You are on page 1of 61

FINAL YEAR PROJECT

NUR AFIEFAH BINTI ABDUL GHANI


PTM110718322
KOLEJ POLY-TECH MARA KUALA LUMPUR
DECLARATION
I hereby that the work in this thesis is my own except for quotations and summarises which have
been duly acknowledge
Date : ____________________
Name : Nur Afiefah inti Abdul !hani
ID Number : "#$%%&'%()**
ACKNOWLEDGEMENT
ABSTRACT
CONTENTS
Pa!
D+,-A.A#I/N
A,0N/1-+D!+$+N#
A2#.A,#
,/N#+N#2
-I2# /3 #A-+
-I2# /3 3I!4.+
,5A"#+. % IN#./D4,#I/N
% /b6ective of the research
* ,ompanies background
) -iterature review
7)7% $ulpha -and erhad
7)7* $agna "rima erhad
7)7) $alton erhad
,5A"#+. * 3./$ 3INAN,IA- A,,/4N#IN! "/IN# /3 8I+1
*7% I3.2 %&%
*7* I3.2 %%&
*7) I3.2 %%9
,5A"#+. ) 3./$ 3INAN,IA- $ANA!+$+N# "/IN# /3 8I+1
)7% "rofitability .atio
CHAPTER 1
INTRODUCTION
1"1 OBJECTI#E OF THE RESEARCH
%7%7% -earn on how to read an annual report7
.eading an annual report can be difficult process if we don:t know exactly what we are
looking for and where to find it7 5owever; after all I did and study for the report; I can
understand that mostly of them are standardi<ed with their own =key words: or =parts:
such as they provide a table contents with numbering so it is easy for the user to find the
parts needed and the title is written in big si<e7 #his guide helps me make things more
accessible7 It explains the three important basic financial statements from the annual
report7 In the annual report it will included the income statement of the company and
shows how good the company is at making money7 /ther than that; in cash flow statement
it shows how the company paying for their operations and their future growth7 -ast but not
least; balance sheet7 In balance sheet; it shows what the company owns and owes7
%7%7* #he effectiveness and efficiencies of the company7
It is also important to know what are the profit maximi<ations and wealth maximi<ations
of a company for the investors to invest in a company7 "rofit maximi<ation refers to how
much profit the company makes and profit maximi<ation is basically is a single>period or;
at most; a short>term goal; to be achieved within one year7 1ealth maximi<ation is the
modern approaches for the improvements of the company business7
%7%7) Does the company follow the International 3inancial .eporting 2tandard ?I3.2@A
A company should follow the I3.2 and today nearly %&& countries require or allow the
use of I3.2 for the preparation of financial statements by publicly held companies as the
business world became more global; regulators; investors; large companies and auditing
firms began to reali<e the importance of having common standards in all areas of the
financial reporting chain7
%7%7B Discover the company inside the industry of property in $alaysia7
y doing this final year pro6ect; I am able to discover the company in the property
industry in $alaysia that listed in 0uala -umpur 2tock +xchange ?0-2+@7 efore this; in
my thoughts the only company based on the industrial on properties that is listed in 0-2+
are ,ountry 5eights 5olding hd; $0 -and hd and Amcorp properties hd7 ut as I
make more research I learnt that there are a lot of other companies that is listed in 0-2+
in fact some of the companies are more potential and equally rank with the others7 #his is
good as they open up a bigger opportunity for those who want to make investments or to
become one of the company:s shareholders7
%7%7C 21/# and 2$A.# of a company7
A company must have their strength and weaknesses; a company also must apply 21/#
and 2$A.# for their performance and for improvements7 As for the three company that I
did a research on; I find that three of them have the positive and negative sides and it is
good as this can help the companies to evaluate and take actions for the company7
1"2 COMPANIES BACKGROUND
%7*7% $ulpha -and erhad
$ulpha -and erhad is listed on the $ain $arket of ursa $alaysia and offers
mixed property development services D investment across the region7 #he company:s
focus is on real estate and property related services; with its primary operations and
investments centered in $alaysia7 $ulpha -and erhadEs real estate development and
investments in $alaysia; located in several strategic development areas include .aintree
.esidence; 9 0enny 5ills; +nclave angsar and #ropicana in the 0lang 8alley7 In the
Northern ,orridor +conomic .egion ?N,+.@; $ulpha:s prominent pro6ects namely
#aman ukit "unchor; ukit "unchor Industrial "ark and #aman 2eri ayu in "enang
coupled with the mixed development township; #aman DesaAman near 0ulim 5igh #ech
"ark; 0edah; further enhance $ulpha:s property portfolio7$oving forward; $ulpha -and
is set to expand and embark on the hospitality D lifestyle division aside its existing core
business > property development and property investment D management7 1ith the
presence of hospitality D lifestyle; $ulpha pursues to enrich and further heighten its
portfolio as an emerging boutique developer in $alaysia7#he principal activities of
$4-"5A- are investment holding; property development and property investment7 #he
principal activities of the subsidiaries are investment holding; property development;
property investment and licensee of a quarry plant $"A2,A- is one of the largest
producers of ready>mixed concrete in $alaysia7 In addition; the company is also involved
in the provision; such as fabrication and sale of batching plants and rental of mixer
trucks7 $"A2,A- managed to secure several ma6or7
%7%7* $agna "rima erhad
$agna "rima was incorporated in $alaysia on C December %FFC as a private
limited company before subsequently being converted to a public limited company;
assuming its listing status on ursa $alaysia and adopting its present name of $agna
"rima erhad on %9 Ganuary %FF'7 $agna "rima erhad is an investment holding
company and through its subsidiaries; provides a diverse range of property development;
building construction; trading and management services7 3ocussed in the 0lang 8alley;
$agna "rima erhad is a niche developer of integrated lifestyle themed pro6ects that
attract robust take up rates7 #he !roup focuses on purchasing and developing pocket>
si<ed land banks which are located in high density areas; with easy accessibility and have
a significant gross development value7 $agna "rimaEs two current signature pro6ects
are #he Avare and #he Istana; $elbourne7 #he Avare; an immaculate 9>star super luxury
condominium located near 0-,,; was awarded the ,N, Asia "acific "roperty Award
in the light rise development category7 #his 6ewel in $agna "rimaEs portfolio is spread
over %7&9 acres of magnificently landscaped terrain and consists of one B%>storey tower
that houses 6ust two units per floor7 #he Istana $elbourne; a *C>storey single tower
apartment located in the heart of $elbourne:s ,entral usiness District7 #he building:s
design; both internal and external; exudes timelessness and elegance which residents will
find easy to en6oy7
%7%7) $alton erhad
#he $alton !roup comprises mainly the 0huan,hoo !roup; ukit .imau
Development and Domain Group. 0huan,hoo !roup started its construction and
property development businesses in %F(& and launched its maiden property development
pro6ect; 0uchai usiness ,entre; comprising )% units of C>storey shop offices in %FF*
under 0huan ,hoo .ealty 2dn hd7 2ince then; it has successfully completed several
pro6ects ranging from residential houses and condominiums to high>rise office buildings
in the 0lang 8alley7 ukit .imau Development 2dn hd is the developer of the
integrated self>contained ukit .imau #ownship spanning over )C( acres of development
land in 2hah Alam neighbouring the 0ota 0emuning #ownship7 #he development is
strategically located in the vicinity of many ma6or fast growing areas in the 0lang 8alley
such as 2hah Alam; 2ubang Gaya; andar 2unway and 0lang7 1ith its innovative resort
lifestyle concept; the pro6ect has received consistent support and high take>up rate since
its first launch7 Domain !roup carries out construction and pro6ect management
activities7 Domain .esources 2dn hd; the holding company; has been the pro6ect
manager for various housing pro6ects under ank Negara $alaysia:s H#abung "usingan
"erumahan #erbengkalaiI and H#abung "usingan "erumahan 0os .endahI schemes
since %FF%7 4nder the schemes; the group has successfully rehabilitated and completed
more than %*;'&& units of properties in 0lang 8alley; "enang; Gohor and $elaka7 Apart
from that; the group has also undertaken many construction pro6ects awarded by
multinational corporations such as ,arrefour 5ypermarket; "acific Dunlop !roup; .obert
osch "te -td; #esco 5ypermarket and many more7 In *&&*; 0huan ,hoo !roup;
Domain !roup and ukit .imau Development were in6ected into !adek ,apital erhad;
culminating in its re>listing on the $ain oard of ursa $alaysia7 /n *& 3ebruary *&&*;
it assumed the present name; $alton erhad.
1"3 LITERITURE #IEW
%7)7% $ulpha -and erhad
1. $ulpha -and hd:s unit $ayfair 8entures 2dn hd has acquired two ad6acent
parcels of leasehold land for .$%%97%mil cash to develop into a mixed commercial
development with a gross development value ?!D8@ of about .$'&&mil7 In a filing
with ursa $alaysia; $ulpha -and said $ayfair acquired the land measuring 97B%
acres from #ropicana !old D ,ountry .esort hd; a wholly>owned subsidiary of
#ropicana ,orp hd7 $ulpha -and said that it is upon completion of the proposed
acquisition; $ayfair 8entures intends to develop the land for mainly service
residences7
*7 In a related party transaction involving its parent $ulpha International hd ?$I@;
$ulpha -and hd ?$-@ will undertake the development $I:s land and
headquarters in "etaling Gaya into high>rise serviced residences7 -ocated in 2ection
%) in "etaling Gaya; the property is currently vacant as $I has moved to its new
headquarters in $enara$uda6aya in $utiaraDamansara7 $I holds a 9'J stake in
$-7 1ith a gross development value of about .$*&& million to .$*C& million;
work on the development is expected to commence in the first half of *&%C and be
completed three years later; $- said in an announcement to ursa $alaysia two
days ago7 $- will buy the two>acre ?&7(%ha@ tract of land from $ulpha "roperties
?$@ 2dnhd ?$"$@; a wholly owned subsidiary of $ulpha !roup 2ervices 2dnhd
?$!2@ which; in turn; is a wholly owned subsidiary of $I7 #he proposed
acquisition price is .$B'7&' million cash7 As part of the deal; $- has proposed to
sell two parcels of land in Gohor aru to $I:s wholly owned subsidiary; -eisure
3arm +questrian 2dn hd7 #he two parcels will be sold for a total of .$%F79'
million7 $easuring *9;F'& sq m ?*7'ha@; the first parcel has a price tag of .$%B7F*
million and has been designated for the development of apartments7 "rior to the
proposed land sale; $- was in the process of conceptualising the development of 9'
villas there with golf course frontage7 #he second parcel; which covers an area of
C7%'* sq m; is priced at .$B7'C million7 #he deal also involves a proposed )>for>*
bonus issue by $-7 $- said the proposed inter>company transactions are part of
$I:s strategy to streamline its property development pro6ects in $alaysia7 $I;
through -eisure 3arm; will in future concentrate in the southern region; while $-
will concentrate in the central and northern regions of "eninsular $alaysia7
%7)7* $agna "rima erhad
%7 $agna "rima hd; whose shares rose )BJ to hit limit up; said it was in the midst
of considering a potential fund raising exercise for the company according to a
reply issued to ursa $alaysia 2ecurities after ursa had issued an unusual
market activity query to the company7 It said its board was not aware of any other
factor which may have contributed to the unusual market activity7 #he company
will make the necessary announcement to the exchange at the appropriate time
upon finalisation of the terms and timing of the proposed fund raising exercise7
#he property developer:s shares rose )BJ and had risen as much as )& cent to
.$%7%( before closing at .$%7%9 with some (7C million shares done7 At *7)(pm
on 1ednesday; its shares rose four cent to .$%7*& with some six million shares
traded between .$%7%& and .$%7))7 #he 3$ 0-,I inched higher; up &7*B
points to %;'(979)7 #urnover was ('%79% million valued at .$%7%C(bil7 #here
were )9* gainers; *(B losers and )&( counters unchanged7 #he group is involved
in the high>end development of #he Avare; 0-,, and #he Istana in $elbourne7
*7 $agna "rima hd expects to launch several pro6ects with a gross development
value ?!D8@ of over .$* billion7 It is planning to build the retail mall; which is
phase ); in the second quarter this year7 #his will run concurrently with the
serviced apartment pro6ect7 #he apartments and the retail mall are slated for
completion in *&%C; while the construction of the office blocks is estimated to be
completed in *&%B7 About (&J of phase one of the development consisting of
office blocks has been snapped up7 #he niche property developer is planning to
embark on two more pro6ects this year7 /ne of them is on a parcel of land in
"etaling Gaya; 2elangor; which the company purchased for .$*)7&) million7 #he
'9;'C' sq ft tract will house )9 shop lots with a !D8 of .$9( million7 #he shops
are expected to be completed in %( months after commencement of works7 $agna
"rima also plans to commence its .$%7B billion mixed development in 2ection
%C7#he company acquired the *&>acre land last 2eptember *&%* from ",$
ina2dnhd for .$%&& million7 It was settled with .$'& million in cash and
.$)& million in shares amounting to a )&J stake in $agna "rima unit; $agna
+cocity 2dn hd
%7)7) $alton erhad
%7 $alton hdEs share price rose to a high of F% cent in heavy trade on reports about
its purchase of "usat andar Damansara from Gohor ,orp7 $alton was up rose B7C
cent to (( cent7 #here were B'7CC million shares traded between (C cent and F%
cent7 #he 3$ 0-,I was up )7&% points to %;'F&7(%7 #urnover was C)F7C9
million shares done at .$))%7Fmil7 #o recap; G,orp and $alton were embroiled
in a legal case in the courts as $alton>related entities were seeking to enforce a
*&&F agreement; whereby Gohor ,orp had supposedly agreed to sell "usat andar
Damansara for .$'&&mil7 In the latest development; 2tari< reported Gohor
,orp chief executive officer Datuk 0amaru<<aman Abu 0assim as saying on $ay
*F that the deal involving the sale of its pri<ed real estate asset "usat andar
Damansara to $alton would go ahead as planned within six months; sub6ect to
conditions being met7
*7 #he legal tussle between $altonhd and Gohor ,orp ?G,orp@ over the pri<ed
"usat andar Damansara ?"D@ development has been resolved; according to
$alton deputy chairman !uido "aul "hilip Goseph .avelli7 G,orp and $alton had
been embroiled in a legal tussle as $alton>related entities were seeking to enforce
a *&&F agreement whereby G,orp had supposedly agreed to sell "D for
.$'&&mil7 $alton shareholders unanimously approved the property exchange
exercise with G,orp7 G,orp will be exchanging "D with $alton for a *&>storey
commercial building in "etaling Gaya known as 8 2quare7 #he deal also involved
$alton>linked companies paying G,orp>linked companies .$C&&mil cash7
According to $alton:s previous announcements; chairman #an 2ri Desmond -im
2iew ,hoon>controlled unit Impian +kspresi 2dn hd:s preliminary plan to
redevelop "D included the construction of five new towers K two office and
three residential K as well as a suburban mall in the commercial space7 Analysts
reckoned that "D could be the next growth area in view of -im:s success with
the "avilion pro6ect in 0uala -umpur7 #he redevelopment could exceed .$%&bil
in gross development value; with construction lasting for no less than six years7
#he market is expecting -im to turn "D into another property play with his
golden touch7
CHAPTER 2
FROM FINANCIAL ACCOUNTING POINT OF #IEW
2"1 IFRS101 PRESENTATION OF FINANCIAL STATEMENT

3inancial statements shall present fairly the financial position; financial performance and cash
flows of an entity7 3air presentation requires the faithful representation of the effects of
transactions; other events and conditions in accordance with the definitions and recognition
criteria for assets; liabilities; income and expenses set out in the 3ramework7 #he application of
3.2s; with additional disclosure when necessary; is presumed to result in financial statements
that achieve a fair presentation7 %9 An entity whose financial statements comply with 3.2s shall
make an explicit and unreserved statement of such compliance in the notes7 An entity shall not
describe financial statements as complying with 3.2s unless they comply with all the
requirements of 3.2s7
An entity cannot rectify inappropriate accounting policies either by disclosure of the
accounting policies used or by notes or explanatory material7 In the extremely rare circumstances
in which management concludes that compliance with a requirement in an 3.2 would be so
misleading that it would conflict with the ob6ective of financial statements set out in the
3ramework; the entity shall depart from that requirement in the manner set out in paragraph *& if
the relevant regulatory framework requires; or otherwise does not prohibit; such a departure7
1hen an entity has departed from a requirement of an 3.2 in a prior period; and that
departure affects the amounts recognised in the financial statements for the current period; it
shall make the disclosures set out in paragraph *&?c@ and ?d@7 1hen preparing financial
statements; management shall make an assessment of an entity:s ability to continue as a going
concern7 An entity shall prepare financial statements on a going concern basis unless
management either intends to liquidate the entity or to cease trading; or has no realistic
alternative but to do so7 1hen management is aware; in making its assessment; of material
uncertainties related to events or conditions that may cast significant doubt upon the entity:s
ability to continue as a going concern; the entity shall disclose those uncertainties7 1hen an
entity does not prepare financial statements on a going concern basis; it shall disclose that fact;
together with the basis on which it prepared the financial statements and the reason why the
entity is not regarded as a going concern7
An entity shall prepare its financial statements; except for cash flow information; using the
accrual basis of accounting and shall present separately each material class of similar items7 An
entity shall present separately items of a dissimilar nature or function unless they are immaterial7
/ther than that; an entity shall not offset assets and liabilities or income and expenses; unless
required or permitted by an 3.27 An entity shall present a complete set of financial statements
including comparative information at least annually7 1hen an entity changes the end of its
reporting period and presents financial statements for a period longer or shorter than one year; an
entity shall disclose; in addition to the period covered by the financial statements are the reason
for using a longer or shorter period; and the fact that amounts presented in the financial
statements are not entirely comparable7
,omparative information except when 3.2s permit or require otherwise; an entity shall
disclose comparative information in respect of the previous period for all amounts reported in the
current period:s financial statements7 An entity shall include comparative information for
narrative and descriptive information when it is relevant to an understanding of the current
period:s financial statements7 1hen the entity changes the presentation or classification of items
in its financial statements; the entity shall reclassify comparative amounts unless reclassification
is impracticable7 1hen the entity reclassifies comparative amounts; the entity shall disclose the
nature of the reclassification; the amount of each item or class of items that is reclassified and the
reason for the reclassification7 1hen it is impracticable to reclassify comparative amounts; an
entity shall disclose the reason for not reclassifying the amounts and the nature of the
ad6ustments that would have been made if the amounts had been reclassified7
In the financial statement; an entity shall clearly identify the financial statements and
distinguish them from other information in the same published document7 An entity also shall
present current and non>current assets; and current and non>current liabilities; as separate
classifications in its statement of financial position in accordance with paragraphs 99K'9 except
when a presentation based on liquidity provides information that is reliable and more relevant7
1hen that exception applies; an entity shall present all assets and liabilities in order of liquidity7
1hichever method of presentation is adopted; an entity shall disclose the amount expected to be
recovered or settled after more than twelve months for each asset and liability line item that
combines amounts expected to be recovered or settled no more than twelve months after the
reporting period; and more than twelve months after the reporting period7
An entity shall classify an asset as current when it expects to realise the asset; or intends to
sell or consume it; in its normal operating cycle; it holds the asset primarily for the purpose of
trading and it expects to realise the asset within twelve months after the reporting period or the
asset is cash or a cash equivalent ?as defined in 3.2 %&'@ unless the asset is restricted from being
exchanged or used to settle a liability for at least twelve months after the reporting period7 An
entity shall classify all other assets as non>current7 An entity shall classify a liability as current
when it expects to settle the liability in its normal operating cycle; it holds the liability primarily
for the purpose of trading; the liability is due to be settled within twelve months after the
reporting period and it does not have an unconditional right to defer settlement of the liability
for at least twelve months after the reporting period ?see paragraph ')@7 #erms of a liability that
could; at the option of the counterparty; result in its settlement by the issue of equity instruments
do not affect its classification7 An entity shall classify all other liabilities as non>current7 An
entity shall disclose information that enables users of its financial statements to evaluate the
entity:s ob6ectives; policies and processes for managing capital7
2"2 IFRS 11$ PROPERTY PLANT AND E%UIPMENT
#his 2tandard clarifies that an entity is required to apply the principles of this 2tandard to items
of property; plant and equipment used to develop or maintain biological assets and mineral rights
and mineral reserves such as oil; natural gas and similar non>regenerative resources7 .ecognition
subsequent cost shows an entity evaluates under the general recognition principle all property;
plant and equipment costs at the time they are incurred7 #hose costs include costs incurred
initially to acquire or construct an item of property; plant and equipment and costs incurred
subsequently to add to; replace part of; or service an item7 3.2 %%9*&&B contained two
recognition principles7 An entity applied the second recognition principle to subsequent costs7
$easurement at recognition asset dismantlement; removal and restoration costs shows the cost of
an item of property; plant and equipment includes the costs of its dismantlement; removal or
restoration; the obligation for which an entity incurs as a consequence of installing the item7 Its
cost also includes the costs of its dismantlement; removal or restoration; the obligation for which
an entity incurs as a consequence of using the item during a particular period for purposes other
than to produce inventories during that period7 3.2 %%9*&&B included within its scope only the
costs incurred as a consequence of installing the item7 $easurement at recognition asset
exchange transactions shows an entity is required to measure an item of property; plant and
equipment acquired in exchange for a non>monetary asset or assets; or a combination of
monetary and non>monetary assets; at fair value unless the exchange transaction lacks
commercial substance7 4nder 3.2 %%9*&&B; an entity measured such an acquired asset at fair
value unless the exchanged assets were similar7 $easurement after recognition is revaluation
model if fair value can be measured reliably; an entity may carry all items of property; plant and
equipment of a class at a revalued amount; which is the fair value of the items at the date of the
revaluation less any subsequent accumulated depreciation and accumulated impairment losses7
4nder 3.2 %%9*&&B; use of revalued amounts did not depend on whether fair values were
reliably measurable7 Depreciation unit of measure happened when entity is required to determine
the depreciation charge separately for each significant part of an item of property; plant and
equipment7 3.2 %%9*&&B did not as clearly set out this requirement7 Depreciation depreciable
amount explain that entity is required to measure the residual value of an item of property; plant
and equipment as the amount it estimates it would receive currently for the asset if the asset were
already of the age and in the condition expected at the end of its useful life7 3.2 %%9*&&B did not
specify whether the residual value was to be this amount or the amount; inclusive of the effects
of inflation; that an entity expected to receive in the future on the asset:s actual retirement date7
Depreciation period shows that an entity is required to begin depreciating an item of property;
plant and equipment when it is available for use and to continue depreciating it until it is
derecognised; even if during that period the item is idle7 3.2 %%9*&&B did not specify when
depreciation of an item began and specified that an entity should cease depreciating an item that
it had retired from active use and was holding for disposal7 Derecognition date explain that an
entity is required to derecognise the carrying amount of an item of property; plant and equipment
that it disposes of on the 3.2 %%9 date the criteria for the sale of goods in 3.2 %%( .evenue
would be met7 3.2 %%9*&&B did not require an entity to use those criteria to determine the date
on which it derecognised the carrying amount of a disposed>of item of property; plant and
equipment7 An entity is required to derecognise the carrying amount of a part of an item of
property; plant and equipment if that part has been replaced and the entity has included the cost
of the replacement in the carrying amount of the item7 3.2 %%9*&&B did not extend it
derecognition principle to such partsL rather; its recognition principle for subsequent expenditures
effectively precluded the cost of a replacement from being included in the carrying amount of the
item7 Derecognition gain classification explain that an entity cannot classify as revenue a gain it
realises on the disposal of an item of property; plant and equipment7 3.2 %%9*&&B did not
contain this provision7
2"3 IFRS 110 E#ENT AFTER REPORTING PERIOD
#he ob6ective is to prescribe when an entity should ad6ust its financial statements for events after
the reporting period and the disclosures that an entity should give about the date when the
financial statement were authorised for issue and about events after the end of the reporting
period7 Ad6usting events an entity shall ad6ust the amounts recognised in its financial statements
to reflect ad6usting events after the end of the reporting period7 3or examples of ad6usting events
are the settlement after the end the reporting period of a court case that confirms that the entity
had a present at the end of the reporting period the receipt of information after the end of the
reporting period indicating that an asset was impaired at the end of the reporting period the
discovery of fraud or errors that show that the financial statements are incorrect7
Non>ad6usting events an entity shall not ad6ust the amounts recognised in its financial
statements to reflect non>ad6usting events after the end of the reporting period7 +xamples of non>
ad6usting events are;a ma6or business combination or disposal a ma6or subsidiary after reporting
date; announcement of plans to discontinue an operation7 #he destruction of a ma6or production
plant by a fire after the reporting date entering into significant commitments or contingent
liabilities7 ,ommencement ma6or litigati arising solely out of events occuring after reporting
date7
CHAPTER 3
FROM FINANCIAL MANAGEMENT POINT OF #IEW
)7% "rofitability .atio
)7%7% Net profit ratio
Net profit ratio M Net profit x %&&J
Net sales
M&'()a La*+ ,-000. Ma*a P/01a ,-000. Ma'23* B!/)a+ ,-000.
F%' x %&&J
%';(C&
M C7%) J
(;)'* x %&&J
*&%;'B)
M B7%CJ
'*;9FB x %&&J
B9*;)F*
M %C7'*J
)7%7) !ross profit ratio
!ross profit ratio M !ross profit x %&&J
Net sales
M&'()a La*+ ,-000. Ma*a P/01a ,-000. Ma'23* B!/)a+ ,-000.
B;F** x %&&J
%';(C&
M *'7C'J
)C;FF* x %&&J
*&%;'B)
M %'7(B J
%9*;&'( x %&&J
B9*;)F*
M )C7&CJ
)7%7) .eturn on capital employed
.eturn on capital employed M Net profit x %&&J
,apital employed
,apital employed M #otal asset K current liabilities
N
/wner:s equity O non>current liabilities
M&'()a La*+ ,-000. Ma*a P/01a ,-000. Ma'23* B!/)a+ ,-000.
F%'
*9);&)&
M &7)CJ
(;)'*
'**;%*C
M %7%9J
'*;9FB
%;)9&;%)F
M C7)BJ
)7* Activity ratio
)7*7% Inventory turnover ratio
Inventory turnover ratio M ,ost of goods sold
Average inventory
Average inventory M /pening O closing inventory
*
M&'()a La*+ ,-000. Ma*a P/01a ,-000. Ma'23* B!/)a+ ,-000.
%*;F*(
9(;*)(
M &7%F times
%9C;'C%
9;*&%
M*' times
)&&;)%B
C&;BC%
M 9 times
)7*7* .eceivable turnover ratio
.eceivable turnover ratio M Net sales
Average debtors balance
M&'()a La*+ ,-000. Ma*a P/01a ,-000. Ma'23* B!/)a+ ,-000.
%';(C&
B;9FF
M )7( times
*&%;'B)
C';9)B
M )7C times
B9*;)F*
9(;*(&
97( times
)7) -iquidity ratio:
B7% ,urrent ratio
,urrent ratio M ,urrent assets
,urrent liabilities
M&'()a La*+ ,-000. Ma*a P/01a ,-000. Ma'23* B!/)a+ ,-000.
%%&;BC* )*(;*B& 99);&%&
C';')F
M %7F%
**';(F*
M %7BB
B&&;'')
M %79C
B7* Puick ratio
Puick ratio M ,urrent asset K inventory> prepaid assets
,urrent liabilities
M&'()a La*+ ,-000. Ma*a P/01a ,-000. Ma'23* B!/)a+ ,-000.
%%&;BC* K %)9;B'C
C';')F
M >&7BC
)*(;*B& K %*;B&*
**';(F*
M %7)F
99);&%& K %&&;F&%> )*(
B&&;'')
M%7B
CHAPTER 4
FROM MANAGERIAL POINT OF #IEW
4"1 CORPORATE GO#ERNANCE
B7%7% $ulpha -and erhad
#he oard
#he oard has the overall responsibility for corporate governance; strategic direction;
development and control of the ,ompany7 #he oard has adopted all the six specific
responsibilities as listed in the ,ode7 #he oard has adopted a five year strategic plan and
key performance indicators were developed towards achieving the ob6ectives7 #he oard
meets at least four times a year; with additional meetings convened when necessary7 Due
notice is given for the meetings and matters to be dealt with7 In the intervals between oard
meetings; oard decisions for urgent matters are obtained via circular resolutions to which
are attached sufficient information required for an informed decision7 3our oard meetings
were held during the year ended )% December *&%%7
oard alance
#he oard currently has six members comprising two +xecutive Directors and four Non>
+xecutive Directors7 /f the four Non>+xecutive Directors; three are independent; thereby
fulfilling the one>third requirement7 A brief profile of each Director is presented on pages
%& to %%7 #he ,hairman is responsible for ensuring oard effectiveness and conduct7 #he
,hief +xecutive /fficer oversees the dayto>day operations and implementation of the
oard:s policies and decisions7 #here is active and unrestricted participation in the
deliberations and decision making of the oard7 #he Directors have extensive working
experience and are from diverse professional backgrounds with a wide range of business
and financial experience and knowledge7 #here is proper balance in the oard with the
presence of the Independent Directors7 #he role of the Independent Directors is particularly
important as they provide unbiased and independent opinions and advice7 $r -im 0ok
eng has been appointed by the oard as the Independent Non>+xecutive Director to whom
any concern regarding the ,ompany may be conveyed7
2upply of Information
All Directors are provided with an agenda and a set of oard papers in sufficient time prior
to a oard meeting to enable the Directors to review and consider the items to be discussed
at the oard meeting7 #he oard papers include; inter alia; the following:>
%7 quarterly progress report by the ,hief +xecutive /fficerL
*7 quarterly financial reportL and
)7 $inutesQdecisions of meetings of the ,ommittees of the oard7
Directors may obtain independent professional advice in the furtherance of their duties at
the ,ompany:s expense7 All Directors have access to the advice and services of the
,ompany 2ecretary in carrying out their duties7
Appointments to the oard
#he Nomination ,ommittee recommends the appointment of new Directors to the oard7
8isits to the !roup:s businesses and meetings with senior management will be arranged for
the new Directors to facilitate their understanding of the !roup7 As part of the ,ontinuing
+ducation "rogramme; the Directors attended seminars and courses to keep abreast of
current and regulatory matters7
.e>election
#he ,ompany:s Articles of Association provide for all Directors who are appointed by the
oard to be sub6ect to election by the shareholders at the first opportunity after their
appointment7 #he Articles also provide that at least one third of the remaining Directors be
sub6ect to re>election by rotation at each Annual !eneral $eeting provided always that all
Directors shall retire from office at least once every three years but shall be eligible for re>
election7
oard ,ommittees
#he oard has delegated specific responsibilities to the following ,ommittees:>
%7 Audit ,ommittee
*7 Nomination ,ommittee
#he Nomination ,ommittee comprises exclusively of Non>+xecutive Directors; the
ma6ority of whom are independent; with $r ,hung #<e 5ien as ,hairman and $r
-im 0ok eng and -t7 ,ol ?.@ Abdul Galil in Abdullah as members7 #he main
responsibilities of the Nomination ,ommittee are as follows:
i7 recommend new nominees to the oard as well as oard ,ommitteesL
ii7 assist the oard in annually reviewing its required mix of skills; experience
and other qualities of the Non> +xecutive DirectorsL and
iii7 assessing the effectiveness of the oard and oard ,ommittees and the
contribution of each Director7 During the year; the Nomination ,ommittee
met once and the meeting was attended by all its members7
)7 .emuneration ,ommittee
#he .emuneration ,ommittee comprises of Non>+xecutive Directors7 Its members
are -t7 ,ol ?.@ Abdul Galil in Abdullah as ,hairman and $r ,hung #<e 5ien and
$r -im 0ok eng as members7 #he main responsibilities of the .emuneration
,ommittee are to recommend to the oard the following:>
i7 remuneration package of each Director of the ,ompanyL and
ii7 incentive schemes; profit sharing arrangements or the like for management or
other employees7
During the year; the .emuneration ,ommittee met once and the meeting was
attended by all its members7
DI.+,#/.2: .+$4N+.A#I/N
#he ,ompany has adopted the ob6ectives as recommended by the ,ode to determine the
remuneration of the Directors so as to ensure that the ,ompany attracts and retains the
Directors of the calibre needed to run the !roup successfully7 In the case of +xecutive
Directors; the remuneration is structured so as to link rewards to corporate and individual
performance7 3or Non>+xecutive Directors; the level of remuneration reflects the
experience and level of responsibilities undertaken by each Director7
#he .emuneration ,ommittee recommends to the oard the remuneration
?including fees@ for each Director of the ,ompany7 3ees are sub6ect to the approval of the
shareholders7 .easonable expenses incurred by the Directors in the course of carrying out
their duties are reimbursed by the ,ompany7
3or the year ended )% December *&%%; the Directors: remuneration of the ,ompany
amounted to .$F&;&&& representing fees payable to the three Independent Non>+xecutive
Directors7
25A.+5/-D+.2
,ommunication between the ,ompany and Investors
#he oard acknowledges the need for shareholders to be informed of all material business
matters of the ,ompany7 Announcements to ursa $alaysia are made on significant
developments and matters within the !roup7 3inancial results are released on a quarterly
basis to provide shareholders with an overview of the !roup:s performance7
2hareholders: $eeting
#he ,ompany:s practice is to give as much notice as possible to shareholders of its general
meetings7 In addition; notices of general meetings with sufficient information of business to
be dealt with thereat are published in one national newspaper to provide for wider
dissemination of such notice to encourage shareholders participation7 !eneral meetings are
a mean of direct communication and interaction between the ,ompany and shareholders7 It
is the policy of the oard to have all its members present at shareholders: meetings7 At
such meetings; shareholders are encouraged to participate in the question and answer
session7
A,,/4N#AI-I#R AND A4DI#
3inancial .eporting
In preparing the annual financial statements and quarterly announcements of results to
shareholders; the oard aims to present a balanced and understandable assessment of the
!roup:s position and prospects7 #he oard considers that in preparing the financial
statements and announcements; the !roup has used appropriate accounting policies and
standards; consistently applied and supported by reasonable and prudent 6udgements and
estimates7
Internal ,ontrol
#he oard has an overall responsibility for the !roup:s system of internal controls
covering not only financial controls but also operational and compliance controls as well as
risk management7 #his system can only provide reasonable and not absolute assurance
against material misstatement; loss or fraud7 "lease refer to the 2tatement on Internal
,ontrol7
Audit ,ommittee
#he information on the Audit ,ommittee is presented in the Audit ,ommittee .eport on
pages *& to *%7 #hrough the Audit ,ommittee; the ,ompany has established an appropriate
relationship with the ,ompany:s auditors; both internal and external7 #he external auditors
attend the Audit ,ommittee:s meetings when necessary and may meet the Audit
,ommittee without the presence of the management7
DI.+,#/.2: .+2"/N2II-I#R 2#A#+$+N#
#he Directors are required by the ,ompanies Act; %F9C to prepare financial statements
which are in accordance with applicable approved financial reporting standards and give a
true and fair view of the financial position of the !roup and ,ompany at the end of the
financial year and of the financial performance and cash flows of the !roup and ,ompany
for the financial year7
In preparing the financial statements; the Directors have:
i7 ensured that the financial statements are in accordance with the provisions of the
,ompanies Act; %F9C; the applicable financial reporting standards and the -isting
.equirements of ursa $alaysiaL
ii7 adopted the appropriate accounting policies and applied them consistently and
iii7 made 6udgements and estimates that are prudent and reasonable7
#he Directors are responsible for ensuring that the !roup and ,ompany keep proper
accounting records which disclose with reasonable accuracy the financial position of the
!roup and ,ompany and which enables them to ensure that the financial statements
comply with the ,ompanies Act; %F9C7
#he Directors have the general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the !roup and to detect and prevent fraud and other
irregularities7
/#5+. IN3/.$A#I/N
$aterial ,ontracts
/ther than those disclosed in the financial statements; there were no material contracts
entered into by the ,ompany and its subsidiaries involving the interests of Directors and
ma6or shareholders7
,/."/.A#+ 2/,IA- .+2"/N2II-I#R
$ulpha -and erhad has maintained unwavering support to the protection of the
environment and mitigating the impacts of our operations on the surroundings where we
operate7 #his is the core to our corporate social responsibility conduct and practices7 As a
property development company; energy saving and waste avoidance are the central
components of our commitment to maintain a sustainable development and utilising natural
resources in a responsible manner7 +nclave angsar pro6ect is built with !I ?!reen
uilding Index@ green and ,/N2P4A2 ?,onstruction Puality Assessment 2ystem@ ,I
,ertification7 1e strive to enhance and incorporate energy saving features to all our new
developments with new technology and latest practices in the market7 #he blueprint of
+nclave angsar will include design specifications that adopt green features for efficiency
in water and energy usage with a !reen Architectural ,oncept in mind7 .ainwater will be
required to be collected and reuse for landscaping7 !round levels of each unit feature added
openings for natural lighting and cross ventilation7 #his will aid in reducing the
requirement for artificial lighting7
C7) $agna "rima erhad
#he oard of Directors ?HoardI@ recogni<es that the practice of good corporate
governance is a fundamental element in the !roup:s continued growth and success7 #he
oard remains fully committed to ensuring that the highest standards of corporate
governance; based on the "rinciples and est "ractices set out in the $alaysian ,ode on
,orporate !overnance ?H,odeI@ are applied and maintained throughout the !roup with the
ultimate ob6ective of safeguarding and enhancing shareholder value as well as the financial
performance of the !roup7 #he oard confirms that the !roup has complied with the best
practices in the ,ode throughout the financial year ended )% December *&%%7
/A.D /3 DI.+,#/.2
#he oard
#he !roup is led and controlled by an experienced oard; comprising members from
diverse professional background; having expertise and experience; skills and knowledge in
fields such as technical; legal; financial; corporate and management skills7 #he oard is
responsible for the overall management of the !roup and in ensuring that the !roup is
managed with integrity; transparency and accountability7 #he oard will review and adopt
strategic plans for the !roup; set direction; oversee and manage the conduct of the
business7 0ey matters such as approval of annual and quarterly results; acquisitions and
disposals; capital expenditures; budgets; material contracts and business engagements; and
succession planning for top management are decided upon by the oard7
#he oard is assisted by various ,ommittees including the $anagement ,ommittee;
which oversees the day>to>day operations of the !roup including review of monthly
performance; budgets; capital investment proposals and many other operating issues arising
out of the ordinary course of business7 #he oard has delegated specific responsibilities to
other oard committees; which operate within clearly defined terms of reference7 2tanding
committees of the oard include the Audit ,ommittee; Nomination ,ommittee and
.emuneration ,ommittee7 /ther committees such as +2/2 ,ommittee and #ender
,ommittee were set up for specific purposes7 .eports of proceedings and outcome of
various ,ommittee meetings were submitted to the oard7
/A.D $++#IN!2
2upply of Information
#he agenda for every oard meeting; together with relevant management reports; proposal
papers and supporting documents are furnished to all Directors for their perusal in advance
of the oard meeting date; so that the Directors have ample time to review matters to be
deliberated at the oard meeting to enable them to discharge their duties7 $inutes of every
oard meeting are circulated to all Directors for their perusal prior to confirmation of the
minutes at the following oard meeting7
#he oard report contains relevant information on the business of the meeting;
which may include among others: >
S "erformance of the !roup
S /perational matters
S usiness development issues and market responses
S ,apital expenditure proposals
S Acquisitions and disposals proposals
S Appointment of senior executives
#he Directors have full and timely access to all information within the ,ompany; whether
as a full oard or in their individual capacity; in the furtherance of their duties7 In addition;
the oard has ready and unrestricted access to all information within the ,ompany and
!roup as well as the advice and services of senior management and ,ompany 2ecretary in
carrying out their duties7 #he ,ompany 2ecretary is responsible for ensuring that oard
meeting procedures are followed and that applicable rules and regulations are complied
with7 #he Directors may also seek independent professional advice; at the ,ompany
expense; if required7
Directors #raining
All Directors are encouraged to attend talks; training programmes and seminars to update
themselves on new developments in the business environment during the year ended )%
December *&%%7 A directors: training conducted by +psilon Advisory 2ervices 2dn hd
was held on %* Guly *&%% and the topic was .egulatory 4pdates for Directors and
+xecutives7 #he Directors will continue to undertake other relevant programmes to further
enhance their skills and knowledge7
Appointment and .e>election to the oard
Appointments to the oard are made based on the recommendation of the Nomination and
.emuneration committee7 In accordance with the ,ompany:s Articles of Association; at
least one>third of the Directors are required to retire by rotation at each Annual !eneral
$eeting but are eligible to offer themselves for re>election at the Annual !eneral $eeting7
#he Directors shall also retire from office at least once in three years but shall be eligible
for re>election7
#5+ A4DI# ,/$$I##++
#he oard is also assisted by the Audit ,ommittee whose members; key function and
activities for the year under review are stated in pages *) to *B of the Annual .eport7
#5+ N/$INA#I/N ,/$$I##++
#he oard has established a Nomination ,ommittee; which has the primary responsibility
to assess the suitability of candidates for nomination to the oard and to recommend such
appointments7 #he ob6ective is to ensure independent assessment of appointments to the
oard7 #he ,ommittee is also responsible for annual assessment of the skills mix and
experience possessed by oard members to ensure effectiveness of the oard; the other
committees of the oard and the contribution of individual Directors7
#he Nomination ,ommittee has three ?)@ members comprising three ?)@ Independent
Non +xecutive Directors7 During the financial year ended )% December *&%%; three ?)@
meetings were held7
#5+ .+$4N+.A#I/N ,/$$I##++
#he .emuneration ,ommittee reviews and recommends to the oard the remuneration
package of the executive directors and senior management of the !roup with the main aim
of providing the level of remuneration sufficient to attract and retain key personnel needed
to run the !roup successfully7 #he .emuneration ,ommittee has three ?)@ members
comprising exclusively Independent Non +xecutive Directors7 During the financial year
ended )% December *&%%; two ?*@ meetings were held7
+$"-/R++ 25A.+ /"#I/N 2,5+$+ ?+2/2@ ,/$$I##++
#he +2/2 ,ommittee was established with delegated authority by the oard to administer
the +2/2 of the !roup in accordance with the 2cheme:s by>laws and the exercise of any
discretion under the by>laws with regards to the eligibility of employees to participate in
the +2/2; share offers and share allocations and to attend to such other matters as may be
required7 #he +2/2 ,ommittee has five ?C@ members comprising two ?*@ Independent Non
+xecutive Directors and three ?)@ +xecutive Directors7
.+-A#I/N25I" 1I#5 25A.+5/-D+.2 AND IN8+2#/.2
#he oard recogni<es the importance of communication and proper dissemination of
information to its shareholders and investors7 $a6or corporate developments and
happenings in the ,ompany have always been promptly announced to all shareholders; in
line with ursa 2ecurities: ob6ective of ensuring transparency and good corporate
governance practice7
#he financial performance of the !roup; ma6or corporate developments and other
relevant information are promptly disseminated to shareholders and investors via
announcements of its quarterly performance; annual report and corporate announcements to
ursa 2ecurities7 During the Annual !eneral $eeting; the shareholders have opportunity to
enquire and comment on the ,ompany:s performance and operations7
A,,/4N#AI-I#R AND A4DI#
3inancial .eporting
In its financial reporting via quarterly announcements of results; annual financial
statements and annual report presentations including the ,hairman:s 2tatement and .eview
of /perations; the oard of Directors provides a comprehensive assessment of the !roup:s
performance and prospects for the benefit of shareholders; investors and interested parties7
#he Audit ,ommittee also assists the oard by scrutini<ing the information to be disclosed;
to ensure accuracy and adequacy7
Internal ,ontrol
#he oard has the overall responsibility of maintaining a system of internal control that
provides reasonable assurance of effective and efficient operations and compliance with
laws and regulations as well as with internal procedures and guidelines7 #he effectiveness
of the system of internal control of the !roup was reviewed periodically by the Audit
,ommittee7 #he review covers the financial; operational as well as compliance controls7
Directors: responsibility in financial reporting
#he oard is responsible for the preparation of the annual financial statements of the !roup
and to ensure that the financial statements give a true and fair view of the state of affairs of
the !roup and its result and cash flow for the financial year7 #he oard has ensured that the
financial statements have been prepared in accordance with applicable approved
accounting standards in $alaysia; the requirements of the ,ompanies Act %F9C and other
regulatory provisions7 In preparing the financial statements; the oard has ascertained that
reasonable prudent 6udgment and estimates have been consistently applied and the
accounting policies adopted have been complied with7 #he Directors have a general
responsibility of taking reasonable steps to safeguard the assets of the !roup and to prevent
and detect any irregularities7
.elationship with Auditors
#hrough the Audit ,ommittee and the oard; the !roup has established transparent and
appropriate relationship with the !roup:s auditors; both internal and external7 #he Audit
,ommittee also met the external auditors twice in financial year *&%% without the presence
of the management7
ADDI#I/NA- ,/$"-IAN,+ IN3/.$A#I/N
"ursuant to "aragraph F7*C of the $ain $arket -isting .equirements of ursa $alaysia
2ecurities erhad 2hare uy>ack During the financial year; the ,ompany has not
undertaken any share buy>back exercise7
/ption; 1arrant and ,onvertible 2ecurities
During the current financial year ended )% December *&%%; the ,ompany issued
(C;9(9;)C9 ordinary shares of .$&7*C each for cash; pursuant to the exercise of
(C;9(9;)C9 $" 1arrants *&&9Q*&%% ?H1arrantsI@ at the exercise price of .$&7)' per
ordinary share; details of which are disclosed in the Directors: .eport on page *F7 1arrants
were exercised prior to the expiry of the subscription .ights of 1arrants *&&9Q*&%% at
C7&&p7m on $onday; *9 2eptember *&%%7 #here was no option granted and the ,ompany
did not issue any convertible securities during the financial year ended )%December *&%%7
American Depository .eceipt ?HAD.I@ or !lobal Depository .eceipt ?H!D.I@ "rogramme
During the financial year; the ,ompany did not sponsor any AD. or !D. "rogramme7
Imposition of 2anctionsQ"enalties
#here were no sanctions andQor penalties imposed on the ,ompany or its subsidiaries;
Directors or management by the relevant regulatory bodies7
Non>Audit 3ees
No amounts of non>audit fees were paid to external auditors by the !roup during the
financial year ended )% December *&%%7
8ariation in results
#here were no material variances between the audited results for the financial year ended
)% December *&%% and the unaudited results previously announced7
"rofit !uarantee
No profit guarantee was received by the ,ompany during the financial year7
$aterial ,ontracts
#here were no material contracts of the ,ompany and its subsidiary companies which
involve Directors and ma6or shareholders interest; either still subsisting at the end of
financial year ended *&%% or entered into since the end of the previous financial year
,/."/.A#+ 2/,IA- .+2"/N2II-I#R
$agna "rima continues to make strides towards integrating ,2. into our working practices
and long term strategic goals7 5ighlights during 3R%% include our continued support of
5abitat for 5umanity:s house builds in the !reater 0lang 8alley area by lending our site
supervisory and building expertise7 #he !roup also extended financial assistance to
organi<ations serving the sickly and handicapped; fund raising activities organi<ed by
children:s homes; to associations promoting the arts and societies encouraging healthy
lifestyles via sporting activities7 Internally; we continue place an emphasis on nurturing and
developing our greatest asset K our employees7 #o this end; employees continue to be
encouraged to pursue professional development courses in various areas ranging from risk
management to accounting; construction and property management; information
technology; seminars on updates in the housing and developers acts and soft skills training
in topics such as leadership and self>development7
B7%7) $alton erhad
#5+ /A.D
%7 oard $embership
#he !roup is led and controlled by an effective oard7 "resently; the oard comprises
four executive directors and three independent non>executive directors as set out below7
During the financial year; $r ,hong 1an "ing who was $anaging Director resigned on
% April *&%%7 #he present composition of the oard complies with the requirement of the
$ain $arket -isting .equirements of ursa $alaysia 2ecurities erhad ?H$ain $arket
-isting .equirementsI@7 #here is balance in the oard as each independent director
brings invaluable 6udgement to bear on issues of strategy; performance; resource
allocation; risk management and standards of conduct7 In the opinion of the oard; the
minority shareholders are fairly well represented by the presence of these highly capable
and credible independent non>executive directors7 $r !uido "aul "hilip Goseph .avelli is
the senior independent non>executive director7 Any concerns relating to the !roup may
be conveyed to him7
*7 Directors: Duties and .esponsibilities
$alton is led by a team of experienced directors7 +ach director comes from different
professional background bringing depth and diversity of expertise; a wide range of
experience and perspective to the business operations7 #here is a clear division of role
and responsibilities of the +xecutive ,hairman and the $anaging Director to ensure
balance of power and authority7 #he +xecutive ,hairman is primarily responsible for the
vision and strategic direction of the !roup7 #he +xecutive Directors including $anaging
Director are responsible for the implementation of the ob6ectives and goals of the !roup
and operational matters of the !roup7 #he Deputy ,hairman; an independent non>
executive director; ensures that the oard practices good governance in discharging its
duties and responsibilities7 #he oard; as a whole; retains overall control of the !roup7
As a matter of course; from time to time; the oard examines its si<e with a view to
determine the impact of its number upon its effectiveness7
)7 oard $eetings
#he oard meets at least five times a year; with additional matters addressed by way of
circular resolutions and additional meetings held as and when necessary7 #he oard met
five times during the financial year ended )& Gune *&%%7
B7 oard ,ommittees
As recommended by the ,ode; the oard may establish oard ,ommittees to assist the
oard in discharging its duties7 #he oard has formed the following ,ommittees; each
with its own functions and responsibilities7 All oard ,ommittees report to the oard7
S Audit ,ommittee
S Nominating ,ommittee
S .emuneration ,ommittee
C7 Appointment to the oard
It is recommended in "art * of the ,ode that the assessment of new candidates for
appointment as directors is to be made by the Nominating ,ommittee7 #he decision for
appointment of new directors is a matter for deliberation by the oard as a whole7 #he
Nominating ,ommittee of $alton comprises exclusively independent non>executive
directors7 #he members of the Nominating ,ommittee are as follows:>
S !uido "aul "hilip Goseph .avelli
S 56 Ahmad in 56 Ismail; "G0
S #an "eng 2heung
#he authorities; functions and responsibilities of the Nominating ,ommittee are set out in
its terms of reference7 #he main ob6ectives of the Nominating ,ommittee are to review;
recommend and consider candidates for appointment to the oard; to assess the
effectiveness and continually seek ways to upgrade the effectiveness of the oard as a
whole and the ,ommittees of the oard7 It also assesses the contribution of each
Director; executive or independent non>executive7 During the financial year ended )&
Gune *&%%; the Nominating ,ommittee met once to review the performance of all the
oard members; individually and collectively as a oard7
97 Appointment and .e>election of the Directors
In accordance with the Articles of Association of the ,ompany; the oard can appoint
any person to be a Director as and when it is deemed necessary7 Any person so appointed
shall hold office until the next Annual !eneral $eeting at which time he will be sub6ect
to election by the shareholders7 In compliance with the $ain $arket -isting
.equirements; the Articles of Association of the ,ompany provide that all Directors of
the ,ompany; including the $anaging Director shall retire from office at least once every
three years but be eligible for re>election7
'7 Directors: #raining and Development
#he oard of Directors as a whole will assess; then establish and propose training and
development programmes which in its view are essential and beneficial to the Directors
in carrying out his or her duties and responsibilities as a Director7 #he Directors will
continuously review conferences; seminars and forums based on the suitability and
timing7 In addition to attending conferences; seminars and other training programmes; the
Directors constantly keep up to date with all types of reading materials concerning
market development; industry news; changes in the regulations; related issues and all
happenings7 All of the Directors have attended the Directors: $andatory Accreditation
"rogramme ?H$A"I@ as required by ursa $alaysia 2ecurities erhad7 During the
financial year ended )& Gune *&%%; the Directors attended various seminar and forums;
amongst others; industry>related programmes including the Bth $alaysian "roperty
2ummit *&%%; !reen #our; #all uildings K ,ost D ,onstruction ,hallenges and
Development 2trategies for !reater 0- D 0lang 8alley; programmes organised by ursa
$alaysia including #he oard:s .esponsibility for ,orporate ,ulture and Assessing the
.isk and ,ontrol +nvironment; rand ,reation with lue /cean 2trategy and 1orld
+xpo *&%& held in 2hanghai7
(7 2upply and Dissemination of Information
oard meetings are structured with pre>determined agendas7 Appropriate and complete
oard papers are prepared prior to each oard meeting7 #hese are distributed to the
oard in sufficient time to enable the Directors to obtain further information and
explanation; where necessary7 Directors also have unfettered access to all information
within the !roup in furtherance of their duties7 #here are matters reserved specifically for
the oard:s decision including the approval of acquisitions and disposals of assets and
investments that are material to the !roup7 #he Directors in their individual capacity or
the oard as a whole; in furtherance of their duties; have access to independent
professional advice; if and when they deem necessary; and at the !roup:s expense7 All
Directors have access to the advice and services of the ,ompany 2ecretary and the
Internal Audit Department7
F7 Directors: .emuneration
#he ,ompany has adopted the principle recommended in the ,ode whereby the level of
remuneration of the Directors is sufficient to attract and retain Directors needed to
manage the !roup successfully7 #he remuneration system is structured to link rewards to
corporate and individual performance in the case of executive directors7 In the case of
non>executive directors; the level of remuneration shall reflect the level of responsibilities
undertaken by the particular non>executive director concerned7
#5+ /A.D ?cont:d@
Directors: .emuneration ?cont:d@
#o assist the oard in the discharge of its responsibilities in this matter; the oard
endorsed the formation of a .emuneration ,ommittee on *B /ctober *&&*7 #he
composition of the .emuneration ,ommittee is as follows:>
S !uido "aul "hilip Goseph .avelli
S ,hua #hian #eck
S 56 Ahmad in 56 Ismail; "G0
#he authorities; functions and responsibilities of the .emuneration ,ommittee are set out
in its terms of reference7 #he ,ommittee will review the remuneration packages of each
individual +xecutive Director from time to time to ensure that the remuneration packages
remain competitive in order to attract and retain competent executives who can manage
the !roup successfully7 +xecutive Directors play no part in decisions on their own
remuneration7 #he determination of remuneration packages of non>executive directors is
a matter of the oard as a whole7 #he independent non>executive directors do not partake
in decisions affecting their remuneration7 During the financial year ended )& Gune *&%%;
the .emuneration ,ommittee had met to discuss the remuneration structure and packages
for review by the oard7
DIA-/!4+ +#1++N #5+ ,/$"ANR AND IN8+2#/.2
#he oard values and encourages dialogues with the shareholders to establish better
understanding of the ,ompany:s ob6ectives and performance7 #he Annual !eneral
$eeting provides an appropriate forum for the shareholders to participate in questions
and answers sessions7 #he ,ompany is committed to disseminate information in strict
adherence to the disclosure requirements of the $ain $arket -isting .equirements7 #he
,ompany ensures that material information relating to the !roup is disclosed by way of
announcement to the ursa $alaysia 2ecurities erhad as required7 #he ,ompany has
established its website; www7malton7com7my which allows shareholders and the public;
access to corporate information; financial statements; news and events relating to the
!roup7
,/."/.A#+ 2/,IA- .+2"/N2II-I#R
#he oard recognises the importance of the !roup in its role as a responsible corporate
citi<en7 #he !roup:s business and operation practices reflect its values and the interests
of all stakeholders including its customers; investors; employees; the community and
environment7 #he !roup is committed to conduct its business in socially and
environmentally conscious and responsible approach7 #he oard is aware that as the
!roup continues to grow; so will its social responsibility efforts7 It will have to make
frequent ad6ustments in response to economic and regulatory changes7 It reviews its
product development and operational practices and procedures from time to time;
considering and adopting sustainable methods and processes where applicable and
feasible7 As an employer; the !roup is committed in the development and training needs
of its employees; both technical and soft skills7 As a conscientious developer; the !roup
undertakes community campaigns to create awareness among the community on security
and selfpreservation matters7 #he !roup has and will continually support humanitarian
causes; educational and social development of the society through donation; sponsorships
and participation in fund raising and community events which include the involvement
and efforts of the employees of the !roup7
$A#+.IA- ,/N#.A,#2
#here were no material contracts involving the interests of the Directors andQor ma6or
shareholders of the ,ompany other than those disclosed in the .elated "arty Disclosure
presented in the 3inancial 2tatements of this Annual .eport7
N/N>A4DI# 3++2 "AID #/ +T#+.NA- A4DI#/.
Non>audit fees paid; during the financial year ended )& Gune *&%%; to $essrs Deloitte D
#ouche amounted to .$%*F;*C&7&&7
.+,4..+N# .+-A#+D "A.#R #.AN2A,#I/N2
#he ,ompany was given shareholders: mandate to enter into .ecurrent .elated "arty
#ransactions for the sale of trading stock properties with related parties ?H.ecurrent
#ransactionsI@ at the 3ifteenth Annual !eneral $eeting held on *C November *&%&7
A,,/4N#AI-I#R AND A4DI#
%7 3inancial .eporting
In presenting the annual financial statements and quarterly results; the oard aims to
present a balanced and understandable assessment of the !roup:s position and prospects7
#he Audit ,ommittee assists the oard in examining information to be disclosed to
ensure the accuracy and authenticity of such information7
*7 .elationship with the +xternal Auditors
#he oard has established a formal and transparent relationship with the auditors of the
,ompany7 #he role of the Audit ,ommittee in relation to the external auditors is
described in the Audit ,ommittee .eport of this Annual .eport7
2#A#+$+N# /N IN#+.NA- ,/N#./-
#he oard is committed to maintain a sound internal control system to safeguard the
shareholders: interest and the !roup:s assets7 #he oard has established an appropriate
control environment and risk management framework as well as reviewing its adequacy
and integrity7
%7 ,ontrol +nvironment and .isk $anagement 3ramework
#his is established to identify significant risks faced by the !roup in its operating
environment7 #he !roup continuously identifies and assesses impact of such risks and
develops necessary measures to control the risks7
*7 !roup 2tructure
#his is achieved through clearly defined operating and reporting structures with clear
lines of accountability and responsibilities7 ,hanges in the !roup structure are duly
communicated to management team of the !roup7 In addition; details of directorships
within the !roup are constantly highlighted to ensure that related parties are duly
identified; as necessary7
)7 Internal Audit 3unction
In addition; the !roup has an internal audit department which carries out the internal
audit function in the !roup7 #he findings of the internal audit department are regularly
reported to the Audit ,ommittee7 #he Audit ,ommittee meets at least four times a year
with the oard to discuss significant issues found during the internal audit process and
make necessary recommendations to the oard7
B7 ,ontrol 3ramework
3inancial Information and Information 2ystem
$onthly management reports are prepared at subsidiary levels and sub6ect to
review by senior management and the executive directors7
"erformance .eporting and $onitoring
Puarterly financial statements are presented to the Audit ,ommittee and the
oard for review and discussion7
2tandardisation of "olicies and "rocedures
2tandardised policies and procedures are implemented to address the financial and
operational controls of the !roup7
DI.+,#/.2: .+2"/N2II-I#R IN ".+"A.IN! #5+ 3INAN,IA- 2#A#+$+N#2
#he Directors are required to prepare financial statements for each financial year which
give a true and fair view of the state of affairs of the !roup at the end of the financial
year and of the results and the cash flow of the !roup for the financial year7 #he
Directors are satisfied that; in preparing the financial statements of the !roup for the
financial year ended )& Gune *&%%; the !roup has adopted approved applicable
accounting standards in $alaysia and complied with the provisions of the ,ompanies
Act; %F9C7
,5A"#+. C
3./$ A4DI# "/IN# /3 8I+1
5"1 MULPHA LAND BERHAD
.esponsibility
#he oard of Directors ?Hthe oardI@ acknowledges responsibility for maintaining a sound
system of internal controls and for reviewing its adequacy and integrity7 #he system of
internal controls; designed to safeguard shareholders: investments and the !roup:s assets;
covers not only financial controls but also operational and compliance controls and risk
management7 2uch systems; however; are designed to manage rather than eliminate risks that
may hinder the achievement of the !roup:s business ob6ectives7 Accordingly; the systems
can only provide reasonable and not absolute assurance against material misstatement; loss
and fraud7
.isk $anagement
.isk management is considered by the oard as an integral part of the business operations7
#he risk management function is undertaken by the .isk $anagement Department of
$ulpha International hd; the ,ompany:s holding company7 #he .isk $anagement
,ommittee of the holding company oversees the risk management process7 All reports on
risk management are reviewed by the Audit ,ommittee of the ,ompany7 #he !roup has in
place a risk management framework to identify; evaluate; monitor and manage risks that may
affect the !roup:s businesses7 #he framework focuses on the property sector which is the
core business of the !roup7 Included in the framework is the +nterprise .isk7 $anagement
"olicy and "rocedure which is based on the AustraliaQNew Uealand standard B9)& : *&&B;
one of the global authoritative standards for +nterprise .isk $anagement7
0ey +lements of Internal ,ontrol
#he other key elements of the !roup:s internal control system include the following:>
clearly defined delegation of responsibilities; organisation structure and
appropriate authority limits have been established by the oardL
internal policies and procedures are in place which are updated as and when
necessaryL
reporting systems are in place which generate financial and other reports for the
oard and management7 $onthly management meetings are held during which
the reports are discussed and the necessary action takenL
annual business plans and budgets are prepared and actual performance is
reviewed against the budgets on a monthly basis and
the adequacy and effectiveness of the system of internal controls is continually
assessed by the Internal Audit Department of the holding company and reviewed
by the Audit ,ommittee of the ,ompany7
Internal Audit
#he internal audit functions of the !roup are performed by the Internal Audit Department of
the holding company7 #he Internal Audit Department undertakes the review of the system of
internal controls; procedures and operations so as to provide reasonable assurance that the
internal control system is sound; adequate and operating satisfactorily7
$onitoring and .eview of the 2ystem of Internal ,ontrols
During the year; a number of improvements to internal controls were identified and
implemented7 No weaknesses were noted which have a material impact on the !roup:s
financial performance or operations7 #he monitoring; reviews and reporting procedures and
systems in place give reasonable assurance that the controls are adequate and appropriate to
the !roup:s operations and that risks are at an acceptable level7 2uch procedures and
systems; however; do not eliminate the possibility of human error; the deliberate
circumvention of control procedures by employees and others and the occurrence of
unforseeable circumstances7
#he terms of reference of the ,ommittee are as follows:>
,omposition
#he ,ommittee shall be appointed by the oard from amongst the Directors of the ,ompany7
#he ,ommittee shall comprise of not less than three members7 All the members must be
Non>+xecutive Directors; with a ma6ority of them being Independent Directors7 At least one
member of the ,ommittee must be a member of the $alaysian Institute of Accountants or
fulfil such other requirements as prescribed or approved by the +xchange7 /ne of the
members of the ,ommittee who is an Independent Director shall be appointed ,hairman of
the ,ommittee by the members of the ,ommittee7
$eetings And $inutes
#he ,ommittee shall meet at least four times a year7 A quorum shall be at least two members
present; the ma6ority of whom shall be Independent Directors7 #he ,ommittee may request
any member of the management and representatives of the external auditors to be present at
meetings of the ,ommittee7 $inutes of each ,ommittee meeting are to be prepared and
distributed to each member of the ,ommittee and the oard7 #he ,ompany 2ecretary or his
Assistant shall be the 2ecretary of the ,ommittee7
Authority
#he ,ommittee is authorised by the oard of Directors:>
to investigate any matter of the ,ompany and its subsidiaries within its terms of
referenceL
to seek any information it requires from any employee for the purpose of discharging
its functions and responsibilities and all employees are directed to cooperate with any
request made by the ,ommitteeL
to obtain legal or other independent professional advice and to secure the attendance
of outsiders with the experience and expertise if it considers it necessary to do soL and
to convene meetings with the external auditors; the internal auditors or both;
excluding the attendance of other Directors and employees of the ,ompany and
subsidiaries; whenever deemed necessary7
Duties and .esponsibilities
#he duties and responsibilities of the ,ommittee shall be as follows and will cover the
,ompany and its subsidiaries:>
to consider the appointment of external auditors; their terms of appointment and
reference and any questions of resignation or dismissalL
to review with the external auditors their audit plan; scope and nature of auditL
to review the quarterly and annual financial statements before submission to the
oardL
to review and assess the adequacy and effectiveness of the systems of internal control
and accounting control proceduresL
to hear from and discuss with the external auditors any problem and reservation
arising from their interim and final audits or any other matter that the external
auditors may wish to highlightL
to review the internal audit programme; consider the findings of internal audit and the
actions and steps taken by management in response to such findings and ensure co>
ordination between the internal and external auditorsL
to review the adequacy of the scope; functions; competency and resources of the
internal audit function and that it has the necessary authority to carry out its workL
to review related party transactions entered into by the ,ompany and the !roup to
ensure that such transactions are undertaken on the !roup:s normal commercial terms
and that the internal control procedures relating to such transactions are adequateL
to review the process for identifying; evaluating; monitoring and managing significant
risksL
to undertake such other responsibilities as may be delegated by the oard from time
to timeL and
to report to the oard its activities and findings7
Internal Audit 3unctions
#he internal audit functions of the ,ompany are performed by the Internal Audit Department
of $ulpha International hd; the ,ompany:s holding company7 #he principal ob6ective of
the internal audit functions is to undertake regular reviews of the systems of controls;
procedures and operations so as to provide reasonable assurance that the internal control
system is sound; adequate and operating satisfactorily7 #he attainment of such ob6ective
involves the following ma6or activities being carried out by the Internal Audit Department:>
review and appraise the adequacy; effectiveness and reliability of internal control
systems; policies and proceduresL
monitor the adequacy; reliability; integrity; security and timeliness of financial and
other management information systemsL
determine the extent of compliance with relevant laws; codes; standards; regulations;
policies; plans and proceduresL
review the efficiency and effectiveness of operations and identify risk exposureL and
review and verify the means used to safeguard assets7
#he ,ompany was not charged any fee for *&%% for the internal audit service provided by the
Internal Audit Department of the ,ompany:s holding company7
5"2 Ma*a P/01a B!/)a+
#he oard acknowledges the importance of maintaining a sound system of internal control to
safeguard shareholders: investments and the !roup:s assets7 !uided by the ursa 2ecurities:
2tatement on Internal ,ontrol: !uidance for Directors of "ublic -isted ,ompanies; the oard
is pleased to present the 2tatement on Internal ,ontrol of the !roup pursuant to the $ain
$arket -isting .equirements of ursa 2ecurities7
/A.D:2 .+2"/N2II-I#R
#he oard recognises the importance of sound internal control and risk management
practices for good corporate governance7 #he oard acknowledges that it is responsible for
the !roup:s system of internal control to safeguard shareholders: investments and the
!roup:s assets and for the continuing review of its adequacy and integrity7 3or the financial
year under review; the !roup had in place a system of internal control in accordance with
2ection %9'A of the ,ompanies Act; %F9C and had established an on>going process of
reviewing; identifying; evaluating and managing significant risks faced by the !roup7 #he
system of internal control and the process of risk management are reviewed regularly by the
oard with the assistance of the Audit ,ommittee; Internal Audit Department and all relevant
personnel of the !roup through a combination of key processes7 It must be noted however;
the system of internal control is designed to manage rather than to eliminate the risk of
failure to achieve business ob6ectives and can only provide reasonable and not absolute
assurance against material misstatement or loss7
,ontrol +nvironment And 2tructure
#he oard recognises that in order to achieve a sound system of internal control; a conducive
control environment must be established7 #he oard is fully committed to the maintenance of
such a control environment within the !roup and in discharging their responsibilities;
enhanced the following key system of internal control within the !roup to govern the manner
in which the !roup and its employees conduct themselves7 #he key elements of internal
controls comprise the following:>
#he oard meets regularly to monitor and review the overall performance of the
!roup; to consider the findings and recommendations of committees and to consider
the approved measures to be taken and changes in policies and procedures necessary
to address risks and to enhance the system of internal control7
Audit ,ommittee comprises entirely of non>executive directors; and who hold regular
meetings throughout the financial year7 Audit ,ommittee members are briefed and
updated on the matters of corporate governance practice and legal and regulatory
matters7 #he current composition of members; with at least one who is a member of
an accounting association or body; brings with them a wide variety of experience
from different fields and background7 #hey have full and unimpeded access to both
the internal as well as external auditors during the financial year7 #hey also meet with
the external auditors without the presence of the $anagement at least twice a year7
Internal Auditors continue to independently assure the oard; through the Audit
,ommittee; that the internal control system functions as intended7 #heir work practice
as governed by their audit plan is derived on a risk based approach and internal audit
findings are highlighted to the Audit ,ommittee7 #heir annual audit plans are
presented and approved by the Audit ,ommittee annually before the commencement
of the following financial year and updates are given as and when there are any
changes7
3inancial and /perational Information continues to be prepared and presented to the
oard7 A detailed budget is prepared and presented to the oard before the
commencement of a new financial year7 4pon approval of the budget; the !roup:s
performance is then tracked and measured against the approved budget on quarterly
basis7 All ma6or variances and critical operational issues are followed up with action
thereon7 /n a quarterly basis; the results are reviewed by the Audit ,ommittee and
the oard to enable them to gauge the !roup:s overall performance compared to the
approved budgets7
#he -imit of Authority determines the respective levels of authority which are
delegated to staff of the respective levels to enable control of the !roup:s
commitment of both capital and operational expenditure7 #he authority limits are
sub6ect to periodic review throughout the financial year as to their implementation
and for the continuing suitability7
"olicies and procedures for key business processes are formalised and documented
for each significant operating unit7
#ender ,ommittee functions to ensure transparency in the award of contracts7
+xecutive ,ommittee functions to advise the oard in formulating policies and
supervise the management to carry out and implement the policies laid down by the
oard7
An I2/ F&&% Puality $anagement 2ystem which has been in practice to manage and
control the quality requirement for the !roup:s work done and services rendered7
.isk $anagement 3ramework
#he Audit ,ommittee and the $anagement have established the following steps in order to
set>up a formalised .isk $anagement 3ramework: >
.isk $onitoring and ,ompliance7 #he Audit ,ommittee with the assistance of the
Internal Audit Department has set in place an on>going process of formalising the risk
management systems7
5eads of each business unit are in charge of identifying principal risks and
establishing relevant processes and systems to monitor and manage those risks7
+mployees are encouraged to give feedback on risk management issues and make
suggestions for improvement at the operating unit level7
#he system of internal control described in this 2tatement is considered by the oard to be
adequate and risks are considered by the oard to be at an acceptable level within the context
of the business environment throughout the !roup:s business7 5owever; such systems are
designed to manage rather than eliminate the risk of failure to achieve business ob6ectives
and thus they can only provide reasonable assurance and not absolute assurance against
material misstatement7 Nevertheless; the systems of internal control that exist throughout the
financial year under review provide a level of confidence on which the oard relies for
assurance7 #his complies with the provisions recommended in the ursa 2ecurities:
2tatement of Internal ,ontrol: !uidance for Directors of "ublic -isted ,ompanies7 3or the
financial year under review; the oard is satisfied with the adequacy and integrity of the
!roup:s system of internal control and that no material losses; contingencies or uncertainties
have arisen from any inadequate or failure of the !roup:s system of internal control that
would require separate disclosure in the !roup:s Annual .eport7 #his 2tatement is made in
accordance with the resolution of the oard dated %* April *&%*7
Duties and .esponsibilities
#he duties and responsibilities of the ,ommittee are to:
.eview all financial information for publication; including quarterly and annual
financial statements prior to submission to the oard of Directors7 #he review shall
focus on:
,hanges in accounting policies and practices
$a6or 6udgmental areas
2ignificant audit ad6ustments from the external auditors
,ompliance with accounting standards
,ompliance with ursa 2ecurities and other regulatory and legal requirements
Discuss with the external auditors; the nature; scope and approach of the audit of the
financial statements7
Discuss with the external auditor on areas of concern arising from the audit of the
financial statements7
Assess the adequacy and effectiveness of the accounting procedures and the internal
control systems of the ,ompany by reviewing management letters from external
auditors7
Discuss problems and reservations arising from the interim and final audits and any
matters the auditors may wish to discuss in the absence of $anagement; where
necessary7
.eview the internal audit plan and processes; consider ma6or findings of internal audit
and recommend actions and steps to be taken by management in response to the
findings7
.eview the relevance and adequacy of the scope; functions; competency and
resources of internal audit and the necessary authority to carry out the function7
Determine extent of cooperation and assistance given by the employees7
.eview related party transactions and conflict of interest situations that may arise
within the ,ompany7
,onsider the appointment of the external auditors; the terms of reference of their
appointment and any questions on resignation and dismissal before recommendation
to the oard7
4ndertake such other responsibilities as may be agreed to by the ,ommittee and the
oard7
.eport its activities; significant results and findings7
.eview the ,ompany:s arrangements for its employees to raise concerns; in
confidence; about possible wrongdoing in financial reporting or other matters7 #he
,ommittee shall ensure that these arrangements allow proportionate and independent
investigation of such matters and appropriate follow up action7
2ummary /f #he Activities /f #he Audit ,ommittee 3or #he 3inancial Rear +nded )%
December *&%%
#he Audit ,ommittee has carried out the following activities during the financial year under
review7
.eviewed and recommended actions on the quarterly and annual financial results and
performance of the ,ompany and the !roup prior to submission to the oard for
consideration and approval7
.eviewed related party transactions entered into by the ,ompany and the !roup; and
reported the same to the oard of Directors7
.eviewed and discussed with the external auditors the nature and scope of their audit
before reporting the same to the oard7
.eviewed the issues as per the management letters from the external auditors7
.eviewed audit plans for the year for the ,ompany and the !roup; prepared and
reported by the internal auditors7
.eviewed the internal audit reports and to discuss findings or issues that highlighted7
Internal Audit 3unction
#he !roup has an in>house Internal Audit Department that reports directly to the Audit
,ommittee7 #he ,ommittee is aware of the fact that an independent and adequately
resourced internal audit function is essential to assist in obtaining the assurance it requires
regarding the effectiveness of the system of internal controls7 #he activities of the Internal
Audit during the financial year ended )% December *&%% were as follows:
"repared; presented and sought the Audit ,ommittee:s approval of the annual audit
plan for the !roup7
"erformed annual risk profiling on all the departments within the !roup; and based
on available resources; formed the basis of the annual audit plan for the !roup7
.eviewed the compliance of the ,ompany:s 2tandard /perating "rocedure;
Discretionary Authority -imit ?DA-@ and other statutory and regulatory
requirements7
Identified; reviewed and evaluated the adequacy and effectiveness of the ,ompany:s
"olicies and "rocedures and the DA-7
+valuated the efficiency of processes; functions and current practices; and provided
suitable recommendations to the Audit ,ommittee7
"repared audit reports and sought management response on the issues found and
highlighted in the report7 4pon incorporating the response of $anagement into the
final reports; the same were circulated to the Audit ,ommittee7
"resented the audit reports to the Audit ,ommittee during the Audit ,ommittee
meetings held throughout the financial year7
,arried out follow>up reviews on audit reports; and reported to the Audit ,ommittee
the status of implementation of agreed actions in the audit reports7
4ndertook additional tasks as directed by the Audit ,ommittee or $anagement; such
as investigations of complaints received7
During the financial year; the internal audit activities have been carried out according to the
internal audit plans which have been approved by the Audit ,ommittee7 2ix ?9@ audit reports
and one ?%@ special audit report were issued during the financial year incorporating findings
and recommendations with regard to system and control; weaknesses noted in the course of
audit; the management:s responses and the remedial actions on the implementation of all
findings and recommendations in its review process7 In the course of auditing; the Internal
Auditors have identified some internal control weaknesses; which have been or are being
addressed and status of implementation were being monitored7 None of the weaknesses have
resulted in any material losses; contingencies or uncertainties that would require disclosure in
the ,ompany:s Annual .eport7 #he cost incurred for the Internal Audit Department for the
financial year ended )% December *&%% was .$F(;9&*7
5"3 Ma'23* B!/)a+
Internal Audit 3unction
#he !roup has an internal audit department which reports directly to the ,ommittee7 During
the financial year ended )& Gune *&%%; the internal audit department carried out its audit
duties covering business audit; system audit; operational and financial audits for reporting to
the ,ommittee7 #he ,ommittee together with the internal auditors reviewed the quarterly
results for recommendation to the oard of Directors7
#erms /f .eference
/b6ectives of Audit ,ommittee7 #he primary ob6ectives of the ,ommittee are to:>
%@ $aintain; through regularly scheduled meetings; an open line of communication
between the oard; $anagement; external auditors and internal auditorsL
*@ /versee and appraise the quality of the audits conducted by the external auditors and
the internal auditorsL and
)@ "rovide assistance to the oard in fulfilling its fiduciary responsibilities relating to
the ,ompany:s administrative; operating and accounting controls7
#erms /f .eference
$embers of the Audit ,ommittee
%@ #he ,ompany shall appoint an Audit ,ommittee from amongst its directors and shall
consist of not less than three in numbers; all of whom shall be non>executive directors
with a ma6ority of them being independent directors7
*@ At least one member of the Audit ,ommittee:>
must be a member of the $alaysian Institute of AccountantsL or
if he is not a member of the $alaysian Institute of Accountants; he must have
at least ) years: working experience and:>
he must have passed the examinations specified in "art I of the %st
2chedule of the Accountants Act %F9'L or
he must be a member of one of the associations of accountants
specified in "art II of the %st 2chedule of the Accountants Act %F9'7
fulfils such other requirements as prescribed by ursa $alaysia 2ecurities
erhad7
)@ No alternate director shall be appointed as a member of the ,ommittee7
B@ If a member of the ,ommittee for any reason ceases to be a member with the result
that the number is reduced to below ); the oard of Directors shall; within ) months
of that event; appoint such number of new members as maybe required to make up
the minimum number of ) members7
C@ #he oard of Directors must review the term of office and performance of the
,ommittee and each of its members at least once every ) years to determine whether
the ,ommittee and its members have carried out their duties in accordance with their
terms of reference7
,hairman of Audit ,ommittee
#he members of the ,ommittee shall elect a ,hairman from among their number who shall
be an independent director sub6ect to endorsement by the oard7
$eetings and .eporting of Audit ,ommittee
%@ #he quorum in respect of a meeting of the ,ommittee shall be a ma6ority of
independent directors7
*@ #he ,ommittee shall meet at least each quarter of a financial year and such additional
meetings as the ,hairman shall decide in order to fulfil its duties7
)@ #he ,ompany 2ecretary or any person appointed by the Audit ,ommittee shall act as
the 2ecretary of the Audit ,ommittee and shall be responsible; in con6unction with
the ,hairman; for drawing up the agenda and other supporting explanatory
documentation for circulation to the ,ommittee $embers prior to each meeting7 #he
2ecretary will also be responsible for keeping the minutes of the meetings of the
,ommittee; and circulating them to the members and to other members of the oard
of Directors7 #he ,hairman shall convene a meeting of the ,ommittee to consider
any matter the external auditors believe should be brought to the attention of the
directors or shareholders7
B@ #he ,ompany must ensure that other directors and employees attend any particular
,ommittee meeting only at the ,ommittee:s invitation; specific to the relevant
meeting7
C@ All or any of the members of the ,ommittee may participate in a meeting of the
,ommittee by means of a telephone conference; video conferencing or any
communication equipment that allows all persons participating in the meeting to hear
each other7 A person so participating shall be deemed to be present in person at the
meeting and shall be entitled to vote or be counted in a quorum accordingly7
#erms /f .eference
Authority
#he ,ommittee shall; in accordance with a procedure to be determined by the oard of
Directors and at the cost of the ,ompany:>
5ave authority to investigate any matter within its terms of referenceL
5ave the resources which are required to perform its dutiesL
5ave full and unrestricted access to any information pertaining to the
,ompanyL
5ave direct communication channels with the external auditors and person?s@
carrying out the internal audit function or activityL
e able to obtain independent professional or other adviceL and
e able to convene meetings with the external auditors; the internal auditors
or both; excluding the attendance of other directors and employees; whenever
deemed necessary7
#he ,hairman of the ,ommittee shall engage on a continuous basis with senior management
on matters affecting the ,ompany7 1here the ,ommittee is of the view that a matter reported
by it to the oard of Directors of the ,ompany has not been satisfactorily resolved resulting
in a breach of the $ain $arket -isting .equirements of ursa $alaysia 2ecurities erhad;
the Audit ,ommittee shall promptly report such matter to ursa $alaysia 2ecurities erhad7
3unctions and .esponsibilities
#he primary functions of the ,ommittee are to review the following and report the same to
the oard of Directors:>
%@ #he audit plan; audit report and evaluation of the system of internal controls with the
external auditors and assistance given by the employees of the ,ompany to the
external auditorsL
*@ #he adequacy of scope; functions and resources of the internal audit function and the
necessary authority to carry out its dutiesL
)@ #he internal audit programme; processes; the results of the internal audit programme;
processes or investigation undertaken and whether or not appropriate actions are
taken on the recommendation of the internal audit function
B@ #he quarterly results and year end financial statementsL prior to approval by the
oard of Directors; focusing particularly on:>
changes in or implementation of ma6or accounting policy changesL
significant and unusual eventsL and
compliance with accounting standards and other legal requirements7
C@ Any related party transaction and conflict of interest situation that may arise within
the !roup including any transaction;procedure or course of conduct that raises
questions of management integrityL
9@ Any letter of resignation from the external auditors of the ,ompanyL
'@ 1hether there is reason ?supported by grounds@ to believe that the ,ompany:s
external auditor is not suitable for reappointmentL and .ecommend the nomination of
a person or persons as external auditors7