes RM’000

Revenue

External sales, representing total revenue 43,837 2,073 1,624 10,368 41,589 - A 99,491

Results

Interest income 2,661 137 - - 2,754 - 5,552

Fair value gains on investment properties 17,153 - - - 17,835 - 34,988

Depreciation 607 116 - - - - 723

Unrealised foreign exchange gain - - - 157,446 6,470 - 163,916

Finance costs 508 - - - 12,674 - 13,182

Segment profit/(loss) 419,640 (159) 1,993 161,677 45,856 48 B 629,055

Assets

Additions to non-current assets:

Property, plant and equipment 1,368 - - - - - 1,368

Land held for property development - 4,035 - - - - 4,035

Segment assets 617,939 534,324 417,592 826,569 592,377 - C 2,988,801

Segment liabilities 69,266 23,826 - 56 295,010 - D 388,158

129



40. SEGMENTAL REPORTING (CONT’D.)

A Inter-segment sales are eliminated on consolidation.

B The following items are deducted from segment profit to arrive at ‘Profit before tax’ presented in the consolidated statement of profit or loss and comprehensive income:

2016 2015

RM’000 RM’000

Profit from inter-segment sales - 48

C The following items are added to segment assets to arrive at total assets reported in the consolidated statement of financial position:

2016 2015

RM’000 RM’000

Deferred tax assets 3,622 10,480

Tax recoverable 5,363 4,603

8,985 15,083

D The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:

2016 2015

RM’000 RM’000

Deferred tax liabilities 125,183 103,376

Tax payable 279 9,623

125,462 112,999

130



40. SEGMENTAL REPORTING (CONT’D.)

Geographical information

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:

Revenue Non-current assets

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Malaysia 55,768 51,633 1,138,536 1,047,644

Australia 65,157 47,858 632,361 575,736

120,925 99,491 1,770,897 1,623,380

Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial position:

2016 2015

RM’000 RM’000

Property, plant and equipment 55,530 3,465

Land held for property development 421,447 384,425

Investment properties 1,245,520 1,191,954

Other investments 24,417 16,268

Other receivables 20,361 16,788

Deferred tax assets 3,622 10,480

1,770,897 1,623,380

131



41. COMPARATIVES Certain comparatives have been reclassified to conform with the current year’s presentation:

As previously Re- As

stated classification restated

RM’000 RM’000 RM’000

Group

Statement of financial position as at 31 October 2015:

Non-current assets:

Financial assets available for sale (“AFS”) 9,406 6,862 16,268

Other receivables 23,650 (6,862) 16,788

Current assets:

Property development costs - 84,730 84,730

Inventories 85,955 (84,730) 1,225

Current liabilities:

Other payables 31,921 (16,828) 15,093

Provisions - 16,828 16,828

Company

Current assets:

Property development costs - 57,576 57,576

Inventories 57,576 (57,576) -

Current liabilities:

Other payables 25,919 (1,622) 24,297

Provisions - 1,622 1,622

The above reclassifications do not have any impact to the Group’s and to the Company’s statement of financial position as at 1 November 2014. Accordingly, the Group’s and the Company’s statement of financial position as at 1 November 2014 is not presented.

132



42. SUPPLEMENTARY INFORMATION - BREAKDOWN OF RETAINED EARNINGS INTO REALISED AND UNREALISED COMPONENTS The breakdown of the retained earnings of the Group and of the Company as at 31 October 2016 into realised

and unrealised components is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Total retained earnings of the Group and the Company

- Realised 2,132,233 2,179,494 629,864 795,051

- Unrealised 431,699 585,052 17,654 17,654

2,563,932 2,764,546 647,518 812,705

Less: Consolidation adjustments (681,190) (777,358) - -

Retained earnings as per financial statements 1,882,742 1,987,188 647,518 812,705


DISCLOSURE OF RECURRENT RELATED PARTY TRANSACTIONS

At the Fifty-Fourth Annual General Meeting held on 24 March 2016, the Company obtained a shareholders’ mandate to allow the Group to enter into recurrent related party transactions of a revenue or trading nature.

In accordance with Paragraph 3.1.5 of Practice Note No. 12 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the details of recurrent related party transactions conducted during the financial year ended 31 October 2016 pursuant to the shareholders’ mandate are disclosed as follows:-

Transacting Parties

SPB Group subsidiaries

Type of recurrent transactions

Transacted value during financial

year RM’000

Hawaiian Pty Ltd SPB Developments Pty Ltd Provision of property management services in Australia

252

Hawaiian Pty Ltd SPB (Australia) Pty Ltd Provision of property management services in Australia

3,845

Please refer to Sections 2.3 and 2.5 of the Circular to Shareholders dated 3 February 2017 on the name of the related parties and the Company’s relationship with the related parties.


Authorised Share Capital : RM1,000,000,000

Issued and Paid-Up Share Capital : RM343,616,761

Class of Shares : Ordinary Shares of RM1.00 each

Voting Rights : One vote per share

SIZE OF SHAREHOLDINGS

No. of Shareholders

Depositors

% of Shareholders

DepositorsNo. of

Shares held% of

Issued Capital

Less than 100 81 1.457 1,890 0.000

100 to 1,000 1,648 29.645 1,514,809 0.440

1,001 to 10,000 2,916 52.455 11,932,654 3.472

10,001 to 100,000 782 14.067 25,143,572 7.317

100,001 to 17,180,837 130 2.338 70,576,600 20.539

170,180,838 and above 2 0.035 234,447,236 68.229

TOTAL 5,559 100.000 343,616,761 100.000

ANALYSIS OF SHAREHOLDINGSas at 6 January 2017



DIRECTORS’ SHAREHOLDINGS as Per Register of Directors’ Shareholdings as at 6 January 2017

Related Company

Kayin (M) Sdn. Bhd.

Direct Indirect

NameNo. of

Shares held% of

Issued CapitalNo. of

Shares heldNo. of

Issued Capital

Puan Sri Datin Chook Yew Chong Wen (1) - - 2,000 100

Holding Company

Kayin Holdings Sdn. Berhad

Direct Indirect

NameNo. of

Shares held% of


shares heldNo. of

Issued Capital

Puan Sri Datin Chook Yew Chong Wen (1) - - 20,220,000 100

The Company

Direct Indirect

NameNo. of

Shares held% of


shares heldNo. of

Issued Capital

Puan Sri Datin Chook Yew Chong Wen (1) - - 234,447,236(2) 68.23

Wen Chiu Chi 71,247 0.02 - -

Michael Lim Hee Kiang 1,000 Less than 0.01 - -

(1) Deemed interested in Kayin Holdings Sdn. Berhad, the holding company of the Company, by virtue of Kayin (M) Sdn Bhd, which holds 100% of the shares in Kayin Holdings Sdn. Berhad. The entire paid up share capital of Kayin (M) Sdn. Bhd. are collectively controlled by trusts settled by Puan Sri Datin Chook Yew Chong Wen for herself being the primary beneficiary and for her family members.

(2) The total 234,447,236 Ordinary Shares of RM1.00 each are held as follows:-

(i) 194,447,236 Ordinary Shares of RM1.00 each are registered in the name of Kayin Holdings Sdn. Berhad; and

(ii) 40,000,000 Ordinary Shares of RM1.00 each are registered in the name of HSBC Nominees (Tempatan) Sdn. Bhd. – Pledged Securities Account for Kayin Holdings Sdn. Berhad

Puan Sri Datin Chook Yew Chong Wen by virtue of her interest in shares in the Company is also deemed interested in shares in all the Company’s subsidiaries to the extent the Company has an interest.



SUBSTANTIAL SHAREHOLDERS as Per Register of Substantial Shareholders as at 6 January 2017

Direct Indirect

NameNo. of

Shares held% of


Shares held% of

Issued Capital

Kayin Holdings Sdn. Berhad 234,447,236# 68.23 - -

Kayin (M) Sdn. Bhd.*

- - 234,447,236* 68.23

Puan Sri Datin Chook Yew Chong Wen* - - 234,447,236* 68.23

* Deemed interested in Kayin Holdings Sdn. Berhad, the holding company of the Company, by virtue of Kayin (M) Sdn. Bhd., which holds 100% of the shares in Kayin Holdings Sdn. Berhad. The entire paid up share capital of Kayin (M) Sdn. Bhd. are collectively controlled by trusts settled by Puan Sri Datin Chook Yew Chong Wen for herself being the primary beneficiary and for her family members.

# The total 234,447,236 Ordinary Shares of RM1.00 each are held as follows:

(i) 194,447,236 Ordinary Shares of RM1.00 each are registered in the name of Kayin Holdings Sdn. Berhad; and

(ii) 40,000,000 Ordinary Shares of RM1.00 each are registered in the name of HSBC Nominees (Tempatan) Sdn. Bhd. – Pledged Securities Account for Kayin Holdings Sdn. Berhad


THIRTY LARGEST SHAREHOLDERS/DEPOSITORSas at 6 January 2017

No. NameNumber of Share held

Holdings %

1 KAYIN HOLDINGS SDN BHD 194,447,236 56.588

2 HSBC NOMINEES (TEMPATAN) SDN BHD 40,000,000 11.640

PLEDGED SECURITIES ACCOUNT FOR KAYIN HOLDINGS SDN BHD (301-334256-089)

3 HSBC NOMINEES (ASING) SDN BHD 14,029,750 4.082

EXEMPT AN FOR CREDIT SUISSE (SG BR-TST-ASING)

4 VALUECAP SDN BHD 7,097,900 2.065

5 DB (MALAYSIA) NOMINEE (ASING) SDN BHDDEUTSCHE BANK AG SINGAPORE FOR PANGOLIN ASIA FUND

3,044,600 0.886

6 HELEN PUEN 3,030,500 0.881

7 CITIGROUP NOMINEES (ASING) SDN BHD 2,872,400 0.835

EXEMPT AN FOR UBS AG SINGAPORE (FOREIGN)

8 WONG YU @ WONG WING YU 1,650,000 0.480

9 UOB KAY HIAN NOMINEES (ASING) SDN BHD 1,546,248 0.449

EXEMPT AN FOR UOB KAY HIAN PTE LTD (A/C CLIENTS)

10 CIMSEC NOMINEES (TEMPATAN) SDN BHD 1,540,000 0.448

CIMB FOR RAKAMAN ANGGUN SDN BHD (PB)

11 HSBC NOMINEES (ASING) SDN BHD 1,181,700 0.343

EXEMPT AN FOR MORGAN STANLEY & CO. INTERNATIONAL PLC (CLIENT)

12 GAN TENG SIEW REALTY SDN BHD 1,023,100 0.297

13 SEGAMAT HOLDINGS SDN BHD 984,900 0.286

14 HSBC NOMINEES (TEMPATAN) SDN BHD 957,900 0.278

HSBC (M) TRUSTEE BHD FOR PERTUBUHAN KESELAMATAN SOSIAL (AFF HWG6939-403)

15 LEE SOON HIAN 899,900 0.261

16 CIMSEC NOMINEES (TEMPATAN) SDN BHDEXEMPT AN FOR CIMB SECURITIES (SINGAPORE) PTE LTD (RETAIL CLIENTS)

853,000 0.248

17 VAST UPTREND COMPANY SDN BHD 800,000 0.232




THIRTY LARGEST SHAREHOLDERS/DEPOSITORS (CONT’D.)as at 6 January 2017

No. NameNumber of Share held

Holdings %

18 TAN KIM KEE @ TAN KEE 720,800 0.209

19 ENG GUAN CHAN SDN BHD 699,900 0.203

20 LEE SOON HIAN 676,000 0.196

21 CIMSEC NOMINEES (TEMPATAN) SDN BHDCIMB FOR TAN HOCK HIN (PB)

660,000 0.192

22 JOHAN ENTERPRISE SDN BHD 643,300 0.187

23 CITIGROUP NOMINEES (ASING) SDN BHDEXEMPT AN FOR OCBC SECURITIES PRIVATE LIMITED(CLIENT A/C-NR)

632,600 0.184

24 CIMSEC NOMINEES (ASING) SDN BHD EXEMPT AN FOR CIMB SECURITIES (SINGAPORE) PTE LTD (RETAIL CLIENTS)

589,000 0.171

25 OH SIEW HEONG 542,500 0.157

26 ENG SIM LEONG @ NG LEONG SING 522,000 0.151

27 FONG-YUNG ASSOCIATES SDN BHD 516,400 0.150

28 HUANG PHANG LYE 513,000 0.149

29 CHINCHOO INVESTMENT SDN BHD 500,000 0.145

30 M&A NOMINEE (TEMPATAN) SDN BHDTITAN EXPRESS SDN BHD

491,800 0.143

Total 283,666,434 82.553


Location Tenure Site Area Description

Approx.Age

(years)

BookValue

(RM’000)

Date ofRevaluation/

*Date ofAcquisition

Malaysia

1 Jalan BataiDamansara HeightsKuala Lumpur

Freehold 131,083 sq. ft 17-storey apartment building known as SPB Tower and vacant land

38 88,200 31.10.2016


Freehold 96,900 sq. ft 16 units of 2-storey shops/office building

44 36,100 31.10.2016


Freehold 213,660 sq. ft Commercial Land - 76,000 31.10.2016


Freehold 56,539 sq. ft Vacant Land - 32,200 03.02.2016*

5 Jalan DungunDamansara HeightsKuala Lumpur

Freehold 156,030 sq. ft 5 blocks of 4-storey office building known as KompleksPejabat Damansara

43 83,000 31.10.2016

6 Bukit TunkuKuala Lumpur

Freehold 84,286 sq. ft 3 blocks of 4-storey shop/apartment flats known as TamanTunku flats

53 30,330 31.10.2016

7 Bukit TunkuKuala Lumpur

Freehold 11,162 sq. ft One unit residential house

56 4,500 31.10.2016

8 Jalan YewKuala Lumpur

Freehold 56,954 sq. ft Wenworth Hotel 25 22,000 31.10.2016

9 Damansara HeightsKuala Lumpur

Freehold 14.879 acre Commercial Landin Pusat BandarDamansara

- 84,950 -

10 Jalan GelenggangDamansara HeightsKuala Lumpur

Freehold 45,617 sq. ft Marketing Gallery and Show Apartment

- 49,000 31.10.2015

LIST OF PROPERTIESheld by the Group as at 31 October 2016



Approx.Age

(years)

BookValue

(RM’000)

Date ofRevaluation/

*Date ofAcquisition

Malaysia

11 Jalan SemantanDamansara HeightsKuala Lumpur

Freehold 369,611 sq. ft Land with building known asWisma Damansara

- 215,580 -

12 Jalan DamanlelaDamansara HeightsKuala Lumpur

Freehold 163,579 sq. ft 25-storey office building and a four storey annexe block known as Menara Milenium

17 355,000 31.10.2016

13 Bukit PermataBatu Caves GombakSelangor

Freehold 34.11 acre Land for development at Mukim Bandar Selayang District of Gombak

- 41,720 12.07.1999*

14 Sungei TuaSelayang Selangor

Leasehold(Expiry

19/2/2094)

57.12 acre Land for development at Mukim Selayang

- 44,931 08.03.2000*

15 Batu 14Ulu LangatSelangor

Freehold 151.0 acre Vacant land inMukim of Ulu Langat

- 34,010 12.07.1999*


Approx.Age

(years)

BookValue

(AUD’000)

Date ofRevaluation/

*Date ofAcquisition

Australia

16 ClaremontWestern Australia

Freehold 13,029 sq. m Claremont ShoppingCentre

5 187,500 31.10.2016

17 7 Bayview Terrace,ClaremontWestern Australia

Freehold 266 sq. m 2-storey RetailShop Lot

2 2,904 31.10.2016

LIST OF PROPERTIESheld by the Group as at 31 October 2016


NOTICE IS HEREBY GIVEN THAT the Fifty-Fifth Annual General Meeting of the Company will be convened and held at Banquet Hall, 1st Floor, Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70D, Off Jalan Bukit Kiara, 60000 Kuala Lumpur on Tuesday, 28 February 2017 at 10.30 a.m. to transact the following businesses:-

AGENDAAs Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 31 October 2016 together with the Directors’ and Auditors’ Reports thereon.

(Please refer toNote 1 of the

Explanatory Notes)

2. To declare a final single-tier exempt dividend of 12.0 sen per Ordinary Share of RM1.00 each and a special single-tier exempt dividend of 8.0 sen per Ordinary Share of RM1.00 each for the financial year ended 31 October 2016.

OrdinaryResolution 1

3. To approve the payment of Directors’ Fees for the financial year ended 31 October 2016. OrdinaryResolution 2

4. To consider and, if thought fit, to pass the following resolutions pursuant to Section 129(6) of the Companies Act, 1965:-(i) “That pursuant to Section 129(6) of the Companies Act, 1965, Puan Sri Datin Chook

Yew Chong Wen be re-appointed as Director to hold office until the conclusion of the next Annual General Meeting of the Company.”


(ii) “That pursuant to Section 129(6) of the Companies Act, 1965, Dato’ Zaibedah Binti Ahmad be re-appointed as Director to hold office until the conclusion of the next Annual General Meeting of the Company.”


5. To re-elect Mr Ong Liang Win who is retiring under Article 127 of the Company’s Articles of Association.


6. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remuneration.


As Special BusinessTo consider and, if thought fit, to pass the following resolutions:-

7. Authority for Mr Michael Lim Hee Kiang to continue in office as Independent Non-Executive Director


“THAT authority be and is hereby given to Mr Michael Lim Hee Kiang who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years, to continue to act as an Independent Non-Executive Director of the Company until the conclusion of the next Annual General Meeting in accordance with Malaysian Code on Corporate Governance 2012.”

NOTICE OF ANNUAL GENERAL MEETING


8. Authority for Dato’ Zaibedah Binti Ahmad to continue in office as Independent Non-Executive Director


“THAT authority be and is hereby given to Dato’ Zaibedah Binti Ahmad who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years, to continue to act as an Independent Non-Executive Director of the Company until the conclusion of the next Annual General Meeting in accordance with Malaysian Code on Corporate Governance 2012.”

9. Authority for Mr Ong Liang Win to continue in office as Independent Non-Executive Director


“THAT authority be and is hereby given to Mr Ong Liang Win who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years, to continue to act as an Independent Non-Executive Director of the Company until the conclusion of the next Annual General Meeting in accordance with Malaysian Code on Corporate Governance 2012.”

10. Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

“THAT, the Mandate granted by the shareholders of the Company at the Annual General Meeting held on 24 March 2016 pursuant to Paragraph 10.09 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, authorising the Company and its subsidiaries (“SPB Group”) to enter into the recurrent transactions of a revenue or trading nature as set out in Section 2.4 of the Circular to Shareholders dated 3 February 2017 (“Circular”) with the related parties mentioned therein which are necessary for the SPB Group’s day-to-day operations, be and is hereby renewed;

AND THAT the scope of such renewed mandate be and is hereby extended to apply to the recurrent transactions likewise of revenue or trading nature as set out in Section 2.4 of the Circular.

THAT the SPB Group be and is hereby authorised to enter into the recurrent transactions with the related parties mentioned therein provided that:-

a) the transactions are in the ordinary course of business and on normal commercial 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 of the Company; and

b) the disclosure of the aggregate value of the transactions concluded during a financial year will be disclosed in the Annual Report for the said financial year.

THAT authority conferred by such renewed mandate will continue to be in force until:

i) the conclusion of the next Annual General Meeting of SPB following the forthcoming Annual General Meeting at which the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature is approved, at which time it will lapse, unless by a resolution(s) passed at the Annual General Meeting, the authority is again renewed;



ii) the expiration of the period within which the next Annual General Meeting after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but must not extend to such extensions as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or

iii) revoked or varied by resolution passed by the shareholders in 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 (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to this resolution.”


11. Proposed Amendments to the Articles of Association

“THAT the deletions, alterations, modifications, variations and additions to the Articles of Association of the Company as set out in Appendix II attached with the Annual Report for the financial year ended 31 October 2016 be and are hereby approved.”

SpecialResolution

NOTICE OF DIVIDEND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT, subject to the approval of the shareholders at the Fifty-Fifth Annual General Meeting of the Company, a final single-tier exempt dividend of 12.0 sen per Ordinary Share of RM1.00 each and a special single-tier exempt dividend of 8.0 sen per Ordinary Share of RM1.00 each for the financial year ended 31 October 2016, will be paid to the shareholders of the Company on 23 March 2017. The entitlement date for the said dividend shall be 9 March 2017.

A depositor shall qualify for entitlement to the dividend only in respect of:

(a) Shares transferred to the depositor’s securities account before 4.00 p.m. on 9 March 2017 in respect of transfers, and

(b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

BY ORDER OF THE BOARD

TAI YIT CHAN (MAICSA 7009143)CHOONG LEE WAH (MAICSA 7019418) Company Secretaries

Selangor Darul EhsanDate: 3 February 2017



NOTES:

1. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two (2) proxies as his/her proxy or proxies to attend and vote in his/her stead. Where a member appoints two (2) proxies, the member shall specify the proportion of the member’s shareholding to be represented by each proxy.

2. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there shall be no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

3. A proxy need not be a member of the Company and a member may appoint any person to be his/her proxy

without limitation. The provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or his/her attorney duly authorised in writing or, if such appointor is a corporation under its common seal, or the hand of its attorney or duly authorised officer or in some other manner approved by the Directors. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the Share Registrar’s Office of the Company at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Wilayah Persekutuan, Malaysia not less than forty-eight (48) hours before the time for holding of the meeting or any adjournment thereof.

5. In respect of deposited securities, only members whose names appear on the Record of Depositors on 21 February 2017 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his/her behalf.

Explanatory Notes

1. To receive the Audited Financial Statements

Agenda item no. 1 is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of shareholders for the Audited Financial Statements. Hence, this item on the Agenda is not put forward for voting.

2. Ordinary Resolution 7 on authority for Mr Michael Lim Hee Kiang to continue in office as Independent Non-Executive Director

The Board of Directors has via the Nominating Committee conducted an annual performance evaluation and assessment of Mr Michael Lim Hee Kiang, who has served as Independent Non-Executive Director of the Company for a cumulative term of more than nine years, and recommended him to continue to act as Independent Non-Executive Director of the Company based on the justifications as set out in Appendix I.

3. Ordinary Resolution 8 on authority for Dato’ Zaibedah Binti Ahmad to continue in office as Independent Non-Executive Director

The Board of Directors has via the Nominating Committee conducted an annual performance evaluation and assessment of Dato’ Zaibedah Binti Ahmad, who has served as Independent Non-Executive Director of the Company for a cumulative term of more than nine years, and recommended her to continue to act as Independent Non-Executive Director of the Company based on the justifications as set out in Appendix I.



4. Ordinary Resolution 9 on authority for Mr Ong Liang Win to continue in office as Independent Non-Executive Director

The Board of Directors has via the Nominating Committee conducted an annual performance evaluation and assessment of Mr Ong Liang Win, who has served as Independent Non-Executive Director of the Company for a cumulative term of more than nine years, and recommended him to continue to act as Independent Non-Executive Director of the Company based on the justifications as set out in Appendix I.

5. Ordinary Resolution 10 on Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

The Ordinary Resolution 10, if passed, will allow the SPB Group to enter into recurrent related party transactions in the ordinary course of business and the necessity to convene separate general meetings from time to time to seek shareholders’ approval as and when such recurrent related party transactions occur would not arise. This would reduce substantial administrative time, inconvenience and expenses associated with the convening of such meetings, without compromising the corporate objectives of the SPB Group or adversely affecting the business opportunities available to the SPB Group. The shareholders’ mandate is subject to renewal on an annual basis.

6. Special Resolution on Proposed Amendments to the Articles of Association

The Special Resolution, if passed, will render the Articles of Association of the Company to be in line with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and to update the Articles of Association of the Company to be consistent with the prevailing laws, guidelines or requirements of the relevant authorities.

Personal data privacy:

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual General Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the Annual General Meeting (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the Annual General Meeting (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.



APPENDIX I

1. ORDINARY RESOLUTION NO. 7

- Authority for Mr Michael Lim Hee Kiang to continue in office as Independent Non-Executive Director

Justification

a. he fulfilled the criteria under the definition on Independent Director as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, and therefore is able to bring independent and objective judgment to the Board;

b. he has been with the Company for more than nine years and therefore understand the Company’s business operations which enable him to participate actively and contribute during deliberations or discussions at Audit Committee and Board meetings without compromising his independence and objective judgement;

c. he has contributed sufficient time and efforts and attended all the Audit Committee and Board meetings as well as meeting the Management prior to Audit Committee and Board meetings for informed and balanced decision making;

d. he has exercised his due care during his tenure as Independent Non-Executive Director of the Company and carried out his professional duties in the interest of the Company and shareholders; and

e. the current independent directors are strong individuals demonstrating independence. Independence is a result of a director’s state of mind and integrity and not dependent on years of service. The experience of the independent directors in the Company is valuable for determining the strategic direction for the continued stability and growth.


- Authority for Dato’ Zaibedah Binti Ahmad to continue in office as Independent Non-Executive Director

Justification

a. she fulfilled the criteria under the definition on Independent Director as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, and therefore is able to bring independent and objective judgment to the Board;

b. she has been with the Company for more than nine years and therefore understand the Company’s business operations which enable her to participate actively and contribute during deliberations or discussions at Audit Committee and Board meetings without compromising her independence and objective judgement;

c. she has contributed sufficient time and efforts and attended all the Audit Committee and Board meetings as well as meeting the Management prior to Audit Committee and Board meetings for informed and balanced decision making;

d. she has exercised her due care during her tenure as Independent Non-Executive Director of the Company and carried out her professional duties in the interest of the Company and shareholders; and

e. the current independent directors are strong individuals demonstrating independence. Independence is a result of a director’s state of mind and integrity and not dependent on years of service. The experience of the independent directors in the Company is valuable for determining the strategic direction for the continued stability and growth.


APPENDIX I


- Authority for Mr Ong Liang Win to continue in office as Independent Non-Executive Director

Justification

a. he fulfilled the criteria under the definition on Independent Director as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, and therefore is able to bring independent and objective judgment to the Board;

b. his experience in the audit and accounting industries enable him to provide the Board with a diverse set of experience, expertise, skills and competence;

c. he has been with the Company for more than nine years and therefore understand the Company’s business operations which enable him to participate actively and contribute during deliberations or discussions at Audit Committee and Board meetings without compromising his independence and objective judgement;

d. he has contributed sufficient time and efforts and attended all the Audit Committee and Board meetings as well as meeting the Management prior to Audit Committee and Board meetings for informed and balanced decision making;

e. he has exercised his due care during his tenure as Independent Non-Executive Director of the Company and carried out his professional duties in the interest of the Company and shareholders; and

f. the current independent directors are strong individuals demonstrating independence. Independence is a result of a director’s state of mind and integrity and not dependent on years of service. The experience of the independent directors in the Company is valuable for determining the strategic direction for the continued stability and growth.


PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

The Articles of Association of the Company are proposed to be amended in the following manner:-

Article No. Existing Articles Amended Articles

To amend Article 76

At any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands, unless before or upon the declaration of the result of a show of hands, a poll be demanded:-

Subject to the Listing Requirements, any resolution set out in the notice of any general meeting, or in any notice of resolution which may properly be moved and is intended to be moved at any general meeting shall be voted by poll. Subject to the Act, a poll may be demanded:-

(a) by the Chairman of the meeting; (a) by the Chairman of the meeting;

(b) by at least 3 Members present in person or by proxy;

(b) by at least 3 Members present in person or by proxy or attorney;

(c) by any Member or Members present in person or by proxy and representing not less than one-tenth (1/10) of the total voting rights of all the Members having the right to vote at the meeting; or

(c) by any Member or Members present in person or by proxy or attorney and representing not less than one-tenth (1/10) of the total voting rights of all the Members having the right to vote at the meeting; or

(d) by a Member or Members holding shares in the Company conferring a right to vote at the meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth (1/10) of the total sum paid up on all the shares conferring that right.

(d) by a Member or Members holding shares in the Company conferring a right to vote at the meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth (1/10) of the total sum paid up on all the shares conferring that right.

Unless a poll is so demanded, a declaration by the Chairman of the meeting that a resolution has on a show of hands been carried or carried unanimously or by a particular majority, or lost or not carried by a particular majority, and an entry to that effect in the book containing the minutes of the proceedings of the Company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. The demand for a poll may be withdrawn.

APPENDIX II



To amend Article 78

If a poll is duly demand it shall be taken at such time and place and in such manner as the Chairman shall direct, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

A poll shall be taken in such manner as the Chairman of the meeting shall direct and at least one (1) scrutineer must be appointed to validate the votes cast at the general meeting. The appointed scrutineer must not be an officer of the Company or its related corporation, and must be independent of the person undertaking the polling process. The Chairman of the meeting may fix a time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

The poll may be conducted manually using voting slips or electronically using various forms of electronic devices. Such votes shall be counted by the poll administrator, and verified by the scrutineer, as may be appointed by the Chairman of the meeting for the purpose of determining the outcome of the resolution(s) to be decided on poll.

To amend Article 82

Subject to any rights or restrictions for the time being attached to any class or classes of shares, on a show of hands a holder of ordinary shares or preference shares who is personally present or by proxy and entitled to vote shall be entitled to one (1) vote. In case of a poll every Member holding ordinary shares who is present in person or by proxy shall have one (1) vote for every ordinary share held by him. On a poll, a Member entitled to more than one (1) vote need not, if he votes, use all his votes or cast all the votes he uses in the same way. A proxy shall be entitled to vote on show of hands on any question at any general meeting. Where the capital of the Company consists of shares of different monetary denominations, voting rights shall be prescribed in such a manner that a unit of capital in each class when reduced to a common denominator shall carry the same voting power when such right is exercisable.

Subject to Article 76 and any rights or restrictions for the time being attached to any class or classes of shares, on a show of hands a holder of ordinary shares or preference shares who is personally present or by proxy or attorney or in the case of a corporation by a duly authorised representative or by proxy or attorney entitled to vote shall be entitled to one (1) vote. In case of a poll every Member holding ordinary shares who is present in person or by proxy or attorney or in the case of a corporation by a duly authorised representative or by proxy or attorney shall have one (1) vote for every ordinary share held by him. On a poll, a Member entitled to more than one (1) vote need not, if he votes, use all his votes or cast all the votes he uses in the same way. A proxy shall be entitled to vote on any question at any general meeting. Where the capital of the Company consists of shares of different monetary denominations, voting rights shall be prescribed in such a manner that a unit of capital in each class when reduced to a common denominator shall carry the same voting power when such right is exercisable.

APPENDIX II


APPENDIX II


To amend Article 84

Subject to Article 69, a Member shall be entitled to be present and to vote on any question either personally or by proxy at any general meeting, on a show of hands or upon a poll and to be reckoned in a quorum in respect of any fully paid-up shares and of any shares upon which calls due and payable to the Company shall have been paid. No Member shall be entitled to vote or be recognized in a quorum in respect of any shares upon which any call or other sum so due and payable shall be unpaid. The proxy need not be a Member of the Company and a Member may appoint any person to be his proxy without limitation. The provisions of Section 149(1)(b) of the Act shall not apply. A Member shall not be entitled to appoint more than two (2) proxies to attend and vote at a meeting of the Company. If a Member appoints two (2) proxies, he must specify which proxy is entitled to vote on a show of hands. Where a Member who is not an Authorised Nominee appoints two (2) proxies, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

Subject to Articles 69 and 76, a Member shall be entitled to be present and to vote on any question either personally or by proxy at any general meeting, on a show of hands or upon a poll and to be reckoned in a quorum in respect of any fully paid-up shares and of any shares upon which calls due and payable to the Company shall have been paid. No Member shall be entitled to vote or be recognized in a quorum in respect of any shares upon which any call or other sum so due and payable shall be unpaid. The proxy need not be a Member of the Company and a Member may appoint any person to be his proxy without limitation. The provisions of Section 149(1)(b) of the Act shall not apply. A Member shall not be entitled to appoint more than two (2) proxies to attend and vote at a meeting of the Company. If a Member appoints two (2) proxies, he must specify which proxy is entitled to vote on a show of hands. Where a Member who is not an Authorised Nominee appoints two (2) proxies, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

SELANGOR PROPERTIES BERHAD (5199-X)(Incorporated in Malaysia)

I/We, ………………………………….…………..............................................(name of shareholder as per NRIC, in capital letters) NRIC No./ID No./Company No. ……….............…………………..….(new) ……………..........……………….(old) of .......................................................……………………………………………………………….…………………..........…(full address) being a member of SELANGOR PROPERTIES BERHAD hereby appoint……………………..……………..........…… (name of proxy as per NRIC, in capital letters) NRIC No…….…………………...............(new)………………................................ (old) or failing him/her ……………………..……………..........….......................…………..(name of proxy as per NRIC, in capital letters) NRIC No.……………………........……(new)……………..........………(old) or failing him/her, *the Chairperson of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Fifty-Fifth Annual General Meeting of the Company to be held at Banquet Hall, 1st Floor, Kuala Lumpur Golf & Country Club, No. 1, Jalan 1/70D, Off Jalan Bukit Kiara, 60000 Kuala Lumpur on Tuesday, 28 February 2017 at 10.30 a.m. or at any adjournment thereof. My/our proxy is to vote as indicated below.

* Please delete the words “Chairperson of the Meeting” if you wish to appoint some other person to be your proxy.

No. Resolution For AgainstOrdinary Resolution 1

Declaration of a final single-tier exempt dividend of 12.0 sen per Ordinary Share of RM1.00 each and a special single-tier exempt dividend of 8.0 sen per Ordinary Share of RM1.00 each for the financial year ended 31 October 2016

Ordinary Resolution 2

Approval on the payment of Directors’ Fees for the financial year ended 31 October 2016


Re-appointment of Puan Sri Datin Chook Yew Chong Wen as Director


Re-appointment of Dato’ Zaibedah Binti Ahmad as Director


Re-election of Mr Ong Liang Win as Director


Re-appointment of Messrs Ernst & Young as Auditors


Authority for Mr Michael Lim Hee Kiang to continue in office as Independent Non-Executive Director


Authority for Dato’ Zaibedah Binti Ahmad to continue in office as Independent Non-Executive Director


Authority for Mr Ong Liang Win to continue in office as Independent Non-Executive Director


Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

Special Resolution

Proposed Amendments to the Articles of Association

[Please indicate with an “X” in the spaces provided whether you wish your votes to be cast for or against the resolutions. In the absence of specific directions, your proxy will vote or abstain as he/she thinks fit.]

Dated this ............. day of ................................ 2017. The proportions of my/our holding to be represented by my/our proxies are as follows:

1st proxy %2nd proxy %TOTAL 100 %

PROXY FORM

..........…………………………….Signature of Shareholder or

Common Seal of Shareholder

Number of shares held

CDS Account No.

ContactNo.

STAMP

SHARE REGISTRARSELANGOR PROPERTIES BERHADUNIT 32-01, LEVEL 32, TOWER AVERTICAL BUSINESS SUITE, AVENUE 3BANGSAR SOUTH, NO. 8JALAN KERINCHI59200 KUALA LUMPURWILAYAH PERSEKUTUANMALAYSIA

NOTES:

1. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two (2) proxies as his/her proxy or proxies to attend and vote in his/her stead. Where a member appoints two (2) proxies, the member shall specify the proportion of the member’s shareholding to be represented by each proxy.

2. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there shall be no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

3. A proxy need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation. The provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or his/her attorney duly authorised in writing or, if such appointor is a corporation under its common seal, or the hand of its attorney or duly authorised officer or in some other manner approved by the Directors. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the Share Registrar’s Office of the Company Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Wilayah Persekutuan, Malaysia not less than forty-eight (48) hours before the time for holding of the meeting or any adjournment thereof.

5. In respect of deposited securities, only members whose names appear on the Record of Depositors on 21 February 2017 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his/her behalf.

Personal data privacy:

By submitting an instrument appointing a proxy(ies) and/or representative(s), the members accepts and agrees to the personal data privacy terms set out in the Notice of Annual General Meeting dated 3 February 2017.

Please fold here to seal

Please fold here to seal

annual report 2016 - selangorproperties.com.my · statements of the company are in form and content...

Documents