Sustainable Growth

Our continuous aim to grow like a tree......

ANNUAL2018 REPORT

Sustainable Growth CONTENTS

3 Notice of Annual General Meeting 6 Corporate Information 8 Corporate Structure 9 Profile of Directors 13 Profile of Key Senior Management 14 Group Financial Highlights 16 Management Discussion and Analysis 20 Corporate Governance Overview Statement 28 Statement on Risk Management and Internal Control 32 Audit Committee Report 34 Corporate Social Responsibility 35 Financial Statements 119 List of Properties 122 Analysis of Shareholdings Proxy Form

ANNUAL REPORT 2018 NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 24th Annual General Meeting of SHL Consolidated Bhd (the Company) will be held at Ballroom 1, Level 1, Corus Hotel Kuala Lumpur, Jalan Ampang, 50450 Kuala Lumpur, on Wednesday, 29 August 2018 at 11.00 a.m. for the purpose of transacting the following businesses:-

AS ORDINARY BUSINESS (Please refer 1. To receive the Audited Financial Statements for the financial year ended 31 March to Explanatory 2018 together with the Reports of the Directors and the Auditors thereon. Note 1)

2. To approve a Final Dividend of 8 sen per share in respect of the financial year ended Resolution 1 31 March 2018.

3. To approve the payment of Directors’ fees for the financial year ended 31 March 2018. Resolution 2

4. To re-elect the following Directors who retire in accordance with Article 88 of the Company’s Articles of Association:

i. Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Resolution 3 Shah ii. Dato’ Sri Ir. Yap Chong Lee Resolution 4

5. To re-appoint Messrs Khoo Wong & Chan as Auditors of the Company for the financial Resolution 5 year ending 31 March 2019 and to authorise the Directors to fix their remuneration.

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following Ordinary Resolutions:

6. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

“THAT subject always to Bursa Malaysia Securities Berhad’s Main Market Listing Requirements, approval be and is hereby given to the Company and its subsidiaries (SHL Group) to enter into recurrent related party transactions of a revenue or trading nature with those related parties as set out in Section 2.3 of the Circular to Shareholders dated 30 July 2018, which are necessary for the day to day operations in the ordinary course of business and are carried out at arms’ length basis on normal commercial terms of the SHL Group on terms not more favourable to the Related Parties than those generally available to the public and are not detrimental to minority shareholders of the Company and such approval shall continue to be in force until:

i. the conclusion of the next Annual General Meeting of the Company (AGM) at which time it will lapse, unless by a resolution passed at the AGM the mandate is again renewed; or ii. the expiration of the period within which the next AGM after the date it is required to be held pursuant to Section 340(2) of the Companies Act, 2016 (the Act) (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act; or iii. revoked or varied by resolution passed by the shareholders in a general meeting,

whichever is the earlier, (Please refer AND THAT the Directors of the Company be and are hereby authorised to complete to Explanatory and do all such acts and things as they may consider expedient or necessary to give Note 2) effect to the Proposed Shareholders’ Mandate.” Resolution 6

3 SHL CONSOLIDATED BHD NOTICE OF ANNUAL GENERAL MEETING (cont’d)

7. Authority to Issue Shares Pursuant to Sections 75 and 76 of the Companies Act 2016

“THAT pursuant to Sections 75 and 76 of the Companies Act 2016, the Articles of Association of the Company, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and the approvals of the relevant governmental/ regulatory authorities, where such approval is required, the Directors be and are hereby authorised to issue and allot shares in the Company to such persons, at any time, and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed 10% of the total number of issued shares of the Company for the time being AND THAT the Directors be and also empowered to obtain the approval for the (Please refer listing of and quotation for the additional shares so issued on Bursa Malaysia Securities to Explanatory Note 3) Berhad AND THAT such authority shall continue in force until the conclusion of the next Resolution 7 AGM of the Company.”

8. To transact any other business of which due notice shall have been given.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT the Final Dividend of 8 sen per share in respect of the financial year ended 31 March 2018, if approved, will be paid on 5 October 2018 to depositors registered in the Record of Depositors of the Company on 18 September 2018.

A Depositor shall qualify for entitlement to the dividend only in respect of: - i. Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 18 September 2018 in respect of transfers; and ii. Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

By Order of the Board

CHOK KWEE WAH (MACS 00550) TAN KEAN WAI (MAICSA 7056310) Secretaries

Kuala Lumpur 30 July 2018

EXPLANATORY NOTES:

1. Item 1 of the Agenda: Receipt of Audited Financial Statements and Report.

This agenda is meant for discussion only as the provision of Section 340(1)(a) of the Act does not require shareholders’ approval for the Audited Financial Statements. Hence, this Agenda is not put forward for voting.

2. Item 6 of the Agenda: Proposed Shareholders’ Mandate for recurrent related party transactions of a revenue or trading nature.

The Ordinary Resolution 6 is to seek a fresh shareholders’ mandate for the recurrent related party transactions comprising the shareholders’ mandate which has been obtained on 24 August 2017 as well as additional recurrent related party transactions. Further information on the Proposed Shareholders’ Mandate is set out in the Circular to Shareholders dated 30 July 2018, which is despatched together with this Annual Report 2018.

4 ANNUAL REPORT 2018 NOTICE OF ANNUAL GENERAL MEETING (cont’d)

3. Item 7 of the Agenda: Authority to issue shares pursuant to Sections 75 and 76 of the Companies Act 2016

i. The Ordinary Resolution 7 is to seek a fresh general mandate which will empower the Directors to issue shares in the Company up to an amount not exceeding in total ten percent (10%) of the issued capital of the Company for such purposes as the Directors consider would be in the best interest of the Company in order to avoid any delay and cost involved in convening a general meeting to approve such issue of shares. This authority, unless revoked or varied by the Company at a General Meeting, will expire at the conclusion of the next Annual General Meeting of the Company. ii. This general mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placement of shares, for purpose of funding current and/or future investment project(s), working capital and/or acquisitions as well as any strategic opportunities involving equity deals which require the Company to allot and issue new shares on urgent basis. iii. The Company has not issued any shares under the previous general mandate which has been obtained on 24 August 2017 and which will lapse at the conclusion of the 24th AGM to be held on 29 August 2018.

NOTES:

1. Appointment of Proxy.

(a) Only depositors whose names appear in the Register of Depositors as at 21 August 2018 shall be entitled to attend in person or appoint proxies to attend and/or vote on their behalf at the 24th Annual General Meeting. (b) A member entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. A proxy may but does not need to be a member of the Company pursuant to Section 334 of the Act. (c) Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. (d) In the event the member(s) duly executes the form of proxy but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the Meeting as his/their proxy, provided always that the rest of the form of proxy, other than the particulars of the proxy, have been duly completed by the member(s). (e) In the case of a corporate member, the instrument appointing a proxy must be either executed under its common seal or under the hand of its officer or attorney duly authorised. The corporation may by its resolution of its Board or a certificate of authorisation by the Corporation to appoint a person or persons to act as its representative or representatives to attend and vote on their behalf. (f) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (Omnibus Account), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds. (g) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 6th Floor, Wisma Sin Heap Lee, 346, Jalan Tun Razak, 50400 Kuala Lumpur not less than forty-eight (48) hours before the time set for the Annual General Meeting or at any adjournment thereof.

2. Registration of members/proxies

(a) Registration will start at 9.30 a.m. on the day of the 24th AGM. (b) Members/proxies are required to produce original identity cards (IC)/documents during registration for verification. Please remember to collect your IC thereafter. (c) Parking tickets can be validated at the registration counter for members/proxies who park their vehicles in Corus Hotel Kuala Lumpur only. SHL will NOT validate nor reimburse members/proxies for parking charges using Touch’ N Go card, or the valet parking services at the podium. (d) Each members/proxy will be given a wristband upon registration. No person will be allowed to enter the meeting room without wearing the wristband. There will be no replacement in the event members/ proxies lose or misplace the wristband. Members/proxies are allowed to enter the meeting room at 10.45 a.m. (e) The registration counter will only process verification of identities and registration. For other queries/ clarification, please proceed to the Help Desk counter. (f) The registration counters will be closed at 11.45 a.m. Unregistered members/proxies are not allowed to enter the meeting room after the registration is closed. (g) Each member and/or proxy attending the 24th AGM in person will be entitled for one (1) lunch voucher only. Where a member and/or proxy is also appointed as proxy for other members to attend the 24th AGM, he or she will only be entitled to one (1) lunch voucher only regardless of the number of members he or she is representing. (h) If you are attending the meeting as shareholder as well as proxy, you will be registered once and will be given only one identification wristband to enter the meeting hall.

5 SHL CONSOLIDATED BHD CORPORATE INFORMATION

BOARD OF DIRECTORS

Non-Independent Non-Executive Chairman Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah

Executive Directors Dato’ Sri Yap Teiong Choon Dato’ Sri Ir. Yap Chong Lee

Non-Independent Non-Executive Directors Wong Tiek Fong Au Lai Koong

Senior Independent Non-Executive Director Souren Norendra

Independent Non-Executive Director Ng Chin Hoo

AUDIT COMMITTEE SHARE REGISTRAR

Souren Norendra (Chairman) Bina Management (M) Sdn Bhd Wong Tiek Fong Lot 10, The Highway Centre Ng Chin Hoo Jalan 51/205, 46050 Petaling Jaya Selangor Darul Ehsan Tel: 603-7784 3922 Fax: 603-7784 1988

REMUNERATION COMMITTEE AUDITORS

Souren Norendra (Chairman) Khoo Wong & Chan Dato’ Sri Yap Teiong Choon Chartered Accountants Dato’ Sri Ir. Yap Chong Lee 8.06-8.08, 8th Floor Ng Chin Hoo Plaza First Nationwide 161, Jalan Tun H. S. Lee 50000 Kuala Lumpur

NOMINATION COMMITTEE COMPANY SECRETARIES

Souren Norendra (Chairman) Chok Kwee Wah (MACS 00550) Wong Tiek Fong Tan Kean Wai (MAICSA 7056310) Ng Chin Hoo PRINCIPAL BANKERS REGISTERED OFFICE Malayan Banking Berhad 6th Floor, Wisma Sin Heap Lee Hong Leong Bank Berhad 346, Jalan Tun Razak CIMB Bank Berhad 50400 Kuala Lumpur Bangkok Bank Berhad Tel: 603-2163 7788 OCBC Bank (Malaysia) Berhad Fax: 603-2163 1391 United Overseas Bank (Malaysia) Bhd E-mail: [email protected] Website: www.shlcb.com.my STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad Stock Name: SHL Stock Code: 6017

6 Gathering growth... SHL CONSOLIDATED BHD Corporate Structure

100% Integrated Management Corporation Sdn. Bhd.

INVESTMENT 100% SHL Corporate Services Sdn. Bhd. AND SERVICES 100% SHL Realty Sdn. Bhd.

60% Goodstock Land Sdn. Bhd.

100% Sin Heap Lee Construction Sdn. Bhd.

CONSTRUCTION 100% * SHL Infra Sdn. Bhd.

100% * Soil-Mech Drillers Sdn. Bhd.

100% Sin Heap Lee Company Sdn. Berhad

SUPPLY AND 100% Sin Heap Lee Brickworks Sdn. Bhd. LOGISTICS 100% Kajang Granite Quarry Sdn. Bhd.

100% Senick Sdn. Bhd.

100% Ho Sin & Son Enterprise Sdn. Bhd.

100% Goodstock (Tawau) Sdn. Bhd.

100% Sin Heap Lee Development Sdn. Bhd. 100% SHL-M Sdn. Bhd. DEVELOPMENT 100% Sungai Long Golf Resort Berhad 100% Mayang Kiara Sdn. Bhd.

67% SHL-M Ventures Sdn. Bhd. 100% Sukma Pesona Sdn. Bhd.

100% Wilayah Builders Sdn. Bhd. 30% OPT Ventures Sdn. Bhd.

* under the process of Members’ Voluntary Winding Up pursuant to Section 254(1) of the Companies Act, 1965

8 ANNUAL REPORT 2018 PROFILE OF DIRECTORS

Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Dato’ Sri Yap Teiong Choon Sultan Salahuddin Abdul Aziz Shah (Executive Director) (Non-Independent Non-Executive Chairman) (Age 65, Malaysian, Male) (Age 65, Malaysian, Male)

Tengku Abdul Samad Shah was appointed to the Dato’ Sri Yap was appointed to the Board on 1 Board on 1 March 1995. He had his early education March 1995. He had his early education in Victoria in Victoria Institution, Kuala Lumpur and attended Institution, Kuala Lumpur. He obtained a Bachelor of the Wolaroi College NSW, Australia from 1970 to Commerce with double majors in Economics and 1972. Accounting in 1976 and a Master in Commerce with Honours majoring in Advance Accounting from the He is currently the Chairman of the Company and University of Canterbury, New Zealand in 1977. He a Director of several subsidiaries of the Company. is a Chartered Accountant by profession and is a His directorship in other public company within the member of the Malaysian Institute of Accountants, SHL Group is Director of Sungai Long Golf Resort the New Zealand Society of Accountants, a Fellow Berhad. of the Institute of Certified Public Accountants of Singapore and the Australian Society of Certified Tengku Abdul Samad Shah attended four (4) out Practicing Accountants. of five (5) Board Meetings held during the financial year ended 31 March 2018. He started his career with Messrs Hanafiah, Raslan and Mohamad in 1977 and subsequently left the He does not have any family relationship with any accounting profession in 1982 and has since been Director and/or major shareholder, nor any conflict managing the Sin Heap Lee Group of Companies. of interest with the Company. He has no convictions He is presently an Executive Director and a Director for any offences within the past 5 years (other than of all subsidiaries of the Company. His directorship traffic offences, if any) nor any public sanction or in other public company within the SHL Group is penalty imposed by regulatory bodies during the Director of Sungai Long Golf Resort Berhad. financial year. Dato’ Sri Yap is a member of the Remuneration Committee of the Company. He attended all Board Meetings held during the financial year ended 31 March 2018.

He is the brother of Dato’ Sri Ir. Yap Chong Lee, an Executive Director of the Company. Save as disclosed herein, he does not have any family relationship with any Director and/or major shareholder, nor any conflict of interest with the Company. He has no convictions for any offences within the past 5 years (other than traffic offences, if any), nor any public sanction or penalty imposed by regulatory bodies during the financial year.

9 SHL CONSOLIDATED BHD PROFILE OF DIRECTORS (cont’d)

Dato’ Sri Ir. Yap Chong Lee Wong Tiek Fong (Executive Director) (Non-Independent Non-Executive Director) (Age 64, Malaysian, Male) (Age 56, Malaysian, Male)

Dato’ Sri Ir. Yap was appointed to the Board on 1 Mr. Wong was appointed to the Board on 1 April March 1995. He obtained a Bachelor of Technology 2004. He obtained a Diploma in Commerce majoring in Civil and Structural Engineering from (Financial Accounting) from Tunku Abdul Rahman Bradford University, England in 1978, a Master of College, Kuala Lumpur in 1985. He is a Chartered Science majoring in Construction Management Accountant by profession and a member of the from Birmingham University, England in 1979 and Malaysian Institute of Accountants, the Chartered a Postgraduate Certified Diploma in Accounting Tax Institute of Malaysia and a fellow of the and Finance, England in 1979. He is a Fellow of Association of Chartered Certified Accountants, both the Institution of Engineers, Malaysia and the United Kingdom. Association of Consulting Engineers, Malaysia. His career began in 1985 with a firm of Chartered His working career began in 1979, with a consulting Accountants, Messrs Khoo Wong & Chan as an engineering firm, Sepakat Setia Perunding Audit Senior where he gained wide experience (Sendirian) Berhad and was subsequently in corporate auditing and taxation of diverse appointed as a Director of the firm in 1990. He has industries. Prior to joining SHL Group in May 1989 as been involved in the management of Sin Heap a Financial Accountant responsible for the financial Lee Group of Companies since May 1982. He is accounting and management of SHL Group, presently an Executive Director and a Director of he was attached to KPMG, a firm of Chartered all subsidiaries of the Company. His directorship Accountants, as an Audit Senior. Subsequently, in other public company within the SHL Group is he was promoted as the Financial Controller of Director of Sungai Long Golf Resort Berhad. SHL Group in May 1995. Presently, he is the Chief Financial Officer of SHL Group and a Director of Dato’ Sri Ir. Yap is a member of the Remuneration several subsidiaries of the Company. His directorship Committee of the Company. Dato’ Sri Ir. Yap in other public company within the SHL Group is attended all Board Meetings held during the Director of Sungai Long Golf Resort Berhad. financial year ended 31 March 2018. Mr. Wong is a member of the Audit Committee, He is the brother of Dato’ Sri Yap Teiong Choon, Nomination Committee and Risk Management an Executive Director of the Company. Save as Committee of the Company. He attended all Board disclosed herein, he does not have any family Meetings held during the financial year ended 31 relationship with any Director and/or major March 2018. shareholder, nor any conflict of interest with the Company. He has no convictions for any offences He does not have any family relationship with any within the past 5 years (other than traffic offences, Director and/or major shareholder, nor any conflict if any), nor any public sanction or penalty imposed of interest with the Company. He has no convictions by regulatory bodies during the financial year. for any offences within the past 5 years (other than traffic offences, if any) nor any public sanction or penalty imposed by regulatory bodies during the financial year.

10 ANNUAL REPORT 2018 PROFILE OF DIRECTORS (cont’d)

Souren Norendra Ng Chin Hoo (Senior Independent Non-Executive Director) (Independent Non-Executive Director) (Age 48, Malaysian, Male) (Age 58, Malaysian, Male)

Mr. Souren Norendra was appointed to the Board Mr. Ng was appointed to the Board on 2 December on 24 February 2010. He completed his secondary 2013. He obtained his Bachelor of Commerce education at the Methodist Boys School, Kuala (Commercial Law & Accounting) from University Lumpur and then proceeded to England where of Melbourne, Australia in 1983. He is a Chartered he read law and attained his LLB (Hon) from the Accountant by profession and is a member of the University of Hull in 1992. He obtained his Certificate Malaysian Institute of Accountants, a member of Legal Practice (CLP) from University Malaya and of the Institute of Certified Public Accountants was called to the Malaysian Bar in 1995. of the Australian Society of Certified Practicing Accountants and a member of the Institute of He has been practicing as an advocate and Chartered Secretaries and Administrators. solicitor in the firm of Messrs Norendra & Yap since being called to the Bar and is now a Partner of the Mr. Ng has wide experience in management firm. His areas of specialty are in corporate and consulting and financial management primarily conveyancing law. gained working for KPMG Management Consulting in England and Malaysia. Mr. Ng was an Executive Mr. Souren is the Chairman of the Audit Committee, Director of KPMG Management Consulting as well Nomination Committee and Remuneration as Limited Partner with KPMG. Since leaving KPMG, Committee of the Company. He attended all Board Mr. Ng has held various senior positions in listed Meetings held during the financial year ended 31 companies. He does not hold any directorship in March 2018. He does not hold any directorship in any public companies and listed issuers. any public companies and listed issuers. Mr. Ng is a member of the Audit Committee, He does not have any family relationship with any Nomination Committee and Remuneration Director and/or major shareholder, nor any conflict Committee of the Company. He attended all Board of interest with the Company. He has no convictions Meetings held during the financial year ended 31 for any offences within the past 5 years (other than March 2018. traffic offences, if any) nor any public sanction or penalty imposed by regulatory bodies during the He does not have any family relationship with any financial year. Director and/or major shareholder, nor any conflict of interest with the Company. He has no convictions for any offences within the past 5 years (other than traffic offences, if any) nor any public sanction or penalty imposed by regulatory bodies during the financial year.

11 SHL CONSOLIDATED BHD PROFILE OF DIRECTORS (cont’d)

Au Lai Koong (Non-Independent Non-Executive Director) (Age 53, Malaysian, Male)

Mr. Au was appointed to the Board on 26 May 2016. He obtained a Bachelor of Science degree in Civil and Structural Engineering from Bradford University, England in 1988.

He started his career in 1988 as an Engineer and was promoted as a Project Manager for Sin Heap Lee Construction Sdn Bhd in 1995. He has been involved in a wide range of development projects from industrial and housing to commercial buildings such as Wisma Sin Heap Lee, Clubhouse for Sungai Long Golf and Country Club, Menara Taipan, Taman Universiti Indah, Seri Kembangan, Taman Putra Indah, Bandar Sungai Long, Alam Budiman, Sungai Choh Indurtrial Park and Kajang Goodview Heights. Presently, he is the Senior Project Manager of SHL Group and a Director of several subsidiaries of the Company. He does not hold any directorship in any public companies and listed issuers.

Mr. Au is a member of Risk Management Committee of the Company. He attended all Board Meetings held during the financial year ended 31 March 2018.

He does not have any family relationship with any Director and/or major shareholder, nor any conflict of interest with the Company. He has no convictions for any offences within the past 5 years (other than traffic offences, if any) nor any public sanction or penalty imposed by regulatory bodies during the financial year.

12 ANNUAL REPORT 2018 PROFILE OF KEY SENIOR MANAGEMENT

Wong Yew Mei Leong Chin Cheong (Project Budget Controller) (Senior Project Manager) (Age 60, Malaysian, Female) (Age 58, Malaysian, Male)

Ms Wong was appointed as Project Budget Mr Leong was appointed as Senior Project Manager Controller of SHL Group in December 1988. She in 1995. He obtained a Bachelor of Science degree obtained a Diploma in Technology (Building) from in Engineering majoring in Water Resource from Tunku Abdul Rahman College, Kuala Lumpur in 1982 University of Guelph, Guelph, Ontario, Canada in and a Master degree in Business Administration, 1984. University of East Asia, Macau in 1988. He joined Sin Heap Lee Construction Sdn Bhd as an In 1982, she joined Messrs Hashim & Lim, a quantity Engineer in October 1984 and has been involved surveying consulting firm in Kuala Lumpur in which in the project management of several housing she was exposed to all aspects of quantity surveying development projects including Taman Sri Rawang, works on residential, hotels and high-rise buildings. In Rawang, Taman Hot Spring Jaya, Tawau, Wickham October 1986, she joined SHL Group as an Estimator Residence, Ampang, Bandar Sungai Long, Cheras, and was involved in feasibility studies and estimates Alam Budiman, Shah Alam and two smart schools for the SHL Group’s property development and at Putrajaya and Cyberjaya. construction projects. Mr. Leong is the Chairman of Risk Management Ms. Wong is a member of Risk Management Committee of the Company. Committee of the Company. He does not hold any directorship in any public She does not hold any directorship in any public companies and listed issuers. He does not have any companies and listed issuers. She does not have family relationship with any Director and/or major any family relationship with any Director and/ shareholder, nor any conflict of interest with the or major shareholder, nor any conflict of interest Company. He has no convictions for any offences with the Company. She has no convictions for any within the past 5 years (other than traffic offences, if offences within the past 5 years (other than traffic any) nor any public sanction or penalty imposed by offences, if any) nor any public sanction or penalty regulatory bodies during the financial year. imposed by regulatory bodies during the financial year.

13 SHL CONSOLIDATED BHD GROUP FINANCIAL HIGHLIGHTS

FINANCIAL YEAR ENDED 2014 2015 2016 2017 2018

FINANCIAL RESULTS (RM Million) Revenue 205.3 230.6 231.9 203.2 180.5 Profit before Tax 80.0 123.2 96.2 102.7 82.4 Net Profit 58.8 104.2 80.0 82.8 69.7 Net Profit attributable to Shareholders 58.3 103.5 79.7 82.3 69.1

FINANCIAL POSITION (RM Million) Total Assets 760.2 904.7 871.6 897.1 941.3 Share Capital 242.1 242.1 242.1 242.1 247.7 Equity attributable to Shareholders 594.9 694.4 713.8 750.2 790.5

FINANCIAL RATIOS Basic Earnings per Share (sen) 24.09 42.73 32.90 33.99 28.55 Net Tangible Assets per Share (RM) 2.46 2.87 2.95 3.10 3.26 Return on Equity (%) 9.81 14.90 11.17 10.97 8.74 Return on Capital Employed (%) 26.03 24.71 22.58 21.47 17.10 Return on Invested Capital (%) 19.13 20.90 18.77 17.31 14.48 Gross Dividend per Share (sen) 19.00 25.00 20.00 18.00 16.00 Net Dividend per Share (sen) 17.25 25.00 20.00 18.00 16.00

Revenue Profit before Tax (RM Million) (RM Million)

123.2 230.6 231.9

102.7 205.3 96.2 203.2 80.0 82.4 180.5

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

Equity attributable to Shareholders Basic Earnings per Share (RM Million) (Sen)

790.5 750.2 42.73 713.8 33.99 694.4 594.9 32.90 28.55 24.09

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

14 SOLID FOUNDATION SHL CONSOLIDATED BHD MANAGEMENT DISCUSSION AND ANALYSIS Financial Year Ended 31 March 2018

Overview of Business Results and Operation

In 2017, the Malaysian economy recorded a robust growth of 5.9% (2016: 4.2%), supported by faster expansion in both private and public sector spending. A key highlight for the year was the rebound in gross exports growth as global demand strengthened. This was mainly due to higher demand from major trading partners following the upswing in the global technology cycle, investment expansion in the advanced economies and the turnaround in commodity prices. Altogether, the global technology upturn translated into robust demand for electronics and electrical products while the stronger regional demand and the revival in investment activity in the advanced economies lifted exports of non-electronics and electrical products. Commodity exports also turned around in 2017, supported largely by the recovery in major commodity prices.

The principal activity of SHL Consolidated Bhd Group is effectively development of townships with different products to meet the affordability of different target consumer groups. The property development projects are primarily located in Selangor Darul Ehsan. The property development segment is supported by an in-house construction arm, business segments of trading, investment, services, granite quarrying and manufacturing of clay-bricks to enhance the delivery system with respect to efficiency of time management and cost structure. The brick manufacturing plant in Sepang, Selangor Darul Ehsan produces clay facing bricks for the creation of value homes at competitive prices for the property development projects.

16 ANNUAL REPORT 2018 MANAGEMENT DISCUSSION AND ANALYSIS (cont’d) Financial Year Ended 31 March 2018

For the financial year under review, revenue is reported at RM180.54 million, compared to RM203.16 million recorded in the previous financial year. The decrease in revenue was mainly attributable to substantial handovers of sold units at Alam Budiman, Shah Alam, Selangor Darul Ehsan in the previous financial year. The encouraging demand for homes at the new township namely Goodview Heights, located at Sungai Long South, Selangor Darul Ehsan, the completion of Rumah Selangorku affordable homes in Alam Budiman, Shah Alam, Selangor Darul Ehsan and Rawang Industrial Corporate Park in Sungai Choh, Selangor Darul Ehsan have contributed significantly to the financial performance of the Company.

Profit before tax decreased by 19.8% from RM102.74 million reported in the previous year to RM82.36 million for the current year, mainly due to lower revenue generated by the property development segment. The earnings per share for the financial year under review is 28.55 sen.

Group Financial Highlights

FINANCIAL YEAR ENDED 2014 2015 2016 2017 2018

FINANCIAL RESULTS (RM Million) Revenue 205.3 230.6 231.9 203.2 180.5 Profit before Tax 80.0 123.2 96.2 102.7 82.4 Net Profit 58.8 104.2 80.0 82.8 69.7 Net Profit attributable to Shareholders 58.3 103.5 79.7 82.3 69.1

FINANCIAL POSITION (RM Million) Total Assets 760.2 904.7 871.6 897.1 941.3 Share Capital 242.1 242.1 242.1 242.1 247.7 Equity attributable to Shareholders 594.9 694.4 713.8 750.2 790.5

FINANCIAL RATIOS Basic Earnings per Share (sen) 24.09 42.73 32.90 33.99 28.55 Net Tangible Assets per Share (RM) 2.46 2.87 2.95 3.10 3.26 Return on Equity (%) 9.81 14.90 11.17 10.97 8.74 Return on Capital Employed (%) 26.03 24.71 22.58 21.47 17.10 Return on Invested Capital (%) 19.13 20.90 18.77 17.31 14.48

Trade and other receivables decreased from RM90.22 million at the end of the previous financial year to RM35.96 million at the end of the current financial year. This was mainly due to higher cash collection received from customers. Trade and other payables decreased from RM91.38 million at the end of the previous financial year to RM52.84 million at the end of the current financial year, mainly due to settlement of trade debts made to the creditors.

Cash, deposits and short-term investments have increased from RM290.42 million to RM370.77 million mainly due to substantial increase in net cash inflow arising from operating activities, primarily based on built-then-sell concept under the property development segment.

On a consolidated basis, the current ratio is about 1,134.7% as at 31 March 2018, up from 620.6% as at end of the previous financial year, mainly attributable to an increase in cash, deposits and short-term investments and decrease in trade and other payables.

SHL Consolidated Bhd is a holding company and a substantial amount of business activities are conducted at the subsidiary companies level resulting in the inter-company business revenue within the group being eliminated at the group level. The contribution of efficiency in the delivery process are participated by the subsidiary companies.

17 SHL CONSOLIDATED BHD MANAGEMENT DISCUSSION AND ANALYSIS (cont’d) Financial Year Ended 31 March 2018

The property development segment continues to be the key contributor registering a revenue of RM167.70 million for the financial year ended 31 March 2018, representing about 92.9% of the consolidated revenue. The property development segment will remain focused on building landed properties and affordable value homes with readily available mortgage financing facilities from banks. The following major property development projects located in Selangor Darul Ehsan are being developed in phases.

(a) Goodview Heights in Sungai Long South, Selangor Darul Ehsan

Goodview Heights is a premier billion dollar integrated township of a freehold land area of about 200 acres located in the southern part of Bandar Sungai Long with easy access from the SILK Highway. Goodview Heights is a contemporary mixed development of approximately 2,500 units of residential homes, supported by a commercial hub at the town centre next to a recreational park.

(b) Alam Budiman in Shah Alam, Selangor Darul Ehsan

Alam Budiman is a matured township of about 150 acres comprising of approximately 2,000 units double storey terrace homes, affordable homes and shop offices with ready amenities and infrastructure. Alam Budiman is located near the Guthrie Corridor, the new gateway into Shah Alam.

(c) Bandar Sungai Long, Selangor Darul Ehsan

Bandar Sungai Long is a thriving RM2 billion township that hosts Universiti Tunku Abdul Rahman, Sungai Long Medical Centre and Sungai Long Golf & Country Club which offers its members a world class golf course designed by golf master Jack Nicklaus, the first Jack Nicklaus signature golf course in Malaysia. There are about 28 acres of land to be developed excluding the golf course land bank.

The Group is currently undertaking a development project called Sg Long Residence located at Bandar Sungai Long, Selangor Darul Ehsan comprising of 568 units of condominium with a gross development value of approximately RM323.00 million. Phase 1 of Sg Long Residence has been launched in February 2018.

Risks

The current soft economy and weak consumer sentiment may cause uncertainties and apprehension amongst businesses, resulting in further pressure on sales risk and financial performance.

The Company is experiencing challenges in the sales of properties due to structural pressure on the property industry such as competition from competitors, delivery risk and cost overrun risk.

The process of managing sales risk, delivery risk and cost overrun risk is supported by continuous investment in the training and development of staff, product innovations to fit customers’ requirements and application of technology for improvement of construction techniques.

The Company is able to maintain a high level of liquidity resulting in a very low risk of exposure to changes in interest rate and financing cost.

18 ANNUAL REPORT 2018 MANAGEMENT DISCUSSION AND ANALYSIS (cont’d) Financial Year Ended 31 March 2018

Outlook

In 2018, the Malaysian economy is projected to grow by 5.5% - 6.0%. Domestic demand will continue to be the main driver of growth, underpinned primarily by private sector activity. Private consumption growth is expected to remain sustained, supported by continued growth in employment and income, lower inflation and improving sentiments. Private investment growth is expected to be sustained, underpinned by ongoing and new capital spending in both the manufacturing and services sectors, and strengthened by continued positive business sentiments. Public sector expenditure is projected to decline due to the contraction in public investment amid more moderate growth in public consumption.

The housing market in Malaysia has not been able to provide an adequate supply of affordable housing for the masses at affordable prices in relation to the demography of the nation. This undersupply of affordable homes at affordable prices is likely to worsen given the current trends in income and demographic factors. Going forward, a carefully-designed strategy of participation by the private sector for the housing market will ensure that the supply of houses is able to accommodate households of all income groups. Meeting the demand of affordable housing units will require the commitment of both the Government on policies and the private sector for efficiency planning towards the supply side of affordable homes.

Despite the current challenging and unpredictable Malaysian economic environment, SHL Consolidated Bhd will remain resilient and focused on building landed properties and affordable value homes at the new townships, namely Goodview Heights at Sungai Long South, Alam Budiman at Shah Alam and Bandar Sungai Long, all property development projects located in Selangor Darul Ehsan, the primary social and economic centre of Malaysia.

SHL Consolidated Bhd will continue the process of creating value for all stakeholders, improving the delivery system and enhancing its competitive advantage. With more than 30 years of sustainable track record in the property and construction business sectors, it is anticipated that the Company will be able to navigate the current weak economic condition of Malaysia.

Dividend

The Board of Directors aim to achieve a dividend payout policy in the range of 50% to 60% of profit after tax. The amount of dividend to be paid will take into consideration of the earnings and capital commitment of the Company.

The Company has paid an interim dividend of 8 sen per share, amounting to a net dividend payable of approximately RM19.37 million in April 2018 for the financial year ended 31 March 2018.

Subject to the approval by our company’s shareholders at the forthcoming Annual General Meeting, our Board of Directors is pleased to recommend a final dividend of 8 sen per share in respect of the financial year ended 31 March 2018.

19 SHL CONSOLIDATED BHD Corporate Governance Overview Statement

The Board of Directors of SHL Consolidated Bhd (SHL) presents this statement to provide shareholders and investors with an overview of the corporate governance (CG) practices of the Company under the leadership of the Board during the financial year 2018. This overview takes guidance from the key CG principles as set out in the Malaysian Code on Corporate Governance (MCCG).

This statement is prepared in compliance with Bursa Malaysia Securities Berhad Main Market Listing Requirement and it is to be read together with SHL Group’s application of each principle set out in the MCCG Corporate Governance Report 2018 (CG Report) for the financial year ended 31 March 2018 which is available on SHL’s corporate website at www.shlcb.com.my.

Set out below is a statement on how SHL Group has applied the 3 key principles of good corporate governance as set out in the MCCG.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

Board Responsibilities

The Board is responsible for formulating and reviewing the Company’s strategic plans and key policies, charting the course of the Company’s business operations. The Board, through the Audit Committee and Risk Management Committee provides effective oversight of the Management’s performance, risk assessment and controls over business operations, and compliance with regulatory requirements. The Board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives.

Roles of Chairman and Executive Directors

The Board has established the roles and responsibilities of the Non-Independent Non-Executive Chairman which are distinct and separate from the duties and responsibilities of the Executive Directors. This segregation between the duties of the Non-Executive Chairman and the Executive Directors ensures an appropriate balance of role, responsibility and accountability at Board level.

The Non-Independent Non-Executive Chairman provides leadership to the Board. He ensures the smooth functioning of the Board and that the procedures and processes are in place to facilitate effective conduct of business of the Board. The Chairman also ensures that decisions are taken on a sound and well-informed basis, including by ensuring that all strategic and critical issues are considered by the Board. The Chairman does not participate in the day-to-day management of the Group.

The Executive Directors are primarily responsible for the day-to-day management of the Company. They are responsible for developing the business direction of the Company and also to ensure that Company’s business strategies and policies are effectively implemented.

Company Secretaries

The Board is supported by the Company Secretaries who are experienced, competent and knowledgeable on new statutes and directives issued by the regulatory authorities. They give clear and sound advice on the measures to be taken and requirements to be observed by Company and the Directors arising from new statutes and guidelines issued by the regulatory authorities.

Board Meetings and Access to Information

Board meetings for the ensuing financial year are scheduled in advance before the end of the current financial year to enable the Directors to plan ahead and ensure their full attendance at Board meetings. Beside Board meetings, the Directors are also provided with updates via email or physical copies of reports as and when there are any new developments on the Group’s business or any changes to the latest statutory and/or regulatory requirements.

20 ANNUAL REPORT 2018 Corporate Governance Overview Statement (cont’d)

The Chairman of the Audit Committee, Nomination Committee and Remuneration Committee brief the Board on matters discussed as well as decisions taken in their respective Committee Meetings. A Risk Management Report will be tabled in the Audit Committee meeting for review and subsequently the said Report is presented to the Board by the Chairman of the Audit Committee at least once a year.

Board Charter and Whistleblower Policy and Procedures

The Board Charter sets out the roles and responsibilities of the Board, Board Committees, individual Directors and Management in upholding sound corporate governance standards and practices. The Board Charter reflects the matters reserved for the Board’s consideration and approval.

In May 2018, the Company’s Whistleblower Policy and Procedures has been established and reviewed by Audit Committee and subsequently approved by the Board. The purpose of the Whistleblower Policy and Procedures is to provide avenue for directors and staff to expose any violation or improper conduct or wrongdoing within the Company. The Board also reviewed the Board Charter and Code of Conduct and Ethics periodically.

The Board Charter, Whistleblower Policy and Procedures and Code of Conduct and Ethics are available on SHL’s corporate website at www.shlcb.com.my.

Board Composition

Currently, The Board of Directors comprises seven (7) members. The size and composition of the Board remains adequate to provide for a diversity of views, facilitate effective decision making, and appropriate balance of executive, independent and non-independent directors.

Board Balance and Independence

The Board comprises two (2) Executive Directors, three (3) Non-Independent Non-Executive Directors (including the Chairman) and two (2) Independent Non-Executive Directors.

The Non-Independent Non-Executive Directors are to provide the Group unbiased and independent view and judgement, after taking into consideration the interest of the shareholders, employees, suppliers and customers. The presence of Independent Non-Executive Directors of the calibre necessary to carry sufficient weight in all decisions made by the Board ensures that there is proper check and balance in the Board. Although all Directors have an equal responsibility for the Group’s business and affairs, the role of Independent Non-Executive Directors is particularly important in ensuring that the strategies proposed by the Executive Directors are fully discussed and examined, with due regard to risk management.

The Nomination Committee reviews the independence of Directors by taking into account of the individual Director’s ability to exercise independent judgment at all times and based on the criteria set out in the Listing Requirements of Bursa Securities. When considering the independence of the Directors, the Nomination Committee also reviews the Independence Directors’ other directorships, the annual declaration regarding their independence, the Directors’ disclosures of interests in transactions, and any other relationships between the Group and the Directors which may interfere with the Directors’ exercise of objective or independent judgment.

Based on the assessment carried out during the financial year ended 31 March 2018, the Board is satisfied with the level of independence demonstrated by all the Independent Directors and their ability to act in the best interest of the Company.

The Board strongly views that diversity of the Board’s composition is important to ensure optimal decision- making by harnessing different insights and perspectives. The Board is committed to provide fair and equal opportunities and promoting diversity with due consideration on skills, knowledge, experience, background, age, gender and other qualities in determining the optimum composition of the Board.

Currently, the Board does not have any female director and may consider recruiting a female director in the future.

21 SHL CONSOLIDATED BHD Corporate Governance Overview Statement (cont’d)

Tenure of Independent Directors

The Board has adopted a nine-year policy for Independent Non-Executive Directors, which is implemented on a gradual basis to ensure the continued effective functioning of the Board.

As at the date of this Statement, none of the Independent Non-Executive Directors has served more than 9 years on the Board. Therefore, shareholders’ approval for the re-appointment at the forthcoming AGM is not required.

The Board meets at least five (5) times a year, with additional meetings convened when necessary to review matters that require the Board’s urgent attention and decision. Meetings are scheduled at the beginning of each calendar year to enable the Board members to plan their schedules accordingly. During the financial year ended 31 March 2018, the Board met on five (5) occasions, where a formal agenda are forwarded to all Directors at least two (2) weeks before the meetings.

All issues raised and discussed and decisions made at the Board Meetings are minuted, and are circulated to all Directors for their perusal prior to the confirmation of such minutes at the following Board Meetings.

Besides Board meetings, the Directors also approved various matters requiring the sanction of the Board by way of circular resolutions during the financial year.

The attendance of each Director at the Board Meeting held during the financial year ended 31 March 2018 was as follows:

No. of meetings attended by directors during their Director tenure in office

Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah 4/5 Dato’ Sri Yap Teiong Choon 5/5 Dato’ Sri Ir. Yap Chong Lee 5/5 Wong Tiek Fong 5/5 Souren Norendra 5/5 Ng Chin Hoo 5/5 Au Lai Koong 5/5

All the Directors complied with the minimum 50% attendance requirement in respect of Board meetings held during the financial year ended 31 March 2018 pursuant to Paragraph 15.05 of the Bursa Malaysia Listing Requirements.

22 ANNUAL REPORT 2018 Corporate Governance Overview Statement (cont’d)

Directors’ Training

The Directors have participated and continue to undergo the relevant training programmes to further enhance their skill and knowledge as well as the latest statutory and/or regulatory requirements in discharging their fiduciary duties to the Company.

Training programmes attended by the Directors during the financial year ended 31 March 2018 are as follows:

Name of Directors Course Title Date

Dato’ Sri Yap Teiong Choon Companies Act 2016 : Practical Insights on Compliance 14.6.2017

MAICSA Symposium 2017 – Companies Act 2016: 6.12.2017 Nuts and Bolts

Dato’ Sri Ir. Yap Chong Lee “Lean Construction” – How Lean Management 6.7.2017 Sustains Growth & Profitability for Malaysia Construction Industry

Wong Tiek Fong MFRS 9 Financial Instruments: Gearing Up For First-Time 19.9.2017 Adoption

Sustainability Engagement Series: Sector Specific 14.11.2017 Sustainability Statement Writing Workshop (Property Development/Investment/Construction Sector)

Corporate Governance Briefing Sessions: MSSG Reporting 2.3.2018 & CG Guide

Souren Norendra Securities Commission Malaysia’s Conversation with 14.11.2017 Audit Committees

New Appointment and Re-Election of Directors

The Nomination Committee comprises of two (2) Independent Non-Executive Directors and one (1) Non- Independent Non-Executive Director, as follows:

Chairman: Souren Norendra (Senior Independent Non-Executive Director)

Member: Ng Chin Hoo (Independent Non-Eecutive Director); and Wong Tiek Fong (Non-Independent Non-Executive Director)

The Nomination Committee’s responsibility, among others, is to identify and recommend the right candidate with the necessary skills, experience and competencies to be filled in the Board and Board Committees. Recruitment matters are discussed in depth by the Nomination Committee before the entire Board makes the final decision on new appointments.

The duties and responsibilities of the Nomination Committee are as follows: i. identifying, reviewing and recommending candidates for appointment as Directors of the Company; ii. re-nominating retiring Directors for re-appointment at Annual General Meeting (AGM) and determining annually the independence of Directors; iii. deciding the assessment process and implementing a set of objective performance criteria to be applied from year to year for evaluation of the Board’s performance; iv. evaluating the Board’s effectiveness as a whole and each Director’s contribution to its effectiveness in accordance with the assessment process and performance criteria; and v. ensuring an appropriate framework and succession plans for members of the Board.

23 SHL CONSOLIDATED BHD Corporate Governance Overview Statement (cont’d)

Selection of candidates to be considered for appointment as Directors is facilitated through recommendations from the Directors, external parties including the Company’s contacts in the finance, legal, accounting, construction, advertisements, independent search firms and property development professions. The Nomination Committee interviews the short listed candidates before formally considering and recommending them for appointment to the Board and where applicable, to the Committees.

In reviewing and recommending to the Board any new Director appointments, the Nomination Committee considers: a. the candidate’s independence, in the case of the appointment of an Independent Non-Executive Director; b. the composition requirements for the Board and Committees (if the candidate is proposed to be appointed to any of the Committees); c. the candidate’s age, track record, experience and capabilities and such other relevant factors as may be determined by the Nomination Committee which would contribute to the Board’s collective skills; and d. any competing time commitments if the candidate has multiple board representations.

During the financial year, the Nomination Committee did not recruit or appoint any director to the Board.

In accordance with the Listing Requirements of Bursa Securities and Article 88 of the Company’s Articles of Association, at least 1/3 or the number nearest to 1/3 of the Directors shall retire from office each year, such that all directors retire at least once in every 3 years at the AGM. The retiring directors shall be eligible for re-election at the AGM.

Upon the recommendation of Nomination Committee, the following Directors retire by rotation at the forthcoming 24th AGM of the Company pursuant to Article 88 of the Company’s Articles of Association and being eligible, have offered themselves for re-election:

(a) Y.A.M Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah (b) Dato’ Sri Ir. Yap Chong Lee

Annual Assessment

The Group has in place a formal process for assessment of the effectiveness of the Board as a whole and the contribution by each Director to the effectiveness of the Board. The Nomination Committee assesses the Board’s performance as a whole annually, using objective and appropriate quantitative and qualitative criteria which were recommended by the Nomination Committee and approved by the Board. When assessing the overall Board performance, the Nomination Committee takes into consideration the feedback from individual Directors on areas relating to the Board’s competencies and effectiveness.

The results of the overall evaluation of the Board by the Nomination Committee including its recommendation, if any, for improvements are presented to the Board.

The annual evaluation process for the individual Directors’ performance comprises three parts: a. background information concerning the Directors including their attendance records at Board and Committee meetings; b. questionnaires for completion by all individual Board members; and c. Nomination Committee’s evaluation based on certain assessment parameters.

The questionnaires and the assessment parameters were recommended by the Nomination Committee and approved by the Board. The completed questionnaires are then reviewed by the Nomination Committee before the Nomination Committee completes its evaluation of the individual Directors. When deliberating on the performance of a particular Director who is also a member of the Nomination Committee, that member abstains from the discussions in order to avoid any conflict of interests. The results of the individual evaluation of the Directors are also used by the Nomination Committee to review, where appropriate, the composition of the Board and Committees, and to support its proposals, if any, for appointment of new members and its recommendations for the re-appointment and re-election of retiring Directors. Comments from the Directors, if any, concerning the Board as a whole and the general performance of the Directors, are also presented to the Board.

24 ANNUAL REPORT 2018 Corporate Governance Overview Statement (cont’d)

Time Commitment

When considering the nomination of Directors for appointment or re-election/re-appointment, the Nomination Committee also takes into account the competing time commitments faced by Directors with multiple board representations. An analysis of the directorships held by the Directors is reviewed annually by the Nomination Committee.

Based on the analysis and the Directors’ commitment and contributions to the Group which are also evident in their level of attendance and participation at Board and Committee meetings, the Nomination Committee is satisfied that all Directors are able to carry out and have been adequately carrying out their duties as a Director of the Group.

Remuneration

The Remuneration Committee consists of two (2) Independent Non-Executive Directors and two (2) Executive Directors, as follows:

Chairman:

Souren Norendra (Senior Independent Non-Executive Director)

Members:

Ng Chin Hoo (Independent Non-Executive Director); Dato’ Sri Yap Teiong Choon (Executive Director); Dato’ Sri Ir. Yap Chong Lee (Executive Director)

The Duties and responsibilities of the Remuneration Committee are as follows: i. to recommend the remuneration framework for Non-Executive Directors; ii. to evaluate, deliberate and recommend the remuneration package of Executive Directors; iii. to ensure individual directors abstain from making decisions in respect of their individual remuneration; and iv. to ensure that the remuneration packages are competitive in attracting and retaining directors capable of meeting the Company’s needs.

The Remuneration Committee recommends the level and structure of remuneration policies for the Board and Senior Management of the Company to ensure the same remains competitive, appropriate, and in alignment with the prevalent market practices.

Remuneration review of the Board and Senior Management is carried out annually to ensure that the Company continues to retain and attract the best talents in the industry.

The remuneration of the Board is disclosed in the SHL’s Corporate Governance Report 2018 for the financial year ended 31 March 2018 which is available on SHL’s corporate website at www.shlcb.com.my.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

Audit Committee

The Audit Committee comprises the following Directors, all of whom are Non-Executive Directors.

Chairman: Souren Norendra (Senior Independent Non-Executive Director)

Members: Ng Chin Hoo (Independent Non-Executive Director); and Wong Tiek Fong (Non-Independent Non-Executive Director)

25 SHL CONSOLIDATED BHD Corporate Governance Overview Statement (cont’d)

Annually, the composition of Audit Committee is reviewed by the Nomination Committee and recommended to the Board for its approval. With the relevant skill sets, knowledge and experience, the Audit Committee members are financially literate and are able to understand, analyse and challenge matters under the purview of the Audit Committee including the financial reporting process.

The Audit Committee members reviewed the Company’s financial statements in the presence of External Auditors prior to recommending the financial statements for the Board’s approval and issuance to shareholders. The review was to ensure that the audited financial statements were drawn up in accordance with the provisions of the Companies Act, 2016, the Listing Requirements of Bursa Malaysia Securities Berhad and the applicable approved accounting standards approved by the Malaysian Accounting Standards Board. The Audit Committee members also reviewed the quarterly results of the Company prior to submission to the Board for approval and release to public.

Assessment of suitability and independence of external auditors

The Audit Committee reviews the independence and objectivity of the external auditors and the services provided, including quality of services, audit planning independence, objectivity and professional skepticism, annual non-audit services and is satisfied that the external auditors is competent and with audit independence. The External Auditors have confirmed in writing that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independent criteria set out by the Malaysian Institute of Accountants.

The Audit Committee have a private dialogue with the external auditors at least once a year and whenever necessary, without the presence of the other directors or Management, to exchange independent views on matters which require the Audit Committee’s attention.

Risk Management and Internal Control Framework

The Board is responsible for the Group’s risk management framework and system of internal control and for reviewing their adequacy and integrity. The Board has established an ongoing process for identifying, evaluating and managing significant risks faced by the Group. The Executive Directors and Management assist the Board on the implementation and maintenance of the risk management process and compliance with Board’s policies on risk and control. This process has been in place throughout the year and up to the date of approval of the annual report and financial statements. The Board fully supports the contents of the Internal Control Guidance and through the Audit Committee, continually reviews the adequacy and effectiveness of the risk management process within the various operating business units.

The Risk Management Committee assessed and monitored the risk management controls and measures taken.

The Audit Committee assists the Board in discharging these responsibilities by overseeing and reviewing the Risk Management Framework and the effectiveness of risk management and internal controls of the Company.

Details on the Group’s Enterprise Risk Management Framework are set out in this Statement on Risk Management and Internal Control of this Annual Report.

Internal Audit Function

The Board has established an internal audit function within the Group, which is led by the Head of Internal Audit who reports directly to the Audit Committee. Details of the Group’s internal control system and framework are set out in the Statement on Risk Management and Internal Control and Audit Committee Report of this Annual Report respectively.

The Board recognises the importance of an effective internal control system in improving risk management, enhancing controls and ensuring compliance with applicable laws and regulations. The internal control system also designed to safeguard the Group’s operations and assets and hence protect shareholders’ investment in the Group. In this regard, the internal audit function of the Group is carried out by the internal audit department. The internal audit function is placed under the preview of the Audit Committee. The Head of Internal Audit present the risk assessment report on the adequacy, efficiency and effectiveness of the Group’s internal control system to the Audit Committee.

26 ANNUAL REPORT 2018 Corporate Governance Overview Statement (cont’d)

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

Effective Stakeholder Communication

The Group recognises the importance of being accountable to its investors and as such has maintained an active and constructive communication policy to enable the Board and Management to communicate effectively with its shareholders, stakeholders and the public generally.

The Group continuously discloses and disseminates relevant and comprehensive information to the public in a timely manner to keep its stakeholders informed of its growth strategies, business activities, business and financial performance. This facilitates the stakeholders in making informed decisions, be it in their dealings with the Group or in exercising their rights as shareholders.

Periodic and Continuous Disclosure

To comply with the Bursa Malaysia Listing Requirements, corporate disclosure policies and procedures have been in place to guide all employees pertaining to corporate disclosure requirements. Clear roles and responsibilities of directors, management and employees are provided together with levels of authority. Only authorised spokespersons are allowed to handle and disclose material information. Persons responsible for preparing the disclosure will conduct due diligence and proper verification before disclosure is made to investing public.

Annual General Meeting (AGM)

SHL dispatches its notice of AGM to shareholders at least 21 days before the AGM by enclosing the notice of AGM, which provides information to the shareholders with regard to, details of the AGM, their entitlement to attend the AGM, the right to appoint a proxy and also the qualifications of a proxy. Since 2013 AGM, SHL has removed the limitation on the number of proxies to be appointed by an exempt authorised nominee with shares in the Company for multiple beneficial owners in one securities account to allow greater participation of beneficial owners of shares at general meetings of the Group.

In line with the recent amendments to the Main Market Listing Requirements of Bursa Securities, the Group implements poll voting for all the resolutions set out in the Notice of AGM and appoints a scrutineer to validate the votes cast at AGM.

Electronic Communications

The Board is mindful of its obligation to provide timely and fair disclosure of material information to shareholders. Shareholders are kept abreast of the financial and other material information concerning the Group through regular and timely dissemination of information. The Group website at www.shlcb.com. my contains information about the Group including all publicly disclosed financial information, corporate announcements, annual reports and profiles of the Group.

The Group has established a website at www.shlcb.com.my, where shareholders can access for information.

This CG Overview Statement was approved by the Board of Directors on 30 May 2018.

27 SHL CONSOLIDATED BHD STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

The Board is committed to maintaining a sound system of risk management, internal control and good corporate governance practices of the Group in compliance with Paragraph 15.26(b) of the Listing Requirements of Bursa Securities and guided by the Statement on Risk Management & Internal Control Guidelines for Directors of Listed Issuers.

Board’s Responsibility

The Directors acknowledge their ultimate responsibility for the Group’s system of internal control and risk management and for reviewing the adequacy and integrity of the system but the purview does not cover its associated company where the Group does not have full management control. However, the Group’s interest is served through representation on the board of the associated company. The system of internal control covers risk management, operational, organisational, financial and compliance controls to safeguard the Group’s assets and shareholders’ investments.

The Board continually implements and reviews the adequacy and effectiveness of the Group’s risk management and internal control system and ensures that risks have been managed within the Group’s risk appetite and tolerable ranges and the system is viable and robust.

The system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

KEY FEATURES OF RISK MANAGEMENT AND INTERNAL CONTROL PROCESSES

The Group has established a clear line of accountability, authority and responsibility organisational structure for the Board, its committees and operating units. Key processes in reviewing the adequacy and effectiveness of the risk management and internal control are as follows:-

• The Audit Committee of the Group, with the assistance of the Risk Management Committee, performs risk management assessments and through the Internal Audit Department, reviews the internal control processes, and evaluates the adequacy and effectiveness of the risk management and internal control system. • The Risk Management Committee was established to oversee and perform reviews on the Group’s risk management processes. The Risk Management Committee is chaired by Chief Risk Officer and includes Head of business units of the Group. The Risk Management Committee reports to the Audit Committee where key risks and mitigating actions are deliberated and implemented. • The Nomination Committee assists the Board to review and recommend appropriate remuneration policies for Directors and to ensure their remuneration commensurate with their performance. The Nomination Committee also reviews and recommends candidates to the Board and evaluates the performance of Directors on an annual basis. • The Internal Audit Department performs internal audits on various operating units within the Group on a risk based approach and based on the annual audit plan approved by the Audit Committee. The Internal Audit Department checks and tests the effectiveness of the internal control system periodically and highlights significant findings to the Audit Committee.

KEY ELEMENTS OF THE RISK MANAGEMENT AND INTERNAL CONTROLS

The key elements of the Group’s risk management and internal controls are as follows:-

• Clearly defined authorisation, approval limits and control procedures within the Board and the Senior Management. • Top down communication is conducted to all levels pertaining to Group’s value and code of ethics. • Standard Operating Policies and Procedures are systematically documented, revised and made available to guide staff in their day-to-day work. • Senior Management meet on a periodic basis with managers of business units to ensure that the processes for identifying, evaluating, monitoring and reporting of risks and internal control are implemented adequately and effectively. • Periodic reporting to the Board and its committees on the results of control assurance, risk management and audit activities of the Group. • The Board reviewed the effectiveness of risk management and internal controls annually and ensured that they are effective and efficient.

28 ANNUAL REPORT 2018 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont’d)

RISK MANAGEMENT FRAMEWORK

Risk management continues to play an important part in the Group’s business activities and is an essential component of its planning process. The Board has overall responsibility to ensure that the Group has the capability and necessary framework to manage risks in new and existing businesses. To assist the Board in its risk management oversight, the Audit Committee has been authorised by the Board to provide oversight and review on matters relating to the risk management policies and systems of the Group.

The Board has established an ongoing process for identifying, evaluating and managing significant risks faced by the Group. This process has been in place throughout the year and up to the date of approval of the annual report and financial statements. The Board fully supports the contents of the Internal Control Guidance and through the Audit Committee, continually reviews the adequacy and effectiveness of the risk management process within the various operating business units.

The formalisation of the Enterprise Risk Management Framework involves the following initiatives:

1. A formal risk policy and guidelines have been established and communicated to all employees throughout the Group.

2. A risk management structure which outlines the lines of reporting and responsibility at the Board, Audit Committee, Risk Management Committee and management levels have been established. The risk management structure enhances risk oversight and monitoring process.

3. The Audit Committee’s risk management function is assisted by the Risk Management Committee, whose members comprise of senior management. The Risk Management Committee is responsible for ensuring the effectiveness of the risk management framework of the Group, the objective of which is to provide enterprise risks involved in property investment, property development, construction, manufacturing, recreation and management activities and a systematic process for identification, assessment, management and reporting of such risks on a consistent and reliable basis. The Risk Management Committee is mandated to focus on key strategic risks whilst also to ensure that the business units are responsible for the day-to-day tracking, monitoring and control of risks within their operations.

4. Chief Risk Officers continuously carry out their responsibilities to identify, assess and prioritise the risks faced by the Group based on the likelihood of occurrence and magnitude of impact and also to assist management in identifying procedures or steps to be taken to manage or control these risks.

5. The Group Management’s implementation of a group-wide risk assessment process identifies the key risks facing each business, the potential impact and likelihood of those risks occurring, the control effectiveness and the action plans being taken to manage those risks to the desired level. The risk profile for the Group and individual business units is produced by an automated risk management system, and together with the risk registers, are reported by the Risk Management Committee to the Audit Committee on a yearly basis. The Chairman of the Audit Committee reports the significant risks and control issues to the Board for its consideration.

6. Ongoing risk management education and training is provided at management and staff levels.

29 SHL CONSOLIDATED BHD STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont’d)

RISK ASSESSMENT REVIEWS

During the financial year, all divisions conducted their risk management and internal control system reviews which were assessed by the Risk Management Committee and reported to Audit Committee.

The Group identified major risk areas of concern and implemented appropriate actions to mitigate those risks as outlined below:-

1. Operational

Operational Risks relate to the effectiveness and efficiency of people, the integrity of internal control system and processes and external factors that affect day to day operations. The Group manages operational risks by focusing on prevention and corrective management through compliance with operating manuals, standard operating procedures, internal control and guidelines on limits of authority. At Group level, the residual operational risks are:

i. Project Management Risks

The Group has clearly defined procedures for monitoring, managing and controlling major projects. The respective operating business heads review and report the progress of major projects and significant business activities to the Executive Directors on a regular basis. Significant issues are brought to the attention of the Risk Management Committee, the Audit Committee and the Board of Directors.

ii. Human Resources Risks

The Group believes in adopting competitive and attractive human resource practices, especially in the areas of staff recruitment, talent development and compensation. The Group believes in building a talent-pool to increase the availability of experienced and capable employees to fill key business leadership positions in the company.

iii. Crisis Risks

The Group has business continuity plans in place for responding to crises and emergencies in ways that will ensure quick recovery and resumption of critical business functions. The Group regularly reviews its emergency response and business continuity plans and conducts tests and exercises from time to time to ensure its workability and relevance. The Group regularly reviews the type, scope and adequacy of insurance coverage that it buys, taking into account, the availability of such cover, its costs and the likelihood of occurrence and magnitude of risk involved.

2. Competition

The Group is exposed to stiff competition from other construction and property development companies. Intense competition may result in highly competitive pricing in order to secure sales of the Group’s property development projects, which may consequently affect the financial performance of the Group.

In order to stay competitive, the Group shall constantly update itself on the latest market conditions, sustaining Group’s track record and continue to maintain its competitive edge in terms of cost efficiency, service quality, reliability and innovativeness. Applying energy saving and other technologically advanced green features will enhance the Group’s niche position in the construction and property development industries.

3. Supply and Cost of Raw Materials

The main raw materials used by the Group include steel bars, pre-mixed and ready mixed concrete, sand, aggregates, cement, plywood, timber and other building materials, which are sourced and procured locally and overseas. Any increase of building material prices will affect the property development cost and also the selling price of property. To mitigate the price risk, detailed planning and budgeting prior to calling for tendering of property development projects is put in place to ensure lowest tender price is awarded. However, there is no assurance that any future shortage in raw materials and/or increase in the cost of raw materials will not have a material adverse impact on the Group.

30 ANNUAL REPORT 2018 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont’d)

4. Cost Overruns

The implementation of the property development projects involves the Group carrying out internal costing and budgeting estimates of raw materials, sub-contracting costs and other related costs and overheads based on the indicative pricing or quotations given by our suppliers and sub-contractors as well as our own estimate of costs.

However, there are a number of circumstances that could lead to additional costs not previously factored into the contract value or selling price of the properties, which include, unforeseen circumstance such as adverse soil conditions, unfavorable weather conditions or unexpected construction constraints at the worksite and fluctuations in the prices of raw materials and sub- contractors’ services as well as additional costs incurred that may not have been foreseen at the initial stage of planning for the construction or property development project.

To mitigate the risk of cost overruns, detailed planning and budgeting are implemented in the Group’s property development projects.

5. Government Regulations and Controls

The operations of the Group’s property development division are subject to government regulations, among others, the Environment, Health and Safety regulations and the requirements of local municipal councils. These regulations, acts and requirements are to control and protect workers and consumers as well as to set minimum standards for the construction and property development industries.

Typically, these laws and regulations provide for substantial fines and potential criminal prosecution for any breach of the same. Any breach of these laws can result in permit revocation, cessation of or restriction in operations rendering remedial work required.

The Group has strictly complied and will continue to comply with these laws and regulations, however, there can be no assurance that changes to the present laws, regulations or policies or the introduction of new ones will not adversely affect the Group’s business.

The Board is satisfied that there is an ongoing process of identifying, evaluating and managing significant risks that may affect the achievement of the Group’s business objectives. The system of internal control will continue to be reviewed and updated in line with changes in the operating environment.

6. Housing loans financing

In view of the slowdown in the local and global economy, strict mortgage lending policies by banking institutions resulting in lower loan approvals have affected the sale of properties and subsequently reduced the profitability of the Group. To mitigate such risk, the Group carries out the following measures:-

• Switching product focus to affordable housing where demand is still resilient. • Maintaining close working relationship with financial institutions to counter the cooling policies. • Developing innovative strategies and negotiating attractive interest rate for loans.

Review of this Statement

Pursuant to paragraph 15.23 of the Main Market Listing Requirements, the External Auditors have reviewed this Statement for inclusion in the 2018 Annual Report, and reported to the Board that nothing has come to their attention that causes them to believe that the Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal control. The statement was approved by the Board on 30 May 2018.

Conclusion

The Board is of the view that the system of internal control and risk management are in place for the year under review, and up to the date of approval of this Statement, is sound and sufficient to safeguard shareholders’ investment, the interests of customers, regulators, employees and other stakeholders, and the Group’s assets. The Board has received assurance from the Executive Directors and the Chief Financial Officer that the Group’s risk management and internal control system are operating adequately and effectively, in all material aspects, based on the risk management model adopted by the Group.

31 SHL CONSOLIDATED BHD AUDIT COMMITTEE REPORT

MEMBERSHIPS AND MEETINGS

The Audit Committee comprises the following Directors, all of whom are Non-Executive Directors.

Chairman: Souren Norendra (Senior Independent Non-Executive Director)

Members: Ng Chin Hoo (Independent Non-Executive Director); and Wong Tiek Fong (Non-Independent Non-Executive Director)

The Audit Committee met five (5) times during the financial year ended 31st March 2018. The attendances of the Audit Committee Members were as follows:

No. of meetings attended by directors during their Name of Members tenure in office

Souren Norendra 5/5 Wong Tiek Fong 5/5 Ng Chin Hoo 5/5

The Secretary was present in all the meetings. Representatives of the External Auditors and the Head of Internal Audit also attended the meetings upon invitation.

SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

The main activities undertaken by the Committee were as follows: i. Reviewed the External Auditors’ scope of work and audit plans for the year. Prior to the audit, representatives from the external auditors presented their audit strategy and plan. ii. Reviewed the independence and objectivity of the External Auditors and the services provided, including non-audit services. The Audit Committee undertook an annual assessment of the External Auditors including the quality of audit, sufficiency of resources and the External Auditors’ independence, objectivity and professionalism. The Audit Committee also considered the nature of the provision of the non-audit services and fees and is of the opinion that such non-audit services and fees did not impair or threaten the audit independence. Based on the assessment, the Audit Committee is of the opinion that External Auditors is independent for the purpose of the Group’s statutory audit. iii. Recommended to the Board for approval of the audit and non-audit fees payable to the External Auditors as disclosed in Note to the financial statements. iv. Reviewed the internal audit department’s resources requirements, programmes and plans for the financial year under review. v. Reviewed the internal audit reports, which highlighted the audit issues, recommendations and management’s response. Discussed with management actions taken to improve the system of internal control and ensure that it is efficient and adequate. vi. Recommended to the Board improvement opportunities in internal control, procedures and risk management. vii. Assessed and reviewed the going concern basis for preparing the Group’s consolidated financial statements based on principal risks, uncertainties, capital expenditures, future performance and existing financial position of the Group.

32 ANNUAL REPORT 2018 AUDIT COMMITTEE REPORT (cont’d)

viii. Met with the External Auditors and Internal Auditors without the presence of any executive Board member. At the meeting the AC enquired about significant and unusual events, abnormal transactions and conflict of interest on related party transactions. However, there were no areas of concern raised during the year under reviewed. ix. Reviewed the changes in or implementation of major accounting policy, significant financial reporting issues, judgements made by Management, unusual events in the quarterly and annual report prior to submission to the Board for their consideration and approval. The Audit Committee was satisfied that there were no significant changes of major accounting policy, financial reporting issues, judgements made by Management and unusual events during the year under reviewed. x. Reviewed the Company’s compliance in particular the quarterly and annual financial statements with the Listing Requirements of Bursa Malaysia Securities Berhad, MASB and other relevant legal and regulatory requirements. xi. Reviewed with the External Auditors the results of the audit and the audit report for year ended 31.3.2018. At the meeting, the AC discussed and reviewed key audit matters with the External Auditors and is satisfied with the steps taken by External Auditors to resolve the key audit matters. xii. Reviewed on a quarterly basis the related party transactions entered into by the Group and ensure that the transactions are fair and reasonable, and are not to the detriment of the minority shareholders. xiii. Reviewed the Group risk assessment report and ensured that action plans taken are adequate and effective.

INTERNAL AUDIT FUNCTION

The internal audit department is independent of the activities or operations of other operating units. The principal role of the department is to undertake independent regular and systematic reviews of the systems of internal control, risk management and governance frameworks within the Group so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively. It is the responsibility of the internal audit department to provide the Audit Committee with independent and objective reports on the state of internal control of the various operating units within the Group and the extent of compliance of these units with the Group’s established policies and procedures as well as relevant statutory requirements.

The internal audit activities carried out during the year are as follow:-

• Examined and evaluated the effectiveness and efficiency of the Group’s internal control system and risk management system based on risk based approach audit plan and recommending improvements to existing system of controls. • Regular internal audit visits to ascertain the extent of compliance with established Group policies and procedures and statutory requirements. • Conducted follow-up audits to assess if appropriate actions have been taken to address issues highlighted in previous audit reports. • Conducted recurrent related party transactions reviews to assess accuracy and completeness of reporting and ensure compliance with Bursa Malaysia Listing Requirements. • Attended physical stock count of the Group.

During the financial year, the cost involved in performing in-house internal audit function is approximately RM244,000/-.

33 SHL CONSOLIDATED BHD CORPORATE SOCIAL RESPONSIBILITY

As part of our commitment to be a responsible corporate citizen, the Group continues to place great emphasis on corporate social responsibility and embarked on its mission by focusing on three primary areas namely Workplace, Environment and Community.

Workplace

We believe that employees are a crucial asset and major contributor to our success. The Group’s policies on recruitment, working hours, remuneration and welfare exceed the requirements set forth by the relevant authorities. Employees and managerial staff continue to attend external seminars, occupational safety and health training as well as management and financial skill upgrading programmes to strengthen their competencies, skills and knowledge with the aim to embed the high standard required to enhance work quality and achieve optimal job performance. During the financial year, the employees have attended various training programmes to enhance their skills and knowledge to maximize their effectiveness on their job performance.

Health and safety is given the highest priority within the Group’s operations. Benefits extended to all employees include accident and disability insurance, maternity/paternity leave and medical coverage for employees’ non-working spouses. At construction sites, all employees, contractors and sub-contractors are properly attired with safety devices so as to comply with ISO9001-2015 requirements.

To encourage unity and teamwork among all employees, sports activities and trips were organised to encourage employees to mingle and interact with one another to foster goodwill and build closer working relationships.

Environment

As a responsible property developer, the Group is committed to preserve the environment and minimise any harmful environmental impact by conforming to the regulations set by the Department of Environment. Before starting any major property development projects, the Group engages independent consultants to conduct environment impact assessments in accordance with the Environment Quality Act.

In order to conserve energy and prevent global warming, the Group has introduced ways of cutting electricity consumption by turning off light and air conditioners during lunch break and to reduce waste by using recycled papers.

Community

The Group contributed in cash and in kind to underprivileged, disable groups and charity organisations.

34 Financial Statements

36 Directors’ Report

41 Statement by Directors

41 Statutory Declaration

42 Independent Auditors’ Report

46 Statements of Comprehensive Income

47 Statements of Financial Position

48 Statements of Changes in Equity

50 Statements of Cash Flows

52 Notes to the Financial Statements SHL CONSOLIDATED BHD Directors’ Report for the year ended 31 March 2018

The Directors have pleasure in submitting the Directors’ report and the audited financial statements of the Group and of the Company for the year ended 31 March 2018.

Principal activities

SHL Consolidated Bhd. is an investment holding company and it provides strategic, financial and corporate planning services. SHL Consolidated Bhd. and its subsidiaries are an integrated commercial and residential property development group which are also involved in granite quarrying and manufacturing of aggregates, general building construction, earthworks, infrastructure works, renting out of plant and machineries, the ownership and operation of a golf resort, the manufacture of clay bricks, supply of finished brickworks of wall and other brick structures, the provision of professional construction management and geo-technical services, the marketing and distribution of building materials, rental of properties and money lending business.

Financial results

Group company R rM’000 rM’000

Profit before taxation 82,356 20,344 Malaysian taxation (12,642) (7)

Profit for the year 69,714 20,337 Other comprehensive income, net of tax 175 -

Total comprehensive income for the year 69,889 20,337

Total comprehensive income for the year attributable to: • equity holders of the Company 69,299 20,337 • non-controlling interests 590 -

69,889 20,337

Dividends

The amounts of dividends declared, paid and proposed since the end of the previous financial year were as follows:-

R rM’000

Dividends paid: • Second interim dividend of 6 Sen per share in respect of financial year ended 2017 14,528 • Final dividend of 6 Sen per share in respect of financial year ended 2017 14,527

29,055

Dividend declared: • Interim dividend of 8 Sen per share in respect of financial year ended 2018 19,370

Dividend proposed: • Final dividend of 8 Sen per share in respect of financial year ended 2018 19,370

36 ANNUAL REPORT 2018 Directors’ Report (cont’d) for the year ended 31 March 2018

Movements of reserves and provisions

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

Share capital

There were no changes in the issued and paid-up capital of the Company during the financial year.

Share options

There were no share options granted during the financial year or unissued shares under option at the end of the financial year, in respect of shares in the Company.

Directors

The Directors of the Company in office during the financial year and up to the date of this report are:-

Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Dato’ Sri Yap Teiong Choon Dato’ Sri Ir. Yap Chong Lee Wong Tiek Fong Souren Norendra Ng Chin Hoo Au Lai Koong

List of Directors of subsidiaries

Pursuant to Section 253 of the Companies Act 2016, the list of Directors of the subsidiaries (excluding Directors who are also Directors of the Company) during the financial year and up to the date of this report is as follows:-

Leong Chin Cheong Y.A.M. Tengku Muhaini Binti Sultan Haji Ahmad Shah Fumiaki Kiyose (Appointed on 4.5.2017) Ng Peck Chin (Resigned on 15.6.2017) Wong Yew Mei (Resigned on 29.11.2017)

Directors’ interests

According to the Register of Directors’ Shareholdings, particulars of interests in the shares in the Company and its related corporations during the financial year of those Directors holding office at the end of the financial year are as follows:-

Ordinary shares 1 April 31 March Company 2017 Addition Disposal 2018

Direct

Dato’ Sri Yap Teiong Choon 4,283,869 - - 4,283,869 Dato’ Sri Ir. Yap Chong Lee 3,235,519 - - 3,235,519 Wong Tiek Fong 80,000 - - 80,000 Au Lai Koong 5,000 - - 5,000

37 SHL CONSOLIDATED BHD Directors’ Report (cont’d) for the year ended 31 March 2018

Directors’ interests (continued)

Ordinary shares 1 April 31 March Company 2017 Addition Disposal 2018

Indirect

Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah 21,222,437 - - 21,222,437 Dato’ Sri Yap Teiong Choon 60,659,844 - - 60,659,844 Dato’ Sri Ir. Yap Chong Lee 92,105,143 - 150,000 91,955,143

By virtue of their interests in the Company, the following Directors are also deemed to be interested in the shares of all the subsidiaries to the extent of the shares held by the Company, and there were no changes in these interests.

Dato’ Sri Yap Teiong Choon Dato’ Sri Ir. Yap Chong Lee

Directors’ benefits

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit (other than the benefits shown under Directors’ Remuneration) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, other than those disclosed in the financial statements.

Neither during nor at the end of the financial year, was the Company a party to any arrangements whose object was to enable the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Other statutory information

Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable steps to:

(i) ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and

(ii) ensure that any current assets, which were unlikely to be realised in the ordinary course of business including the values of current assets as shown in the accounting records of the Group and of the Company had been written down to an amount which the current assets might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances which:

(i) would render the amounts written off for bad debts or the amount of the provision for doubtful debts inadequate to any substantial extent; or

(ii) would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or

(iii) have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

38 ANNUAL REPORT 2018 Directors’ Report (cont’d) for the year ended 31 March 2018

Other statutory information (continued)

At the date of this report, there does not exist any:

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

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

No contingent or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group and of the Company to meet their obligations when they fall due.

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

In the opinion of the Directors:

(i) the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(ii) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

Subsidiaries

(i) Details of subsidiaries:

Details of subsidiaries are disclosed in Note 11 to the financial statements.

(ii) Independent auditors’ reports on the financial statements of the subsidiaries:

Independent auditors’ reports on the financial statements of the subsidiaries did not contain any qualifications or any adverse comment made under Section 266(3) of the Companies Act 2016.

(iii) Subsidiaries’ holding of shares in the holding company and other related corporations:

None of the subsidiaries had any interest in shares in the holding company and other related corporations during the financial year.

Directors’ remuneration

Group company R rM’000 rM’000

Directors’ fee 205 205 Directors’ emoluments 2,348 24

2,553 229

39 SHL CONSOLIDATED BHD Directors’ Report (cont’d) for the year ended 31 March 2018

Indemnity given to or insurance effected for any Directors, officers or auditors

There was no indemnity given to or insurance effected for any Directors, officers or auditors of the Group and of the Company in accordance with Section 289 of the Companies Act 2016.

Ultimate holding company

The Company is not a subsidiary of another corporation at the end of the financial year.

Auditors

Details of auditors’ remuneration are disclosed in Note 6 to the financial statements.

Messrs. Khoo Wong & Chan have indicated their willingness to continue in office.

On behalf of the Board,

______Dato’ Sri Yap Teiong Choon

______Dato’ Sri Ir. Yap Chong Lee

Kuala Lumpur, 4 July 2018

40 ANNUAL REPORT 2018 Statement by Directors Pursuant to Section 251(2) of the Companies Act 2016

We, Dato’ Sri Yap Teiong Choon and Dato’ Sri Ir. Yap Chong Lee being the Directors of SHL Consolidated Bhd. do hereby state on behalf of the Board of Directors that in our opinion, the financial statements set out on pages 46 to 118 give a true and fair view of the financial position of the Group and of the Company as at 31 March 2018 and of their financial performance, changes in equity and cash flows for the year ended on that date in accordance with Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

On behalf of the Board,

Dato’ Sri Yap Teiong Choon Dato’ Sri Ir. Yap Chong Lee

Kuala Lumpur, 4 July 2018

STATUTORY DECLARATION Pursuant to Section 251(1)(b) of the Companies Act 2016

I, Wong Tiek Fong, being the Director primarily responsible for the accounting records and financial management of SHL Consolidated Bhd. do solemnly and sincerely declare that the financial statements set out on pages 46 to 118 are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by } Wong Tiek Fong } at Kuala Lumpur in the } Federal Territory } on 4 July 2018 } Wong Tiek Fong MIA CA6380

Before me,

41 SHL CONSOLIDATED BHD Independent Auditors’ Report To The Members of SHL Consolidated Bhd.

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of SHL Consolidated Bhd., which comprise the statements of financial position as at 31 March 2018 of the Group and of the Company, and the statementsof comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 46 to 118.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 March 2018 and of their financial performance, changes in equity and cash flows for the year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and Other Ethical Requirements

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

There is no key audit matter pertaining to the Company for the financial year. The key audit matters relating to the Group for the financial year are described in the table below:

Key audit matter How our audit addressed the key audit matter

Revenue recognition for property development activities

For the financial year ended 31 March 2018, Our audit procedures included, amongst others: property development revenue of RM167,702,000/- and cost of sales of RM86,895,000/- (Notes 5 and 6) ● Reviewed management-prepared budgets accounted for approximately 93% and 91% of the for property development projects. Group’s revenue and cost of sales respectively. ● Obtained an understanding of the process The Group recognises property development in deriving the stage of completion which revenue by reference to the stage of completion includes verifying the certified work done such of the development activity at the reporting date. as examining progress claims from contractors The stage of completion is based on the proportion and architect certification. of development costs incurred for work performed to date compared to the estimated total property ● Verified the budgeted costs against the letter development costs. of award issued to contractors.

42 ANNUAL REPORT 2018 Independent Auditors’ Report (cont’d) To The Members of SHL Consolidated Bhd.

Key Audit Matters (continued) Key audit matter How our audit addressed the key audit matter

Revenue recognition for property development activities (continued)

Significant judgement is required in the estimation ● Performed analytical reviews including of total property development costs. Where reasonableness test on the percentage of the actual total property development costs completion and profit recognition. are different from the estimated total property development costs, such difference could result in ● Verified the gross development value against a material variance in the amount of profit or loss the signed sale and purchase agreements recognised. Accordingly, we determined this to be and estimated selling price of unsold property a key audit matter. units to latest transacted selling price.

● Observed the progress of significant on-going projects by performing a site visit.

[Refer to Note 3.4(ii) (a) for key sources of estimation Based on the procedures performed, we uncertainty.] are satisfied with the recognition of property development revenue and costs.

Fair value of investment properties

As at 31 March 2018, the Group’s investment Our audit procedures included, amongst others: properties that are measured at fair value amounted to RM69,880,000/- (Note 13), which ● Reviewed the basis of valuation adopted, represents 7% of the Group’s total assets. considered and challenged the assumptions used in the valuation model. The Group determines the fair value of its investment properties by reference to selling prices of recent ● Assessed management’s estimated fair values transactions and asking prices of similar properties by making reference to comparable property of a nearby location. transactions.

We are focused on the above-mentioned area in ● Performed a site visit on major properties. our audit due to complexities in determining fair values of the investment properties, which involved significant judgements in estimating the underlying assumptions to be applied.

[Refer to Note 3.4(ii) (c) for key sources of estimation Based on the procedures performed, we are uncertainty.] satisfied with the Group’s valuation of investment properties.

Information other than the Financial Statements and Auditors’ Report thereon

The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report but excludes the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard.

43 SHL CONSOLIDATED BHD Independent Auditors’ Report (cont’d) To The Members of SHL Consolidated Bhd.

Responsibilities of the Directors for the Financial Statements

The Directors of the Company are responsible for the preparation of the financial statements of the Group and of the Company that give a true and fair view in accordance with Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:-

• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

• Conclude on the appropriateness of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

44 ANNUAL REPORT 2018 Independent Auditors’ Report (cont’d) To The Members of SHL Consolidated Bhd.

Auditors’ Responsibilities for the Audit of the Financial Statements (continued)

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Engagement Partner

The engagement partner on the audit resulting in this independent auditors’ report is Ong Lam Hock @ Tan Ah Lam.

Khoo Wong & Chan ong Lam Hock @ Tan Ah Lam Chartered Accountants Partner (AF: 0736) 3267/07/18(J) Chartered Accountant

Kuala Lumpur, 4 July 2018

45 SHL CONSOLIDATED BHD Statements of Comprehensive Income for the year ended 31 March 2018

Group Company N note 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Revenue 5 180,542 203,159 19,432 46,524 Cost of sales (95,336) (96,501) - -

Gross profit 85,206 106,658 19,432 46,524 Other operating income 13,235 10,085 1,383 - Distribution costs (6,783) (4,860) - - Administration expenses (10,405) (9,873) (471) (411) Finance costs (49) (52) - - Profit from associate 1,152 780 - -

Profit before taxation 6 82,356 102,738 20,344 46,113 Taxation 7 (12,642) (19,936) (7) (4)

Profit for the year 69,714 82,802 20,337 46,109 Other comprehensive income: • realisation of deferred tax liability upon disposal of revalued assets 175 181 - -

Total comprehensive income for the year 69,889 82,983 20,337 46,109

Profit for the year attributable to: • equity holders of the Company 69,124 82,294 20,337 46,109 • non-controlling interests 11 590 508 - -

69,714 82,802 20,337 46,109

Total comprehensive income for the year attributable to: • equity holders of the Company 69,299 82,475 20,337 46,109 • non-controlling interests 11 590 508 - -

69,889 82,983 20,337 46,109

S sen sen Earnings per share 8 Basic and fully diluted 28.55 33.99

The annexed notes form an integral part of the financial statements.

46 ANNUAL REPORT 2018 Statements of Financial Position as at 31 March 2018

Group Company N note 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

ASSETS Non-current assets Property, plant and equipment 9 205,465 214,471 - - Prepaid lease payments 10 675 685 - - Investment in subsidiaries 11 - - 423,407 422,024 Investment in associate 12 10,214 15,437 - - Investment properties 13 69,880 69,880 - - Land held for property development 14 2,745 2,740 - - Investments 15 24 24 - - Trust account 2,397 2,399 - - Deferred tax assets 16 4,924 1,611 - - Trade receivables 17 547 2,322 - -

296,871 309,569 423,407 422,024

Current assets Prepaid lease payments 10 10 10 - - Amounts due from subsidiaries 18 - - 71,195 82,211 Property development costs 19 227,841 191,961 - - Inventories 20 9,894 15,210 - - Trade receivables 17 27,608 79,712 - - Other receivables 21 7,806 8,184 5 - Current tax assets 477 2,057 - - Cash, deposits and short-term investments 22 370,774 290,420 1,559 640

644,410 587,554 72,759 82,851

941,281 897,123 496,166 504,875

EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital 23 247,726 242,124 247,726 242,124 Reserves 24 542,748 508,106 177,660 191,980

790,474 750,230 425,386 434,104 Non-controlling interests 11 61,572 18,610 - -

TOTAL EQUITY 852,046 768,840 425,386 434,104

Non-current liabilities Deferred tax liabilities 16 21,235 21,983 - - Finance lease liabilities 25 220 604 - - Club establishment fund 26 10,988 11,022 - -

32,443 33,609 - -

Current liabilities Amounts due to subsidiaries 18 - - 70,744 70,744 Trade payables 27 45,235 82,505 - - Other payables 28 7,604 8,871 35 26 Current tax liabilities 3,570 2,793 1 1 Finance lease liabilities 25 383 505 - -

56,792 94,674 70,780 70,771

TOTAL LIABILITIES 89,235 128,283 70,780 70,771

TOTAL EQUITY AND LIABILITIES 941,281 897,123 496,166 504,875

The annexed notes form an integral part of the financial statements.

47 SHL CONSOLIDATED BHD Statements of Changes in Equity for the year ended 31 March 2018

total attributable to equity holders of non- Group Note share share *Other retained the controlling total 2018 capital premium reserves profits Company interests equity rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

At 1 April 2017 242,124 1,225 (23,094) 529,975 750,230 18,610 768,840

Profit for the year - - - 69,124 69,124 590 69,714 Other comprehensive income for the year - - 175 - 175 - 175 Total comprehensive income for the year - - 175 69,124 69,299 590 69,889 Transfer in accordance with Section 618(2) of the Companies Act 2016 5,602 (1,225) (4,377) - - - - Purchase of indirect subsidiary - - - - - 42,372 42,372 Transfer within reserves: • realisation of revaluation surplus - - (699) 699 - - - Transaction with owners: • dividends 29 - - - (29,055) (29,055) - (29,055)

At 31 March 2018 247,726 - (27,995) 570,743 790,474 61,572 852,046

2017

At 1 April 2016 242,124 1,225 (22,553) 492,963 713,759 18,102 731,861

Profit for the year - - - 82,294 82,294 508 82,802 Other comprehensive income for the year - - 181 - 181 - 181 Total comprehensive income for the year - - 181 82,294 82,475 508 82,983 Transfer within reserves: • realisation of revaluation surplus - - (722) 722 - - - Transaction with owners: • dividends 29 - - - (46,004) (46,004) - (46,004)

At 31 March 2017 242,124 1,225 (23,094) 529,975 750,230 18,610 768,840

*Analysis of other reserves:

revaluation capital Merger Group surplus reserves deficit Total 2018 rM’000 rM’000 rM’000 rM’000

At 1 April 2017 96,330 11,040 (130,464) (23,094) Total comprehensive income for the year: • other comprehensive income for the year 175 - - 175 Transfer in accordance with Section 618(2) of the Companies Act 2016 - (4,377) - (4,377) Transfer within reserves: • realisation of revaluation surplus (699) - - (699) At 31 March 2018 95,806 6,663 (130,464) (27,995)

2017

At 1 April 2016 96,871 11,040 (130,464) (22,553) Total comprehensive income for the year: • other comprehensive income for the year 181 - - 181 Transfer within reserves: • realisation of revaluation surplus (722) - - (722) At 31 March 2017 96,330 11,040 (130,464) (23,094)

The annexed notes form an integral part of the financial statements.

48 ANNUAL REPORT 2018 Statements of Changes in Equity for the year ended 31 March 2018 (cont’d)

Company Note share share *Other retained total 2018 capital premium reserves profits equity rM’000 rM’000 rM’000 rM’000 rM’000

At 1 April 2017 242,124 1,225 27,738 163,017 434,104 Total comprehensive income for the year: • profit for the year - - - 20,337 20,337 Transfer in accordance with Section 618(2) of the Companies Act 2016 5,602 (1,225) (4,377) - - Transaction with owners: • dividends 29 - - - (29,055) (29,055)

At 31 March 2018 247,726 - 23,361 154,299 425,386

2017

At 1 April 2016 242,124 1,225 27,738 162,912 433,999 Total comprehensive income for the year: • profit for the year - - - 46,109 46,109 Transaction with owners: • dividends 29 - - - (46,004) (46,004)

At 31 March 2017 242,124 1,225 27,738 163,017 434,104

*Analysis of other reserves:

Merger capital Company reserve reserve total 2018 rM’000 rM’000 rM’000

At 1 April 2017 4,377 23,361 27,738 Transfer in accordance with Section 618(2) of the Companies Act 2016 (4,377) - (4,377)

At 31 March 2018 - 23,361 23,361

2017

At 1 April 2016 and 31 March 2017 4,377 23,361 27,738

The annexed notes form an integral part of the financial statements.

49 SHL CONSOLIDATED BHD Statements of Cash Flows for the year ended 31 March 2018

Group Company N note 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Cash flows from operating activities Profit before taxation 82,356 102,738 20,344 46,113

Adjustments for: Depreciation and amortisation 5,895 5,764 - - Gain on disposal of property,plant and equipment (3) (24) - - Derecognition of: • property, plant and equipment - 1 - - • reversal of impairment loss of subsidiaries - - (1,383) - Fair value gain on short-term investments (313) - - - Interest expenses 49 52 - - Interest income (12,703) (9,902) (32) (24) Dividend income - - (19,400) (46,500) Profit from associate (1,152) (780) - -

Operating profit/(loss) before working capital changes 74,129 97,849 (471) (411) (Increase)/decrease in inventories and property development costs (15,479) (6,430) - - (Increase)/decrease in receivables 54,257 (43,187) 11,011 6,615 Increase/(decrease) in payables (38,537) (12,867) 9 (7,012)

Cash generated from/(absorbed by) operations 74,370 35,365 10,549 (808) Tax paid (14,385) (10,814) (7) (5) Tax refunded 214 37 - -

Net cash from/(used in) operating activities 60,199 24,588 10,542 (813)

The annexed notes form an integral part of the financial statements.

50 ANNUAL REPORT 2018 Statements of Cash Flows for the year ended 31 March 2018 (cont’d)

Group Company N note 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Cash flows from investing activities Claim received from trust account 254 279 - - Payment to trust account (252) (267) - - Purchase of: • property, plant and equipment 30 (11,964) (2,440) - - • land held for property development (5) (140) - - Proceeds from disposal of property, plant and equipment 3 24 - - Purchase of short-term investments (11,991) (61,391) - - Proceeds from redemption of short-term investments 1,848 11,409 - - Interest received 12,703 9,902 32 24 Dividends received from subsidiaries - - 19,400 46,500 Dividend received from associate 6,375 - - -

Net cash from/(used in) investing activities (3,029) (42,624) 19,432 46,524

Cash flows from financing activities Repayment of club members’ deposits (34) (823) - - Payment of finance lease liabilities (506) (457) - - Interest paid (49) (52) - - Dividends paid to owners of the Company (29,055) (46,004) (29,055) (46,004) Proceeds of shares issued to indirect non-controlling interest 42,372 - - -

Net cash from/(used in) financing activities 12,728 (47,336) (29,055) (46,004)

Net increase/(decrease) in cash and cash equivalents 69,898 (65,372) 919 (293) Cash and cash equivalents at 1 April 140,425 205,797 640 933

Cash and cash equivalents at 31 March 210,323 140,425 1,559 640

Analysis of cash and cash equivalents Cash and deposits 22 210,323 140,425 1,559 640

The annexed notes form an integral part of the financial statements.

51 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. General information

1.1 principal activities

The Company is an investment holding company and it provides strategic, financial and corporate planning services.

The Group is an integrated commercial and residential property developer and is also involved in granite quarrying and manufacturing of aggregates, general building construction, earthworks, infrastructure works, renting out of plant and machineries, the ownership and operation of a golf resort, the manufacture of clay bricks, supply of finished brickworks of wall and other brick structures, the provision of professional construction management and geo-technical services, the marketing and distribution of building materials, rental of properties and money lending business.

1.2 Legal form and domicile

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad.

1.3 Registered office and principal place of business

The addresses of the registered office and principal place of business are as follows:-

Registered office 6th Floor, Wisma Sin Heap Lee, 346 Jalan Tun Razak, 50400 Kuala Lumpur.

Principal place of business 16th Floor, Wisma Sin Heap Lee, 346 Jalan Tun Razak, 50400 Kuala Lumpur.

1.4 Authorisation for issue

The financial statements were authorised for issue by the Directors on 4 July 2018.

2. Financial risk management policies

The Group and the Company’s financial risk management policies seek to ensure that adequate financial resources are available for the development of the Group and of the Company’s businesses whilst managing their risks. The Group and the Company operate within clearly defined guidelines that are approved by the Board and the Group and the Company’s policies are to forbid speculative transactions.

The main areas of financial risks faced by the Group and by the Company and the policies in respect of the major areas of treasury activity are set out as follows:

52 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

2. Financial risk management policies (CONTINUED)

2.1 interest rate risk

The Group and the Company place surplus funds in the form of short-term deposits with reputable financial institutions to earn interest income based on prevailing market rates. The Group and the Company manage their interest rate risk by placing such funds for the maturity periods of 12 months or less.

The Group and the Company’s policies are to borrow principally on the floating rate basis but to retain a proportion of fixed rate debt. The objectives for the mix between floating and fixed rate borrowings are set to reduce the impact of an upward change in interest rates while enabling benefits to be enjoyed if interest rates fall.

2.2 Market risk

The Group and the Company’s principal exposure to market risk arises mainly from the changes in equity prices. The Group and the Company manage the risk of unfavourable changes by cautious review of the investments before investing and continuous monitoring of their performance and risk profiles.

2.3 credit risk

The credit risk is controlled by the application of credit approvals, limits and monitoring procedures. This is done through reference to published credit ratings by prime financial institutions. In the absence of published ratings, an internal credit review is conducted if the credit risk is material.

2.4 Liquidity and cash flow risks

The Group and the Company seek to achieve a balance between certainty of funding even in difficult times for the markets or the Group and the Company and a flexible, cost-effective borrowing structure. This is to ensure that at the minimum, all projected net borrowing needs are covered by committed facilities. Also, the objective for debt maturity is to ensure that the amount of debt maturing in any one year is within the Group and the Company’s means to repay and refinance.

3. bAsis of preparation

3.1 statement of compliance

The consolidated financial statements of the Group “Group” and separate financial statements of the Company “Company” comply with Financial Reporting Standards (FRSs) and the requirements of the Companies Act 2016 in Malaysia.

These financial statements also comply with the applicable disclosure provisions of the Listing Requirements of Bursa Malaysia Securities Berhad.

3.2 basis of measurement

The financial statements of the Group and of the Company have been prepared under the historical cost basis, unless otherwise indicated in the following significant accounting policies.

3.3 Functional and presentation currency

The financial statements are presented in Ringgit Malaysia (RM), which is the Group and the Company’s functional currency. All financial information presented in RM had been rounded to the nearest thousand.

53 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

3. bAsis of preparation (CONTINUED)

3.4 Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Estimates and judgements

The following are the estimates and judgements made by management in the process of applying the Group and the Company’s accounting policies that have the most significant effect on the amounts recognised in the financial statements.

(i) Critical judgement made in applying accounting policies

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

The Group has developed certain criteria based on FRS 140 in making judgement whether a property qualifies as an investment property. Investment property isa property held for earning rentals or capital appreciation or both. Judgement is made on an individual property basis to determine whether the property qualifies as an investment property.

(ii) Key sources of estimation uncertainty

(a) Property development and construction contracts

The Group recognises property development and contract revenue and costs in profit or loss by using the percentage of completion method. The percentage of completion is determined by reference to proportion of property development costs incurred for work performed to date bear to the total estimated property development costs and surveys of work performed.

Significant judgement is required in determining the percentage of completion, the extent of property development and contract costs incurred, the estimated total property development and contract revenue and costs, as well as the recoverability of the development and contract projects. In making the judgement, the Group evaluates it by relying on past experience and the work of specialists.

(b) Estimated useful lives and impairment assessment of property, plant and equipment

The Group reviews annually the estimated useful lives and assesses for indicators of impairment of property, plant and equipment based on factors such as business plan and strategies, historical sector and industry trends, general market and economic conditions, expected level of usage and future technological developments and other available information. Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned. An impairment or a reduction in the estimated useful lives of property, plant and equipment increases recorded impairment or depreciation and decreases property, plant and equipment or vice versa.

The carrying amount of the Group’s property, plant and equipment as at the end of the financial year is disclosed in Note 9 to the financial statements.

54 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

3. bAsis of preparation (CONTINUED)

3.4 Use of estimates and judgements (continued)

(ii) Key sources of estimation uncertainty (continued)

(c) Fair values of investment properties and property, plant and equipment

Fair values of investment properties and land and buildings classified as property, plant and equipment are determined by the Directors by comparing their current value with recent sale of similar properties in the vicinity with appropriate adjustments made to differences in location, floor area and other relevant factors before arriving at the fair values of the properties. The determination of appropriate adjustments to the recent sale value involves a degree of judgement before arriving at the respective properties’ fair values.

The carrying amounts of the Group’s land and buildings and investment properties as at the end of the financial year are disclosed in Notes 9 and 13 to the financial statements respectively.

(d) Impairment of investment in subsidiaries and associate

The Group and the Company determine whether the carrying amounts of their investments are impaired at reporting date. This involves measuring the recoverable amount which includes fair value less costs to sell and valuation techniques. Valuation techniques include amongst others, discounted cash flows analysis and in some cases, based on current market indicators and estimates that provide reasonable approximations to the detailed computation or based on total equity of the subsidiaries and associates.

The carrying amounts of the Group and the Company’s subsidiaries and associate as at the end of the financial year are disclosed in Notes 11 and 12 to the financial statements respectively.

(e) Valuation of property development costs and inventories

The Group assesses the expected selling price and costs to sell each of the plots or units that constitute the Group’s land bank and completed development units. Cost includes the cost of acquisition of land, the cost of infrastructure and construction works, and legal and professional fees incurred during development prior to sale. Estimation of the selling price is subject to significant inherent uncertainties, in particular the prediction of future trends in the market value of land.

Whilst the Group exercises due care and attention to make reasonable estimates, taking into account all available information in estimating the future selling price, the estimates will, in all likelihood, differ from the actual selling prices achieved in future periods and these differences may, in certain circumstances, be very significant.

The carrying amounts of the Group’s property development costs and inventories as at the end of the financial year are disclosed in Notes 19 and 20 to the financial statements respectively.

(f) Allowance for impairment

The Group reviews the adequacy of allowance for impairment on all receivables as at the reporting date. In assessing the extent of uncollectible debts, management has given due consideration to all pertinent information relating to the ability of the debtors to settle the debts. The pertinent information is inherently uncertain and accordingly, the due consideration involves subjective judgements.

The carrying amount of the Group’s trade receivables as at the end of the financial year is disclosed in Note 17 to the financial statements.

55 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies

4.1 Financial Reporting Standards (FRSs)

(A) Amendments to FRSs and Annual Improvements to FRSs (‘Standards’) that are effective for current year

The following standards are applicable to the Group and the Company, which are effective for current year:-

Effective for financial periods beginning on or after 1 January 2017

• Amendments to FRS 107 Statement of Cash Flows • Amendments to FRS 112 Income Taxes • Annual Improvements to FRSs 2014 – 2016 Cycle

The initial application of these Standards has immaterial impact on the Group’s and the Company’s financial statements.

(B) Withdrawal of Financial Reporting Standards Framework (‘FRS Framework’)

The Malaysian Accounting Standards Board (MASB) gave notice of withdrawal of FRS Framework on 30 November 2017.

FRS Framework shall be withdrawn for financial statements with financial periods beginning on or after 1 January 2018.

4.2 Malaysian Financial Reporting Standards (MFRSs)

On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (‘MFRSs’), which is mandatory for financial periods beginning on or after 1 January 2012, with the exception of transitioning entities.

Transitioning entities (TE) include:

(a) entities that are within the scope of:

• MFRS 141 Agriculture; and • IC Interpretation 15 Agreements for Construction of Real Estate

(b) the parent, significant investor and venture of entities as stated in (a) above.

TE will be allowed to defer adoption of the MFRS framework and continue to use the existing FRS Framework. The adoption of MFRS framework by TE will be mandatory for annual periods beginning on or after 1 January 2018.

The Group and the Company fall within the scope definition of TE and accordingly, will be required to prepare financial statements using the MFRS framework in their first MFRS financial statements for the year ending 31 March 2019.

The Group and the Company are in the process of evaluating the quantitative impact arising from the transition. The qualitative effects arising from the transition to MFRS Framework are discussed below. The effects are based on the Group and the Company’s best estimates at the reporting date.

56 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.2 Malaysian Financial Reporting Standards (MFRSs) (continued)

In preparing the first MFRS financial statements, the Group and the Company will:

● apply MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards which provides first-time adopter certain exemptions and policy choices

● adopt all the applicable accounting pronouncements under the MFRS Framework that are effective upon adoption of MFRS Framework on 1 April 2018 [Note 4.2 (i)]

● not early adopt the accounting pronouncements under the MFRS framework that are yet to be effective for current financial year [Note 4.2(ii)]

(i) Accounting pronouncements that are effective upon the adoption of the MFRS Framework

E effective date

Accounting pronouncements under the MFRS framework where there is no equivalent standard in the FRS framework

• MFRS 15 Revenue from Contracts with Customers 1 January 2018 • Amendments to MFRS 15 Revenue from Contracts with Customers 1 January 2018

Other accounting pronouncements under the MFRS framework that are applicable to the Group and the Company

• MFRS 9 Financial Instruments 1 January 2018 • Amendments to MFRS 140 Investment Property 1 January 2018 • Annual Improvements to MFRS Standards 2014 – 2016 Cycle 1 January 2018

The initial application of these accounting pronouncements is expected to have an immaterial impact on the Group and the Company’s financial statements, other than those disclosed below:-

MFRS 9 Financial Instruments

MFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial assets. This standard replaces FRS 139 Financial Instruments: Recognition and Measurement.

Classification – Financial Assets

MFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics.

MFRS 9 contains three principal classification categories for financial assets:

● Measured at amortised costs ● Measured at fair value through other comprehensive income (FVOCI) ● Measured at fair value through profit or loss (FVTPL)

Based on its assessment, the Group and the Company believe that the new classification requirements will have no material impact on the Group and the Company’s financial assets.

57 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.2 Malaysian Financial Reporting Standards (MFRSs) (continued)

(i) Accounting pronouncements that are effective upon the adoption of the MFRS Framework (continued)

MFRS 9 Financial Instruments (continued)

Classification – Financial Liabilities

MFRS 9 largely retains the existing requirements in FRS 139 for the classification of financial liabilities. However, under FRS 139 all fair value changes of liabilities designated as at FVTPL are recognised in profit or loss, whereas under MFRS 9 these fair value changes are generally presented as follows:-

● The amount of change in the fair value that is attributable to changes in the credit risk of the liability is presented in other comprehensive income; and ● The remaining amount of change in the fair value is presented in profit or loss

The Group and the Company believe that the new classification requirements will have no material impact on the Group and the Company’s financial liabilities.

Impairment – Financial Assets and Contract Assets

MFRS 9 replaces the ‘incurred loss’ model in FRS 139 with a forward-looking ‘expected credit loss’ (ECL) model. This will require considerable judgement about how changes in economic factors affect ECL, which will be determined on a probability-weighted basis.

The new impairment model will apply to financial assets measured at amortised cost or FVOCI (except for investments in equity instruments), and to contract assets.

Under MFRS 9, loss allowances will be measured on either of the following bases:-

● 12-month ECL: this is ECL that result from possible default events within the 12 months after the reporting date; and ● Lifetime ECL: this is ECL that result from all possible default events over the expected life of financial instruments.

Amounts due from subsidiaries, trade and other receivables, including contract assets

The Group and the Company have chosen to apply the simplified approach prescribed by MFRS 9, which requires a lifetime ECL to be recognised from initial recognition of the amounts due from subsidiaries, trade and other receivables, including contract assets.

Cash, deposits and short-term investments

The cash, deposits and short-term investments are held with bank and financial institution counterparties with good credit ratings. The estimated impairment on cash, deposits and short-term investments will be calculated on the 12-month expected loss basis and reflects the short maturities of the exposures. The Group and the Company consider that their cash, deposits and short-term investments have low credit risk based on the external credit ratings of the counterparties.

The Group and the Company believe that the new impairment model may have an impact on the Group and the Company’s financial statements. However, the Group and the Company consider that they are achieving their scheduled milestones in terms of the adoption of MFRS 9 and would be in a position to fully comply with the requirements of MFRS 9 for the financial year ending 31 March 2019.

58 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.2 Malaysian Financial Reporting Standards (MFRSs) (continued)

(i) Accounting pronouncements that are effective upon the adoption of the MFRS Framework (continued)

MFRS 15 Revenue from Contracts with Customers

The core principle of MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with the core principle by applying the following steps:

1) identify the contracts with a customer; 2) identify the performance obligation in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract; and 5) recognise revenue when (or as) the entity satisfies a performance obligation.

MFRS 15 also includes new disclosures that would result in an entity providing users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers.

The key effects as a result of adopting this standard on the property development activities of the Group are as follows:

• in respect of sales of properties that do not come under the purview of Financial Reporting Standards Implementation Committee (“FRSIC”) Consensus 23 Application of MFRS 15 “Revenue from Contracts with Customers” on Sale of Residential Properties issued by the Malaysian Institute of Accountants, the Group has to assess if the property has an alternative use to the Group and whether the sales and purchase arrangement provides the Group with an enforceable right to payment for work completed to date, in determining whether or not the sale of property units should be recognised at a point in time (completion method) or over time (percentage of completion method);

• it requires the identification of separate performance obligations arising from the sale of property units from the various property development projects of the Group, such as the sale of property with complimentary giveaways, and may result in the acceleration of deferment of revenue recognition relating to these separate performance obligations depending on whether the related goods and/or services are delivered or satisfied. This would affect the timing of revenue recognition for the property development activities;

• it requires the recognition of the financing component relating to the sale of property units under the deferred payment scheme (10:90 scheme). This would result in the recognition of interest income using the effective interest method over the terms of the deferment;

• it requires that expenses attributable to securing contracts with customers such as commission expenses be capitalised and expensed by reference to the progress towards complete satisfaction of the performance obligation; and

59 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.2 Malaysian Financial Reporting Standards (MFRSs) (continued)

(i) Accounting pronouncements that are effective upon the adoption of the MFRS Framework (continued)

MFRS 15 Revenue from Contracts with Customers (continued)

• it views liquidated ascertained damages (“LAD”) payable when the developer fails to deliver vacant possession within the stipulated period as consideration payable to customers and is presented as a reduction of the transaction price which would then be accounted for in the profit or loss over the tenure of the respective property development project instead of being accounted for as a direct charge to the profit or loss when the obligation arises.

• it requires additional disclosures on significant judgements and accounting estimates made. This amongst others, determining the transaction prices of those contracts that include variable consideration, transaction price allocation to each performance obligation, and the assumptions made to estimate the stand-alone selling prices of each performance obligation. MFRS 15 also requires revenue recognised to be disaggregated into categories that depict the nature, amount, timing and uncertainty of revenue and cash flows.

The Group expects that the initial application of MFRS 15 may have an impact on the Group’s financial statements. However, the Group considers that it is achieving its scheduled milestones in terms of the adoption of MFRS 15 and would be in a position to fully comply with the requirements of MFRS 15 for the financial year ending 31 March 2019.

(ii) Accounting pronouncements that are yet to be effective for current financial year

No early adoption is made by the Group and the Company on the following accounting pronouncements that are expected to have application to the Group and the Company’s operations. These accounting pronouncements have been issued by the MASB, but yet to be effective:-

Effective for financial periods beginning on or after 1 January 2019 • MFRS 16 Leases • Amendments to MFRS 9 Financial Instruments • Amendments to MFRS 119 Employee Benefits • Amendments to MFRS 128 Investments in Associates and Joint Ventures • Annual Improvements to MFRS Standards 2015 – 2017 Cycle • IC Interpretation 23 Uncertainty over Income Tax Treatments

Effective for financial periods beginning on or after January 2020 Amendments to References to the Conceptual Framework in MFRS Standards

Effective date to be announced • Amendments to MFRS 10 Consolidated Financial Statements • Amendments to MFRS 128 Investments in Associates and Joint Ventures

The Group and the Company are in the process of assessing the impact of these accounting pronouncements.

60 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.3 Consolidated financial statements

(i) Subsidiaries

Subsidiaries are those entities controlled by the Company. Control is achieved when the Company:-

• has power over the investee; • is exposed, or has rights, to variable returns from its involvement with the investee; and • has the ability to use its power to affect its returns.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Subsidiaries are consolidated using the acquisition method of accounting, except for those subsidiaries acquired under common control.

Under the acquisition method of accounting, the consideration transferred is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Contingent consideration is measured at fair value as part of the consideration transferred with subsequent adjustment resulting from events after the acquisition date recognised in profit or loss. Acquisition related costs are recognised as expenses in profit or loss in the period in which they are incurred.

If a business combination is achieved in stages, the previously held equity interest in the acquiree is remeasured to the acquisition-date fair value. Any resulting gain or loss is recognised in profit or loss.

Non-controlling interests that are present ownership interests entitling their holders to a proportionate share of the acquiree’s net assets in the event of liquidation may be initially measured either:

• at fair value; or • at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets.

The choice of measurement is made on a transaction-by-transaction basis. Other types of non-controlling interest are measured at fair value.

Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at acquisition-date fair value. Any excess of (a) over (b) below is recognised as goodwill in the statements of financial position:-

(a) the sum of:

• the fair value of consideration transferred; • the amount of non-controlling interests in the acquiree (if any); and • the fair value of Group’s previously held equity interests in the acquiree (if any).

(b) the Group’s share of the fair value of the identifiable net assets acquired at the acquisition date.

In instances where (b) exceeds (a), the excess is recognised as a gain on bargain purchase directly in profit or loss on the acquisition date.

All intragroup transactions, balances and unrealised gains and losses are eliminated in full. Intragroup unrealised losses may indicate an impairment that requires recognition in the consolidated financial statements.

61 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.3 Consolidated financial statements (continued)

(i) Subsidiaries (continued)

Loss of control

Upon a loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any gain or loss arising from the loss of control of a subsidiary is recognised in profit or loss and measured as the difference between:

• aggregate of the fair value of the consideration received and the fair value of any retained interest and

• previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests.

If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity- accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

Transactions with non-controlling interests

Non-controlling interests represent that portion of the profit or loss and net assets ofa subsidiary attributable to equity interests that are not owned, directly or indirectly by the Group. It is measured at:-

• the non-controlling interests’ share of the fair value of the subsidiary’s identifiable assets and liabilities at the acquisition date; and

• changes in the subsidiary’s equity since that date.

Total comprehensive income is attributed to the Group and the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interest in a subsidiary without loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests is adjusted and the fair value of consideration paid or received is recognised directly in equity and attributed to the Group.

(ii) Business combination under common control

Business combinations under common control are accounted for using the predecessor method of merger accounting. Under the predecessor method of merger accounting, the profit or loss and other comprehensive income include the results of each of the combining entities from the earliest date presented or from the date when these entities came under the control of the common controlling party (if later).

The assets and liabilities of the combining entities are recognised basing on the carrying amounts from the perspective of the common controlling party, or the combining entities if the common controlling party prepares no consolidated financial statements.

The difference in the cost of combination over the aggregate carrying amounts of the assets and liabilities of the combining entities as at the date of the combination is recognised directly in equity. Transaction costs for the combination are recognised as expenses in the profit or loss.

62 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.3 Consolidated financial statements (continued)

(iii) Associates

Associates are entities in which the Group is in a position to exercise significant influence. Significant influence is the power to participate in the financial and operating policy decisions, but has no control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting and are initially measured at cost. The Group’s investment in associates includes goodwill identified on acquisition net of any accumulated impairment loss.

The Group assesses at each reporting date whether there is any objective evidence that an investment in the associate is impaired. If this is the case, the Group measures the amount of impairment as the difference between the recoverable amount of the associate and its carrying amount and recognises the amount in profit or loss.

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the profit or loss, and its share of post-acquisition movements in reserves is recognised in other comprehensive income. Where necessary, adjustments are made to the results and net assets of associates to ensure consistency of accounting policies with those of the Group. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group discontinues recognising further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

When significant influence ceases, the disposal proceeds, if any, and the fair value of any retained investment are compared to the carrying amount of the investment as at that date. The difference together with any accumulated exchange differences that relate to the associate is recognised in the profit or loss as gain or loss on disposal of the associate. The remaining investment retained in the previous associate is subsequently accounted for as an available-for-sale financial asset in accordance with FRS 139.

4.4 revenue recognition

Revenue is recognised to the extent that:-

• it is probable that the economic benefits will flow to the Group and the Company; and • it can be reliably measured.

Revenue is measured at the fair value of consideration received or receivable.

The following specific recognition criteria must also be met before revenue is recognised:-

(i) Investment income

Dividend income from investments is recognised in profit or loss when the right to receive is established.

63 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.4 revenue recognition (continued)

(ii) Income from property development and construction contracts

The Group recognises property development and construction contracts revenues using the percentage of completion method as described in Notes 4.16 and 4.17 respectively.

(iii) Interest income

Interest income is recognised in profit or loss as it accrues using the effective interest method.

(iv) Rental income

Rental income is recognised in profit or loss on a straight-line basis over the relevant tenancy agreements.

(v) Income from sales of goods and services

Sales of goods are recognised when a Group entity has delivered products to the customer; the customer has accepted the products and collectibility of the related receivables is reasonably assured.

Sales of services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

4.5 Employee benefits

(i) Short-term benefits

Wages, salaries, bonuses and social security contributions are recognised as expenses in the period in which the associated services are rendered by employees of the Group and of the Company. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plans

As required by law, the Group and the Company make contributions to the state pension scheme, the Employees Provident Fund (“EPF”). Such contributions are recognised as expenses in profit or loss as incurred.

4.6 borrowing costs

Borrowing costs incurred to finance the construction of any qualifying assets are capitalised as part of the cost of the assets during the period of time that is required to complete and prepare the asset for its intended use.

All other borrowing costs are recognised as expenses in profit or loss in which they are incurred.

64 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.7 Income taxes

Income tax expense represents the sum of the current tax and deferred tax.

Current tax and deferred tax are recognised in profit or loss except to the extent that they relate to a business combination or items recognised directly in equity or in other comprehensive income.

Current tax

The current tax is the amount of income taxes payable in respect of the taxable profit for a period. The Group and the Company’s liabilities for current tax are calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax

Deferred tax is recognised in full, using the liability method, on temporary differences arising between the carrying amounts of assets and liabilities in the financial statements and their tax bases. No deferred tax is recognised for the temporary differences arising from:-

• the initial recognition of goodwill; • the initial recognition of assets or liabilities in a transaction other than a business combination and that affects neither accounting or taxable profit or loss.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Where investment properties are carried at their fair value, the amount of deferred tax recognised is measured using the tax rates that would apply on sale of those assets at their carrying amount at the reporting date, unless the property is:

• depreciation; and • held with the objective to consume substantially all of the economic benefits embodied in the property over time, rather than through sale.

In all other cases, the amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group and the Company intend to settle their current tax assets and liabilities on a net basis.

65 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.8 revaluations

The Group and the Company adopt the policy to revalue the land and/or buildings held as property, plant and equipment at least once in every 5 years or at such shorter period as may be considered to be appropriate based on the advice of external professional valuers and appraisers and / or Directors’ valuation.

A revaluation surplus is recognised in other comprehensive income and accumulated in equity under revaluation surplus, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss.

A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset carried in the revaluation surplus, in which case the decrease is recognised in other comprehensive income and it reduces the amount accumulated in equity under revaluation surplus.

On disposal of revalued asset, amount in revaluation surplus relating to that asset is transferred to retained profits.

4.9 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

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

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

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

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

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

Level 1 inputs are unadjusted quoted prices in active market for identical assets or liabilities Level 2 inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities either directly or indirectly Level 3 Inputs that are unobservable for the asset or liability

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

66 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.10 impairment of assets

(i) Non-financial assets

The carrying amounts of non-financial assets are assessed for impairment when there is an indication that the assets might be impaired. For goodwill and intangible assets with indefinite useful life, the recoverable amount is estimated at each reporting date.

Impairment is measured by comparing the carrying amounts of the assets with their recoverable amounts. The recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use, which is measured by reference to discounted future cash flows. Recoverable amounts are estimated for individual assets, or if it is impossible, for the cash-generating unit (CGU). For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

An impairment loss is recognised in profit or loss immediately, unless the asset is measured at revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of previously recognised revaluation surplus for the same asset.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

In respect of goodwill, no reversal is made for impairment loss previously recognised. In respect of other assets, subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairment loss. It is recognised to the extent of the carrying amount of the asset that would have determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately, unless the asset is measured at revalued amount. A reversal of an impairment loss on a revalued asset is recognised in other comprehensive income and it increases the amount accumulated in equity under revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in profit or loss, a reversal of that impairment loss is recognised as income in profit or loss.

67 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.10 impairment of assets (continued)

(ii) Financial assets

The Group and the Company assess as at each reporting date whether there is any objective evidence that a financial asset is impaired.

Available-for-sale financial assets

(a) Quoted instruments:

Equity instruments:

In the case of equity investments classified as available-for-sale, objective evidence of impairment includes:

• significant financial difficulty of the issuer or obligor;

• information about significant changes with an adverse effect that has taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may by impaired; and

• significant or prolonged decline in the fair value of the investment below its costs.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from other comprehensive income and recognised in profit or loss.

No reversal of impairment losses in profit or loss on available-for-sale equity investments in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income.

Debt instruments:

In the case of debt instruments classified as available-for-sale, impairment is assessed basing on the same criteria as financial assets measured at amortised cost. However, the amount recognised for impairment is the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in profit or loss.

Further interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recognised as part of finance income.

If a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed in profit or loss.

68 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.10 impairment of assets (continued)

(ii) Financial assets (continued)

Available-for-sale financial assets (continued)

(b) Unquoted instruments:

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets measured at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

No reversal is made for such impairment losses in subsequent periods.

Loans and receivables

To assess whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as:-

• probability of insolvency; • significant financial difficulties of the debtor; and • default or significant delay in payments

For certain categories of financial assets, such as trade receivables, assets that are assessed to be unimpaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables includes:-

• the Group and the Company’s past experience of collecting payments; • an increase in the number of delayed payments in the portfolio past the average credit period; and • observable changes in national or local economic conditions that correlate with default on receivables

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

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

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset is equal to or below its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

69 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.11 property, plant and equipment

Property, plant and equipment are measured at cost and valuation less accumulated depreciation and impairment losses.

Depreciation is recognised in profit or loss on a straight line basis over the estimated useful lives of items of property, plant and equipment, except those leased under finance lease, where applicable. If there is no reasonable certainty that the ownership will be transferred to the Group by the end of the lease term, an item of property, plant and equipment is depreciated over the shorter of its useful life and the lease term.

The principal annual rates adopted are as follows:-

Long leasehold land - 87 years Buildings - 2% Plant & machinery - 9% to 20% Motor vehicles - 20% Furniture, fittings & equipment - 10% to 20%

On derecognition or disposal of an item of property, plant and equipment, the difference between net disposal proceeds, if any, and its carrying amount is recognised in profit or loss.

Expenditure incurred to replace a component of an item of property, plant and equipment that is recognised separately, including major inspection and overhaul expenditure, is capitalised. Other subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the item of property, plant and equipment. All other expenditure is recognised in profit or loss as an expense as incurred.

4.12 investments in subsidiaries and associates

Investments in subsidiaries and associates are measured at cost less accumulated impairment losses.

On loss of control of a subsidiary or significant influence of an associate, the difference between the fair value of considerations received, if any, and its carrying amount is recognised as gain or loss on derecognition in profit or loss.

4.13 investment properties

Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties are measured at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the period which they arise.

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

Transfer is made to investment property when, and only when, there is a change in use, evidenced by ending of owner-occupation, commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner-occupation or commencement of development with a view to sale.

70 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.13 investment properties (continued)

For a transfer from investment property to owner-occupied property or inventories, the deemed cost of property for subsequent accounting is its fair value at the date of change in use. If the property occupied by the Group and by the Company as an owner-occupied property becomes an investment property, the Group and the Company account for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use. For a transfer from inventories to investment property, any difference between the fair value of the property at that date and its previous carrying amount is recognised in profit or loss. When the Group and the Company complete the construction or development of a self-constructed investment property, any difference between the fair value of the property at that date and its previous carrying amount is recognised in profit or loss.

4.14 Goodwill

Goodwill is measured at cost less accumulated impairment losses.

Goodwill arising from a business combination represents the excess of (a) over (b):-

(a) the sum of:

• the fair value of consideration transferred; • the amount of non-controlling interests in the acquiree (if any); and • the fair value of the Group’s previously held equity interest in the acquiree

(b) the Group’s share of the fair value of the identifiable net assets acquired at the acquisition date.

Goodwill is allocated to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination, for the purposes of impairment testing.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

4.15 Exploration cost

Exploration cost is recognised as an expense as incurred. When a decision is taken that a quarry property is economically feasible and should be developed for commercial production, all further directly attributable exploration cost is recognised as tangible assets to the extent that such expenditure is expected to generate future economic benefits. Exploration cost is derecognised to profit or loss when it is determined that:

• further exploration activities will yield no commercial quantities of reserves, or • no further exploration drilling is planned; or • the right to explore in the specific area has expired or is surrendered.

Capitalised exploration cost is measured at cost less accumulated impairment losses.

71 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.16 property development activities

Property development revenue

The Group recognises property development revenue using the percentage of completion method, determined primarily by reference to the proportion of property development costs incurred for work performed to date bear to the total estimated property development costs and surveys of work performed. Where property development outcome is unable to be reliably determined, property development revenue is recognised only to the extent of the recoverable costs. Revenue recognition commences when legal binding sale and purchase agreement is signed on property unit.

Additional revenue due to variation in development work is recognised if it is probable that the customer will approve the variation and the amount can be reliably measured.

Land held for property development

Land held for property development is measured at cost less accumulated impairment losses. Costs associated with the acquisition of land include the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies.

Such asset is transferred to property development costs when development activities have commenced and when it can be demonstrated that the development activities can be completed within the normal operating cycle.

Property development costs

Property development costs are measured at lower of cost and net realisable value. Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities including borrowing costs.

Property development costs on property units sold are recognised as expenses in the period in which they are incurred to match the attributable revenue recognised. If estimates of costs to complete property development (including costs to be incurred over the defects liability period) indicate losses, the expected losses are recognised as expenses fully in profit or loss.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion inclusive of expected loss and selling expenses.

Property development costs expected to be incurred on property development are based on estimates of total property development costs at completion. These estimates are reviewed and revised periodically throughout the lives of the property development and adjustments to costs resulting from such revisions are recognised in the accounting period in which the revisions are made.

Accrued and progress billings

The excess of revenue recognised in profit or loss over the billings to purchasers is presented as an asset and classified as accrued billings.

The excess of billings to purchasers over revenue recognised in profit or loss is presented as a liability and classified as progress billings.

72 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.16 property development activities (continued)

Completed property units

Completed property units that remain unsold are transferred to inventories.

The accounting policy in respect of inventories are set out in Note 4.18.

Transfer of land

Where a land classified as property, plant and equipment is measured at valuation, such land is transferred to land held for property development and/or property development costs at its carrying amount as surrogate cost.

4.17 construction contracts

Contract revenue

The Group recognises contract revenue using the percentage of completion method, determined primarily by reference to surveys of work performed.

A prudent estimate of the profit attributable to work performed is recognised once the outcome of the contract work can be assessed with reasonably certainty. Where contract work outcome is unable to be reliably determined, revenue is recognised to the extent of the recoverable costs and no profit is recognised. In all cases, expected losses are recognised as expenses fully in profit or loss.

Profits expected to be realised on contract work are based on estimates of total revenues and cost at completion. These estimates are reviewed and revised periodically throughout the lives of the contract works and adjustments to profits resulting from such revisions are recognised in the accounting period in which the revisions are made.

Claim for additional contract revenue is recognised if it is probable that the claim will result in additional revenue and the amount can be reliably estimated.

Amount due from/to contract customers

Construction contracts measured at costs plus attributable profits less expected losses and progress billings are presented as an asset and classified as amount due from contract customers.

The excess of progress billings over costs plus attributable profits less expected losses is presented as a liability and classified as amount due to contract customers.

Costs consist of direct materials, direct labour, direct overhead, sub-contract charges and attributable expenses.

73 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.18 inventories

Inventories are measured at the lower of cost and net realisable value. Cost is determined on the following bases:-

category Basis

Completed property units Specific identification and/or relative sale value Building materials, raw materials and goods FIFO (first-in-first-out) for resale Work in progress and finished goods Weighted average

Cost of completed property units comprises direct cost of construction and proportionate land and development costs.

Cost comprises materials, direct labour cost and an appropriate proportion of production overheads.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

4.19 Financial instruments

Financial instruments are any contracts that give rise to both:-

• a financial asset of one entity; and • a financial liability or equity instrument of another entity

Financial instruments are offset when the Group and the Company have:-

• a legally enforceable right to set off the recognised amounts; and • an intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously

(i) Financial assets

The Group and the Company classify their financial assets at initial recognition into four categories, based on the nature and purpose of the financial assets:-

• Financial assets at fair value through profit or loss • Available-for-sale financial assets • Held-to-maturity investments • Loans and receivables

74 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.19 Financial instruments (continued)

(i) Financial assets (continued)

At the reporting date, the Group and the Company have only financial assets categorised as the following:-

Category Nature and purpose

(a) Financial assets at fair These include: value through profit or loss • financial assets held for trading; and • financial assets designated upon initial recognition at fair value through profit or loss

Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.

Derivatives are also categorised as held for trading unless they are designated as hedges.

(b) Available-for-sale Financial assets that are either: financial assets • designated as available-for-sale upon initial recognition; or • precluded from classifying into any of the other three categories.

Available-for-sale financial assets include equity and debt securities.

(c) Loans and receivables Financial assets with fixed or determinable payments that are unquoted in an active market.

Initial recognition and measurement

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

When financial assets are recognised initially, they are measured at fair value plus transactions costs.

75 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.19 Financial instruments (continued)

(i) Financial assets (continued)

Subsequent recognition and measurement

Category Recognition and measurement principle

(a) Financial assets at fair These financial assets are subsequently measured at value through profit or loss fair value.

Any gains or losses arising from changes in fair value of the financial assets are recognised in profit or loss.

Net gains or net losses on financial assets at fair value through profit or loss exclude the following which are recognised separately in profit or loss as income or expenses:-

• exchange differences; • interest income; • dividend income

(b) Available-for-sale financial These financial assets are subsequently measured at assets fair value.

Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except the following which are recognised in profit or loss:

• impairment losses; • foreign exchange gains and losses on debt instruments; • gains and losses of hedged items attributable to hedge risks of fair value hedges; • interest calculated for a debt instrument using the effective interest method.

The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised.

Investment in equity instruments that have no quoted market price in an active market and whose fair value are unable to be reliably determined are measured at cost less accumulated impairment losses.

(c) Loans and receivables These financial assets are measured at amortised cost using effective interest method, less impairment.

Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

76 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.19 Financial instruments (continued)

(i) Financial assets (continued)

Derecognition

A financial asset is derecognised when, and only when:-

• the contractual rights to the cash flows from the financial asset expire; or • the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset.

On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in the profit or loss.

(ii) Financial liabilities

The Group and the Company classify their financial liabilities at initial recognition into two categories, based on the nature and purpose for which they are issued:-

• Financial liabilities at fair value through profit or loss • Financial liabilities at amortised cost

At the reporting date, the Group and the Company have only financial liabilities categorised as financial liabilities at amortised cost.

Financial liabilities at amortised cost

Accounting principle Methodology

Classification These are financial liabilities other than those classified into financial liabilities at fair value through profit or loss.

Financial liabilities at amortised cost include amounts due to subsidiaries, trade payables, other payables, finance lease liabilities and club establishment fund.

Initial recognition and Financial liabilities at amortised cost are recognised when, Measurement and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial liabilities at amortised cost are recognised initially, they are measured at fair value plus transactions costs.

Subsequent recognition Financial liabilities at amortised cost are subsequently and measurement measured at amortised cost using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

77 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.19 Financial instruments (continued)

(ii) Financial liabilities (continued)

Financial liabilities at amortised cost (continued)

Accounting principle Methodology

Derecognition A financial liability is derecognised when, and only when, the obligation specified in the contract is discharged, cancelled or expires.

On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

(iii) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided.

4.20 Financial guarantee contracts

The Group and the Company have issued corporate guarantee to banks for borrowings of its subsidiaries. These guarantees are financial guarantees as they require the Group and the Company to reimburse the banks if the subsidiaries fail to make principal or interest payments when due in accordance with the terms of their borrowings.

Financial guarantees are initially measured at their fair values plus transaction costs in the statements of financial position. Subsequent to initial measurement, financial guarantees are amortised to profit or loss over the period of the subsidiaries’ borrowings, unless it is probable that the Group and the Company will reimburse the bank for an amount higher than the unamortised amount. In this case, an estimate of the obligation is made and recognised as a provision in the statements of financial position.

4.21 Leases

(i) Finance leases

Leases in which the Group and the Company assume substantially all the risks and rewards of ownership are classified as finance leases. An item of property, plant and equipment leased by way of finance lease is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments at the inception of the lease.

In calculating the present value of the minimum lease payments, the discount rate is the interest rate implicit in the lease, if this is practicable to determine; otherwise, the incremental borrowing rate of the Group and the Company is used.

78 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

4. significant accounting policies (CONTINUED)

4.21 Leases (continued)

(ii) Operating leases

(a) The Group as lessor

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

(b) The Group as lessee

Leases of the assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are recognised in profit or loss over the lease period.

(c) Prepaid lease payments

Leasehold land that has an indefinite economic life and title that is unexpected to be passed to the Group by the end of the lease period is classified as operating lease. The up-front payments for right to use the leasehold land over a predetermined period are accounted for as prepaid lease payments and are measured at cost less accumulated amortisation.

The up-front payments are recognised as expenses in profit or loss to match the inflow of benefits accrued.

4.22 provisions

Provisions are recognised in the statements of financial position when the Group and the Company have a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation and when a reliable estimate of the amount can be made.

4.23 cash and cash equivalents

Cash and cash equivalents consist of bank balances, deposits repayable on demand and highly liquid investments that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value, against which the bank overdrafts are deducted.

5. revenue

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Property development 167,702 188,958 - - Sales of goods 914 2,411 - - Services rendered 9,631 9,895 - - Dividend income - - 19,400 46,500 Others 2,295 1,895 32 24

180,542 203,159 19,432 46,524

Revenue of the Group represents sales of goods and services derived from the principal activities, net of discounts, allowances and taxes.

Revenue of the Company represents dividend and interest income.

79 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

6. profit before taxation

This is arrived at:-

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

After charging all expenses including: Directors’ fee 205 180 205 180 Auditors’ remuneration:- Audit fees: • current year 154 134 22 20 • adjustment for prior year (4) (8) 3 (5) Other professional fees 63 55 - - Employee benefits expense: Directors’ emoluments: • others 24 24 24 24 Other employees’ emoluments and benefits: • salaries and bonus 11,002 9,686 - - • defined contribution plans 1,136 987 - - • others 1,499 1,469 - -

13,637 12,142 - - Rent of land and buildings 153 159 - - Finance lease interest 49 52 - - Depreciation of property, plant and equipment 5,885 5,754 - - Amortisation of prepaid lease payments 10 10 - - Allowance for impairment on receivables 525 18 - - Property development expenses: • property development costs 83,965 88,209 - - • adjustment for prior year - 36 - - • inventories 2,930 - - -

86,895 88,245 - - Direct operating expenses of investment properties which generated rental income 1,092 856 - - Derecognition of property, plant and equipment - 1 - -

80 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

6. profit before taxation (CONTINUED)

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

And crediting all income including: Gross dividends from subsidiaries - - 19,400 46,500 Rent of land and buildings from investment properties 1,955 1,628 - - Rental income: • others 108 122 - - Interest income: • short-term investments 5,642 4,714 - - • short-term deposits 7,025 5,074 32 24 • others 36 114 - -

12,703 9,902 32 24 Gain on disposal of property, plant and equipment 3 24 - - Reversal of allowance for impairment on receivables 1 5 - - Reversal of impairment for subsidiaries - - 1,383 - Derecognition of allowance for impairment on receivables 18 52 - - Fair value gain on short-term investments 313 - - -

7. tAxation

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Malaysian: Current tax expense/(income): • current year 16,562 17,613 7 5 • adjustment for previous year (34) 2,558 - (1)

16,528 20,171 7 4 Deferred tax expense/(income): Origination and reversal of temporary differences: • current year (3,912) (199) - - • adjustment for previous year 26 (36) - -

(3,886) (235) - -

12,642 19,936 7 4

81 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

7. tAxation (continued)

The tax reconciliation is as follows:- Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Taxation based on Malaysian application statutory tax rate of 24% 19,765 24,657 4,883 11,067 Disallowable expenses for tax purposes 582 836 112 98 Non-taxable income for tax purposes: • profit from associate (276) (187) - - • tax-exempt dividend - - (4,656) (11,160) • reversal of impairment losses - - (332) - • others (7,323) (7,208) - - Taxes for previous year (8) 2,522 - (1) Effect of reduction in tax rates (9) (575) - - Unrecognised deferred tax assets 83 - - - Benefit from previously unrecognised deferred tax assets (147) (125) - - Others (25) 16 - -

Taxation recognised in profit or loss 12,642 19,936 7 4

Benefit from previously unrecognised deferred tax assets on unutilised tax losses is used to reduce current tax expense.

8. eArnings per share

The calculation of basic earnings per share of the Group is based on the net profit attributable to ordinary shareholders amounting to approximately RM69,124,000/- (2017: RM82,294,000/-) and the number of ordinary shares outstanding during the financial year of 242,124,000 (2017: 242,124,000).

Diluted earnings per share

Fully diluted earnings per share is the same as basic earnings per share as it is considered that there are no dilutive potential ordinary shares.

82 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

9. property, plant and equipment

Freehold Long Furniture, land & leasehold Plant & Motor fittings & Group buildings land machinery vehicles equipment total 2018 RM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Cost/valuation: At 1 April 2017 191,555 2,056 75,400 7,550 6,102 282,663 Additions 8,869 1,604 1,151 100 240 11,964 Disposals - - - (50) (8) (58) Derecognition - - (81) - (21) (102) Transfer to property development costs (15,086) - - - - (15,086)

At 31 March 2018 185,338 3,660 76,470 7,600 6,313 279,381

Accumulated depreciation: At 1 April 2017 1,550 11 41,469 6,903 4,117 54,050 Charge for the year 360 33 4,671 334 487 5,885 Disposals - - - (50) (8) (58) Derecognition - - (81) - (21) (102) Transfer to property development costs (1) - - - - (1)

At 31 March 2018 1,909 44 46,059 7,187 4,575 59,774

Accumulated impairment losses: At 1 April 2017 - - 14,142 - - 14,142 Charge for the year ------

At 31 March 2018 - - 14,142 - - 14,142

Carrying amount: At 31 March 2018 183,429 3,616 16,269 413 1,738 205,465

83 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

9. property, plant and equipment (continued)

Freehold Long Furniture, land & leasehold Plant & Motor fittings & Group buildings land machinery vehicles equipment total 2017 RM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Cost/valuation: At 1 April 2016 191,033 - 76,183 7,550 5,994 280,760 Additions 522 625 1,529 - 384 3,060 Disposals - - (95) - - (95) Derecognition - - (2,217) - (276) (2,493) Transfer from land held for property development - 1,431 - - - 1,431

At 31 March 2017 191,555 2,056 75,400 7,550 6,102 282,663

Accumulated depreciation: At 1 April 2016 1,200 - 39,295 6,454 3,934 50,883 Charge for the year 350 11 4,486 449 458 5,754 Disposals - - (95) - - (95) Derecognition - - (2,217) - (275) (2,492)

At 31 March 2017 1,550 11 41,469 6,903 4,117 54,050

Accumulated impairment losses: At 1 April 2016 - - 14,142 - - 14,142 Charge for the year ------

At 31 March 2017 - - 14,142 - - 14,142

Carrying amount: At 31 March 2017 190,005 2,045 19,789 647 1,985 214,471

84 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

9. property, plant and equipment (continued)

Analysis of valuation of land & buildings:

Group 2018 2017 RM’000 rM’000

At cost: • freehold land and buildings 9,766 997 • long leasehold land 3,660 2,056

13,426 3,053 At 2015 valuation: • freehold land and buildings 175,572 190,558

188,998 193,611

Fair value measurement of freehold land and buildings

The fair values of the freehold land and buildings of the Group at the reporting date analysed by the various levels within the fair value hierarchy are as follows:

Group 2018 2017 RM’000 rM’000

Fair value hierarchy: Level 1 - - Level 2 - - Level 3 175,572 190,558

175,572 190,558

Level 3 fair value

The Group’s freehold land and buildings are revalued by Directors on 31 March 2015 based on the valuation performed by an external independent professional valuer.

Estimation uncertainty and key assumptions

The following key assumptions are made by the Directors in arriving at the fair values of the Group’s freehold land and buildings:-

• comparison of the Group’s freehold land and buildings with similar properties that were listed for sale within the same locality or other comparable localities; • consideration of the viability for future development; and • reference to the relevant property valuers and real estate agents on market conditions and changing market trends.

Level 3 fair value is determined using unobservable inputs for the land and buildings, i.e. price per square foot.

85 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

9. property, plant and equipment (continued)

Significant changes in the estimated market value per square foot in isolation, would result ina significant higher/(lower) fair value of the properties.

The reconciliation for level 3 of the fair value hierarchy is as follows:-

Group 2018 2017 RM’000 rM’000

At 1 April 190,558 190,558 Transfer to property development costs (14,986) -

At 31 March 175,572 190,558

Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

There is no transfer of amount into or out of Level 3 fair value for both years under review.

If the freehold land and buildings had been carried under the cost model, they would have been recognised at the following amounts:-

Group 2018 2017 RM’000 rM’000

Freehold land and buildings: At cost 25,643 25,695 Accumulated depreciation 3,757 3,591

Carrying amount 21,886 22,104

The carrying amounts of assets leased under finance lease arrangements are as follows:- Group 2018 2017 RM’000 rM’000

Plant and machinery 1,148 1,493 Motor vehicles 295 597

1,443 2,090

Impairment of plant and machinery

The Group has recognised impairment losses of RM14,142,000/- (2017: RM14,142,000/-) in prior years. Current financial year impairment assessment indicated that no further impairment loss is required for the carrying amount of plant and machinery assessed. The recoverable amount of plant and machinery is determined based on value-in-use.

86 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

10. prepaid lease payments

Leasehold land

Group 2018 2017 RM’000 rM’000

Carrying amount: At 1 April 695 705 Amortisation for the year (10) (10)

At 31 March 685 695

Analysed between: Current 10 10 Non-current 675 685

At 31 March 685 695

11. investment in subsidiaries

Unquoted shares

Company 2018 2017 RM’000 rM’000

At cost: At 1 April and 31 March 446,631 446,631

Accumulated impairment losses: At 1 April 24,607 24,607 Reversal (1,383) -

At 31 March 23,224 24,607

Carrying amount: At 31 March 423,407 422,024

87 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

11. investment in subsidiaries (continued)

Details of the subsidiaries, all of which are incorporated in Malaysia, are as follows:-

issued Effective name of company equity capital holding principal activities rM 2018 2017 % %

• Sin Heap Lee Development 90,000,000 100 100 Property development Sdn. Bhd.

• Sin Heap Lee Construction 113,320,000 100 100 Building construction Sdn. Bhd. works, earthworks and infrastructure works, renting out of plant and machineries, construction management services and money lending business

• Integrated Management 1,000,000 100 100 Provision of professional Corporation Sdn. Bhd. management services in commercial and industrial studies and planning, construction management and financial services

• Sin Heap Lee Company 7,500,000 100 100 Rental of properties, Sdn. Berhad marketing agent of bricks and building materials

• Sin Heap Lee Brickworks 35,600,000 100 100 Manufacturing of clay- Sdn. Bhd. bricks, supply of finished brickworks of wall and other brick structures

SHL Realty Sdn. Bhd. 3,000,000 100 100 Property investment

SHL Corporate Services 3,000,000 100 100 Providing strategic, Sdn. Bhd. financial and corporate planning services

Goodstock (Tawau) 2,000,002 100 100 Property development Sdn. Bhd.

Wilayah Builders Sdn. Bhd. 9,000,000 100 100 Property development

Ho Sin & Son Enterprise 1,000,000 100 100 Property development Sdn. Bhd.

Mayang Kiara Sdn. Bhd. 50,000 100 100 Property development

Sukma Pesona Sdn. Bhd. 500,000 100 100 Property development

Kajang Granite Quarry 5,000,000 100 100 Granite quarrying and Sdn. Bhd. manufacturing of aggregates

88 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

11. investment in subsidiaries (continued)

issued Effective name of company equity capital holding principal activities rM 2018 2017 % %

Senick Sdn. Bhd. 5 100 100 Granite quarrying and manufacturing of aggregates

Goodstock Land Sdn. Bhd. 1,500,000 60 60 Letting of properties

subsidiaries of Sin Heap Lee Development Sdn. Bhd.

SHL-M Sdn. Bhd. 45,000,000 100 100 Property development

SHL-M Ventures Sdn. Bhd. 128,400,000 67 - Property development

subsidiary of SHL-M Sdn. Bhd.

* Sungai Long Golf Resort 5,000,000 100 100 Golf resort operator Berhad

Notes:

• Subsidiaries which are consolidated using merger method of accounting. * A wholly-owned subsidiary of SHL-M Sdn. Bhd.

11.1 Reversal of impairment loss on subsidiaries

During the financial year, the Company has conducted a review on its subsidiaries’ recoverable amounts.

As a result, a reversal of impairment loss totalling RM1,383,000/- (2017: inapplicable) is recognised in light of the improved performance of the subsidiaries under review.

89 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

11. investment in subsidiaries (continued)

11.2 Purchase of an indirect subsidiary

During the financial year, the Group purchased a new indirect subsidiary, SHL-M Ventures Sdn. Bhd., a company incorporated in Malaysia, for a cash consideration of RM86,028,000/-.

The purchase has immaterial impact on the Group’s financial position, financial results and cash flows at the purchase date.

The effects of the purchase on the Group’s financial position at the end of the year areas follows:-

Group 2018 R rM’000

Property, plant and equipment 142 Property development costs 114,480 Receivables 474 Current tax assets 22 Cash and deposits 25,847 Payables (12,400) Non-controlling interests (42,426)

Increase in Group’s net assets 86,139

The effects of the purchase on the Group’s financial result during the year are as follows:-

Other operating income 1,163 Distribution costs (853) Administration expenses (85)

Profit before taxation 225 Taxation (60)

Profit for the year 165 Non-controlling interests (54)

Increase in Group’s profit 111

The fair values of the indirect subsidiary identifiable assets and liabilities approximated their carrying amounts. Accordingly, no fair value adjustments were made to account for the purchase.

90 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

11. investment in subsidiaries (continued)

11.3 Non-controlling interests in subsidiaries

The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:-

Goodstock sHL-M Land ventures sdn. Bhd. sdn. Bhd. total 2018 rM’000 rM’000 rM’000

NCI percentage of ownership interest and voting interest 40% 33% Carrying amount of NCI 19,146 42,426 61,572 Profit allocated to NCI 536 54 590

Non-current assets 45,735 142 45,877 Current assets 5,817 140,823 146,640 Non-current liabilities (3,480) - (3,480) Current liabilities (208) (12,400) (12,608)

Net assets 47,864 128,565 176,429

Revenue 2,604 - 2,604 Profit for the year 1,340 165 1,505 Other comprehensive income for the year - - - Total comprehensive income for the year 1,340 165 1,505

Cash flows from operating activities 1,158 (53,394) (52,236) Cash flows from investing activities 127 (48,661) (48,534) Cash flows from financing activities - 127,902 127,902

Net increase/(decrease) in cash and cash equivalents 1,285 25,847 27,132

2017

NCI percentage of ownership interest and voting interest 40% - Carrying amount of NCI 18,610 - 18,610 Profit allocated to NCI 508 - 508 Dividends paid to NCI - - -

Non-current assets 45,709 - 45,709 Current assets 4,604 - 4,604 Non-current liabilities (3,512) - (3,512) Current liabilities (277) - (277)

Net assets 46,524 - 46,524

Revenue 2,496 - 2,496 Profit for the year 1,268 - 1,268 Other comprehensive income for the year - - - Total comprehensive income for the year 1,268 - 1,268

Cash flows from operating activities (3,679) - (3,679) Cash flows from investing activities 139 - 139 Cash flows from financing activities - - -

Net increase/(decrease) in cash and cash equivalents (3,540) - (3,540)

91 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

12. investment in associate

Group 2018 2017 RM’000 rM’000

Unquoted shares, at cost 1,305 1,305 Share of post-acquisition profits 8,909 14,132

10,214 15,437

Share of net assets 10,214 15,437

There is no goodwill in the associate’s own financial statements and on the acquisition of the Group’s interest in the associate.

Details of associate are as follows:-

name of company Effective holding principal activities (Incorporated in Malaysia) 2018 2017 % %

Opt Ventures Sdn. Bhd. 30 30 Property development

Financial information of associate

The summarised financial information represents the amounts reported in the financial statements of associate:-

(i) Summarised statement of comprehensive income

OPT Ventures Sdn. Bhd. 2018 2017 R rM’000 rM’000

Revenue 2,256 4,550 Profit for the year 3,841 2,601 Other comprehensive income, net of tax - - Total comprehensive income 3,841 2,601 Dividend paid (21,250) -

(ii) Summarised statement of financial position

OPT Ventures Sdn. Bhd. 2018 2017 R rM’000 rM’000

Current assets 22,302 47,818 Non-current assets 22,672 24,670

44,974 72,488

Current liabilities (9,643) (19,748) Non-current liabilities (1,283) (1,283)

(10,926) (21,031)

Net assets 34,048 51,457

92 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

12. investment in associate (continued)

(iii) Reconciliation of the summarised financial information presented above to the carrying amounts of the Group’s interest in associate

OPT Ventures Sdn. Bhd. 2018 2017 R rM’000 rM’000

Net assets at 1 April 51,457 48,856 Profit for the year 3,841 2,601 Other comprehensive income - - Dividend paid (21,250) -

Net assets at 31 March 34,048 51,457

Interest in associate as at year end 30% 30%

Carrying amount of Group’s interest in associate 10,214 15,437

13. investment properties

Group 2018 2017 R rM’000 rM’000

At 1 April and 31 March 69,880 69,880

Fair value measurement

The fair values of investment properties are determined by the Directors (2017: Directors) based on the sales comparable approach that reflects the recent transaction prices for the similar properties which have been sold or are being offered for sale. The Directors are of the opinion that the said valuation remains to be appropriate for the current financial year as the Group revalues its investment properties whenever fair value of the said assets is expected to differ substantially from the carrying amounts.

The fair value measurement of investment properties are classified as level 3 in the fair value hierarchy.

Level 3 fair value of investment properties have been generally derived using the sales comparison approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property type, size, location, tenure, title restrictions and other relevant characteristics.

Significant increase/(decrease) in estimated market value per square foot in isolation, would result in a significant higher/(lower) fair value of properties.

There have been no transfer between levels during the financial year in the fair value hierarchy.

In estimating the fair value of the properties, the highest and best use of the properties is different from their current use as these properties are held for long-term investment purposes.

93 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

14. Land held for property development

Land Development Group costs costs total 2018 R rM’000 rM’000 rM’000

At cost: At 1 April 2017 2,380 360 2,740 Additions 2 3 5

At 31 March 2018 2,382 363 2,745

2017

At cost: At 1 April 2016 3,807 224 4,031 Additions 4 136 140 Transfer to property, plant and equipment (1,431) - (1,431)

At 31 March 2017 2,380 360 2,740

15. investments

Group 2018 2017 R rM’000 rM’000

Unquoted in Malaysia, at cost: • club membership 24 24

16. Deferred tax assets and liabilities

Deferred tax assets and liabilities recognised in the statement of financial position after appropriate offsetting are as follows:-

Group 2018 2017 R rM’000 rM’000

Deferred tax assets (4,924) (1,611) Deferred tax liabilities 21,235 21,983

16,311 20,372

The deferred tax assets and liabilities are offset as:-

• the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and

• they relate to taxes levied by the same authority on the Group.

Deferred tax assets of the Group are recognised when the realisation of the related tax benefits through the future taxable profits is probable based on recent history of results of the Group.

94 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

16. Deferred tax assets and liabilities (CONTINUED)

The movements and components of deferred tax assets and liabilities before appropriate offsetting are as follows:-

revaluation property, surplus on Unabsorbed property plant and land and capital reinvestment investment development Group equipment buildings allowances allowances properties costs total 2018 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

At 1 April 2017 7,684 10,136 - (384) 3,771 (835) 20,372 Amount recognised in: • profit or loss (899) (25) (124) 384 - (3,222) (3,886) • other comprehensive income - (175) - - - - (175)

At 31 March 2018 6,785 9,936 (124) - 3,771 (4,057) 16,311

2017 At 1 April 2016 8,612 10,342 - (1,102) 3,771 (835) 20,788 Amount recognised in: • profit or loss (928) (25) - 718 - - (235) • other comprehensive income - (181) - - - - (181)

At 31 March 2017 7,684 10,136 - (384) 3,771 (835) 20,372

Unrecognised deductible temporary differences

The amounts of deductible temporary differences for which no deferred tax assets have been recognised in the statement of financial position are as follows:-

Group 2018 2017 R rM’000 rM’000

Unabsorbed capital allowances 3,117 3,117 Unutilised tax losses 1,745 2,880 Receivables 343 -

5,205 5,997

The above deductible temporary differences have no expiry date. No deferred tax assets have been recognised in respect of these deductible temporary differences because it is improbable that future profit will be available against which the Group can utilise the benefits therefrom.

95 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

17. trade receivables

Group 2018 2017 R rM’000 rM’000

Non-current: Interest-bearing advances 547 2,322

Current: Amount due from contract customer - 260 Interest-bearing advances 2,275 774 Others 25,936 78,775

28,211 79,809 Less: Allowance for impairment (603) (97)

27,608 79,712

28,155 82,034

Trade receivables are non-interest-bearing and generally on 14 to 90-day (2017: 14 to 90-day) terms. The contractual terms of interest-bearing advances are as follows:-

Unsecured interest-bearing advances 1

Group 2018 2017

Principal amount RM50,000 RM50,000

Interest rate 4.00% per annum 4.00% per annum

Repayment terms Monthly instalments Monthly instalments of RM921/- each of RM921/- each for 60 months for 60 months

Unsecured interest-bearing advances 2

Group 2018 2017

Principal amount RM75,000 RM75,000

Interest rate 4.00% per annum 4.00% per annum

Repayment terms Monthly instalments Monthly instalments of RM1,381/- each of RM1,381/- each for 60 months for 60 months

96 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

17. trade receivables (CONTINUED)

Secured interest-bearing advances 3

Group 2018 2017

Principal amount RM3,000,000 RM3,000,000

Interest rate 5.00% per annum 5.00% per annum

Repayment terms 8 quarterly principal 8 quarterly principal repayments ** repayments **

Group 2018 2017 ** Payable on R rM’000 RM’000

14 August 2017 250 250 14 November 2017 250 250 14 February 2018 250 250 14 May 2018 250 250 14 August 2018 500 500 14 November 2018 500 500 14 February 2019 500 500 14 May 2019 500 500

Interest is charged and payable on monthly basis.

Interest-bearing advances 3 is secured by personal guarantee of the borrowers’ Director.

The following tabulation shows the elements included in amount due from contract customer:

Group 2018 2017 R rM’000 rM’000

Cost incurred - 260 Less: Progress billings - -

Amount due from contract customer - 260

Analysed as:- Amount due from contract customer - 260

97 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

17. trade receivables (CONTINUED)

Ageing analysis of trade receivables

The ageing analysis of trade receivables is as follows:-

Group 2018 2017 R rM’000 rM’000

Neither past due nor impaired 27,728 70,167

Past due unimpaired: • 1 to 30 days past due 91 7,793 • over 30 days past due 336 3,814

427 11,607 Impaired 603 97

28,758 81,871

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due unimpaired

Trade receivables that are past due unimpaired relate to customers that have good track record with the Group. Based on past experiences and no adverse information to date, the Directors of the Group are of the opinion that no allowance for impairment is necessary in respect of these balances as there has been no significant change in the credit quality and the balances are still considered fully collectible.

Receivables that are impaired

These receivables are impaired individually at the reporting date. The movements of the allowance accounts used to record the impairment are as follows:-

Group 2018 2017 R rM’000 rM’000

Movements in allowance accounts: At 1 April 97 136 Charge for the year 525 18 Derecognition (18) (52) Reversal (1) (5)

At 31 March 603 97

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that:

• are in significant financial difficulties and; • have defaulted on payments.

These receivables are unsecured by any collateral or credit enhancements.

98 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

18. Amounts due from/(to) subsidiaries

The unsecured outstanding amounts are non-interest-bearing and repayable on demand.

19. property development costs

Land Development Group costs costs total 2018 R rM’000 rM’000 rM’000

At cost: At 1 April 2017 96,558 657,558 754,116 Additions 2,015 103,191 105,206 Transfer from property, plant and equipment 15,085 - 15,085 Transfer to inventories (23) (423) (446) Derecognition on completion of project (38,358) (339,506) (377,864)

At 31 March 2018 75,277 420,820 496,097

Cost recognised in profit or loss: At 1 April 2017 53,334 508,821 562,155 Charge for the year 1,117 82,848 83,965 Derecognition on completion of project (38,358) (339,506) (377,864)

At 31 March 2018 16,093 252,163 268,256

Carrying amount: At 31 March 2018 59,184 168,657 227,841

2017

At cost: At 1 April 2016 92,892 565,147 658,039 Additions 3,666 92,411 96,077

At 31 March 2017 96,558 657,558 754,116

Cost recognised in profit or loss: At 1 April 2016 50,081 423,865 473,946 Charge for the year 3,253 84,956 88,209

At 31 March 2017 53,334 508,821 562,155

Carrying amount: At 31 March 2017 43,224 148,737 191,961

99 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

19. property development costs (continued)

Included in the property development costs are:

Group 2018 2017 R rM’000 rM’000

Employee benefits expense capitalised: Directors’ emoluments: • salary, allowance and bonus 2,161 2,146 • defined contribution plans 148 146 • others 15 14

2,324 2,306 Other employees’ emoluments and benefits: • salary, allowance and bonus 984 1,054 • defined contribution plans 82 97 • others 68 63

1,134 1,214

3,458 3,520

20. inventories

Group 2018 2017 R rM’000 rM’000

At cost: Completed property units 6,522 9,006 Building materials 113 957 Raw materials 199 116 Goods for resale 200 194 Work in progress 226 106 Finished goods 2,634 4,831

9,894 15,210

21. other receivables Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Advances 76 76 - - Deposits 5,252 5,432 - - Other debtors 1,133 1,494 5 -

6,461 7,002 5 - Prepayments 1,345 1,182 - -

7,806 8,184 5 -

The unsecured advances are non-interest-bearing and repayable on demand.

100 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

22. cAsh, deposits and short-term investments

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Cash and bank balances: • housing development accounts 4,541 5,153 - - • others 13,001 12,704 121 130

17,542 17,857 121 130 Short-term deposits 192,781 122,568 1,438 510

210,323 140,425 1,559 640 Short-term investments 160,451 149,995 - -

370,774 290,420 1,559 640

Short-term investments are placements made in management funds that invest in Islamic deposits and other Shariah-compliant investment instruments permitted by the Shariah Advisory Council of the Securities Commission Malaysia and/or Shariah Adviser. Short-term fund aims to provide a higher level of liquidity while providing better return from non-taxable income by predominantly investing its assets in Sukuk and short-term Islamic Money Market Instruments. The income is calculated daily and distributed at month end.

Housing Development Accounts are held and maintained pursuant to Section 7A of the Housing Development Act, 1966. These accounts are restricted from use in other operations.

23. sHAre capital

Number of ordinary shares Amount 2018 2017 2018 2017 ‘000 ‘000 rM’000 rM’000

Issued and fully paid: At 1 April 242,124 242,124 242,124 242,124 Transfer in accordance with Section 618(2) of the Companies Act 2016 5,602 - 5,602 -

At 31 March 247,726 242,124 247,726 242,124

The Companies Act 2016, which came into operation on 31 January 2017, abolishes the concept of:-

• authorised share capital; • par value of share capital; and • share premium and merger reserve accounts (Note 24).

In current year, the Company transfers the credit standing in the share premium and merger reserve accounts of RM1,225,000/- and RM4,377,000/- respectively to the share capital account pursuant to the transitional provision set out in Section 618(2) of the Act.

There is no impact on the numbers of ordinary shares in issue or the relative entitlement of any member of the Company as a result of this transitional provision.

101 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

24. reserves

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Non-distributable: Share premium - 1,225 - 1,225 Revaluation surplus 95,806 96,330 - - Merger reserve - - - 4,377 Capital reserves 6,663 11,040 23,361 23,361 Merger deficit (130,464) (130,464) - -

(27,995) (21,869) 23,361 28,963 Distributable: Retained profits 570,743 529,975 154,299 163,017

542,748 508,106 177,660 191,980

24.1 Share premium Share premium represents premium on shares issued by the Company.

24.2 Revaluation surplus Revaluation surplus represents the surpluses arising from the revaluation of land and buildings of the subsidiaries net of related tax effects, if any.

24.3 Merger reserve The premium on the shares issued by the Company was credited to merger reserve. On consolidation, the merger reserve is dealt with as merger adjustment by elimination.

24.4 Capital reserves Capital reserves of the Company represent gains arising from the disposal of investments in subsidiaries on Group restructuring.

Capital reserve of the Group represents share premium of the subsidiaries and reserve capitalised by a subsidiary for bonus issue of shares.

24.5 Merger deficit Merger deficit represents the difference between the nominal value of shares issued bySHL Consolidated Bhd. to effect the merger and the nominal value of the shares acquired from the merged entities and is arrived at as follows:-

R rM’000

Nominal value of 176,263,799 ordinary shares of RM1/- each issued by SHL Consolidated Bhd. 176,264 Nominal value of 45,800,000 ordinary shares of RM1/- each acquired (45,800)

Merger deficit 130,464

102 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

25. Finance lease liabilities

Group 2018 2017 R rM’000 rM’000

Minimum lease payments: • 1 year or less 405 551 • 5 years or less but over 1 year 225 630

630 1,181 Future finance charge on finance leases (27) (72)

Present value of finance lease liabilities 603 1,109

Present value of finance lease liabilities: • 1 year or less 383 505 • 5 years or less but over 1 year 220 604

603 1,109

The repayment periods of the finance lease liabilities range from 3 to 5 years (2017: 3 to 5 years) at the inception of the leases. Interest is levied at rates ranging from 4.18% to 6.83% (2017: 4.18% to 6.83%) per annum. The finance lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default.

26. cLUb establishment fund

Club establishment fund represents refundable deposits due to the members of the golf resort.

27. trade payables

Group 2018 2017 R rM’000 rM’000

Trade payables 25,340 23,505 Progress billings 19,895 59,000

45,235 82,505

Trade payables are non-interest-bearing and are normally on 30 to 75-day (2017: 30 to 75-day) terms.

103 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

28. other payables

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Accrued expenses 1,064 1,933 23 23 Refundable deposits 2,971 4,377 - - Others 3,569 2,561 12 3

7,604 8,871 35 26

29. Dividends

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Paid: In respect of financial year ended 31 March 2017: • First interim dividend of 6 Sen per share - 14,528 - 14,528 • Second interim dividend of 6 Sen per share 14,528 - 14,528 - • Final dividend of 6 Sen per share 14,527 - 14,527 -

In respect of financial year ended 31 March 2016: • Second interim dividend of 7 Sen per share - 16,949 - 16,949 • Final dividend of 6 Sen per share - 14,527 - 14,527

29,055 46,004 29,055 46,004

Declared: In respect of financial year ended 31 March 2018: • Interim dividend of 8 Sen per share 19,370 - 19,370 -

In respect of financial year ended 31 March 2017: • Second interim dividend of 6 Sen per share - 14,528 - 14,528

Proposed: In respect of financial year ended 31 March 2018: • Final dividend of 8 Sen per share 19,370 - 19,370 -

In respect of financial year ended 31 March 2017: • Final dividend of 6 Sen per share - 14,527 - 14,527

No recognition is made on the dividend proposed until it has been approved at the Annual General Meeting. The amount will be recognised as an appropriation of retained profits in the year in which it is approved.

104 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

30. Analysis of purchase of property, plant and equipment

Group 2018 2017 R rM’000 rM’000

Cash payment 11,964 2,440 Finance lease arrangement - 620

11,964 3,060

31. cApital management

The primary objective of the management of the Group and the Company’s capital structure is to maintain an efficient mix of debt and equity in order to achieve a low cost of capital, while taking into account the desirability of retaining financial flexibility to pursue business opportunities and adequate access to liquidity to mitigate the effect of unforeseen events on cash flows.

The Directors regularly review the Group and the Company’s capital structure and make adjustments to reflect economic conditions, business strategies and future commitments.

The Group and the Company monitor capital using a gearing ratio, which is total debt divided by total capital.

The Group and the Company are in no breach of any gearing covenants during the financial years ended 31 March 2018 and 31 March 2017. In the same period, no significant changes were made in the objectives, policies and processes relating to the management of the Group and the Company’s capital structure.

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Finance lease liabilities 603 1,109 - -

Total debts 603 1,109 - -

Share capital 247,726 242,124 247,726 242,124 Reserves 542,748 508,106 177,660 191,980

Total capital 790,474 750,230 425,386 434,104

Gearing ratio (times) 0.001 0.001 - -

105 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

32. Financial instruments

32.1 Liquidity risk

Liquidity risk refers to the risk that the Group and the Company will encounter difficulty in meeting financial obligations when they fall due.

The table below summarises the maturity profile of the Group and the Company’s financial liabilities as at the reporting date based on contractual undiscounted repayment obligations:-

Within one to More than Group one year five years five years Total 2018 rM’000 rM’000 rM’000 rM’000

Financial liabilities: Non-interest-bearing: • Trade payables 25,340 - - 25,340 • Other payables 7,604 - - 7,604 • Club establishment fund - - 10,988 10,988

32,944 - 10,988 43,932

Interest-bearing: • Finance lease liabilities: • principal 383 220 - 603 • interest 22 5 - 27

405 225 - 630

2017

Financial liabilities: Non-interest-bearing: • Trade payables 23,505 - - 23,505 • Other payables 8,871 - - 8,871 • Club establishment fund - - 11,022 11,022

32,376 - 11,022 43,398

Interest-bearing: • Finance lease liabilities: • principal 505 604 - 1,109 • interest 46 26 - 72

551 630 - 1,181

106 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

32. Financial instruments (CONTINUED)

32.1 Liquidity risk (continued)

Within one to More than Company one year five years five years Total 2018 rM’000 rM’000 rM’000 rM’000

Financial liabilities: Non-interest-bearing: • Amount due to subsidiaries 70,744 - - 70,744 • Other payables 35 - - 35

70,779 - - 70,779

2017

Financial liabilities: Non-interest-bearing: • Amount due to subsidiaries 70,744 - - 70,744 • Other payables 26 - - 26

70,770 - - 70,770

32.2 interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market interest rates.

Sensitivity analysis for interest rate risk

No sensitivity analysis has been presented as the Group and the Company’s exposure to interest rate risk on the following interest-bearing instruments is insignificant:-

# Fixed rate instruments

These comprise interest-bearing trade receivables, short-term deposits, short-term investments and finance lease liabilities. The effective interest rates during the year are as follows:-

Group Company 2018 2017 2018 2017 % % % %

Trade receivables: • Interest-bearing advances 4.00 - 5.00 4.00 - 5.00 - - Short-term deposits 2.75 - 4.05 2.95 - 4.30 3.30 - 3.60 2.95 - 3.70 Short-term investments 3.52 – 3.63 3.66 – 3.77 - - Finance lease liabilities 4.18 - 6.83 4.18 - 6.83 - -

107 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

32. Financial instruments (CONTINUED)

32.3 price risk

Price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or foreign currency).

The Group is exposed to price risk arising from its investment in short-term investments. These short-term investments are quoted in Malaysia and are classified as fair value through profit or loss financial assets.

Sensitivity analysis for price risk

The table below shows the analysis of the impact arising from reasonable possible changes in the prices of the fair value through profit or loss financial assets:-

Group 2018 2017 R rM’000 rM’000

Increase/(decrease) in retained profits: Short-term investments: • Net assets value +/-1% 1,605 1,500

32.4 credit risk

Credit risk is the potential loss from a transaction in the event of default by the counterparty.

At the reporting date, the Group and the Company’s maximum exposure to credit risk is represented by:-

▪ the carrying amount of each class of financial assets recognised in the statements of financial position; and

▪ utilised amounts of RM811,000/- (2017: RM1,945,000/-) relating to a corporate guarantee given by the Company to banks for credit facilities granted to subsidiaries, as disclosed in Note 34 to the financial statements.

Credit risk is controlled by the application of credit approvals, setting of counterparty limits and monitoring procedures. Credit risk is minimised given the Group and the Company’s policies of selecting only counterparties with high credit worthiness.

The Group has no significant concentrations of credit risk with any single counterparty.

108 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

32. Financial instruments (CONTINUED)

32.5 Fair values of financial instruments

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

As at the reporting date, the fair values of the Group and the Company’s financial instruments approximate their carrying amounts except as disclosed below:-

Non-current financial assets

Group 2018 2017 carrying Fair carrying Fair amount value amount value rM’000 rM’000 rM’000 rM’000

Trade receivables: • Non-current portion 547 505 2,322 2,120

Unquoted equity securities

No fair value information has been disclosed for investment in unquoted securities of the Group as it is impracticable to estimate their fair values of the unquoted securities of the Group in the absence of quoted market prices in an active market. The Group believes that the carrying amounts represent recoverable amounts and the Group has no intention to dispose of the unquoted securities at the reporting date.

Methods and assumptions used to estimate fair values

The following methods and assumptions are used to estimate the fair value of each class of financial instruments:

Financial instruments Fair values determination

• Short-term investments The fair values of the financial assets are determined by reference to statements of account at the reporting date provided by fund managers.

• Trade and other receivables The carrying amounts of these financial instruments (current) approximate fair values due to the relatively short-term • Cash and deposits maturity of these instruments. • Trade and other payables • Amounts due from/(to) subsidiaries

• Trade receivables The fair value of the non-current trade receivables are (non-current) estimated by discounting the future contractual cash flows at the current market rate.

The carrying amounts of the non-current trade receivables are reasonable approximation of fair value due to insignificant impact of discounting.

109 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

32. Financial instruments (CONTINUED)

32.5 Fair values of financial instruments (continued)

Methods and assumptions used to estimate fair values (continued)

Financial instruments Fair values determination

• Finance lease liabilities The carrying amounts of short-term finance lease liabilities approximate fair values because of the short period to maturity of these instruments.

The fair values of long-term finance lease liabilities are estimated based on the current rates available for finance lease liabilities with the same maturity profile. The carrying amount of the long-term finance lease liabilities are reasonable approximations of fair values due to the insignificant impact of discounting.

• Trust account The carrying amounts of these financial instruments • Club establishment fund approximate fair values, which represent the estimated amounts of the Group would receive or refund to members upon termination of investment contract.

32.6 Fair value hierarchy

As at the reporting date, short-term investments represent the only financial instrument carried at fair value held by the Group, which is under Level 2 of the fair value hierarchy with a recorded amount of RM160,451,000/- (2017: RM149,995,000/-).

32.7 Financial instruments by category

The table below provides an analysis of financial instruments categorised as follows:-

At fair value Available- Financial through for-sale liabilities at total profit financial Loans and amortised carrying Group N note or loss assets receivables cost amount 2018 R rM’000 rM’000 rM’000 rM’000 rM’000

Financial assets: • Investments 15 - 24 - - 24 • Trust account - - 2,397 - 2,397 • Trade receivables 17 - - 28,155 - 28,155 • Other receivables 21 - - 6,461 - 6,461 • Cash, deposits and short-term investments 22 160,451 - 210,323 - 370,774

160,451 24 247,336 - 407,811

Financial liabilities: • Finance lease liabilities 25 - - - 603 603 • Club establishment fund 26 - - - 10,988 10,988 • Trade payables 27 - - - 25,340 25,340 • Other payables 28 - - - 7,604 7,604

- - - 44,535 44,535

110 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

32. Financial instruments (CONTINUED)

32.7 Financial instruments by category (continued)

At fair value Available- Financial through for-sale liabilities at total profit financial Loans and amortised carrying Group N note or loss assets receivables cost amount 2017 R rM’000 rM’000 rM’000 rM’000 rM’000

Financial assets: • Investments 15 - 24 - - 24 • Trust account - - 2,399 - 2,399 • Trade receivables 17 - - 81,774 - 81,774 • Other receivables 21 - - 7,002 - 7,002 • Cash, deposits and short-term investments 22 149,995 - 140,425 - 290,420

149,995 24 231,600 - 381,619

Financial liabilities: • Finance lease liabilities 25 - - - 1,109 1,109 • Club establishment fund 26 - - - 11,022 11,022 • Trade payables 27 - - - 23,505 23,505 • Other payables 28 - - - 8,871 8,871

- - - 44,507 44,507

Financial liabilities at total Loans and amortised carrying company note receivables cost amount 2018 rM’000 rM’000 rM’000

Financial assets: • Amounts due from subsidiaries 18 71,195 - 71,195 • Other receivables 21 5 - 5 • Cash, deposits and short-term investments 22 1,559 - 1,559

72,759 - 72,759

Financial liabilities: • Amounts due to subsidiaries 18 - 70,744 70,744 • Other payables 28 - 35 35

- 70,779 70,779

2017

Financial assets: • Amounts due from subsidiaries 18 82,211 - 82,211 • Cash, deposits and short-term investments 22 640 - 640

82,851 - 82,851

Financial liabilities: • Amounts due to subsidiaries 18 - 70,744 70,744 • Other payables 28 - 26 26

- 70,770 70,770

111 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

33. commitments

Non-cancellable operating lease commitment:

Group as lessor

Group 2018 2017 R rM’000 rM’000

Future minimum rental receivable: • 1 year or less 1,834 1,146 • 5 years or less but over 1 year 2,012 242

3,846 1,388

The Group entered into commercial property leases on its portfolio of investment properties consisting of commercial buildings. These leases have non-cancellable lease terms of 3 years (2017: 3 years).

34. contingent liabilities Company 2018 2017 R rM’000 rM’000

Unsecured: Corporate guarantees given to bankers for banking facilities granted to subsidiaries 811 1,945

35. segment reporting

Management has determined the operating segments based on reports reviewed by the Board of Directors and the working group that makes strategic decisions.

Segment information is presented in respect of Group’s business. No segment reporting by geographical segments has been provided as the Group is primarily involved in business operations in Malaysia. Inter-segment pricing is determined according to the normal course of business and has been established under the terms that are no less favourable than those arranged with external customers. Segment revenue, results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

112 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

35. segment reporting (continued)

Investment and property Group services development construction trading Manufacturing Quarrying elimination consolidated 2018 RM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Revenue External sales 11,926 167,702 - - 322 592 - 180,542 Inter-segment revenue 6,248 - 82,951 40,974 8,048 - (138,221) -

18,174 167,702 82,951 40,974 8,370 592 (138,221) 180,542

Results Operating profit 23,694 61,601 3,325 14 (920) 8,235 (27,399) 68,550 Interest income 908 7,247 1,676 402 1,352 1,118 - 12,703 Finance costs (34) (15) - - - - - (49) Profit from associate - 1,152 - - - - - 1,152

Profit before taxation 24,568 69,985 5,001 416 432 9,353 (27,399) 82,356 Taxation (12,642) Non-controlling interests (590)

Profit for the year 69,124

Assets Segment assets 243,918 602,645 97,783 23,924 81,877 55,417 (179,898) 925,666 Investment in associate - 10,214 - - - - - 10,214 Unallocated assets 5,401

Total assets 941,281

Liabilities Segment liabilities 14,216 46,009 41,610 10,768 1,231 509 (49,913) 64,430 Unallocated liabilities 24,805

Total liabilities 89,235

Others Capital expenditure 2,004 1,802 138 - 274 7,751 - 11,969

Non-cash expenses: • depreciation and amortisation 1,295 467 93 - 4,040 - - 5,895

113 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

35. segment reporting (continued)

Investment and property Group services development construction trading Manufacturing Quarrying elimination consolidated 2017 RM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Revenue External sales 11,790 188,958 - - 299 2,112 - 203,159 Inter-segment revenue 6,001 - 92,645 25,799 18,255 - (142,700) -

17,791 188,958 92,645 25,799 18,554 2,112 (142,700) 203,159

Results Operating profit 50,114 81,514 5,387 (13) 472 10,683 (56,049) 92,108 Interest income 512 6,175 1,387 387 1,202 239 - 9,902 Finance costs (28) (22) (2) - - - - (52) Profit from associate - 780 - - - - - 780

Profit before taxation 50,598 88,447 6,772 374 1,674 10,922 (56,049) 102,738 Taxation (19,936) Non-controlling interests (508)

Profit for the year 82,294

Assets Segment assets 253,815 610,353 96,872 16,495 92,855 4,725 (197,097) 878,018 Investment in associate - 15,437 - - - - - 15,437 Unallocated assets 3,668

Total assets 897,123

Liabilities Segment liabilities 14,486 78,243 44,255 3,647 12,683 530 (50,337) 103,507 Unallocated liabilities 24,776

Total liabilities 128,283

Others Capital expenditure 1,741 1,459 - - - - - 3,200

Non-cash expenses: • depreciation and amortisation 1,134 466 147 - 4,017 - - 5,764

114 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

36. related party disclosures

36.1 Related party transactions

Transactions with subsidiaries:

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Dividend income: Kajang Granite Quarry Sdn. Bhd. - - 19,400 30,000 Integrated Management Corporation Sdn. Bhd. - - - 1,500 Sin Heap Lee Development Sdn. Bhd. - - - 6,000 Sin Heap Lee Construction Sdn. Bhd. - - - 7,000 SHL Realty Sdn. Bhd. - - - 2,000

- - 19,400 46,500

Unsecured corporate guarantees: Maximum principal amount of corporate guarantees given to bankers for banking facilities granted to: ▪ Sin Heap Lee Company Sdn. Berhad - - 8,900 8,900 ▪ Sin Heap Lee Brickworks Sdn. Bhd. - - 1,000 1,000 ▪ Sin Heap Lee Construction Sdn. Bhd. - - 57,000 57,000 ▪ Sin Heap Lee Development Sdn. Bhd. - - 6,000 6,000

- - 72,900 72,900

Transactions with entities over which certain Directors have substantial financial interests:

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Expenses: Engineering consultancy services: SSP Housing Sdn. Bhd. 6,723 3,968 - - Sepakat Setia Perunding (Sendirian) Bhd. 252 198 - - Project Delivery Partner Sdn. Bhd. 1,981 - - -

115 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

36. related party disclosures (CONTINUED)

36.2 Related party balances

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Amounts due from subsidiaries: Sin Heap Lee Development Sdn. Bhd. - - 51,795 55,995 SHL Corporate Services Sdn. Bhd. - - - 1,216 Kajang Granite Quarry Sdn. Bhd. - - 19,400 23,000 SHL Realty Sdn. Bhd. - - - 2,000

- - 71,195 82,211

Amount due to subsidiaries: Sin Heap Lee Construction Sdn. Bhd. - - 70,743 70,743 SHL Corporate Services Sdn. Bhd. - - - 1

- - 70,743 70,744

36.3 Directors’ remunerations

The aggregate amounts of remunerations received by the Directors of the Company during the financial year were as follows:-

Group Company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Non-executive Directors 145 120 145 120 Executive Directors 60 60 60 60

Total Directors’ fees 205 180 205 180

Non-executive Directors 718 714 24 24 Executive Directors 1,630 1,616 - -

Total Directors’ other emoluments 2,348 2,330 24 24

Total Directors’ remunerations 2,553 2,510 229 204

Analysed as amounts: ▪ capitalised in property development costs (Note 19) 2,324 2,306 - - ▪ recognised directly in profit or loss 229 204 229 204

2,553 2,510 229 204

116 ANNUAL REPORT 2018 Notes to the Financial Statements 31 March 2018 (cont’d)

37. comparative information

The following significant items of comparative information have been restated arising from a review of disclosure requirements:-

Group As previously As restated reported R rM’000 rM’000

Statement of cash flows: Cash flows from investing activities: Purchase of short-term investments (61,391) - Proceeds from redemption of short-term investments 11,409 - Net cash from/(used in) investing activities (42,624) 7,358

Net increase/(decrease) in cash and cash equivalents (65,372) (15,390)

Cash and cash equivalents at 1 April 205,797 305,810

Cash and cash equivalents at 31 March 140,425 290,420

Analysis of cash and cash equivalents: Cash and deposits 140,425 290,420

Notes to the financial statements: Property development costs (Note 19): Land costs: At cost: ∙ At 1 April 2016 92,892 57,027 ∙ At 31 March 2017 96,558 60,693

Cost recognised in profit or loss: ∙ At 1 April 2016 50,081 14,216 ∙ At 31 March 2017 53,334 17,469

Cash, deposits and short-term investments (Note 22): Deposits with financial institution under Islamic principles - 149,995 Short-term investments 149,995 -

Financial instruments (Note 32): Interest rate risk: ∙ short-term investments 3.66% - 3.77% -

Price risk: Increase/(decrease) in retained profits: Short-term investments: ∙ Net assets value +/-1% 1,500 -

Fair value hierarchy: ∙ short-term investments ∙ Level 2 149,995 -

Financial instruments by category: Loans and receivables: Cash and deposits - 290,420 Cash, deposits and short-term investments 140,425 - At fair value through profit or loss: Cash, deposits and short-term investments 149,995 -

290,420 290,420

117 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2018 (cont’d)

37. comparative information (continued)

Segment reporting

Investment and property services development construction trading Manufacturing Quarrying elimination consolidated Group RM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

results As previously reported: Operating profit ------92,108 Interest income ------9,902 Finance costs ------(52) Profit from associate ------780

Profit before taxation ------102,738

As restated: Operating profit 50,114 81,514 5,387 (13) 472 10,683 (56,049) 92,108 Interest income 512 6,175 1,387 387 1,202 239 - 9,902 Finance costs (28) (22) (2) - - - - (52) Profit from associate - 780 - - - - - 780

Profit before taxation 50,598 88,447 6,772 374 1,674 10,922 (56,049) 102,738

Assets As previously reported: Segment assets 234,092 314,741 10,823 2,228 41,710 1,837 - 605,431 Unallocated assets 276,255

As restated: Segment assets 253,815 610,353 96,872 16,495 92,855 4,725 (197,097) 878,018 Unallocated assets 3,668

Liabilities: As previously reported: Segment liabilities 2,417 67,109 16,977 3,647 670 530 - 91,350 Unallocated liabilities 36,933

As restated: Segment liabilities 14,486 78,243 44,255 3,647 12,683 530 (50,337) 103,507 Unallocated liabilities 24,776

118 ANNUAL REPORT 2018 LIST OF PROPERTIES As at 31 March 2018

Date of Description Tenure/Age Net Book Acquisition/ &/or of Building Land Area Value Date of Location Usage (Years) (Acres) RM’000 Revaluation

Selangor Darul Ehsan

Lot 27871 Golf Course, Club Freehold 149.54 145,373 31-3-2015 Mukim of Cheras Houses and Driving 1 & 25 District of Hulu Langat Range

P.T. 21147 Medical Centre Freehold 8 0.52 22,000 31-3-2015 Mukim of Cheras District of Hulu Langat

P.T. 21062 Food Court Freehold 8 0.46 2,180 31-3-2015 Mukim of Cheras District of Hulu Langat

2½ Miles, Sungai Pelek Land and factory Freehold 10.09 13,678 31-3-2015 43900 Sepang building 21 & 28

Lot 1731, 1737, P.T. 9519 & Agriculture land Freehold 14.15 2,217 31-3-2015 63/2 Mukim and District of Sepang

P.T. 721 Agriculture land 99 years 1.27 158 31-3-2015 Mukim and District of lease expiring Sepang in 2083

Lot 1465, 1467, 1468 & Clay reserve land 99 years 6.07 527 31-3-2015 1471, P.T. 720 lease expiring Mukim and District of in 2084/ Sepang 2087

Lot 64, 207, 208, 730 Clay reserve land Freehold 16.75 2,941 31-3-2015 Mukim and District of Sepang

Lot 1117 Agriculture land Freehold 3.54 931 23-6-2009 Mukim of Semenyih District of Hulu Langat

Lot 173 Agriculture land Freehold 4.81 7,751 20-10-2017 Mukim Semenyih, Batu 17, Jalan Semenyih, District of Hulu Langat

Lot 2116 & 3489 Land held for Freehold 5.18 173 24-9-1992 Mukim of Cheras future housing 7-5-1990 District of Hulu Langat development

P.T. 21023, 21226, 21911, Land held Freehold 7.48 7,839 31-3-2000 39753 & 39754 for future 19-12-1989 Mukim of Cheras development 31-3-2015 District of Hulu Langat

119 SHL CONSOLIDATED BHD LIST OF PROPERTIES (cont’d) As at 31 March 2018

Date of Description Tenure/Age Net Book Acquisition/ &/or of Building Land Area Value Date of Location Usage (Years) (Acres) RM’000 Revaluation

Selangor Darul Ehsan (cont’d)

Lot 4137 Land held 99 years 0.37 1 15-1-1991 Mukim of Cheras for future lease expiring District of Hulu Langat development in 2067

Lot 30571 & 30572 Land held for Freehold 3.00 2,699 31-3-2015 Mukim of Cheras future housing District of Hulu Langat development

P.T. 1-491 Land held 99 years 87.90 11,658 10-2-1999 Mukim of Batang Kali for future lease expiring District of Hulu Selangor development in 2089

Lot 3954 & 3955 Land held 99 years 0.37 493 4-8-2016 Mukim Batang Kali for future lease expiring District of Hulu Selangor development in 2088

P.T. 405, 412, 413, 1586, Land held Freehold 10.69 1 4-4-1979 2053, 2302, 2305, 2349- for future 18-12-1986 2357, 2403 & 2404 development 31-3-1987 Mukim of Rawang District of Gombak

Lot 32691-32692, Land held for Freehold 2.98 88 31-3-1994 32715-32718, 33996- future housing 33997, P.T. 34019-34040 development Mukim and District of Petaling

P.T. 6595, 6596 & 6933 Commercial land 99 years 4.87 3,123 19-2-2003 Mukim Bukit Rajah lease expiring District of Petaling in 2102

Lot 7989 & 7990, PT 10503, Ongoing Freehold 111.70 24,817 1-12-1997 Lot 1340 development of 9-8-1997 Mukim of Semenyih housing scheme 31-3-2000 District of Hulu Langat

P.T. 58715-58738 & Ongoing 99 years 9.62 15,452 7-5-1998 59170-59187 development of lease expiring Mukim of Cheras housing scheme in 2092 District of Hulu Langat

Lot 58761-58790 Ongoing Freehold 4.52 19,251 19-12-1989 Mukim of Cheras development of District of Hulu Langat housing scheme

Lot 27762 Ongoing Freehold 9.56 77,565 31-3-2015 Mukim of Cheras development of District of Hulu Langat housing scheme

120 ANNUAL REPORT 2018 LIST OF PROPERTIES (cont’d) As at 31 March 2018

Date of Description Tenure/Age Net Book Acquisition/ &/or of Building Land Area Value Date of Location Usage (Years) (Acres) RM’000 Revaluation

Wilayah Persekutuan

Lot 251, Section 43 Commercial Freehold 0.23 45,700 31-3-2015 Wilayah Persekutuan building 24 Kuala Lumpur

Negeri Sembilan

Lot 493, 497, 499, 502, 503, Agriculture land Freehold 101.49 2,482 31-3-2000 504, 505, 506, 507, 510, 580, held for future 697, 698 & 699 development Mukim of Parit Tinggi District of Kuala Pilah

121 SHL CONSOLIDATED BHD ANALYSIS OF SHAREHOLDINGS As at 29 June 2018

SHARE CAPITAL

Issued and Fully Paid-up Capital - RM242,123,725.00 Class of Shares - Ordinary Shares Voting Right - One Vote Per Ordinary Share No. of Shareholders - 3,472

DISTRIBUTION OF SHAREHOLDINGS

no. of no. of Size of Shareholdings shareholders % shares %

Less than 100 365 10.51 14,549 0.01 100 - 1,000 498 14.34 345,483 0.16 1,001 - 10,000 2,193 63.16 7,000,002 2.89 10,001 - 100,000 351 10.11 9,828,163 4.06 100,001 and below 5% 61 1.76 67,742,682 27.98 5% and above 4 0.12 157,192,846 64.92

TOTAL 3,472 100.00 242,123,725 100.00

SUBSTANTIAL SHAREHOLDERS

Name of NRIC No./ Direct Holdings indirect Holdings Substantial Shareholders Registration No. no. of Shares % no. of Shares %

1 Y.A.M. Tengku Abdul Samad Shah 530927-10-5667 - - 21,222,437 8.77 Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah 2 Dato’ Sri Yap Teiong Choon 530218-10-5955 4,283,869 1.77 60,659,844 25.05 3 Dato’ Sri Ir. Yap Chong Lee 540921-10-5761 3,235,519 1.34 91,955,143 37.98 4 Yap Teiong Choon Holdings Sdn Bhd 67870-U 3,411,944 1.41 54,247,900 22.41 5 YTC Global Sdn Bhd 49941-A 2,728,197 1.13 51,519,703 21.28 6 Sin Heap Lee Holdings Sdn Bhd 67869-D 51,519,703 21.28 - - 7 Sin Heap Lee Capital Sdn Bhd 73421-H 91,340,143 37.72 - - 8 Taipan Equity Sdn Bhd 292562-W 21,222,437 8.77 - -

DIRECTORS’ SHAREHOLDINGS

Direct Holdings indirect Holdings Name of Directors NRIC No. no. of Shares % no. of Shares %

1 Y.A.M. Tengku Abdul Samad Shah 530927-10-5667 - - 21,222,437 8.77 Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah 2 Dato’ Sri Yap Teiong Choon 530218-10-5955 4,283,869 1.77 60,659,844 25.05 3 Dato’ Sri Ir. Yap Chong Lee 540921-10-5761 3,235,519 1.34 91,955,143 37.98 4 Wong Tiek Fong 620620-06-5161 80,000 0.03 - - 5 Au Lai Koong 650726-10-5149 5,000 0.00 - - 6 Souren Norendra 701228-10-5119 - - - - 7 Ng Chin Hoo 590514-08-5391 - - - -

122 ANNUAL REPORT 2018 ANALYSIS OF SHAREHOLDINGS (cont’d) As at 29 June 2018

LIST OF THE THIRTY (30) LARGEST SHAREHOLDERS AS AT 29 JUNE 2018

NRIC No./ Names Registration No. no. of Shares %

1 SIN HEAP LEE CAPITAL SDN BHD 73421-H 91,340,143 37.72 2 SIN HEAP LEE HOLDINGS SDN BHD 67869-D 37,019,703 15.29 3 MALAYSIA NOMINEES (TEMPATAN) SDN BHD 6193-K 14,500,000 5.99 Pledged Securities Account for Sin Heap Lee Holdings Sdn Bhd 4 AMSEC NOMINEES (TEMPATAN) SDN BHD 102918-T 14,333,000 5.92 Pledged Securities Account - Ambank (M) Berhad for Taipan Equity Sdn Bhd 5 HSBC NOMINEES (ASING) SDN BHD 4381-U 11,947,000 4.93 Exempt AN for J.P. Morgan Chase Bank, National Association (SINGAPOREJPMPB) 6 SSP PROFESSIONAL SERVICES SDN BHD 93332-T 8,982,400 3.71 7 TAIPAN EQUITY SDN BHD 292562-W 6,889,437 2.85 8 KMB-WAJAR SERI SDN BHD 621146-W 4,948,500 2.04 9 YAP TEIONG CHOON HOLDINGS SDN BHD 67870-U 3,411,944 1.41 10 YTC GLOBAL SDN BHD 49941-A 2,728,197 1.13 11 DATO’ SRI IR. YAP CHONG LEE 540921-10-5761 2,463,019 1.02 12 YAP TEONG SUAN 440427-10-5493 2,303,142 0.95 13 DATO’ SRI YAP TEIONG CHOON 530218-10-5955 2,223,650 0.92 14 DATO’ SRI YAP TEIONG CHOON 530218-10-5955 2,060,219 0.85 15 DATIN SRI PHAN FOO BEAM 530301-08-6986 2,000,000 0.83 16 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 284597-P 1,906,750 0.79 Pledged Securities Account for Ng Peck Chin 17 ENVIMATIC SDN BHD 251931-X 1,391,774 0.57 18 LIM KHUAN ENG 420329-08-5697 1,350,000 0.56 19 GOH THONG BENG 401020-07-5219 1,032,800 0.43 20 DATO’ SRI IR. YAP CHONG LEE 540921-10-5761 772,500 0.32 21 KHER PEK CHOO 520301-10-5578 640,000 0.26 22 YAP BOON HUNG 600704-10-5863 566,500 0.23 23 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 284597-P 510,000 0.21 Pledged Securities Account for Lim Bee Ying 24 YAP TEONG PENG 491012-71-5011 500,000 0.21 25 YAP WENG YAU 831028-14-6261 500,000 0.21 26 DB (MALAYSIA) NOMINEE (ASING) SDN BHD 317329-W 400,000 0.17 Deutsche Bank AG Singapore for Yeoman 3-Rights Value Asia Fund (PTSL) 27 YAP HONG ENG 351206-10-5014 375,000 0.15 28 YAP BOON WAN 580830-10-5957 344,750 0.14 29 YAP LAY KUAN 730306-10-5134 339,250 0.14 30 YAP LAY MENG 651010-10-7696 333,000 0.14

123 This page is intentionally left blank. PROXY FORM

CDS Account No. No. of shares held Contact No. SHL CONSOLIDATED BHD. (Company No: 293565-W) (Incorporated in Malaysia)

I/We NRIC / Passport / Company No. of being a member of SHL CONSOLIDATED BHD. hereby appoint NRIC / Passport No. (Proportion: %) of and/or failing him/her, NRIC / Passport No. (Proportion: %) of or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote on my/our behalf at the 24th Annual General Meeting of the Company to be held on Wednesday, 29 August 2018 at 11.00 a.m. and at any adjournment thereof, and to vote as indicated below: - Ordinary Resolutions For Against

Resolution 1 To approve the Final Dividend

Resolution 2 To approve the payment of Directors’ fees Resolution 3 To re-elect Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah as Director of the Company Resolution 4 To re-elect Dato’ Sri Ir. Yap Chong Lee as Director of the Company

Resolution 5 To re-appoint Messrs Khoo Wong & Chan as Auditors of the Company and authorise the Directors to fix their remuneration

Resolution 6 To approve the proposed Shareholders’ Mandate for SHL Group to enter into recurrent related party transactions of a revenue or trading nature Resolution 7 Authority to issue and allot shares pursuant to Sections 75 and 76 of the Companies Act 2016

(Please indicate your vote by marking (X) in the space provided above on how you wish your vote to be cast. Unless voting instructions are indicated in the space above, the proxy will vote or abstain from voting as he/she thinks fit.)

As witness my/our hand(s) this day of , 2018

Signature of Member / Common Seal

Notes: (a) Only depositors whose names appear in the Register of Depositors as at 21 August 2018 shall be entitled to attend in person or appoint proxies to attend and/or vote on their behalf at the 24th Annual General Meeting. (b) A member entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. A proxy may but does not need to be a member of the Company pursuant to Section 334 of the Act. (c) Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. (d) In the event the member(s) duly executes the form of proxy but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the Meeting as his/their proxy, provided always that the rest of the form of proxy, other than the particulars of the proxy, have been duly completed by the member(s). (e) In the case of a corporate member, the instrument appointing a proxy must be either executed under its common seal or under the hand of its officer or attorney duly authorised. The corporation may by its resolution of its Board or a certificate of authorisation by the Corporation to appoint a person or persons to act as its representative or representatives to attend and vote on their behalf. (f) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (Omnibus Account), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds. (g) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 6th Floor, Wisma Sin Heap Lee, 346, Jalan Tun Razak, 50400 Kuala Lumpur not less than forty-eight (48) hours before the time set for the Annual General Meeting or at any adjournment thereof. Fold here

Please affix Stamp

SHL Consolidated Bhd. (293565-W) 6th Floor, Wisma Sin Heap Lee 346, Jalan Tun Razak 50400 Kuala Lumpur

Fold here