ECOFIRS-AnnualReport2012 (1.2MB)

Strengthening our foundation
Annual Report 2012
Our Vision & Mission

Leveraging on the experience and expertise amassed over the years and constantly acquiring new knowledge, we strive to achieve success in our business undertakings and are committed to deliver exceptional value to our customers, business partners, shareholders and other stakeholders.
Cover Rationale
At EcoFirst, we stand steadfast and resilient against economic and environmental challenges. Over the years, we have made commitments to make a genuine difference going the extra mile for our customers, shareholders and stakeholders. Through our Groups diversification, success comes from synergies and the strengthening of our foundation. And without understanding our past, we cannot build a better future.
strengthening our foundation
Annual Report 2012
contents
Statement Accompanying Notice of Annual General Meeting Corporate Information Chairmans Statement
Notice of Annual General Meeting
2
Board of Directors
3
Five-Year Group Statistics
4 20
Audit Committee Report
6
Corporate Governance Statement
12
Statement of Directors Responsibility
Directors Profile
13
Other Information
21
Statement on Internal Control Financial Statements
25 33
26
Particulars of Group Properties Analysis of Shareholdings
27
Form of Proxy
31
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Notice of THIRTY-ninth ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Thirty-Ninth Annual General Meeting of the Company will be held at Ballroom 1, Level 5, The Summit Hotel, Subang USJ, Persiaran Kewajipan, USJ 1, 47600 UEP Subang Jaya, Selangor Darul Ehsan on Monday, 26 November 2012 at 10.00 a.m. to transact the following business:AGENDA ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the financial year ended 31 May 2012 together with the Directors and Auditors Reports thereon. 2. To approve the Directors Fees for the financial year ended 31 May 2012. 3. To re-elect the following Directors who will be retiring pursuant to Article 113 of the Companys Articles of Association: 3.1 Dato (Dr.) Teoh Seng Foo 3.2 Dato Boey Chin Gan 4. To re-appoint Messrs Russell Bedford LC & Company, the retiring Auditors as Auditors of the Company and to authorize the Directors to determine their remuneration. SPECIAL BUSINESS To consider and if thought fit, to pass the following resolution, with or without modifications, as an Ordinary Resolution of the Company: 5. ORDINARY RESOLUTION AUTHORITY FOR DIRECTORS TO ISSUE SHARES RESOLVED: THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities) and the approvals of the relevant governmental and/or regulatory authorities (if any), the Directors be and are hereby authorized to issue shares in the Company at any time, upon such terms and conditions, for such purposes and to such person or persons as the Directors may deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company at the time of issue AND THAT the Directors be also empowered to obtain the approval of Bursa Securities for the listing of and quotation for the additional shares so issued on Bursa Securities AND THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company. (Resolution 1)
(Resolution 2) (Resolution 3)
(Resolution 4)
(Resolution 5)
6. To transact any other business for which due notice shall have been given in accordance with the Companies Act, 1965 and the Companys Articles of Association. BY ORDER OF THE BOARD YEOH CHONG KEAT (MIA 2736) REBECCA LEONG SIEW KWAN (MAICSA 7045547) Secretaries Kuala Lumpur 2 November 2012
2 ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012
NOTICE OF THIRTY-NINTH ANNUAL GENERAL MEETING
Notes:In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 November 2012 (General Meeting Record of Depositors) shall be eligible to attend, speak and vote at this meeting. (ii) A member entitled to attend and vote at the meeting is entitled to appoint not more than one (1) proxy to attend and vote in his stead. A proxy need not be a member of the Company and Section 149(1) of the Companies Act, 1965 shall not apply. (iii) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (omnibus account), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. (iv) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised. (v) The original 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 Registered Office of the Company at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting. (i)
Explanatory notes on Special Business:

Resolution 5 The Ordinary Resolution proposed under this resolution 5, if passed, will renew the authority given to the Directors of the Company to issue and allot new shares in the Company at any time, to such person or persons, upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit (General Mandate), provided that the number of shares issued pursuant to this General Mandate, when aggregated with the nominal value of any such shares issued during the preceding twelve (12) months, does not exceed 10% of the nominal value of total issued share capital of the Company at the time of issue. This renewed General Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next annual general meeting (AGM) of the Company. The General Mandate procured and approved in the preceding year 2011 which was not exercised by the Company during the year, will expire at the forthcoming Thirty-Ninth AGM of the Company. With this renewed General Mandate, the Company will be able to raise funds expeditiously for the purpose of funding future investment, working capital and/or acquisition(s) without having to convene a general meeting to seek shareholders approval when such opportunities or needs arise.
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STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

Further details of the following Directors standing for re-election are set out in the Directors Profile Section of the Annual Report: (a) Dato (Dr.) Teoh Seng Foo (b) Dato Boey Chin Gan
ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012
Corporate information
board of directors
CHAIRMAN 1. Dato Syed Ariff Fadzillah bin Syed Awalluddin PRESIDENT 2. Dato (Dr.) Teoh Seng Foo GROUP CHIEF EXECUTIVE OFFICER / EXECUTIVE DIRECTOR 3. Dato Tiong Kwing Hee DIRECTORS 4. Amos Siew Boon Yeong 5. Dato Boey Chin Gan 6. Lim Een Hong 7. Teoh Seng Kian (Alternate Director to Dato (Dr.) Teoh Seng Foo)
3 4 5 1 2
Secretaries
Yeoh Chong Keat Rebecca Leong Siew Kwan
Registered Office
Suite 11.1A, Level 11 Menara Weld 76, Jalan Raja Chulan 50200 Kuala Lumpur Tel : 03 2031 1988 Fax : 03 2031 9788
Auditors
Russell Bedford LC & Company 10th Floor, Bangunan Yee Seng 15, Jalan Raja Chulan 50200 Kuala Lumpur
Stock Exchange Listing

Bursa Malaysia Securities Berhad Main Market
Share Registrar
Symphony Share Registrars Sdn. Bhd. Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/46 47301 Petaling Jaya Selangor Darul Ehsan Tel : 03 7841 8000 Fax : 03 7841 8151/8152
Website
www.ecofirst.com.my
strategy
Advancing Progress
CHAIRMANS STATEMENT
On behalf of the Board of Directors of EcoFirst Consolidated Bhd (the Company), I hereby present to you the Annual Report and the Audited Financial Statements of the Company and the Group for the Financial Year Ended 31 May 2012.
CHAIRMANS STATEMENT
The newly built South City Apartments consisting of 2 blocks of 13-storey service apartments situated on top of South City Plaza.
...financial year ended 31 May 2012. With a profit before tax of RM15.4 million against a revenue of RM160.5 million, this represents an increase of 63% and 543% respectively against the preceding years performance.
Taipan@Ipoh Cybercentre soon-to-be completed 2-storey shop-offices.
Performance Review
I am pleased to report that the Group continued its positive performance for the financial year ended 31 May 2012. With a profit before tax of RM15.4 million against a revenue of RM160.5 million, this represents an increase of 63% and 543% respectively against the preceding years performance. The Groups commercial development project, Taipan@Ipoh Cybercentre in Daerah Kinta, Jelapang, Perak contributed substantially to the Groups revenue and profitability with the early completion of the first phase consisting of 102 units of 3-storey shop-offices and the on-going second phase consisting of 147 units of 2-storey shopoffices. Total revenue registered from this project during the year under review was RM110.8 million.
The Groups joint-venture development for two blocks of service apartments situated on top of the Groups existing mall, South City Plaza in Seri Kembangan, Selangor realized RM40.0 million in terms of revenue recognition. The proceeds were utilized to repay bank borrowings which resulted in substantial interest cost savings. Recurring rental income and property management fees for the Groups investment properties totaled RM9.8 million in revenue during the financial year 2012. The income derived was basically from South City Plaza as the newly completed 1Segamat Mall in Segamat, Johor was opened for business only in the last quarter of financial year 2012. A revaluation surplus of RM22.4 million was recognized during the year in respect of
1Segamat Mall which was fully constructed and completed during the financial year under review.
Operational Review
The development of South City Apartments which is situated on top of South City Plaza was constructed within a year and was completed in July 2012. The two blocks of 13-storey towers consists of 416 units of fully-furnished apartments, with built-up areas ranging from 566 to 1,241 square feet per unit. The South City Apartments is located within easy reach of several educational institutions within South City Plaza itself and around the vicinity. Due to high demand for student accommodation in the area,
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CHAIRMANS STATEMENT
Newly opened 1Segamat Mall the first and only retail mall in Segamat, Johor.
the launching was successful with units being fully sold. The South City Apartments can accommodate up to 2,000 students. Together with students from education providers at South City Plaza namely AsiaPacific University College of Technology and Innovation (UCTI), SEGI Training Centre and International College of Health Sciences (ICHS), retail business at South City Plaza is expected to expand and grow. A s p a r t a l so o f th e per fo r m a nc e transformation plan for South City Plaza, we have converted the Lower
Ground Floor into a commercial platform for wholesalers which is known as The Scope@SCP. It is specially designed to increase the trade mix in South City Plaza. The idea was successfully accepted by wholesalers and as at todate, more than 90% of the lettable area of Lower Ground Floor has been leased. The Group is proud that its newly opened shopping complex, the 1Segamat Mall, is recognized as the go to place for shopping, entertainment, dining and relaxing for the people of Segamat town and neighbouring areas. Being the first and only retail mall in Segamat with the most modern amenities, the mall has steadily attracted more than 100,000 patrons every month since its soft opening in April 2012. The mall is situated just next to the Segamat bus station and taxi terminal, and is directly linked to the transportation hub via a purpose-built overhead pedestrian bridge.
The mall comprises three shopping levels with a gross built-up area of 480,000 square feet including two levels of car park bays. The mall has within half a year since its soft launch reached an occupancy rate of 95% with anchor tenants UO Superstore occupying 70,000 square feet and Lotus Five Star Cinema occupying 30,000 square feet comprising an 8-hall Cineplex. Other notable tenants at 1Segamat Mall include Guardian, Watsons, Kamdar, Popular Bookstore, Old Town White Coffee, Big Apple Donuts & Coffee, Tempura Snack Bar, Nanyang Kopitiam, Shihlin Taiwan Street Snacks and many more. Just next to 1Segamat Mall, the Group is developing seven units of commercial shops for sale. The three and four storey shops have built-up areas ranging from 4,666 to 20,165 square feet, whereby a corner and two adjoining lots have been built specifically to cater for an 81-room budget hotel.
The Scope@SCP
...within half a year since its soft launch reached an occupancy rate of 95% with anchor tenants UO Superstore occupying 70,000 square feet and Lotus Five Star Cinema occupying 30,000 square feet comprising an 8-hall Cineplex.
CHAIRMANS STATEMENT
Completed 3-storey shop-offices under the first phase of Taipan@Ipoh Cybercentre development in Jelapang, Perak.
With the entire project in Segamat targeted to be completed by end 2012, the Group believes that it will bring greater vibrancy to the town and enhance its real estate value. It will also definitely be a push factor in the economic activity in the area. In the Ipoh, Perak region, the Groups development project known as Taipan@ Ipoh Cybercentre saw the completion of the first phase which comprised 102 units of 3-storey shop-offices which was fully sold. We are proud to report that the project was completed ahead of the scheduled delivery date. The second phase of the project consisting of 147 units of shop-offices is on-going and will continue to contribute positively to the financial performance of the Group in the coming financial year. With the softening of global iron ore prices and the introduction of export taxes by the Indonesian authorities, the Group expects a challenging year ahead for the iron ore mining business and on a prudent basis has made a fifty percent provision for its mining investment cost. With regards to the Network Marketing and the Agro-Biotechnology Divisions, the Group has made the decision to exit from these businesses due to its non-core and nonsignificant business impact to the Group.
Industry Overview And Prospects

The stable growth in the Malaysian economy in the first half of 2012 was largely supported by firm domestic demand and sustained fixed investment which compensated for slower export growth as a result of weaker demand from the Eurozone and the US economies. For the remaining part of 2012, major domestic economic sectors are projected to register growth, albeit at a slower pace. Regulatory reforms in the financial sector have also helped attract investors to the country. Numbers in the investment activities show improvement, particularly in the private sector and projects that were initiated by the government.
Overall, domestic demand during the next year is expected to remain resilient on the back of supportive policy measures, and hence the Group expects to maintain its performance level which is largely domestic driven.
Corporate And Social Responsibilities

Mindful of our corporate social responsibilities (CSR), the Group integrates socially responsible initiatives into its everyday business activities. Over the year, the Group utilized its network and hosted at South City Plaza and 1Segamat Mall several activities which included, amongst others, No
...the Groups development project known as Taipan@Ipoh Cybercentre saw the completion of the first phase which comprised 102 units of 3-storey shop-offices which was fully sold. We are proud to report that the project was completed ahead of the scheduled delivery date.
ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012 9
CHAIRMANS STATEMENT
CSR activities held at South City Plaza and 1Segamat Mall.
More Hunger 30 Hour Famine jointly organized with World Vision, several blood donation campaigns hosted together with the Lions Club, Persatuan E-Kuan Tao and Pusat Bimbingan Ajaran Confucius and festivity celebrations including singing competition for underprivileged children and orphans. The Group also co-organized health screening programmes with National Kidney Foundation of Malaysia, health talks and charity drive by a medical centre and the State Welfare Department as well as a cancer awareness campaign with MAKNA. As part of our wider commitment to the society, we also provided venue sponsorship for activities such as fund raising for childrens society, donation drives, community singing contest and pet shows. Human capital is always a significant factor to the success of an organization. As such,
we will continue to focus on providing our personnel with training and development opportunities, enhancing staff welfare in terms of health and security matters and providing a conducive working environment.
Last but not least, I wish to extend my sincere thanks to my fellow Board members for their invaluable counsel and contribution towards the betterment of the Group.
Acknowledgement
On behalf of the Board of Directors, I wish to express my appreciation to the management team and all employees of the Group for their perseverance and dedication over the past year. We seek this continued commitment to work together to achieve our mission of growth and excellence. My appreciation also goes to our valued shareholders, clients, bankers and business associates for their continued support and assistance to create better value for all concerned.
Dato Syed Ariff Fadzillah Bin Syed Awalluddin Chairman
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Teamwork
Together As One
BoaRd Of Directors
6 7
4 3
1 Dato Syed Ariff Fadzillah bin Syed Awalluddin (Chairman/Independent Non-Executive Director) Malaysian
2 Dato (Dr.) Teoh Seng Foo (President/Non-Independent Executive Director) Malaysian
3 Dato Tiong Kwing Hee (Group Chief Executive Officer/Executive Director) Malaysian
4 Mr. Amos Siew Boon Yeong (Independent Non-Executive Director) Malaysian
5 Mr. Teoh Seng Kian (Alternate Director to Dato (Dr.) Teoh Seng Foo) Malaysian
6 Mr. Lim Een Hong (Independent Non-Executive Director) Malaysian
7 Dato Boey Chin Gan (Independent Non-Executive Director) Malaysian
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Directors Profile
Dato Syed Ariff Fadzillah bin Syed Awalluddin (Chairman/Independent Non-Executive Director) Malaysian
Dato Syed Ariff Fadzillah bin Syed Awalluddin, aged 69, was appointed to the Board on 27 January 2006. He was re-designated to Chairman/Independent Non-Executive Director on 1 December 2009. He is also the Chairman of the Nomination Committee and a member of the Remuneration Committee. He holds a Bachelor of Arts degree in History from University Malaya. He also holds a Diploma in Development Administration and a Master of Arts in International Relations. He started his career as an Assistant District Officer in Kulim, Kedah in 1967. He was an Assistant Secretary in the Public Service Commission, Kuala Lumpur between 1970 and 1972 before being transferred to the Ministry of Foreign Affairs. Prior to retiring in November 2001, he served as the Ambassador of Malaysia to the Kingdom of Thailand from 1996 to 2001, Ambassador to the Republic of Korea with joint accreditation to Mongolia (1992 to 1995) and Ambassador of Malaysia to Fiji with concurrent accreditations to Tuvalu, Tonga, Western Samoa, Kiribati and Nauru (1998 and 1991). His other foreign assignments include postings to Indonesia, Libya and Canada. He was also the Deputy Permanent Representative of the Permanent Mission of Malaysia to the United Nations between 1982 and 1986. From 1991 to 1992, he served as the Undersecretary at the Ministry of Foreign Affairs in charge of Southeast Asia and South Pacific. He also sits as director on the boards of MNRB Holdings Berhad, MNRB Retakaful Berhad and Malaysian Reinsurance Berhad. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past ten (10) years. He has attended all five (5) Board meetings held during the financial year ended 31 May 2012.
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Directors Profile
Dato (Dr.) Teoh Seng Foo (President/Non-Independent Executive Director) Malaysian
Dato (Dr.) Teoh Seng Foo, aged 56 was appointed to the Board on 5 May 1997. He was re-designated from the position of an Executive Deputy Chairman to President/Non-Independent Executive Director on 1 December 2009. He is also the Chairman of the Executive and Remuneration Committees. An accountant by profession, Dato Teoh is a Chartered Accountant of the Malaysian Institute of Accountants, a Chartered Management Accountant and Fellow Member of the Chartered Institute of Management Accountants, United Kingdom. Dato Teoh has wide corporate experience, having held senior management positions in multi-nationals such as Intel Technology, Woodward & Dickerson Inc., Coopers & Lybrand and Esquel Group. Dato Teoh was conferred the Honorary Doctorate in Business Administration by University of Abertay Dundee, United Kingdom. He is also a Patron of the University of Abertay Foundation based in United Kingdom. Dato Teoh currently holds board position as the President of Meda Inc. Berhad. He is a brother to Teoh Seng Aun and Teoh Seng Kian (who is also his alternate director), who are major shareholders of the Company. Apart from the above, he has no other family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company, other than those disclosed in the notes accompanying the financial statements, and has no convictions for offences, other than traffic offences (if any), within the past ten (10) years. He has attended all the five (5) Board meetings held during the financial year ended 31 May 2012.
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Directors Profile
Dato Tiong Kwing Hee (Group Chief Executive Officer/Executive Director) Malaysian
Dato Tiong Kwing Hee, aged 54, first joined the Board as an Alternate Director on 18 September 2008 and subsequently appointed as Executive Director/Chief Executive Officer on 2 January 2009. He is currently the Group Chief Executive Officer of the Company. He is also a member of the Executive Committee. He obtained a Bachelor of Arts (Hons) majoring in Business Administration from Hanover College, United States of America in 1982 and a Master Degree in Business Economics from Miami University, United States of America in 1983. He started his career with Sim Lim Holdings Berhad in 1983 as Executive Officer in charge of corporate finance and was promoted to Manager in 1984 and General Manager in 1985. He left Sim Lim Holdings Berhad in 1987 following his venture into the timber industry and became a shareholder cum director of marketing in Wansuria Sdn Bhd. He was a substantial shareholder in London Pacific Ltd, a company listed on the New Zealand Stock Exchange between 1988 and 1994. In 1994, he left the timber industry when he sold off his stake in Wansuria Sdn Bhd. In 1995, he joined D-Systems Pte Ltd, a Singapore based company with exclusive distribution rights of drywall system from United States of America for Asia Pacific region, as the Chief Executive Officer. In 1997, he was head hunted on a two (2) years contract as an Executive Director of a listed company to prepare that company for a corporate restructuring. During the course of his career, he has been directly involved in various industrial sectors including corporate finance, financial services, manufacturing, plantations, property, construction, education, leisure, entertainment and mineral resources. He has extensive hands-on experience, knowledge and exposure in international business, corporate planning, restructuring and corporate turnaround. Dato Tiong is also currently the Executive Director of Mercury Industries Berhad. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company, other than those disclosed in the notes accompanying the financial statements, and has no convictions for offences, other than traffic offences (if any), within the past ten (10) years. He has attended all the five (5) Board meetings held during the financial year ended 31 May 2012.
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Directors Profile
Mr. Amos Siew Boon Yeong (Independent Non-Executive Director) Malaysian
Mr. Amos Siew Boon Yeong, aged 54, was appointed to the Board on 27 October 2005. He is also the Chairman of the Audit Committee and a member of the Remuneration Committee. He qualified as a Certified Public Accountant in 1984 and is currently a member of the Malaysian Institute of Certified Public Accountants, a Chartered Accountant with the Malaysian Institute of Accountants and an associate member of the Chartered Tax Institute of Malaysia. He is also a Certified Financial Planner and is a member of the Financial Planning Association of Malaysia. He started his auditing career and professional training with the accounting firm, Coopers & Lybrand in 1978 before establishing his own practice in 1988. He is currently the sole practitioner of the public accounting firm, Messrs. Siew Boon Yeong & Associates. He has vast experience in auditing, tax planning, corporate finance and financial planning and has been involved in numerous assignments on merger and acquisitions, debt restructuring and liquidation. He is also a Director of SEG International Bhd. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past ten (10) years. He has attended all the five (5) Board meetings held during the financial year ended 31 May 2012.
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Directors Profile
Dato Boey Chin Gan (Independent Non-Executive Director) Malaysian
Dato Boey Chin Gan, aged 47, was appointed to the Board on 1 April 2009. He is also a member of the Audit and Nomination Committees. He obtained the Bachelor of Arts (Honours) from University Kebangsaan Malaysia (UKM). Dato Boey is very active in the social economic development of the country. He has served as the Press Secretary to the Minister of Housing and Local Government of Malaysia for 11 years from 1993 to 2004. In 2004, Dato Boey was the Kedah State Assemblyman. Dato Boey has vast experiences and extensive knowledge in administrative and strategic planning by virtue of his long service in government sectors. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past ten (10) years. He has attended all the five (5) Board meetings held during the financial year ended 31 May 2012.
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Directors Profile
Mr. Lim Een Hong (Independent Non-Executive Director) Malaysian
Mr Lim Een Hong, aged 45, was appointed to the Board on 29 March 2010. He is also a member of the Audit and Nomination Committees. He was a lawyer by profession and holds a Bachelor of Law (Hons) from University of Malaya. Presently, he is the Chief Executive Officer and Director of Eduspec Holdings Bhd. He started his career as a litigation lawyer handling banking and civil litigation cases from 1992 to 1996. He was partner of Eugene Tan & Co from 1994 to 1998 before setting up his own firm, Messrs EH Lim, Lee & Partners. He is exposed to property and land conveyancing transactions, property financing and land dealings. He has vast experience in land dealings negotiations, corporate restructuring, joint venture participation, acquisition, investment management and general corporate representation. He stopped his legal practice and joined Eduspec Holdings Berhad in year 2010 as the Chief Executive Officer and Director. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past ten (10) years. He has attended four (4) out of five (5) Board meetings held during the financial year ended 31 May 2012.
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Directors Profile
Mr. Teoh Seng Kian (Alternate Director to Dato (Dr.) Teoh Seng Foo) Malaysian
Mr. Teoh Seng Kian, aged 52, was appointed as Alternate Director to Dato (Dr.) Teoh Seng Foo, the President, on 1 December 2009. He graduated with a Bachelor of Engineering (Mechanical) degree from Australia in 1984. He started his career with an Australian company specializing in manufacturing of building materials. Upon returning to Malaysia, he served as a director in a company involved in quarrying and infrastructure construction. He is currently the Executive Director of Meda Inc. Berhad. He is a major shareholder of the Company and is deemed to have an interest in all the shares held by the Company in the subsidiaries by virtue of his substantial interest in shares of the Company. He is a brother to Dato (Dr.) Teoh Seng Foo, the President of the Company and Teoh Seng Aun, who is a major shareholder of the Company. Apart from the above, he has no other family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company, other than those disclosed in the notes accompanying the financial statements, and has no convictions for offences, other than traffic offences (if any), within the past ten (10) years.
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Five-Year Group Statistics

200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000
2008 2009 2010 2011 2012
30,000 20,000 10,000 0 -10,000 -20,000 -30,000 -40,000 -50,000 -60,000 -70,000 -80,000 -90,000 -100,000
2008 2009 2010 2011 2012
300,000
250,000
200,000
150,000
100,000
50,000
2008
2009
2010
2011
2012
(RM000) Revenue
(RM000) Profit / (Loss) Before Taxation and Minority Interests
(RM000) Shareholders Fund
Year ended 31 May Revenue Profit / (Loss) Before Taxation and Minority Interests Profit / (Loss) Attributable to Shareholders Shareholders Funds Total Assets Employed Earnings / (Loss) Per 50 Sen Share Net Assets Per 50 Sen Share Weighted Average Number of Shares (50 Sen Per Share) in Issue During the Year
(000) (RM Million) (RM Million) (RM Million) (RM Million) (Sen) (RM) (RM Million)
Period ended 31 May 2008* 30.5
2012 160.5
2011 25.0
2010 21.1
2009 44.0
15.4 10.9 130.0 440.2 1.7 0.18
9.5 8.8 118.6 414.4 1.4 0.18
(41.4) (41.4) 105.2 358.7 (6.4) 0.16
(90.3) (90.6) 145.3 433.6 (13.9) 0.22
(22.2) (33.4) 232.0 515.2 (5.1) 0.36
650,148
650,148
650,148
650,148
650,148
* 10 months period from 1.8.2007 to 31.5.2008 due to change in financial year end from 31 Jul to 31 May.
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Corporate governance statement

Introduction
The Board of Directors (Board) of EcoFirst Consolidated Bhd (ECB) takes cognizance of the Malaysian Code of Corporate Governance 2012 (MCCG 2012) issued by the Securities Commission Malaysia (SC) in which the Company will be required to report its extent of compliance with the MCCG 2012 in the annual report to be published in 2013. The MCCG 2012 will supersede the Malaysian Code on Corporate Governance [Revised 2007] (the Code). Prior to transiting to the principles and recommendations of MCCG 2012 (where appropriate), the Board of ECB subscribes to the fundamental principles of good corporate governance and best practice provisions contained in the Malaysian Code on Corporate Governance (Revised 2007) (the Code). Compliance with the Code has always been recognised by ECB as the basic tenet to safeguard the interests of all stakeholders and to enhance shareholders value.
BOARD OF DIRECTORS
Constitution of the Board and Board Balance The Board, led by an Independent Non-Executive Chairman, comprises of six (6) members of whom two (2) are Executive Directors, four (4) are Non-Executive Directors all of whom are Independent, including the Chairman. One (1) of the Executive Directors has an appointed Alternate Director. The profile of each Director is set out in the Directors Profile Section of the Annual Report. The Boards composition brings to the Group a diverse wealth of skills, knowledge and a balanced mix of experience and expertise to effectively discharge its stewardship responsibilities in spearheading the Groups growth and future direction. There is a clear segregation of responsibilities between the Directors to ensure a balance of power and authority. Generally, the Executive Directors are responsible for making and implementing operational and corporate decisions. Non-Executive Directors play a pivotal role in corporate accountability by providing unbiased and independent views in the sharing of knowledge and experience, towards the formulation of policies and in the decision-making process. Where a potential conflict of interest may arise, it is mandatory practice for the Director concerned to declare his interest and abstain from the decision-making process. There is a clear division of responsibility between the Chairman and Group Chief Executive Officer to ensure that there is a balance of power and authority. The Chairman is responsible for ensuring Board effectiveness whilst the Group Chief Executive Officer has overall responsibility for the operating units, organizational effectiveness and implementation of Board policies and decisions. Although all the Directors have an equal responsibility for the Groups operations, the role of these Independent Non-Executive Directors is important as they provide independent views, advice and judgement on issues of strategy, business performance and controls. The Independent NonExecutive Directors provide independent and constructive views in ensuring that the strategies proposed by the management are studied and deliberated to take account of the interests not only of the Group, but also of shareholders, and the public at large. Meetings of the Board of Directors At least four (4) Board meetings are held annually; each meeting scheduled to consider the quarterly financial results and operational performance. Additional meetings are convened as and when necessary. During the financial year ended 31 May 2012, five (5) Board meetings were held and the summary of attendance by the Directors is as follows:
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CORPORATE GOVERNANCE STATEMENT
Name of Directors Dato (Dr.) Teoh Seng Foo (Alternate Director : Teoh Seng Kian) Dato Tiong Kwing Hee Dato Syed Ariff Fadzillah bin Syed Awalluddin Amos Siew Boon Yeong Dato Boey Chin Gan Lim Een Hong
Total Attendance 5/5 5/5 5/5 5/5 5/5 4/5
% of Attendance 100 100 100 100 100 80
The Company Secretary also attended all the Board meetings held during the financial year under review. Access to Advice and Information Board meetings are structured with a pre-set agenda, providing the Directors with relevant and timely information to enable them to discharge their duties and responsibilities effectively. Board papers, which provide updates on operational, financial and corporate developments, are circulated to enable Directors to obtain further explanation where necessary in order to facilitate informed decision-making. All Directors have access to all information within the Group and direct access to the advice and services of the Company Secretary, whether as a full Board or in their individual capacity. In addition, the Directors are also empowered to seek external and independent professional advice at the Companys expense, in order to discharge their duties and responsibilities more effectively. Board Committees The Board has delegated specific responsibilities to three (3) committees, which operate within approved terms of reference, to assist in the effective discharge of its principal responsibilities. Notwithstanding the above, the ultimate responsibility for the final decision lies with the full Board. These committees are: a) Nomination Committee The Nomination Committee, which comprises wholly of Non-Executive Directors, recommends candidates with an optimal mix of qualifications, skills and experience to the Board. The Nomination Committee also carries out annual evaluation on the effectiveness of the whole Board, the various Committees and individual Directors contribution to the Boards decision-making process. The present members of the Nomination Committee are as follows: Dato Syed Ariff Fadzillah bin Syed Awalluddin Dato Boey Chin Gan Lim Een Hong - - - Chairman/Independent Non-Executive Director Member/Independent Non-Executive Director Member/Independent Non-Executive Director
b) Remuneration Committee The Remuneration Committee, comprising mainly Non-Executive Directors, is responsible for drawing up the policy framework and to make recommendations to the Board on the remuneration packages of the Executive Directors. The Executive Directors do not participate in decisions relating to their remuneration packages. The Board as a whole determines the remuneration of Non-Executive Directors with the Director concerned abstaining from participating in decisions in respect of his individual remuneration.
22
The Remuneration Committee comprises of the following members: Dato (Dr.) Teoh Seng Foo Amos Siew Boon Yeong Dato Syed Ariff Fadzillah bin Syed Awalluddin - - - Chairman/President/Executive Director Member/Independent Non-Executive Director Member/Independent Non-Executive Director
c) Audit Committee The terms of reference and further information on the Audit Committee are outlined in the Audit Committee Report Section of this Annual Report.
Re-election All Directors will retire at regular intervals by rotation once at least every three (3) years and shall be eligible for re-election in accordance with the provisions of the Companys Articles of Association. Directors Training All Directors have attended and completed the Mandatory Accreditation Programme as prescribed by Bursa Malaysia Securities Berhad (Bursa Securities). The Board acknowledges the importance of continuous training and they have attended various training programmes and seminars to keep abreast with developments in the business environment as well as with the new relevant regulatory and statutory requirements, to further enhance their skills and knowledge. During the financial year ended 31 May 2012, the Directors have attended the following training programmes:-
No.
Directors
Title of Training Programmes Financial Institutions Directors Education (FIDE) Programme Actuarial Valuation of Family & General Insurance / Takaful Business and Performance Management BNMs Guidelines on Shariah Governance Framework and Takaful Operators Framework
Date 05/07/2011 to 08/07/2011 31/07/2011
1. Dato Syed Ariff Fadzillah Bin Syed Awalluddin
26/04/2012
2. Dato (Dr.) Teoh Seng Foo Practical Guide to Establishing a Risk Management Handbook 3. Dato Tiong Kwing Hee Practical Guide to Establishing a Risk Management Handbook 4. Amos Siew Boon Yeong National Tax Conference 2011 Seminar Percukaian Kebangsaan 2011 7th Tricor Tax & Corporate Seminar
24/04/2012 24/04/2012 19/07/2011 to 20/07/2011 12/10/2011 19/10/2011 24/04/2012 24/04/2012 24/04/2012
5. Dato Boey Chin Gan Practical Guide to Establishing a Risk Management Handbook 6. Lim Een Hong Practical Guide to Establishing a Risk Management Handbook 7. Teoh Seng Kian (Alternate Director Practical Guide to Establishing a Risk to Dato (Dr.) Teoh Seng Foo) Management Handbook
23
DIRECTORS REMUNERATION
The details of the remuneration for the Directors of the Company for the financial year under review are as follows: 1. Aggregate remuneration of the Directors categorised into appropriate components: Executive Directors Non-Executive Directors Fees (RM) - 145,200 Remuneration and others (RM) 901,780 - Total (RM) 901,780 145,200
2. The number of Directors whose total remuneration fall within the following bands: Range of Remuneration Nil Below RM50,000 RM400,001 to RM450,000 RM450,001 to RM500,000 *Alternate Director Number of Directors Executive 1* - 1 1 Non-Executive 4 -
RELATIONSHIP WITH SHAREHOLDERS

Shareholders Communication and Investors Relationship Policy The Group recognises the importance of establishing a direct line of communication with shareholders and investors through timely dissemination of information on the Groups performance and major developments via appropriate channels of communication. Platforms for dissemination of information include the Annual General Meetings (AGM) and Extraordinary General Meetings (EGM), if any, distribution of Annual Reports and relevant circulars, issuance of press releases and press conferences. Information on the financial performance of the Group is communicated to the public via the announcement of its financial results to Bursa Securities on a quarterly basis. To further enhance the transparency and communication with the shareholders and other stakeholders, the Company has an official website at www.ecofirst.com.my for the timely dissemination of business related information for the benefit of all interested parties. Shareholders could be given the opportunity to communicate directly with Dato Syed Ariff Fadzillah bin Syed Awalluddin, or any of the other Independent Non-Executive Directors should there be any concerns relating to the Company.
AGM
The AGM is the principal forum for communicating with shareholders. Henceforth, the Chairman and the Board encourage shareholders to attend and participate in an open discussion during the AGM. Shareholders who are unable to attend are allowed to appoint a proxy to attend and vote on their behalf. Shareholders are given the opportunity to seek clarification on any matter pertaining to the business and financial performance of the Company.
ACCOUNTABILITY AND AUDIT

Financial Reporting The Board is responsible for ensuring the proper maintenance of accounting records of the Group. The Audit Committee assists the Board in reviewing information for disclosure purposes such as the quarterly report for release to Bursa Securities in order to ensure its accuracy, adequacy and completeness. A Statement by Directors on their responsibility in preparing the Annual Financial Statements is set out below. Internal Control The Statement on Internal Control presented on page 31 of this Annual Report provides an overview of the state of internal controls within the Group. Relationship with Auditors The Board through the establishment of an Audit Committee maintains a formal and transparent arrangement with the Companys auditors, both internal and external. Compliance Statement The Company has been in compliance with the Code during the financial year under review save for the disclosure of details of the remuneration of each Director. The Board is of the view that the transparency and accountability aspects of Corporate Governance as applicable to Directors Remuneration are appropriately served by the band disclosure made above under Directors Remuneration. The Board is committed and will continue to enhance compliance with the MCCG 2012 within the Company and the Group. This statement was approved by the Board of Directors on 24 September 2012.
**************************************************************************************************
Statement OF Directors responsibility in Preparing the Annual Financial Statements

The Directors are legally required, in accordance with the Companies Act, 1965, to prepare financial statements, which present a true and fair view of the state of affairs, and of the results of the operations of the Group and the Company and in preparing the financial statements for the financial year ended 31 May 2012, the Directors have: ensured compliance with applicable accounting standards approved in Malaysia; adopted and consistently applied appropriate accounting policies; and made judgements and estimates that are prudent and reasonable. The Directors are responsible for ensuring that proper accounting records are maintained, which disclose with reasonable accuracy, the financial position of the Group and also to ensure that the financial statements comply with applicable approved accounting standards in Malaysia. In addition, the Board is responsible for the proper safeguarding of the Groups assets and to take reasonable steps for the prevention and detection of fraud and other irregularities.
25
OTHER INFORMATION
Material Contracts Except as disclosed in Note 27 (a) of the Financial Statements, there were no material contracts subsisting at the end of financial year or entered into since the end of the previous financial year by the Company or its subsidiaries, which involved the interest of the Directors and major shareholders. Non-Audit Fee No non-audit fee was paid to external auditors during the financial year. Share Buy-backs The Company did not implement any share buy-back scheme during the financial year. Depository Receipt Programme The Company did not sponsor any depository receipt programme during the financial year. Sanctions and/or Penalties There were no public sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies. Variation in Results There was no material variation between the audited results and the unaudited results previously released for the financial year ended 31 May 2012. Profit Guarantee The Company did not make any arrangement during the financial year which requires profit guarantee. Options, Warrants or Convertible Securities There were no options or convertible securities issued or exercised during the financial year. Utilisation of Proceeds Raised from Corporate Proposal There were no proceeds raised from any corporate proposal during the year under review. The Company did not implement any fund raising exercise during the financial year under review. Recurrent Related Party Transaction of a Revenue Nature There was no recurrent related party transaction of a revenue nature, which requires shareholders mandate during the financial year.
26
AUDIT COMMITTEE REPORT

MEMBERSHIP The Audit Committee (the Committee) comprises wholly of Independent Non-Executive Directors as follows:Amos Siew Boon Yeong - Chairman/Independent Non-Executive Director Dato Boey Chin Gan - Member/Independent Non-Executive Director Lim Een Hong - Member/Independent Non-Executive Director Meetings & Attendances A total of five (5) meetings of the Audit Committee were held during the financial year ended 31 May 2012. The meetings were appropriately structured through the use of agendas, which were distributed in advance to all the members of the Audit Committee. Attendances of each member were as follows and the Company Secretary attended all the meetings during the year:Members Amos Siew Boon Yeong Dato Boey Chin Gan Lim Een Hong Total Attendance 5/5 5/5 4/5 % of Attendance 100 100 80
TERMS OF REFERENCE OF THE AUDIT COMMITTEE

Constitution The Terms of Reference of the Audit Committee was established by the Board on 26 April 1994. Subsequently, amendments were made to the terms of reference and approvals were sought at the Companys Board Meetings held on 29 March 2001 and 26 March 2008. Membership The Audit Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of not less than three members. All the Audit Committee members must be non-executive directors, with a majority of them being Independent Directors. At least one member of the Audit Committee: 1. must be a member of the Malaysian Institute of Accountants; or 2. if he is not a member of the Malaysian Institute of Accountants, he must have at least three years working experience and: (i) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or (ii) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or (iii) fulfils such other requirements as prescribed or approved by the Exchange. No alternate director shall be appointed as a member of the Audit Committee. The members of the Audit Committee shall select a Chairman from among their numbers who shall be an Independent Director. If a member of the Committee resigns, dies or for any other reason ceases to be a member with the result that the number of members is reduced below three, the Board shall, within three months of that event, appoint such number of new members as may be required to make up the minimum number of three members. The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board at least once every three years to determine whether the Audit Committee and its members have carried out their duties in accordance with their terms of reference.
Audit committee Report
Authority The Audit Committee shall, in accordance with a procedure determined by the Board and at the cost of the Company: 1. have authority to investigate any matter within its terms of reference; 2. have the resources which are required to perform its duties; 3. have full and unrestricted access to any information pertaining to the Company; 4. have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity; 5. be able to obtain independent professional or other advice; and 6. be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary. Functions The functions of the Committee shall be to review the following and report the same to the Board: 1. with the external auditors, their audit plans; 2. with the external auditors, their evaluation of the system of internal controls; 3. with the external auditors, their audit reports; 4. the assistance given by the Companys employees to the external auditors; 5. the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its works; 6. the internal audit programme, processes, the results of the internal audit programme, processes or investigations undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; 7. the quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly on: (a) changes in or implementation of major accounting policy changes; (b) significant and unusual events; and (c) compliance with accounting standards and other legal requirements;
8. any related party transactions and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity; 9. any letter of resignation from the external auditors of the Company; and 10. to consider the nomination of a person or persons as external auditors together with such other functions as may be agreed to by the Audit Committee and the Board.
28
Meetings Meetings shall be held not less than four (4) times a year. The external auditors may request a meeting if they consider that one is necessary. The Chairman shall convene a meeting whenever any member of the Audit Committee requests for a meeting by giving not less than three (3) clear days notice thereof unless such requirement is waived by all members. However, consent from member that is overseas is not required. Written notice of the meeting together with the agenda shall be given to the members of the Audit Committee. In order to form a quorum in respect of a meeting of an Audit Committee, the majority of members present must be Independent Directors and any decision shall be by a simple majority. The Chairman shall not have a casting vote. Reporting procedure The Secretary of the Committee shall circulate the minutes of meetings of the Committee to all members of the Board.
SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

The Audit Committee carried out the following duties in accordance with its terms of reference: Reviewed the external auditors scope of work and audit plans for the year. Prior to the audit, representatives from the external auditors presented their audit strategy and plan. Reviewed with the external auditors, major issues arising from the audit. Reviewed the internal audit programme and reports, which highlighted the audit issues, recommendations and managements response. The members of the Audit Committee were briefed on pertinent audit issues findings and observations by the Internal Auditors at the meetings of the Audit Committee. The Audit Committee also discussed the management actions taken to improve the system of internal control based on recommendations made in the internal audit reports. Recommended to the Board areas of improvement opportunities in internal control systems and procedures. Reviewed the quarterly unaudited financial results for announcements purposes before recommending them for the Boards approval. Reviewed the draft audited financial statements of the Group and of the Company prior to submission to the Board for their consideration and approval. Reviewed related party transactions entered into by the Group. Reviewed the Audit Committee Report and the Statement on Internal Control for insertion into the Companys Annual Report. Met with the External Auditors, in the absence of management, to discuss problems and reservations (if any) arising from their audits. Reviewed the applicability of certain new accounting standards on the financials of the Group.
29
STATEMENT ON EMPLOYEES SHARE OPTION SCHEME (ESOS)

The Committee will verify the ESOS allocation in compliance with the criteria as stipulated in the by-laws of ESOS of the Company, if any.
INTERNAL AUDIT FUNCTION

The internal audit function is outsourced to an independent professional consultancy firm entrusted with the role of providing independent and systematic reviews on the systems of internal control of the Group. The Internal Audit function provides an independent and objective feedback to the Audit Committee and the Board on the adequacy, effectiveness and efficiency of the internal control system within the Group. Throughout the financial year under review, the Internal Auditors had carried out the internal audit works on the main business operations of the Group i.e. property investment, property management and property development, assignments which were in accordance with the annual internal audit plan approved by the Audit Committee. The Internal Auditors also carried out ad-hoc assignments as and when requested by the Audit Committee. Upon completion of each audit cycle, the Internal Auditors would report to the Audit Committee on their audit findings, their recommendations of corrective actions to be taken by the management together with the managements responses in relation thereto. The Internal Auditors would also conduct follow-up reviews on previously reported issues during the audit cycles and the results of their observations would be reported to the Audit Committee accordingly. At the request of the Audit Committee, the Internal Auditors may re-visit previously audited business operations to further assess the system of internal controls and the procedures implemented. There was no material internal control failure that was reported in respect of internal audit works carried out during the financial year under review that would have resulted in any significant loss to the Group.
30
Statement on internal Control

In compliance with Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board is committed to maintain a sound system of internal control in the Group and is pleased to provide the following statement, which outlines the state, nature and scope of internal control of the Group during the financial year ended 31 May 2012.
Board Responsibilities
The Board maintains a system of internal control to safeguard shareholders investment and the Groups assets. The Board is committed to establish an appropriate control environment and also to review the adequacy and integrity of the system of internal control. Due to the limitations inherent in any system of internal control, these systems, though implemented, are designed to manage, rather than to eliminate the risk of failure to achieve corporate objectives. Accordingly, the system can only provide reasonable but not absolute assurance against material misstatement or loss. The Board confirms that there is an underlying and ongoing process in the Group for the identification, evaluation and mitigation of its significant risks. The Board further confirmed that these processes are being regularly reviewed and accords with the Statement of Internal Control: Guidance for Directors of Public Listed Companies.
Enterprise Risk Management Framework

Risk management is an integral part of the Groups business operations. The Board confirms that there is an on-going process of identifying, evaluating, monitoring and managing significant risks which is embedded in various operational processes and procedures of the respective operational functions and management team. The process was regularly reviewed and discussed at management meetings, quarterly Audit Committee and Board of Directors meetings.
Internal Audit Function

The internal audit function which is outsourced to an independent professional firm reports directly to the Audit Committee to provide feedback regarding the adequacy and integrity of the Groups system of internal control. The internal audit function reviews the key activities of the Group based on the annual audit plan approved by the Audit Committee. The Audit Committee reviews the audit plan, together with internal audit reports to obtain the necessary level of assurance with respect to the adequacy of the internal controls as required by the Board. The Audit Committee presents its findings to the Board on a quarterly basis or as appropriate. During the financial year, the internal auditor reviewed critical business processes, identified risks and internal control gaps, assessed the effectiveness and adequacy of the existing state of internal control of the major subsidiaries and recommended possible improvements to the internal control process. This is to provide reasonable assurance that such system continue to operate satisfactorily and effectively within the Group. During the financial year, the cost incurred for the internal audit function amounted to approximately RM 33,150.00.
31
Statement on internal Control
Other Risks and Control Processes

In addition to the risk management and internal audit function, the Board has put in place an organisational structure with formally defined lines of responsibility and delegation of authority, allowing internal checks and balances. This includes a Procurement & Quality Assurance standard operational procurement manual. These procedures are relevant to the Group and provide continuous assurance to top management and the Board. The Group has also developed and made available to employees an Employee Handbook. Quarterly updates of the financial results of the Group are provided to the Audit Committee and the Board for assessment of the performance of the Group. Management meetings, which involve Executive Directors and selected executive personnel, are regularly held in order to identify and address any problems encountered by the Group, so that appropriate actions could be taken to address the issues.
Review of Statement by External Auditors

The External Auditors have reviewed this statement for inclusion in the Annual Report 2012 and reported to the Board that nothing has come to their attention that causes them to believe that this statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of the internal controls. This statement is made in accordance with the resolution passed by the Board of Directors on 24 September 2012.
32
Financial statements
contents
Directors Report Statement by Directors Statutory Declaration
34
Report of the Independent Auditors
38
Statements of Comprehensive Income
38
Statements of Financial Position
39
Statements of Changes in Equity Statements of Cash Flows
41 44
42
Notes to the Financial Statements
43
46
DIRECTORS REPORT
The directors submit their report and the audited financial statements of the Group and the Company for the financial year ended 31 May 2012.
Principal activities
The principal activities of the Company consist of investment holding and provision of management services. The principal activities of the subsidiaries are disclosed in Note 12 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.
Financial results
Group Company RM000 RM000 Net profit/(loss) for the year Attributable to: Owners of the Company Non-controlling interests 10,207 (5,374)
10,920 (713) 10,207
(5,374) (5,374)
In the opinion of the directors, the results of the operations of the Group and the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature.
Dividends
No dividend has been paid or declared by the Company since the end of the previous financial year. The directors also do not recommend any dividend payment in respect of the current financial year.
Reserves and provisions

There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.
Issue of shares and debentures

The Company has not issued any new shares or debentures during the financial year.
Share options
No options have been granted by the Company to any parties during the financial year to take up unissued shares of the Company. No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company. As at the end of the financial year, there were no unissued shares of the Company under options.
34
DIRECTORS REPORT
Directors
The directors of the Company in office since the date of the last report are: Dato Syed Ariff Fadzillah Bin Syed Awalluddin Dato (Dr.) Teoh Seng Foo Teoh Seng Kian (Alternate to Dato (Dr.) Teoh Seng Foo) Dato Tiong Kwing Hee Amos Siew Boon Yeong Dato Boey Chin Gan Lim Een Hong
Directors' interests
The interests in the Company and its related companies of those who were directors at the end of the financial year, as recorded in the Register of Directors Shareholdings kept under Section 134 of the Companies Act, 1965, are as follows: Number of ordinary shares of RM0.50 each Balance as at Balance as at 1.6.2011 Bought Sold 31.5.2012 Direct interest Dato (Dr.) Teoh Seng Foo 20,290,500 Teoh Seng Kian (Alternate to Dato (Dr.) Teoh Seng Foo) 79,602,632 Dato Tiong Kwing Hee 14,554,600 Other shareholdings in which directors are deemed to have interests # Dato (Dr.) Teoh Seng Foo Teoh Seng Kian (Alternate to Dato (Dr.) Teoh Seng Foo) - 1,900,000 2,986,800 9,100,000 11,190,500 - 81,502,632 - 17,541,400
- 2,495,300
3,000,000 -
- -
3,000,000 2,495,300
# Disclosure of interest pursuant to Section 134(12) of the Companies Act, 1965. None of the other directors in office at the end of the financial year, had held shares or beneficial interest in shares of the Company and its related companies during the financial year, according to the register required to be kept under Section 134 of the Companies Act, 1965.
Directors' benefits
Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors as shown in the financial statements or the fixed salary of a full time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefit which may be deemed to have arisen by virtue of the transactions between the Group and the Company and a company in which certain directors of the Company have interests as disclosed in Note 27 to the financial statements. There were no arrangements during or at the end of the financial year, which had the object of enabling directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
35
DIRECTORS REPORT
Other statutory information

Before the financial statements of the Group and the Company were made out, the directors took reasonable steps: (a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and had satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and (b) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their expected realisable values. At the date of this report, the directors are not aware of any circumstances: (a) which would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and the Company inadequate to any substantial extent; (b) which would render the values attributed to current assets in the financial statements of the Group and the Company misleading; and (c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and the Company misleading or inappropriate. In the interval between the end of the financial year and the date of this report: (a) no item, transaction or event of a material and unusual nature has arisen which, in the opinion of the directors, would substantially affect the results of the operations of the Group and the Company for the financial year in which this report is made; and (b) no charge has arisen on the assets of the Group and the Company which secures the liability of any other person nor have any contingent liabilities arisen in the Group and the Company. No contingent or other liability of the Group and the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may affect the ability of the Group and the Company to meet their obligations as and when they fall due. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements, which would render any amount stated in the financial statements misleading.
36
DIRECTORS REPORT
Auditors
The auditors, Messrs Russell Bedford LC & Company, have indicated their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors,
DATO (DR.) TEOH SENG FOO
DATO TIONG KWING HEE Seri Kembangan, Selangor Darul Ehsan Dated: 24 September 2012
37
STATEMENT BY DIRECTORS
The directors of ECOFIRST CONSOLIDATED BHD state that, in the opinion of the directors, the accompanying financial statements are drawn up in accordance with the provisions of the Companies Act, 1965 and the Approved Accounting Standards for Entities Other Than Private Entities 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 May 2012, and of their financial performance and their cash flows for the year ended on that date. The supplementary information set out in Note 34, which is not part of the financial statements, is prepared in all material respects, 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 and the directive of Bursa Malaysia Securities Berhad. Signed on behalf of the Board in accordance with a resolution of the directors,
DATO (DR.) TEOH SENG FOO
DATO TIONG KWING HEE Seri Kembangan, Selangor Darul Ehsan Dated: 24 September 2012
Statutory Declaration
I, DATO TIONG KWING HEE, being the director primarily responsible for the financial management of ECOFIRST CONSOLIDATED BHD, do solemnly and sincerely declare that to the best of my knowledge and belief, the accompanying financial statements are correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the above named DATO TIONG KWING HEE at Kuala Lumpur in Wilayah Persekutuan on 24 September 2012. DATO TIONG KWING HEE Before me, MOHAN A.S. MANIAM No. W521 COMMISSIONER FOR OATHS Kuala Lumpur, Wilayah Persekutuan
38
TO THE MEMBERS OF ECOFIRST CONSOLIDATED BHD (Incorporated in Malaysia)
REPORT OF THE INDEPENDENT AUDITORS
1. Report on the financial statements We have audited the accompanying financial statements which comprise the statements of financial position of the Group and of the Company as at 31 May 2012, and the related statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. 1.1 Directors responsibility for the financial statements The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with the Companies Act 1965 (Act) and the Approved Accounting Standards for Entities Other Than Private Entities in Malaysia, and 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.
1.2 Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Approved Standards on Auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, 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.
1.3 Opinion In our opinion, the financial statements have been properly drawn up in accordance with the Act and the Approved Accounting Standards for Entities Other Than Private Entities 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 May 2012, and of their financial performance and their cash flows for the year ended on that date.
2. Report on other legal and regulatory requirements In accordance with the requirements of the Act, we also report on 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 by its subsidiaries have been properly kept in accordance with the provisions of the Act. (b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Companys financial statements are in form and content appropriate and proper for the purposes of the preparation of the Groups financial statements and we have received satisfactory information and explanations required by us for those purposes. (c) The auditors reports on the financial statements of the subsidiaries were not subject to any qualification material in relation to the Groups financial statements and did not include any comment made under Section 174(3) of the Act.
39
REPORT OF THE INDEPENDENT AUDITORS

TO THE MEMBERS OF ECOFIRST CONSOLIDATED BHD (Incorporated in Malaysia)
3. Other reporting responsibilities The supplementary information set out in Note 34 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.
4. Other matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Act and for no other purpose. We do not assume responsibility to any other person for the content of this report.
RUSSELL BEDFORD LC & COMPANY TEOH WUEY SZE AF 1237 2831/01/14 (J) CHARTERED ACCOUNTANTS PARTNER
Kuala Lumpur Dated: 24 September 2012
40
STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MAY 2012 Group Company 2012 2011 2012 2011 Note RM000 RM000 RM000 RM000 Revenue Cost of sales 4 5 160,483 (125,362) 35,121 27,993 (7,803) (19,373) (14,003) 21,935 (6,525) 15,410 (5,203) 10,207 24,976 (19,387) 5,589 50,527 (499) (9,864) (28,058) 17,695 (8,243) 9,452 (959) 8,493 633 - 633 3,779 - (2,576) (5,352) (3,516) (1,858) (5,374) - (5,374) 2,520 2,520 1,396 (3,221) (4,378) (3,683) (2,957) (6,640) (6,640)
Gross profit Other operating income Distribution costs Administration expenses Other operating expenses Profit/(Loss) from operations Finance costs 6 Profit/(Loss) before tax Income tax expense 7 8
Net profit/(loss) for the year Other comprehensive income: Available-for-sale financial assets: - Gain on fair values changes - Reclassification adjustments relating of derecognition Exchange differences on translation of financial statements of foreign subsidiaries Other comprehensive income for the year, net of tax Total comprehensive income/(loss) for the year Net profit/(loss) attributable to: Owners of the Company Non-controlling interests Total comprehensive income/(loss) attributable to: Owners of the Company Non-controlling interests Basic earnings per share (sen) 9
3,669 (3,239) (4) 426 10,633
3,420 - 5 3,425 11,918
3,349 (3,239) - 110 (5,264)
3,200 3,200 (3,440)
10,920 (713) 10,207
8,760 (267) 8,493
(5,374) - (5,374)
(6,640) (6,640)
11,346 (713) 10,633 1.68
12,185 (267) 11,918 1.35
(5,264) - (5,264)
(3,440) (3,440)
The accompanying notes form an integral part of the financial statements.

STATEMENTS OF Financial position

AS AT 31 MAY 2012 Group Company 2012 2011 2012 2011 Note RM000 RM000 RM000 RM000 Non current assets Plant and equipment Investment properties Investment in subsidiaries Other financial assets Deferred tax assets Intangible asset Trade receivables 10 11 12 13 14 15 18 2,732 356,192 - 7,820 - - - 366,744 44 17,866 43,039 - 10,109 515 1,845 73,418 440,162 325,074 (195,106) 129,968 14,038 144,006 1,660 318,265 - 7,781 226 - 2,087 330,019 329 56,830 7,484 - 16,029 214 3,451 84,337 414,356 325,074 (206,452) 118,622 14,751 133,373 449 - 43,338 6,984 - - - 50,771 - - - 302,677 1,125 262 457 304,521 355,292 325,074 (208,265) 116,809 - 116,809 658 43,338 7,318 51,314 278,258 130 486 434 279,308 330,622 325,074 (203,001) 122,073 122,073
Current assets Inventories 16 Property development costs 17 Trade receivables 18 Amount due from subsidiaries 19 Other receivables, deposits and prepayments 20 Tax recoverable Cash and bank balances Total assets Share capital Reserves 21 22
Equity attributable to owners of the Company Non-controlling interests Total equity Non current liabilities Hire purchase liabilities 23 Borrowings 24 Trade payables 25 Other payables 26 Tax payable Current liabilities Trade payables 25 Amount due to subsidiaries 19 Other payables and accruals 26 Hire purchase liabilities 23 Borrowings 24 Tax payable Total liabilities Total equity and liabilities
139 96,458 3,715 6,100 7,040 113,452 30,529 - 96,202 137 23,514 32,322 182,704 296,156 440,162
277 104,644 1,653 - - 106,574 23,302 - 88,189 190 28,370 34,358 174,409 280,983 414,356
136 40,583 - 377 - 41,096 - 175,455 19,616 109 2,207 - 197,387 238,483 355,292
246 17,957 471 18,674 170,306 19,423 146 189,875 208,549 330,622

Group Equity Foreign attributable Fair value exchange to owners Non Share Share adjustment Revaluation translation Accumulated of the controlling Total capital premium reserve reserve reserve losses Company interests equity RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 295,727 - 295,727 - - 295,727 - 295,727 4,820 - 7 (495,660) 430 - (4) 10,920 4,390 - 11 (506,580) 118,622 11,346 129,968 3,420 - 5 8,760 12,185 970 - 1,436 (1,436) 6 - (516,776) 1,436 106,437 - 15,018 - (267) 14,751 (713) 14,038 - 970 1,436 - 6 - (517,030) 254 105,213 1,224 15,018 - 120,231 1,224 121,455 11,918 133,373 10,633 144,006
At 1 June 2010 Effect of adopting FRS 139
325,074 -
As restated Transfer Total comprehensive income for the year -
325,074 -
At 31 May 2011 Total comprehensive income for the year -
325,074
At 31 May 2012
325,074
Company Fair value Share Share adjustment Accumulated capital premium reserve losses Total RM000 RM000 RM000 RM000 RM000 325,074 - 325,074 - 325,074 - 325,074 295,727 - 295,727 - 295,727 - 295,727 - 950 950 3,200 4,150 110 4,260 (496,238) - (496,238) (6,640) (502,878) (5,374) (508,252) 124,563 950 125,513 (3,440) 122,073 (5,264) 116,809
At 1 June 2010 Effect of adopting FRS139
As restated Total comprehensive loss for the year
At 31 May 2011 Total comprehensive loss for the year
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2012
At 31 May 2012
43
STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 MAY 2012 Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Cash flows from/(used in) operating activities Profit/(Loss) before taxation Adjustments for: Accretion of implicit interest in retention sums receivable Adjustments on financial liabilities carried at amortised cost Amortisation of financial guarantee liabilities Amortisation of financial liabilities carried at amortised cost Bad debts written off Depreciation Fair value adjustments on: - investment properties - quoted instrument designated as financial assets at fair value through profit or loss Gain from bonus issued by quoted investment in Malaysia Gross dividend income Impairment losses on - plant and equipment - investment in subsidiaries Interest expense Interest income Inventories written off Loss on revocation of retail units sold Plant and equipment written off Allowance for doubtful debts of - subsidiaries - others Allowance for doubtful debts no longer required Provision for liquidated ascertained damages Provision for litigation damages Provision for liquidated ascertained damages no longer required Loss/(Gain) on disposal of - plant and equipment - other financial assets Waiver of term loan liabilities Operating profit/(loss) before working capital changes Decrease in inventories (Increase)/Decrease in trade and other receivables Increase/(Decrease) in trade and other payables Decrease/(Increase) in development costs Cash generated from/(used in) operations Income tax (paid)/refunded net Net cash from/(used in) operating activities 15,410 (87) - - 2,328 9 595 (22,793) (28) (485) (58) 270 - 4,197 (8) 161 777 215 - 3,408 (766) - 3,689 - - (3,000) - 3,834 124 (29,566) 19,375 38,964 32,731 (274) 32,457 9,452 (62) (2,689) - 131 - 655 (3,542) - - (33) 1,230 - 8,112 (339) 56 23,713 292 - 3,958 (38,451) 817 - (2,054) 53 - (1,328) (29) 44 (6,923) 5,172 (14,134) (15,870) (12) (15,882) (5,374) - - (106) - - 219 - (27) (434) (58) - - 1,858 (8) - - - 5,352 - - - - - - (3,000) - (1,578) - (431) 205 - (1,804) 224 (1,580) (6,640) (123) 290 (1,633) 1,577 2,957 (339) 201 1,350 1,250 (933) (2,043) 1,081 (937) (1,899) (1,899)

STATEMENTS OF Cash flows

FOR THE YEAR ENDED 31 MAY 2012
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Cash flows from/(used in) investing activities Acquisition of a subsidiary (Note 12) Acquisition of quoted investment Net dividends received Increase in investment properties Interest received Proceeds from disposal of - other financial assets - plant and equipment Payments for - additional shares in an existing subsidiary - plant and equipment Net cash (used in)/from investing activities Cash flows from/(used in) financing activities Interest paid Repayments of revolving credits net Repayments from/(Advances to) subsidiaries Repayments of hire purchase liabilities Repayments of term loans Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Cash and cash equivalents are represented by cash and bank balances - (21) 12 (15,911) 8 3,971 21 - (2,173) (14,093) (3,641) (25) 32 - 279 - 16 - (501) (3,840) - (20) 12 - 8 3,971 - - (10) 3,961 (4,500) (24) 32 279 (2,000) (324) (6,537)
(4,197) - - (191) (15,582) (19,970) (1,606) 3,451 1,845 1,845
(69) (413) - (237) (2,279) (2,998) (22,720) 26,171 3,451 3,451
(1,858) - 378 (147) (731) (2,358) 23 434 457 457
(24) (14,027) (139) (14,190) (22,626) 23,060 434 434

NOTES TO THE FINANCIAL STATEMENTS

31 MAY 2012 1. General information The principal activities of the Company consist of investment holding and provision of management services. The principal activities of the subsidiaries are disclosed in Note 12. 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 registered office is located at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur. The principal place of business is located at 1.61 First Floor, South City Plaza, Persiaran Serdang Perdana, Seksyen 1, 43300 Seri Kembangan, Selangor Darul Ehsan. The financial statements were approved and authorised for issue by the board of directors on 24 September 2012.
2. Basis of preparation of the financial statements The financial statements of the Group and the Company have been prepared and presented in accordance with the provisions of the Companies Act, 1965 and the Approved Accounting Standards for Entities Other Than Private Entities issued by the Malaysian Accounting Standards Board (MASB). In the preparation of the financial statements, the directors are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the financial year. Actual results could differ from those estimates. Estimates and judgments are continually evaluated by the directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the process of applying the Groups accounting policies, which are described below, management is of the opinion that there are no instances of application of judgment which are expected to have a significant effect on the amounts recognised in the financial statements. Management believes that there are no key assumptions made concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year other than as follow: (i) Property development The Group recognises property development revenue and expenses in the 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. Significant judgement is required in determining the stage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the property development costs. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.
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31 MAY 2012
2. Basis of preparation of the financial statements (continued) (ii) Provision for litigation damages A subsidiary of the Group, Pujian Development Sdn Bhd (PDSB) was served with a writ of summon by 24 purchasers seeking rescission of the Sale and Purchase Agreements entered into with PDSB in respect of the shop units in South City Plaza. The Court has awarded the plaintiff claims and have set 28 September 2012 as the case management date for assessment of damages. In determining the provision of damages to be paid to the purchasers, significant assumptions have been made in relation to the period covered and interest rate used to calculate the interest on the purchase consideration received for the shop units. The carrying amount of the provision as at 31 May 2012 is RM3.69million as disclosed in Note 26 to the financial statements.
The Group and the Company had adopted the new and revised Financial Reporting Standards (FRSs) and IC Interpretations that become mandatory for the current financial year. The adoption of these new and revised FRSs and IC Interpretations does not result in significant changes in accounting policies of the Group and the Company other than as follow: i. Revised FRS 3 Business Combinations and Revised FRS 127 Consolidated and Separate Financial Statements The revised standards are effective for annual periods beginning on or after 1 July 2010. The revised FRS 3 introduces a number of changes in the accounting for business combinations occurring after 1 July 2010. These changes will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. The revised FRS 127 requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will they give rise to gain or loss. All earnings and losses of the subsidiary are attributed to the parent and the non controlling interest, even if the attribution of losses to the non-controlling interest results in a debit balance in the shareholders equity. Furthermore, the revised standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes from revised FRS 3 and revised FRS 127 will affect accounting treatment of future acquisitions or loss of control and transactions with non-controlling interests. The revised FRS 3 and revised FRS 127 have been applied prospectively in accordance with its transitional provisions.
ii. Amendments to FRS 7 Financial Instruments: Disclosures Amendments to FRS 7 enhances the disclosure requirements on fair value measurement using three levels of fair value hierarchy and reinforces existing principles for disclosures about liquidity risk. It also requires qualitative disclosures to be made in the context of quantitative disclosures to enable users to link related disclosures and form an overall picture of the nature and extent of risks arising from financial instruments. The Group has applied Amendments to FRS 7 in the current financial year. The new disclosures are included throughout the Groups financial statements for the year ended 31 May 2012.
The Company has not adopted the new standards, amendments to published standards and interpretations that have been issued but not yet effective. These new standards, amendments to published standards and interpretations do not result in significant changes in accounting policies of the Company upon their initial application other than the following: i. Malaysian Financial Reporting Standards (MFRS) Framework MASB has issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards in conjunction with its plan to converge with the International Financial Reporting Standards (IFRS) in 2012. The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012 with the exception of entities that are within the scope of MFRS 141 Agriculture and IC Interpretation 15 Agreements for Construction of Real Estate including its parent, significant investor and venturer (herein called Transitioning Entities).
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31 MAY 2012
2. Basis of preparation of the financial statements (continued) i. Malaysian Financial Reporting Standards (MFRS) Framework (continued) Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional two years. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2014. The Group falls within the scope definition of Transitioning Entities and accordingly will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 31 May 2015. In general, MFRS 1 requires comparative information to be restated as if the requirements of MFRSs under the new framework have always been applied, except when the standard prohibits retrospective application in some aspects or allows the first time adopter to use one or more of the exemptions or exceptions contained therein. The MFRS 1 requires an entity to provide extensive disclosures to explain how the transition from previous GAAP to MFRSs affected the reported financial position, financial performance and cash flows of the entity. In conjunction with the convergence, the financial statements will be having dual compliance framework. Entities would be required to make, in the notes, an explicit and unreserved statement of compliance with both MFRS and IFRS. The Group is in the process of carrying out its assessment on the financial effects of the differences between FRSs and MFRS Framework. Accordingly, the financial statements for the year ended 31 May 2012 could be different if prepared under the MFRS Framework. The Group is expected to fully comply with the requirements of the MFRS Framework for the financial year ending 31 May 2015.
3. Significant accounting policies Basis of accounting The financial statements of the Group and the Company have been prepared under the historical cost convention and any other bases described in the significant accounting policies as summarised below.
Basis of consolidation 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. Acquisitions of subsidiaries are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss. The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interests proportionate share of the acquirees net identifiable assets.
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31 MAY 2012
3. Significant accounting policies (continued) Basis of consolidation (continued) Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Groups previously held equity interest in the acquiree (if any), over the net fair value of the acquirees net identifiable assets and liabilities is recorded as goodwill in the statement of financial position. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date. 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. Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company. Changes in the Company owners ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributable to owners of the parent.
Revenue and income recognition Revenue from sale of goods is measured at the fair value of the consideration receivable and is recognised in the profit or loss upon delivery of goods and when the risks and rewards of ownership have passed to the customers. Revenue from management services rendered is recognised in the profit or loss when the services are rendered. Revenue from property development is recognised in accordance with the accounting policy disclosed under development property and costs. Revenue relating to construction contracts is recognised in accordance with the accounting policy disclosed under construction contracts. Dividend income is recognised when the shareholders right to receive payment is established. Interest income is recognised as it accrues (using the effective interest rate method) unless collectability is in doubt. Rental income is recognised as it accrues unless collectibility is in doubt. 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 (functional currency). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Companys functional currency and all values are rounded to the nearest thousand (RM000) except when otherwise indicated.
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31 MAY 2012
3. Significant accounting policies (continued) Foreign currencies (continued) (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. 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 Groups 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 other comprehensive income. Exchange differences arising from such non-monetary items are also recognised directly in other comprehensive income.
(iii) Foreign operations The assets and liabilities of foreign operations are translated into Ringgit Malaysia 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.
The principal exchange rates for every unit of foreign currency ruling at reporting date used are as follows:
2012 2011 RM RM United States Dollar 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 of the Group and the Company. 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. 3.18 3.01
(ii) Defined contribution plans Obligations for contributions to defined contribution plans such as Employees Provident Fund are recognised as an expense in the profit or loss as incurred.
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31 MAY 2012
3. Significant accounting policies (continued) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the reporting date. Deferred tax is provided for, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in the profit or loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised in equity or other comprehensive income. Impairment of non-financial assets The carrying amount of assets subject to accounting for impairment are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable amount. Impairment losses are recognised in the profit or loss in the period in which it arises, unless, the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in asset revaluation reserve for the same asset. The recoverable amount is the greater of the assets net selling price and its value in use. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The reversal is recognised in the profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase. Plant and equipment and depreciation Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when 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. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss during the financial year in which they are incurred. Gain or loss arising from the disposal of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in the profit or loss.
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31 MAY 2012
3. Significant accounting policies (continued) Plant and equipment and depreciation (continued) Depreciation on plant and equipment is calculated 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: Machinery, equipment and vehicles Renovation and signage 3 - 10 years 5 years
The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of plant and equipment. Development property and 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 and is stated at cost less any impairment losses. Land held for property development is reclassified as property development costs at the point when development actitivies 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 attributable to development activities or that can be allocated on a reasonable basis to such activities. When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in the 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 reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the year in which they are incurred. Any expected loss on a development project, including costs to be incurred over the defect liability period, is recognised as an expense immediately. Property development costs not recognised as an expense is recognised as an asset, which is measured at the lower of cost and net realisable value. The excess of revenue recognised in the profit or loss over billings to purchasers is classified as accrued billings under trade receivables and the excess of billings to purchasers over revenue recognised in the profit or loss is classified as progress billings under trade payables.
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31 MAY 2012
3. Significant accounting policies (continued) Investment properties Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value. Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties having valued. A gain or loss arising from a change in the fair value of investment properties is recognised in profit or loss for the year in which it arises. A property interest under an operating lease is classified and accounted for as an investment property on a property by property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value. 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 gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise.
Investment in subsidiaries Subsidiaries are those companies controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of a company so as to derive benefits from its activities. The Companys investment in subsidiaries is stated at cost less impairment losses, if any.
Intangible assets Intangible assets including trademark licence acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised on a straight line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each reporting date. Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable. Inventories Inventories are stated at the lower of cost and net realisable value. Cost of inventories is determined on the weighted average basis. Net realisable value represents the estimated selling prices less all estimated costs to completion and costs to be incurred in marketing, selling and distribution. Costs of trading merchandise comprise the cost of purchase plus the cost of bringing the inventories to their present location and condition.
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31 MAY 2012
3. Significant accounting policies (continued) Construction contracts Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs. Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. Cost includes direct materials, labour, sub contract sum and attributable overheads paid or payable to date. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. Amount due from customers for construction contracts is the net amount of costs incurred plus recognised profits less the sum of recognised losses and progress billings for all contracts in progress for which costs incurred plus recognised profits (less recognised losses) exceed progress billings. Amount due to customers for construction contracts is the net amount of costs incurred plus recognised profits less the sum of recognised losses and progress billings for all contracts in progress for which progress billings exceed costs incurred plus recognised profits (less recognised losses). Leases Assets acquired under leases which transfer substantially all the risks and rewards incident to ownership of the assets are capitalised under plant and equipment. The assets and the corresponding lease obligations are recorded at their fair values or, if lower, at the present value of the minimum lease payments of the leased assets at the inception of the respective leases. Finance costs, which represent the difference between the total lease commitments and the fair values of the assets acquired, are charged to the profit or loss over the term of the relevant lease periods so as to give a constant periodic rate of charge on the remaining balance of the obligations for each accounting period. All other leases which do not meet such criteria are classified as operating leases. Lease payments under operating leases are recognised as expense in the profit or loss on a straight line basis over the terms of the relevant lease. Plant and equipment acquired under hire purchase arrangements Plant and equipment acquired under hire purchase arrangements are capitalised in the financial statements and the corresponding obligations treated as liabilities. Finance charges are allocated to the profit or loss to give a constant periodic rate of interest on the remaining hire purchase liabilities. Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risk specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
54

31 MAY 2012
3. Significant accounting policies (continued) 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 the 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.
Segment information An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Groups other components. An operating segments operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Financial instruments Financial instruments are recognised in the statements of financial position when the Group and the Company have become a party to the contractual provisions of the instrument. A financial instrument is recognised initially at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Company has legal enforceable right to offset and intends to settle either on a net basis or realise the asset and settle the liability simultaneously. Financial assets are classified as either at fair value through profit or loss, loans and receivables, held to maturity investments, or available-for-sale as appropriate. Financial liabilities are classified as either at fair value through profit or loss (derivative financial liabilities) or at amortised cost (borrowings and trade and other payables), as appropriate. (i) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. 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.
55

31 MAY 2012
3. Significant accounting policies (continued) Financial instruments (continued) (ii) 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. 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 and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss 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.
(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 three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses in fair value of the financial assets 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 accumulated 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. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group and the Companys right to receive payment is established. Investment 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.
(iv) Payables Payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Payables are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
(v) Interest bearing borrowings 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.
56

31 MAY 2012
3. Significant accounting policies (continued) Financial instruments (continued) (vi) Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due. Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.
(vii) Equity instruments Equity instruments issued by the Company are recorded at the fair value of the proceeds received net of direct issue costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are approved.
A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss. A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. 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 on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Groups and the Companys past experience of collecting payments, an increased 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 exist, the amount of impairment loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. The impairment loss is recognised in profit or loss.
57

31 MAY 2012
3. Significant accounting policies (continued) Impairment of financial assets (continued) (i) Trade and other receivables and other financial assets carried at amortised cost (continued) The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade and other 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 impairment loss decreases and the decrease can be related objectively to an event occurring after 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.
(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 available-for-sale financial assets are 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. If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost (fair value cannot be reliably determined) has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Impairment losses 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.
Statements of cash flows Statements of cash flows are prepared using the indirect method. Cash equivalents are short term, highly liquid investments that are readily convertible to known amount of cash and which are subject to insignificant risk of changes in value.
4. Revenue Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Construction income Dividends Property development/investment Sale of goods Services - 58 158,023 401 2,001 160,483 9,274 33 13,358 585 1,726 24,976 - 58 - - 575 633 1,633 887 2,520
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31 MAY 2012
5. Cost of sales Group 2012 2011 RM000 RM000 Construction costs Property development/investment Sale of goods Services - 124,095 518 749 125,362 7,979 9,582 1,191 635 19,387
6. Finance costs Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Amortisation of financial liabilites carried at amortised cost Interest expenses on: - hire purchase - others - term loan 2,328 20 - 4,177 6,525 131 31 39 8,042 8,243 - 17 - 1,841 1,858 24 39 2,894 2,957
7. Profit/(Loss) before tax Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Profit/(Loss) before tax is arrived at after charging: Auditors remuneration - auditors of the Company - current year - over provision in prior year Bad debts written off Depreciation Directors estimated cash value of benefits in kind Directors fees Directors other emoluments Impairment losses on - plant and equipment - investment in subsidiaries Inventories written off Loss on disposal of plant and equipment Loss on revocation of retail units sold Plant and equipment written off Allowance for doubtful debts - subsidiaries - others Provision for liquidated ascertained damages Provision for litigation damages
164 - 9 595 54 145 848 270 - 161 - 777 215 - 3,408 - 3,689
150 (4) - 655 54 138 780 1,230 - 56 53 23,713 292 - 3,958 817 -
45 - - 219 54 145 632 - - - - - - 5,352 - - -
40 290 54 138 780 1,577 201 1,350 1,250 -
59

31 MAY 2012
7. Profit/(Loss) before tax (continued) Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Profit/(Loss) before tax is arrived at after charging: Rental of - premises - equipment Staff costs Tax penalty interest And crediting: Accretion of implicit interest in retention sums receivable Adjustments on financial liabilities carried at amortised cost Amortisation of financial guarantee liabilities Fair value adjustments on - investment properties - quoted instrument designated as financial assets at fair value through profit or loss Gross dividend income from - Malaysia - unquoted investment in a subsidiary - other unquoted investments - Foreign - other quoted investments Gain from bonus issues of warrants by quoted investment in Malaysia Gain on disposal of other financial assets Interest income from - short term deposits - sundry receivables Provision for liquidated ascertained damages no longer required Allowance for doubtful debts no longer required - subsidiaries - others Waiver of term loan liabilities
243 87 3,193 14,287
103 116 3,422 -
77 17 820 -
98 26 1,112 -
87 - - 22,793 28
62 2,689 - 3,542 -
- - 106 - 27
123 -
- 12 46 485 3,000 8 - - - 766 -
- 9 24 - - 279 60 2,054 - 38,451 1,328
- 12 46 434 3,000 8 - - - - -
1,600 9 24 279 60 208 725 -
Staff costs comprise: Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Defined contribution plan Salaries, wages and allowances Other employee related expenses 310 2,646 237 3,193 299 2,750 373 3,422 82 710 28 820 92 782 238 1,112
60

31 MAY 2012
7. Profit/(Loss) before tax (continued) The number of directors of the Company where total remuneration during the financial year falls within the following bands is analysed as follows: Executive directors: Nil RM350,001 to RM400,000 RM400,001 to RM500,000 Non executive directors: Below RM50,000 2012 1 - 2 2011 1 1 1
Loss on revocation of retail units sold: During the current and previous financial year: a) Pujian Development Sdn Bhd, a subsidiary of the Group has revoked the sale and purchase agreements of certain retail units entered into with a purchaser due to fundamental breach in the terms of the sale and purchase agreements; and b) The directors have decided to retain all retail units under construction in Segamat, Johor for leasing purposes. As a result, Tashima Development Sdn Bhd, a subsidiary of the Group, has obtained mutual agreement with certain purchasers to revoke the sale and purchase agreements entered into previously and has refunded the purchase consideration received in respect of the said retail units.
The loss arising from the various revocation of retail units sold are as follows:
Group 2012 2011 RM000 RM000 Revenue reversed Cost reversed Deposit forfeited (1,132) 355 - (777) (40,533) 13,220 3,600 (23,713)
8. Income tax expense Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Estimated income tax payable Malaysia - current - over/(under) provision in prior years Deferred tax (Note 14) (5,501) 524 (226) (5,203) (360) (13) (586) (959) - - - - -
61

31 MAY 2012
8. Income tax expense (continued) A reconciliation of income tax expense applicable to profit/(loss) before tax at the statutory income tax rate to income tax expense at the effective income tax rate is as follows:
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Profit/(Loss) before tax 15,410 (3,852) (8,406) 6,786 (1,135) 880 524 (5,203) 9,452 (2,363) (759) 11,590 (9,414) - (13) (959) (5,374) 1,343 (1,925) 908 (326) - - - (6,640) 1,660 (1,103) 488 (1,045) Income tax using Malaysian tax rate of 25% (2011: 25%) Expenses not deductible for tax purposes Income not subject to tax Deferred tax assets not recognised Utilisation of previously unrecognised deferred tax assets Over/(Under) provision in prior years - income tax Income tax expense for the year
9. Basic earnings per share Basic Basic earnings per ordinary share is calculated based on the net profit attributable to ordinary shareholders and weighted average number of ordinary shares in issue as follows:
Group 2012 2011 RM000 RM000 Net profit attributable to owners of the Company 10,920 000 650,148 1.68 8,760 000 650,148 1.35 Weighted average number of ordinary shares in issue Basic earnings per ordinary share (sen) Diluted Diluted earnings per share is not presented in the financial statements since there are no dilutive potential ordinary shares as at 31 May 2012 and 2011.
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31 MAY 2012
10. Plant and equipment Machinery, Renovation equipment Group and and 2012 signage vehicles Total RM000 RM000 RM000 Cost At beginning of year Additions Disposals Write offs At end of year Accumulated depreciation At beginning of year Charge for the year Disposals Write offs At end of year 596 199 - (46) 749 6,519 396 (35) (20) 6,860 7,115 595 (35) (66) 7,609 1,211 1,673 - (237) 2,647 12,922 500 (56) (44) 13,322 14,133 2,173 (56) (281) 15,969
Accumulated impairment losses At beginning of year Impairment during the year At end of year Net book value At 31 May 2012 - - - 5,358 270 5,628 5,358 270 5,628
1,898
834
2,732
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31 MAY 2012
10. Plant and equipment (continued) Machinery, Renovation equipment Group and and 2011 signage vehicles Total RM000 RM000 RM000 Cost At beginning of year Additions Acquisition of a subsidiary (Note12) Disposals Write offs At end of year Accumulated depreciation At beginning of year Charge for the year Disposals Write offs At end of year Accumulated impairment losses At beginning of year Impairment during the year At end of year Net book value At 31 May 2011 - - - 4,128 1,230 5,358 4,128 1,230 5,358 678 133 - (215) 596 6,970 522 (112) (861) 6,519 7,648 655 (112) (1,076) 7,115 1,196 417 - - (402) 1,211 13,876 141 52 (181) (966) 12,922 15,072 558 52 (181) (1,368) 14,133
615
1,045
1,660
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31 MAY 2012
10. Plant and equipment (continued) Company Equipment 2012 Renovation and vehicles Total RM000 RM000 RM000 Cost At beginning of year Additions Write offs At end of year 292 - - 292 2,649 10 (147) 2,512 2,941 10 (147) 2,804
Accumulated depreciation At beginning of year Charge for the year Write offs At end of year Net book value At 31 May 2012 24 29 - 53 2,259 190 (147) 2,302 2,283 219 (147) 2,355
239
210
449
Company Equipment 2011 Renovation and vehicles Total RM000 RM000 RM000 Cost At beginning of year Additions Write offs At end of year 375 320 (403) 292 2,899 4 (254) 2,649 3,274 324 (657) 2,941
Accumulated depreciation At beginning of year Charge for the year Write offs At end of year Net book value At 31 May 2011 179 60 (215) 24 2,270 230 (241) 2,259 2,449 290 (456) 2,283
268
390
658
65

31 MAY 2012
10. Plant and equipment (continued) At the reporting date: (i) Plant and equipment under hire purchase arrangements are:
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 At net book value Motor vehicles 210 451 160 335
During the financial year, plant and equipment of the Group and the Company were acquired by means of the following:
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Total additions Additions through hire purchase arrangements Cash payments 2,173 - 2,173 558 (57) 501 10 - 10 324 324
11. Investment properties Long term leasehold retail units, Group commercial space and car Construction 2012 park bays in progress Total RM000 RM000 RM000 At beginning of year Additions during the year Transferred (to)/from property development costs (Note17) Additions arising from revocation of retail units sold Gain from fair value adjustment recognised in profit or loss Reclassification At end of year 278,620 - (6,146) 118 22,793 60,807 356,192 39,645 21,053 109 - - (60,807) - 318,265 21,053 (6,037) 118 22,793 356,192
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31 MAY 2012
11. Investment properties (continued) Long term leasehold retail units, Group commercial space and car Construction 2011 park bays in progress Total RM000 RM000 RM000
At beginning of year Gain from fair value adjustment recognised in profit or loss Transferred from property development costs (Note 17) Additions arising from revocation of retail units sold At end of year
263,247 3,542 - 11,831 278,620
- - 39,645 - 39,645
263,247 3,542 39,645 11,831 318,265
The investment properties of the Group with carrying amount of RM356.1 million (2011: RM318.3 million) have been pledged as collaterals to secure the banking facilities referred to in Note 24. Fair value of investment properties of the Group were stated by the directors based on professional valuations carried out by Hj. Sukiman Bin Kasmin, a registered valuer with Henry Butcher Malaysia (Kluang) Sdn Bhd and Mr Long Tian Chek, a registered valuer with Henry Butcher Malaysia Sdn Bhd in July and August 2012 respectively using the market value basis.
12. Investment in subsidiaries Company 2012 2011 RM000 RM000 Unquoted shares, at cost At beginning of year Effect of adopting FRS 139 As restated Acquisition of a subsidiary Subscription of additional shares in a subsidiary At end of year 309,922 - 309,922 - - 309,922 302,722 700 303,422 4,500 2,000 309,922
Accumulated impairment losses At beginning of year Impairment loss for the year At end of year Carrying amount
(266,584) - (266,584) 43,338
(265,007) (1,577) (266,584) 43,338
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31 MAY 2012
12. Investment in subsidiaries (continued) The details of the subsidiaries are as follows: Groups effective interest 2012 2011 % %
Issued Country of and paid up incorporation share capital RM000 (unless otherwise indicated)
Subsidiaries of the Company Pujian Development Sendirian Berhad Malaysia 6,200 100 100 EcoFirst Development Sdn Bhd Malaysia 100 100 100 EcoFirst Construction Sdn Bhd Malaysia 2,550 100 100 Tashima Development Sdn Bhd Malaysia 500 100 100 Gangsa Etnik Sdn Bhd Malaysia 500 68 68 Panorama Tiara Sdn Bhd Malaysia 3,000 69 69 EcoFirst Products Sdn Bhd Malaysia 1,500 70 70 Earth Revolution Sdn Bhd Malaysia # 51 51 EcoFirst Fibaloy Sdn Bhd Malaysia 1,700 51 51 Opal Horizon Sdn Bhd Malaysia # 100 100 EcoFirst Biotech Sdn Bhd Malaysia 250 52 52 EcoFirst Laboratories Sdn Bhd Malaysia 250 100 100 EcoFirst Agro Holdings Sdn Bhd Malaysia 110 100 100 EcoFirst Hartz Sdn Bhd Malaysia 500 100 100 KE Management & Training Sdn Bhd Malaysia 100 60 60 KE Management Services Sdn Bhd Malaysia # 100 100 Hasil Rezeki (M) Sdn Bhd Malaysia 25 100 100
Property development and property investment Dormant Construction Property development and property investment Property development Property development Multilevel marketing Dormant Ceased operation Investment holding Dormant Research and development Investment holding Ceased operation Ceased operation General insurance agency Dormant
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31 MAY 2012
12. Investment in subsidiaries (continued) Issued Country of and paid up incorporation share capital RM000 (unless otherwise indicated) Subsidiaries of the Company Gaydon Resources Limited British Virgin Islands Malaysia USD1 # 100 100 100 100 Dormant Ceased operation Groups effective interest 2012 2011 % %
Fantasy Bowl Sdn Bhd (formerly known as Minat City Automotive Centre Sdn Bhd) Sawitani Sdn Berhad Jiddi Joned Enterprises Sdn Bhd Berembang Sendirian Berhad Mudek Sdn Bhd Seri Jasin Sdn Bhd Gabema Sdn Bhd EcoFirst Products Worldwide Sdn Bhd Curah Bahagia Sdn Bhd Subsidiary of Gabema Sdn Bhd Pengangkutan Gabema Sdn Bhd Subsidiaries of Pujian Development Sendirian Berhad Kilat Inspirasi Sdn Bhd Efex Trade & Exhibitions Sdn Bhd Budaya Fokus Sdn Bhd Southern Utilities Corporation Sdn Bhd
Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia
10,000 5,500 2,800 2,800 1,946 26 # 2,500
100
100
Investment holding Ceased operation Ceased operation Ceased operation Ceased operation Ceased operation Investment holding Property development
82.2 82.2 98.1 98.1 89.3 89.3 98.3 98.3 97.7 100 100 97.7 100 100
Malaysia
65
90.2 90.2
Ceased operation
Malaysia Malaysia Malaysia Malaysia
180 # 500 #
100 100 100 100
100 100 100 100
Dormant Dormant Ceased operation Ceased operation Provision of management services
SCP Management Sdn Bhd Malaysia 10 100 100
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31 MAY 2012
12. Investment in subsidiaries (continued) Issued Country of and paid up incorporation share capital RM000 (unless otherwise indicated) Groups effective interest 2012 2011 % %
Subsidiaries of EcoFirst Agro Holdings Sdn Bhd EcoFirst Agro-Industries Sdn Bhd Malaysia 1,000 75 75 Investment holding EcoFirst-YPM Sdn Bhd Malaysia 250 70 70 Dormant Subsidiary of EcoFirst Agro-Industries Sdn Bhd J-Biotech EcoFirst Agro Sdn Bhd Malaysia 1,000 52 52 Operation of agriculture related businesses Subsidiary of EcoFirst Products Worldwide Sdn Bhd EcoFirst Products (S) Pte Ltd * Singapore # - 100 Ceased operations The financial statements of the subsidiary indicated by * are not audited by Russell Bedford LC & Company. # issued and paid up share capital of less than RM1,000 During the financial year, EcoFirst Products (S) Pte Ltd, a direct subsidiary of Ecofirst Products Worldwide Sdn Bhd, has been de-registered from the Accounting and Corporate Regulatory Authority of Singapore. The Company also further subscribed for additional 100 ordinary shares of RM1 each in Curah Bahagia Sdn Bhd (CURAH) for a cash consideration of RM100. In the previous financial year, the Company acquired 100% equity interest in CURAH for a total cash consideration of RM4,500,000. Upon acquisition, CURAH become a subsidiary of the Group. CURAH is a company incorporated in Malaysia and is principally involved in property development activities. Subsequently, the Company further subscribed for additional 2,000,000 ordinary shares of RM1 each in CURAH for a cash consideration of RM2,000,000.
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31 MAY 2012
12. Investment in subsidiaries (continued) The fair value of the identifiable assets and liabilities of CURAH as at the date of acquisition is as follows: 2011 RM000 Non current assets Plant and equipment Current assets Property development costs Trade receivables Other receivables, deposits and prepayments Cash and bank balances Total assets Current liabilities Trade payables Other payables and accruals Tax payables Total liabilities Identifiable net assets acquired /Purchase consideration 52
15,045 12,573 6,003 859 34,532
16,961 12,682 389 (30,032) 4,500
The effect of the acquisition on cash flows is as follows: Group 2011 RM000 Total cash consideration paid Less: Cash and cash equivalents of subsidiary acquired Net cash outflow on acquisition 4,500 (859) 3,641
The acquired subsidiary had contributed the following results to the Group: Group 2011 RM000 Revenue Net profit after tax for the year 6,191 223
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31 MAY 2012
13. Other financial assets Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Financial assets at fair value through profit or loss: - Quoted equity instruments in Malaysia, at cost Available-for-sale financial assets: Quoted equity instruments, at cost - Malaysia - Foreign Accumulated impairment losses At beginning of year Disposals At end of year 505 - 453 -
11,316 296 11,612
13,859 249 14,108
2,218 296 2,514
4,761 249 5,010
(11,855) 1,572 (10,283)
(11,855) - (11,855)
(2,942) 1,572 (1,370)
(2,942) (2,942)
Fair value adjustments At beginning of year Opening balance adjustment for FRS 139 Changes for the year - recognised in - profit or loss - statement of other comprehensive income - reclassification adjustment relating to derecognition At end of year Carrying amount of quoted equity instruments Unquoted equity instruments, at cost: At the beginning/end of year Less: Accumulated impairment losses Carrying amount of unquoted equity instruments Total carrying amount of other financial assets Market value of quoted equity shares
4,390 -
- 970
4,150 -
950
28 3,669 (3,239) 458 4,848 6,682
- 3,420 - 3,420 4,390 6,643
27 3,349 (3,239) 137 4,287 5,884
3,200 3,200 4,150 6,218
16,148 (15,010) 1,138 7,820 6,682
16,148 (15,010) 1,138 7,781 6,643
16,110 (15,010) 1,100 6,984 5,884
16,110 (15,010) 1,100 7,318 6,218
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31 MAY 2012
14. Deferred tax assets Group 2012 2011 RM000 RM000 At beginning of year Recognised in profit or loss (Note 8) - current year At end of year Presented after appropriate offsetting as follows: Deferred tax assets Deferred tax liabilities 226 (226) - 812 (586) 226
13,940 (13,940) -
13,135 (12,909) 226
Deferred tax assets of the Group are in respect of the following:
Group 2012 2011 RM000 RM000 Tax effects of unabsorbed capital allowances and unutilised tax losses 13,940 13,135
The unused tax losses and unused tax credits are available indefinitely for offset against future taxable profit of the subsidiaries in which those items arose. Deferred tax liabilities of the Group are in respect of the following:
Group 2012 2011 RM000 RM000 Tax effects of excess of tax capital allowances over related depreciation of property, plant and equipment Deferred tax assets have not been recognised in respect of the following temporary differences: (13,940) (12,909)
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Tax effects of: Unabsorbed capital allowances and unutilised tax losses Other deductible temporary differences 34,511 12,332 46,843 33,738 15,563 49,301 5,198 - 5,198 4,125 4,125
Portion of the deferred tax assets have not been recognised as it is not probable that taxable profit will be available in the foreseeable future to utilise these deferred tax assets.
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31 MAY 2012
15. Intangible asset Group 2012 2011 RM000 RM000 Trademark licence at cost At beginning and end of year Accumulated amortisation At beginning and end of year Accumulated impairment losses At beginning and end of year Carrying amount 570 570
32
32
538 -
538 -
16. Inventories Group 2012 2011 RM000 RM000 17. Property development costs Group 2012 2011 RM000 RM000 At beginning of year: Long term leasehold land Freehold land Development costs 98,338 26,282 60,041 184,661 103,046 108,451 211,497 Trading merchandise, at cost 44 329
Costs incurred during the year: Acquisition of subsidiary (Note12) - Freehold land - Development costs Freehold land Development costs
- - - 6,602 65,240 71,842 (1,058) 70,784
14,100 945 15,045 12,182 18,199 30,381 45,426
Disposal of a parcel of freehold land


31 MAY 2012
17. Property development costs (continued) Group 2012 2011 RM000 RM000 Transferred (to)/from investment properties (Note 11) - Long term leasehold land - Development cost Reversal for completed projects: Long term leasehold land Developments costs Freehold land (19) 6,056 6,037 (4,708) (67,554) (72,262)
(97,696) (52,881) (379) (150,956)
Costs recognised in profit or loss: At beginning of year Recognised during the year Reversal for completed projects At end of year Accumulated expected losses: At beginning of year Reversal during the year Reversal for completed projects Transferred to investment properties (Note 11) At end of year Property development costs at end of year
(50,675) (132,185) 90,200 (92,660)
(46,780) (3,895) (50,675)
(77,156) 16,400 60,756 - - 17,866
(109,773) 32,617 (77,156) 56,830
Property development costs of the Group with carrying value of RM2.8 million (2011: RM32.2 million) have been charged as collaterals to secure the banking facilities as referred to in Note 24.
18. Trade receivables Group 2012 2011 RM000 RM000 Trade receivables Accrued billings for property development 65,770 - 65,770 (22,731) 43,039 (43,039) - 30,776 1,146 31,922 (22,351) 9,571 (7,484) 2,087
Less: Allowance for doubtful debts Less: Portion due within one year Non current portion
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31 MAY 2012
18. Trade receivables (continued) Group 2012 2011 RM000 RM000 The non current portion of trade receivables is receivable as follows: Later than 1 year and not later than 2 years The Groups normal trade credit term is 30 days (2011: 30 days). The following table provides information on the trade receivables credit risk exposure. - 2,087
Group 2012 2011 RM000 RM000 Not impaired or past due 1 - 30 days past due not impaired 31 - 60 days past due not impaired 61 - 90 days past due not impaired More than 90 days past due not impaired 27,928 6,694 5,457 2,304 656 43,039 22,731 65,770 2,100 3,514 3,078 463 416 9,571 22,351 31,922
Impaired
Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. The movements in the allowance for doubtful debts accounts for trade receivables that are individually impaired at reporting date are as follows:
Group 2012 2011 RM000 RM000 At beginning of year Allowance for the year Allowance no longer required Written off At end of year 22,351 1,146 (766) - 22,731 57,589 2,083 (36,497) (824) 22,351
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.
76

31 MAY 2012
19. Amount due from/(to) subsidiaries Company 2012 2011 RM000 RM000 Amount due from subsidiaries Less: Allowance for doubtful debts 350,058 (47,381) 302,677 320,287 (42,029) 278,258
The movements in the allowance for doubtful debts accounts for amount due from subsidiaries that are individually impaired at reporting date are as follows:
Company 2012 2011 RM000 RM000 At beginning of year Allowance for the year Allowance no longer required At end of year 42,029 5,352 - 47,381 40,887 1,350 (208) 42,029
The amounts due from/(to) subsidiaries comprise unsecured interest free advances receivable/(repayable) on demand.
20. Other receivables, deposits and prepayments Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Other receivables Deposits and prepayments 43,706 8,602 52,308 (42,199) 10,109 43,675 12,291 55,966 (39,937) 16,029 33,706 719 34,425 (33,300) 1,125 33,300 130 33,430 (33,300) 130
Less: Allowance for doubtful debts
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Included under other receivables, deposits and prepayments are: - deposits and advances paid in relation to the acquisition of mining rights Less: allowance for doubtful debts - Prepayment for term loan installments - Funds placed at stakeholder for settlement of purchase consideration in relation to acquisition of freehold land used for property development
4,852 (2,262) 2,590 564
4,172 - 4,172 -
- - - 564
981
5,759
77

31 MAY 2012
20. Other receivables, deposits and prepayments (continued) The movements in the allowance for doubtful debts accounts for other receivables and deposits that are individually impaired at reporting date are as follows:
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 At beginning of year Allowance for the year Allowance no longer required Written off At end of year 39,937 2,262 - - 42,199 41,114 1,875 (1,954) (1,098) 39,937 33,300 - - - 33,300 32,775 1,250 (725) 33,300
Other receivables and deposits 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.
21. Share capital Group and Company 2012 2011 No. of No. of ordinary ordinary shares of shares of Group and Company RM0.50 each RM0.50 each 2012 2011 000 000 RM000 RM000 Authorised: At beginning and end of year Issued and fully paid: At beginning and end of year 650,148 650,148 325,074 325,074 2,000,000 2,000,000 1,000,000 1,000,000
22. Reserves Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Accumulated losses Non distributable: Share premium Fair value adjustment reserve Foreign exchange translation reserve 295,727 4,820 7 300,554 (195,106) 295,727 4,390 11 300,128 (206,452) 295,727 4,260 - 299,987 (208,265) 295,727 4,150 299,877 (203,001) (495,660) (506,580) (508,252) (502,878)
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31 MAY 2012
22. Reserves (continued) Share premium represents the excess of the consideration received over the nominal value of the shares issued by the Company. The Groups fair value adjustment reserve represents the cumulative fair value changes, net of tax, of available-for-sale financial assets until they are disposed of or impaired.
23. Hire purchase liabilities Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Amount outstanding Less: Interest in suspense Principal portion Less: Portion due within one year Non current portion 305 (29) 276 (137) 139 516 (49) 467 (190) 277 273 (28) 245 (109) 136 437 (45) 392 (146) 246
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 The non current portion of the hire purchase obligations are payable as follows: Later than 1 year and not later than 2 years Later than 2 years and not later than 5 years Later than 5 years
29 86 24 139
137 56 84 277
26 86 24 136
110 53 83 246
The weighted average effective interest rate implicits in the hire purchase obligations is 4.99% (2011: 5.26%) per annum.
24. Borrowings Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Term loans - secured Non convertible preference shares issued by a subsidiary to its minority shareholder Less: Current portion included under current liabilities Non current portion 118,972 1,000 119,972 (23,514) 96,458 132,014 1,000 133,014 (28,370) 104,644 42,790 - 42,790 (2,207) 40,583 17,957 17,957 17,957
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31 MAY 2012
24. Borrowings (continued) Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 The non current portion of borrowings is payable as follows: Later than 1 year and not later than 2 years Later than 2 years and not later than 5 years Later than 5 years 5,152 20,927 70,379 96,458 56,411 16,116 32,117 104,644 3,444 14,219 22,920 40,583 1,600 10,200 6,157 17,957
The weighted average effective interest rate per annum is as follows:
Term loans - secured Secured borrowings are secured by way of:
2012 % 8.19%
Group Company 2011 2012 2011 % % % 8.48 7.47% 8.60
Carrying amount Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Investment properties (Note 11) Property development costs (Note 17) 356,192 2,811 318,265 32,223 - - -
Certain bank borrowings of the subsidiaries are also guaranteed by the Company. The Companys term loans are secured by the investment properties and property development costs of its subsidiaries.
25. Trade payables Group 2012 2011 RM000 RM000 Trade payables Progress billings for property development 25,572 8,672 34,244 (30,529) 3,715 24,955 24,955 (23,302) 1,653
Less: Portion due within one year Non current portion
Group 2012 2011 RM000 RM000 The non current portion of trade payables are repayable as follows: Later than 1 year and not later than 2 years The normal trade credit period granted to the Group is 30 days (2011: 30 days). 3,715 1,653
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31 MAY 2012
26. Other payables and accruals Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Deposits received from tenants and purchasers of development properties Financial guarantee liabilities Unsecured interest free advances from third parties Provision for contingencies in respect of disposal of subsidiaries Accrued interest Real property gains tax liabilities accrued for accounting purposes Liquidated ascertained damages in respect of property development projects Provision for litigation damages Profit guarantee liabilities Tax penalties and interest accrued for accounting purposes Quit rent and assessment payables Contribution payable for local authority Outstanding purchase consideration for freehold land acquired for property development Other payables Accruals Less: Non current portion Portion due within one year 8,045 - 46 337 13,400 10,197 3,101 3,689 2,189 19,599 2,000 2,598 13,488 17,906 96,595 5,707 102,302 (6,100) 96,202 6,871 - 445 337 13,231 10,197 6,125 - 2,189 5,311 2,017 3,198 23,313 12,797 86,031 2,158 88,189 - 88,189 - 471 46 337 13,400 616 - - 2,189 - - - - 2,749 19,808 185 19,993 (377) 19,616 577 50 337 13,231 616 2,189 2,683 19,683 211 19,894 (471) 19,423
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 The non current portion of other payables are repayable as follows: Later than 1 year and not later than 2 years Later than 2 years and not later than 5 years Later than 5 years 6,100 - - 6,100 - - - - 82 180 115 377 93 263 115 471
The movement of provision for litigation damages is as follows:
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 At beginning of year Provision during the year At end of year - 3,689 3,689 - - - - - - -
The provision was made in relation to the outstanding ligitations disclosed in Note 29(i).
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31 MAY 2012
27. Significant related party disclosures (a) Related party transactions Significant transaction with related parties are as follows:
Group and Company Related parties Type of transactions 2012 2011 RM000 RM000 A person connected to Dato (Dr) Teoh Seng Foo and Acquisition of a subsidiary Teoh Seng Kian, the directors of the Company Dato Tiong Kwing Hee Disposal of other financial assets - 4,500
1,645
The directors are of the opinion that the terms and conditions and prices of the above transactions are not materially different from that obtainable in transactions with unrelated parties. (b) Related party balances Group and Company 2012 2011 RM000 RM000 Significant outstanding balances with companies in which certain directors have interests Name of company Payable Meda Inc Berhad - profit guarantee liabilities (c) Compensation of key management personnel The key management personnel comprises mainly executive directors of the Company whose remuneration is disclosed in Note 7.
2,189
2,189
28. Commitments Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Operating lease commitments The future minimum lease payments under non cancellable operating leases are as follows: Not later than 1 year Later than 1 year and not later than 2 years Later than 2 years and not later than 5 years
461 84 34 579
311 249 54 614
236 51 9 296
236 235 60 531
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31 MAY 2012
29. Material litigations and claims (i) Pujian Development Sdn Bhd (PDSB), a subsidiary of the Group was served with a writ of summons by 24 purchasers seeking rescission of the Sale and Purchase Agreements entered into with PDSB in respect of the shop units in the South City Plaza. The Court has awarded the plaintiffs claims and PDSB has filed for appeal. The Court of Appeal dismissed PDSBs appeal with cost on 3 October 2011. The plaintiff filed an application for assessment of damages at the High Court and it is now fixed for case management on 28 September 2012. For accounting purposes, PDSB had made a provision of RM3.69 million for the payment of interest in relation to the purchase consideration received pending assessment of the High Court.
(ii) The Inland Revenue Board (IRB) issued a writ of summons against each of the 4 subsidiaries, Mudek Sdn Bhd (Mudek), Seri Jasin Sdn Bhd (Seri Jasin), Berembang Sendirian Berhad (Berembang) and Jiddi Joned Enterprises Sdn Bhd (Jiddi Joned) individually for real property gains tax owed by the subsidiaries. The IRB has obtained a summary judgment against Mudek, Seri Jasin and Jiddi Joned. The subsidiaries appeals have been dismissed by the Court of Appeal except for Mudek which has yet to be heard. The total real property gains tax claimed together with its interest and penalties for these three cases amounted to RM6.46 million. In respect of Berembangs suit, the IRBs application for summary judgement was heard on 12 July 2010 whereby the application was dismissed on the basis that there are triable issues. The IRB has filed an appeal to the Court of Appeal which was dismissed. The case was referred to High Court for full trial on 5 March 2012. The Court dismissed the IRBs suit for non-compliance of order given by the Court and the non-presence of the IRBs lawyer at the time of trial. The IRB filed an application to re-instate the summons which is fixed for hearing on 9 October 2012. The total real property gain tax claimed together with its interest and penalties amounted to RM2.2 million. For accounting purposes, all the amounts owed have been recognised for in the financial statements. The said four subsidiaries have initiated another legal proceeding against two parties for failure to release retention sums representing part of the real property gains tax as mentioned above. The Court allowed the subsidiaries claim against one of the party but dismissed the action against the second defendant. Both the subsidiaries and the defendant filed an appeal against the said decision which is pending hearing date.
(iii) The IRB filed 4 separate legal suits against Pujian Development Sdn Bhd (PDSB) for a total amount of RM32.5 million. The claims are for income tax outstanding for assessment years 1998 to 2000, 2001 and 2004 including penalties. The IRB obtained a summary judgment against PDSB for all the suits and PDSBs appeals have been dismissed by the Court of Appeal. As a result, the IRB has imposed additional interest and penalties for the outstanding income tax of RM11.8 million. The amount was accrued in full in the financial statements. (iv) The IRB filed 2 legal suits against Tashima Development Sdn Bhd (Tashima), for the recovery of income tax outstanding totalling RM6.4 million for assessment years 2000, 2001 and 2002 including penalties. The IRB obtained a summary judgment against Tashima for both suits. Tashimas appeal on the summary judgment for assessment year 2000 was withdrawn whilst the appeal for assessment year 2001 and 2002 was dismissed by the Court of Appeal. As a result, the IRB have imposed additional interest and penalties for the outstanding income tax of RM1.0 million. The amount was accrued in full in the financial statements. (v) The IRB filed a legal suit against Sawitani Sdn Bhd (Sawitani) for a total amount of RM1.0 million. The claims are for real property gains tax outstanding for assessment year 2000. The IRB filed an application for summary judgement which was allowed on 27 September 2011. Sawitanis appeal to the Court of Appeal was dismissed on 15 May 2012. The amount was accrued in full in the financial statements.
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31 MAY 2012
30. Segmental information For management purposes, the Group is organised into business units based on their nature of business and has four reportable operating segments as follows:
Business segments Construction Property investment/management/development Network marketing Investment and others The above reportable segments mainly operate in Malaysia. Management monitors the operating results of its business units as well as relying on the segment information as disclosed below for the purpose of making decision about resource allocation and performance assessment. The directors together with the management are of the opinion that all inter segment transactions 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. Information about a major customer Revenue from a major customer amounted to RM40 million (2011: RM Nil) arising from sales by the property investment/management/ development segment.
Property investment/ Investment management/ Network and Construction development marketing others Eliminations Consolidated 31 May 2012 RM000 RM000 RM000 RM000 RM000 RM000 Revenue Revenue from external customers Inter-segment revenue - - - 158,023 382 158,405 298 - 298 2,162 728 2,890 - (1,110) (1,110) 160,483 160,483
Results Profit/(Loss) from operations before interest income Interest income Profit/(Loss) from operations Finance costs Profit/(Loss) before tax Income tax expense Net profit/(loss) for the year Non-controllling interests
(96) 87 (9) (335) (344) (11) (355) -
25,977 - 25,977 (4,329) 21,648 (5,716) 15,932 -
(844) - (844) - (844) - (844) -
(3,197) 8 (3,189) (1,861) (5,050) 524
- - - - - -
21,840 95 21,935 (6,525) 15,410 (5,203) 10,207 713
(4,526) - 713
Profit/(Loss) attributable to owners of the Company (355) 15,932 (844) (3,813) - 10,920
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31 MAY 2012
30. Segmental information (continued) Property investment/ Investment management/ Network and Construction development marketing others Eliminations Consolidated 31 May 2012 RM000 RM000 RM000 RM000 RM000 RM000 Other information Segment assets Segment liabilities Additions to non-current assets Depreciation Non cash expenses other than depreciation and amortisation Amortisation of financial liabilities carried at amortised cost Interest income Dividend income Fair value adjustments on: - quoted instruments designated as financial assets at fair value through profit or loss - investment properties Allowance for doubtful debts no longer required Gain on disposal of other financial assets 3,309 2,289 - 55 - 334 - - 419,060 214,147 23,051 179 3,918 1,994 - - 412 1,128 8 90 368 - - - 17,381 78,592 167 271 2,554 - (8) (58) - - - - - - - - 440,162 296,156 23,226 595 6,840 2,328 (8) (58)
- - - -
- (22,793) (766) -
- - - -
(28) - - (3,000)
- - - -
(28) (22,793) (766) (3,000)
Property investment/ Investment management/ Network and Construction development marketing others Eliminations Consolidated 31 May 2011 RM000 RM000 RM000 RM000 RM000 RM000 Revenue Revenue from external customers Inter-segment revenue Results Profit/(Loss) from operations before interest income Interest income Profit/(Loss) from operations Finance costs Profit/(Loss) before tax Income tax expense Net profit/(loss) for the year Non-controllling interests 9,274 - 9,274 14,858 754 15,612 451 - 451 393 2,549 2,942 - (3,303) (3,303) 24,976 24,976
720 62 782 (135) 647 (12) 635 - 635
23,462 - 23,462 (5,149) 18,313 (348) 17,965 - 17,965
(1,927) - (1,927) - (1,927) (586) (2,513) - (2,513)
(4,961) 339 (4,622) (2,959) (7,581) (13) (7,594) 267 (7,327)
- - - - - - - - -
17,294 401 17,695 (8,243) 9,452 (959) 8,493 267 8,760
Profit/(Loss) attributable to owners of the Company
85

31 MAY 2012
30. Segmental information (continued) Property investment/ Investment management/ Network and Construction development marketing others Eliminations Consolidated 31 May 2011 RM000 RM000 RM000 RM000 RM000 RM000 Other information Segment assets 4,957 397,525 1,066 10,808 - Segment liabilities 4,000 226,302 1,229 49,452 - Additions to non-current assets - 37 31 490 - Depreciation 55 53 123 424 - Non cash expenses other than depreciation and amortisation 270 25,340 157 3,427 - Adjustments for financial liabilities carried at amortised cost - (2,689) - - - Net amortisation of financial liabilities carried at amortised cost 69 - - - - Dividend income - - - (33) - Fair value adjustment on investment properties - (3,542) - - - Allowance no longer required: - doubtful debts - (37,742) - (709) - - liquidated ascertained damaged - (2,054) - - - Waiver of term loan liabilities - - - (1,328) - 414,356 280,983 558 655 29,194 (2,689) 69 (33) (3,542) (38,451) (2,054) (1,328)
31. Event subsequent to the reporting date Subsequent to the reporting date, the Group has disposed of its entire equity interest in a wholly owned subsidiary, SCP Management Sdn Bhd (SCP), for a total consideration of RM1,000. Accordingly, SCP has ceased to be a subsidiary of the Group.
32. Financial instruments, financial risks and capital risk management (a) Categories of financial instruments The following table sets out the financial instruments as at the reporting date:
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Financial assets Fair value throught profit of loss: - other financial assets Available-for-sale: - other financial assets Loans and receivables: - amount due from subsidiaries - trade and other receivables excluding prepayments - cash and bank balances
533 7,287 - 50,136 1,845 59,801
- 7,781 - 23,155 3,451 34,387
480 6,504 302,677 561 457 310,679
7,318 278,258 130 434 286,140
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31 MAY 2012
32. Financial instruments, financial risks and capital risk management (continued) (a) Categories of financial instruments (continued) Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Financial liabilities Amortised cost: - amount due to subsidiaries - borrowings - hire purchase liabilities - trade and other payables excluding statutory liabilities (b) Financial risk management objectives and policies The Groups overall financial risk management programme seeks to minimise potential adverse effects on financial performance of the Group. The Group does not hold or issue derivative financial instruments for speculative purposes. There has been no change in the Groups exposure to these financial risks or the manner in which it manages and measures the risk. Interest rate risk management The Groups primary interest rate risk relates to interest bearing debts. The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The Group actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets. The information on maturity dates and effective interest rates of financial liabilities are disclosed in their respective notes. The sensitivity analysis below have been determined based on the exposure to interest rates for the banking facilities at the reporting date. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents managements assessment of the reasonably possible change in interest rates. If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group and Companys profit/(loss) before tax would decrease/increase by RM599,000 (2011: RM665,000) and RM214,000 (2011: RM90,000) respectively. Liquidity risk management The Group and the Company maintains sufficient cash and bank balances, and internally generated cash flows to finance its activities. The Group and the Company finance their operations by a combination of equity and bank borrowings. The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay.
- 119,972 276 95,937 216,185
- 133,014 467 95,555 229,036
175,455 42,790 245 19,377 237,867
170,306 17,957 392 19,232 207,887
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31 MAY 2012
32. Financial instruments, financial risks and capital risk management (continued) (b) Financial risk management objectives and policies (continued) Liquidity risk
Group Contractual cash flows (including interest payments) On demand Carrying or within Within 1 to Within 2 to More than amount Total 1 year 2 years 5 years 5 years 2012 RM000 RM000 RM000 RM000 RM000 RM000 Non interest bearing debts Interest bearing debts Hire purchase liabilities (fixed rate) 2011 Non interest bearing debts Interest bearing debts Hire purchase liabilities (fixed rate) 95,937 119,972 276 216,185 95,555 133,014 467 229,036 96,257 161,358 305 257,920 95,696 158,132 516 254,344 92,222 25,063 151 117,436 93,902 28,370 210 122,482 4,035 6,091 33 10,159 1,794 61,231 144 63,169 - 29,387 97 29,484 - 20,742 63 20,805 100,817 24 100,841 47,789 99 47,888
Company Contractual cash flows (including interest payments) On demand Carrying or within Within 1 to Within 2 to More than amount Total 1 year 2 years 5 years 5 years 2012 RM000 RM000 RM000 RM000 RM000 RM000 Non interest bearing debts Interest bearing debts Hire purchase liabilities (fixed rate) 2011 Non interest bearing debts Interest bearing debts Hire purchase liabilities (fixed rate) 194,832 42,790 245 237,867 189,538 17,957 392 207,887 194,915 59,901 273 255,089 189,538 24,012 437 213,987 194,455 2,435 119 197,009 189,538 - 146 189,684 89 4,150 33 4,272 - 1,733 144 1,877 211 20,671 97 20,979 - 13,106 63 13,169 160 32,645 24 32,829 9,173 84 9,257
Foreign exchange risk
Foreign exchange 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 and the Company operate mainly in Malaysia and transact predominantly in Ringgit Malaysia (RM). As such, its exposure to foreign exchange risk is minimal other than the quoted equity instrument which is denominated in Hong Kong Dollar.
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31 MAY 2012
32. Financial instruments, financial risks and capital risk management (continued) (b) Financial risk management objectives and policies (continued) Market price risk Market price risk is the risk that the fair value or future cash flows of the Groups financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates). The Group and Company are exposed to equity price risk arising from its investment in quoted equity instruments. The quoted equity instruments in Malaysia are listed on the Bursa Malaysia, whereas the quoted equity instrument outside Malaysia are substantially listed on Hong Kong Exchange and Clearing Limited are classified as available-for-sale and designated as fair value through profit or loss financial assets. Management of the Group monitors the equity instruments on a portfolio basis. Material instruments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the managing director of the Group. A 5% changes in the market price of the quoted equity instruments at the end of the reporting period with all other variables held constant would have the following changes on the performance of the Group and Company:
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Profit or loss Other comprehensive income Credit risk management The Groups credit risk is primarily attributable to its trade and other receivables. Credit risks are managed by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Groups associations to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via the Groups management reporting procedures. For other financial assets including cash and bank balances, the Group minimises credit risk by dealing exclusively with high credit rating counterparties. The Group performs ongoing credit evaluation of its customers and generally does not require collateral on account receivables. At the reporting date, there were no significant concentrations of credit risk other than an amount due from a customer of RM23,595,000 arising from property development revenue and an amount due from a subsidiary of RM269,000,000. The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to a subsidiary. The Company monitors on an ongoing basis the results of the subsidiary and repayments made by the subsidiary. The maximum exposure to credit risk amounts to RM76,182,000 (2011: RM116,745,000) representing the outstanding banking facilities of the subsidiary as at reporting date. Fair values The carrying amounts of cash and cash equivalents, receivables and payables, and other liabilities approximate their respective fair values due to the respectively short-term maturity of these financial instruments. The fair values of the Groups other financial assets, borrowings and hire purchase liabilities approximate their carrying amount. The fair values of financial assets and financial liabilities are determined with standard terms and conditions. 27 307 - 327 24 270 307
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31 MAY 2012
32. Financial instruments, financial risks and capital risk management (continued) (b) Financial risk management objectives and policies (continued) Fair value hierarchy The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable: Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices); and Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Group 2012 Level 1 Level 2 Level 3 Total Financial assets RM000 RM000 RM000 RM000 Quoted shares There were no transfers between Levels 1 and 2 in the current year. Company 2012 Level 1 Level 2 Level 3 Total Financial assets RM000 RM000 RM000 RM000 Quoted shares There were no transfers between Levels 1 and 2 in the current year. 5,884 - - 5,884 6,682 - - 6,682
(c) Capital structure and equity The Groups objectives when managing capital is to maintain a strong capital base and safeguard the Groups ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to the shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts.
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31 MAY 2012
32. Financial instruments, financial risks and capital risk management (continued) (c) Capital structure and equity (continued) The Group monitors capital using a gearing ratio, which is net debt (total borrowings less cash and cash equivalent) divided by total capital which comprises total equity plus net debt. The calculations of the Groups and Companys gearing ratios are as follows:
Group Company 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Borrowings Less: cash and cash equivalents Net Debt Total equity Total capital Gearing ratio 120,248 (1,845) 118,403 144,006 262,409 0.45 133,481 (3,451) 130,030 133,373 263,403 0.49 43,035 (457) 42,578 116,809 159,387 0.27 18,349 (434) 17,915 122,073 139,988 0.13
There were no changes in the Groups approach to capital management during the financial year.
33. Comparative figures The following comparative figures of the Group have been reclassified to conform with current years presentation. As previously reported Reclassification As restated RM000 RM000 RM000 Statement of comprehensive income For the year ended 31 May 2011 Other operating expenses Finance cost (28,189) (8,112) 131 (131) (28,058) (8,243)
34. Supplementary information breakdown of retained profits/accumulated losses into realised and unrealised The breakdown of the retained profits/accumulated losses of the Group and of the Company as at 31 May 2012 into realised and unrealised 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 2012 2011 2012 2011 RM000 RM000 RM000 RM000 Total accumulated profits/(losses) of the Company and its subsidiaries - Realised - Unrealised Less: Consolidation adjustments Accumulated losses as per financial statements (544,939) (13,731) (558,670) 63,010 (495,660) (562,140) (2,357) (564,497) 57,917 (506,580) (510,751) 2,499 (508,252) - (508,252) (502,878) (502,878) (502,878)
91
Particulars of Group Properties

The properties of the Group as at 31 May 2012 and their net book values ("NBV") are indicated below: Investment Properties Approximate Age of Building (years) 12 Date of Acquisition/ Revaluation 3.8.2006
Sizes & Usage 1. 91 sq. metres of office space
Title/ Location B-04-10, Perdana Selatan, Taman Serdang Perdana, (Seksyen 1) 43300 Seri Kembangan, Selangor Darul Ehsan PN No. 7393, Lot No. 1, Pekan Serdang Daerah Petaling, Selangor
Company Pujian Development Sendirian Berhad
Lease Expiry Date 99-year lease expiring 09 Nov 2093
NBV RM000 130
2.
150,417 sq. metres of commercial space
Pujian Development Sendirian Berhad Opal Horizon Sdn Bhd
99-year lease expiring 09 Nov 2093
14.8.2012
271,348
3.
55 sq. metres of commercial space 60 sq. metres of commercial space 55 sq. metres of commercial space 60 sq. metres of commercial space 44,431 sq. metres of commercial space
PN No. 7393, Lot No. 1, Pekan Serdang Daerah Petaling, Selangor PN No. 7393, Lot No. 1, Pekan Serdang Daerah Petaling, Selangor PN No. 7393, Lot No. 1, Pekan Serdang Daerah Petaling, Selangor PN No. 7393, Lot No. 1, Pekan Serdang Daerah Petaling, Selangor PTD 1468, Mukim Gemerah, Segamat, Johor. PTB 1283, Bandar Segamat, Segamat, Johor.
99-year lease expiring 09 Nov 2093 99-year lease expiring 09 Nov 2093 99-year lease expiring 09 Nov 2093 99-year lease expiring 09 Nov 2093 99-year lease Expiring 04 Jul 2100
14.8.2012
268
4.
Efex Trade & Exhibitions Sdn Bhd Ecofirst Development Sdn Bhd Ecofirst Laboratories Sdn Bhd Tashima Development Sdn Bhd
14.8.2012
289
5.
14.8.2012
268
6.
14.8.2012
289
7.
11.7.2012
83,600
356,192
92
Analysis of shareholdings
Statistical Report of Holders of Shares As At 28 September 2012 As per Record of Depositors (ROD) Class of Securities Authorised Share Capital Issued and fully paid-up share capital : : : Ordinary shares of RM0.50 each (Shares) RM1,000,000,000.00 RM325,073,827.00
Voting Rights :
Shareholders Every member present in person or by proxy or represented by attorney shall have one vote and upon a poll, every such member shall have one vote for every share held. 27,023
No. of Shareholders
ANALYSIS OF SHAREHOLDINGS AS AT 28 SEPTEMBER 2012 Number of Number Range of Shareholdings Shareholders of Shares Less than 100 100 1,000 1,001 10,000 10,001 100,000 100,001 less than 5% of issued shares 5% and above of issued shares Total 1,902 4,522 15,201 4,818 580 0 27,023 49,069 4,067,561 68,774,292 141,572,599 435,684,133 0 650,147,654
Percentage (%) 0.01 0.63 10.58 21.77 67.01 0 100.00
LIST OF THIRTY LARGEST REGISTERED SHAREHOLDERS AS AT 28 SEPTEMBER 2012 AS PER ROD Name of Shareholders Number of Shares 1. 2. 3. 4. 5. 6. RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Teoh Seng Aun (STG) Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Teoh Seng Kian RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Teoh Seng Kian (DHG) Maybank Securities Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Teoh Seng Kian (Margin) Maybank Securities Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Teoh Seng Aun EB Nominees (Tempatan) Sendirian Berhad Pledged Securities Account For Teoh Seng Kian (SFC) 22,554,466
Percentage (%) 3.47
19,042,500
2.93
17,551,432
2.70
16,000,000
2.46
15,000,000
2.31
14,384,600
2.21
93
ANALYSIS OF SHAREHOLDINGS
LIST OF THIRTY LARGEST REGISTERED SHAREHOLDERS AS AT 28 SEPTEMBER 2012 AS PER ROD (continued) Name of Shareholders Number of Shares 7. Amsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account For One Sierra Sdn Bhd 8. EB Nominees (Tempatan) Sendirian Berhad Pledged Securities Account For Teoh Seng Aun (SFC) 9. TA Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Wawasan Fokus Sdn Bhd 10. Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Tiong Kwing Hee (8088854) 11. Soh Chin Loong 12. Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Tiong Kwing Hee (8068389) 13. OSK Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Teoh Seng Aun 14. OSK Nominees (Tempatan) Sdn Berhad Pledged Securities Account For Teoh Seng Kian 15. RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Tiong Kwing Hee (DHG) 16. HLIB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Teoh Seng Foo (MG0176-182) 17. Maybank Nominees (Tempatan) Sdn Bhd Yeoh Siok Choo 18. Kenanga Nominees (Tempatan) Sdn Bhd Amara Investment Management Sdn Bhd For Teoh Seng Kian 19. Kenanga Nominees (Tempatan) Sdn Bhd Amara Investment Management Sdn Bhd For Teoh Seng Aun 20. Kenanga Nominees (Tempatan) Sdn Bhd Amara Investment Management Sdn Bhd For Teoh Seng Foo 21. HLIB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Teoh Seng Aun (MG0177-182) 22. Mah Toe Hiong 23. HLIB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Cheam Shaw Fin (MG0033-182) 24. Maybank Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Tang Sing Ling 25. Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Wawasan Fokus Sdn. Bhd.
Percentage (%) 2.11 2.10 1.81 1.69 1.46 1.33 1.15 1.15 1.14 1.00 0.90 0.78 0.78 0.61 0.57 0.55 0.46 0.46 0.41
13,711,300 13,671,000 11,780,500 11,000,000 9,500,000 8,619,300 7,500,000 7,500,000 7,403,100 6,525,000 5,850,000 5,101,200 5,081,500 3,982,999 3,715,000 3,564,300 3,000,000 2,998,500 2,670,900
ANALYSIS OF SHAREHOLDINGS
LIST OF THIRTY LARGEST REGISTERED SHAREHOLDERS AS AT 28 SEPTEMBER 2012 AS PER ROD (continued) Name of Shareholders Number of Shares 26. Malacca Equity Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Teoh Seng Foo 27. Soh Shuh Yih 28. Low Siew Fong 29. HLB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Tan Kim Seng 30. RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Liew Lee Chin (CEB) SUBSTANTIAL SHAREHOLDERS SHAREHOLDINGS AS AT 28 SEPTEMBER 2012 (based on the Register of Substantial Shareholders Shareholdings) No. of Shares Held Name of Substantial shareholders Direct Interest (%) Indirect Interest Teoh Seng Kian Teoh Seng Aun Purewise Sdn Bhd 78,502,632 65,408,854 48,104,300 (12.07) (10.06) (7.40) - - - 2,665,500 2,613,500 2,545,300 2,500,000 2,500,000 Percentage (%) 0.41 0.40 0.39 0.38 0.38
(%) -
DIRECTORS SHAREHOLDINGS (IN THE COMPANY) AS AT 28 SEPTEMBER 2012 (based on the Register of Directors Shareholdings) No. of Shares Held Name of Directors Direct Interest (%) Indirect Interest Dato Syed Ariff Fadzillah bin Syed Awalluddin Dato (Dr.) Teoh Seng Foo Dato Tiong Kwing Hee Amos Siew Boon Yeong Dato Boey Chin Gan Lim Een Hong Teoh Seng Kian (Alternate Director to Dato (Dr.) Teoh Seng Foo) Others ** Dato (Dr.) Teoh Seng Foos spouse Teoh Seng Kians spouse - 9,190,500 28,541,400 - - - 78,502,632 - (1.41) (4.39) - - - (12.07) - - - - - - -
(%) -
3,000,000 2,495,300
(0.46) (0.38)
- -
Notes: ** Disclosure of direct interest held by their spouses, pursuant to Section 134(12)(c) of the Companies Act, 1965
95
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Form of Proxy
Number of shares held Central Depository System Account No.
I/We (FULL NAME IN BLOCK LETTERS) of (Address)
NRIC/Company No.
being a member of ECOFIRST CONSOLIDATED BHD, hereby appoint of (FULL NAME IN BLOCK LETTERS) (Address)
or failing him/her, the CHAIRMAN OF THE MEETING* as my/our proxy to attend and vote for me/us on my/our behalf at the Thirty-Ninth Annual General Meeting of the Company to be held at Ballroom 1, Level 5, The Summit Hotel, Subang USJ, Persiaran Kewajipan, USJ 1, 47600 UEP Subang Jaya, Selangor Darul Ehsan on Monday, 26 November 2012 at 10.00 a.m. or at any adjournment thereof.
* please delete if you do not wish to have this option in the absence of your proxy.
NO RESOLUTIONS ORDINARY BUSINESS 1. 2. 3. 4. 5.
FOR AGAINST
Approval of Directors Fees Re-election of Dato (Dr.) Teoh Seng Foo as Director Re-election of Dato Boey Chin Gan as Director Re-appointment of Messrs Russell Bedford LC & Company as Auditors and to authorise the Directors to fix their remuneration Authority for Directors to issue shares
SPECIAL BUSINESS
Please indicate with X in the space provided how you wish your proxy to vote. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.
Dated this .day of 2012

Notes: (i)
..................................................... Signature of Shareholder / Common Seal
In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 November 2012 (General Meeting Record of Depositors) shall be eligible to attend, speak and vote at this meeting.
(ii) A member entitled to attend and vote at the meeting is entitled to appoint not more than one (1) proxy to attend and vote in his stead. A proxy need not be a member of the Company and Section 149(1) of the Companies Act, 1965 shall not apply. (iii) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (omnibus account), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. (iv) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised. (v) The original 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 Registered Office of the Company at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting.
Fold here
STAMP
The Company Secretary
ECOFIRST CONSOLIDATED BHD (15379-V)

Suite 11.1A, Level 11, Menara Weld 76 Jalan Raja Chulan 50200 Kuala Lumpur Malaysia
Fold here
1.61, First Floor, South City Plaza, Persiaran Serdang Perdana, Seksyen 1, 43300 Seri Kembangan, Selangor Darul Ehsan, Malaysia. Tel : +6 03 89381188 Fax : +6 03 89381133 Website : www.ecofirst.com.my

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Strengthening our foundation

Annual Report 2012

Our Vision & Mission

Notice of Annual General Meeting

Notice of THIRTY-ninth ANNUAL GENERAL MEETING

NOTICE OF THIRTY-NINTH ANNUAL GENERAL MEETING

Explanatory notes on Special Business:

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

Stock Exchange Listing

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

Industry Overview And Prospects

Corporate And Social Responsibilities

CSR activities held at South City Plaza and 1Segamat Mall.

Dato Syed Ariff Fadzillah Bin Syed Awalluddin Chairman

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

2 Dato (Dr.) Teoh Seng Foo (President/Non-Independent Executive Director) Malaysian

4 Mr. Amos Siew Boon Yeong (Independent Non-Executive Director) Malaysian

6 Mr. Lim Een Hong (Independent Non-Executive Director) Malaysian

7 Dato Boey Chin Gan (Independent Non-Executive Director) Malaysian

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

Dato (Dr.) Teoh Seng Foo (President/Non-Independent Executive Director) Malaysian

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

Mr. Amos Siew Boon Yeong (Independent Non-Executive Director) Malaysian

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

Dato Boey Chin Gan (Independent Non-Executive Director) Malaysian

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

Mr. Lim Een Hong (Independent Non-Executive Director) Malaysian

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

Five-Year Group Statistics

(RM000) Profit / (Loss) Before Taxation and Minority Interests

(RM000) Shareholders Fund

Period ended 31 May 2008* 30.5

15.4 10.9 130.0 440.2 1.7 0.18

9.5 8.8 118.6 414.4 1.4 0.18

(41.4) (41.4) 105.2 358.7 (6.4) 0.16

(90.3) (90.6) 145.3 433.6 (13.9) 0.22

(22.2) (33.4) 232.0 515.2 (5.1) 0.36

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

Corporate governance statement

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

Total Attendance 5/5 5/5 5/5 5/5 5/5 4/5

% of Attendance 100 100 100 100 100 80

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

Date 05/07/2011 to 08/07/2011 31/07/2011

1. Dato Syed Ariff Fadzillah Bin Syed Awalluddin

24/04/2012 24/04/2012 19/07/2011 to 20/07/2011 12/10/2011 19/10/2011 24/04/2012 24/04/2012 24/04/2012

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

RELATIONSHIP WITH SHAREHOLDERS

CORPORATE GOVERNANCE STATEMENT

ACCOUNTABILITY AND AUDIT

Statement OF Directors responsibility in Preparing the Annual Financial Statements

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

ECOFIRST CONSOLIDATED BHD (15379-V) Annual Report 2012

AUDIT COMMITTEE REPORT