Sustainable Competitiveness

Annual Report 2 0 2 0 Sustainable Competitiveness

ANNUAL REPORT 2020 www.shlcb.com.my CONTENTS

2 Notice of Annual General Meeting

6 Corporate Information

7 Corporate Structure

8 Profile of Directors

12 Profile of Key Senior Management

13 Group Financial Highlights

14 Management Discussion and Analysis

19 Corporate Governance Overview Statement

28 Statement On Risk Management & Internal Control Statement

32 Audit Committee Report

34 Sustainability Statement

50 Financial Statements

144 List of Properties

147 Analysis of Shareholdings

• Proxy Form

SHL CONSOLIDATED BHD

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the 26th Annual General Meeting (“26th AGM”) of SHL Consolidated Bhd. (the “Company”) will be held fully virtual and entirely via remote participation and voting at the Broadcast Venue at the Conference Room, 18th Floor, Wisma Sin Heap Lee, 346 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia on Wednesday, 30 September 2020 at 11.00 a.m. for the purpose of transacting the following businesses, with or without modifications thereto:-

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended (Please refer to 31 March 2020 together with the Reports of the Directors and the Auditors Explanatory Note 1) thereon.

2. To approve a Final Dividend of 5 sen per share in respect of the financial year Resolution 1 ended 31 March 2020.

3. To approve the payment of Directors’ fees for the financial year ended 31 Resolution 2 March 2020.

4. To approve the payment of Directors’ benefits for the financial year ended 31 Resolution 3 March 2020 and for the period from 1 April 2020 until the next Annual General Meeting of the Company.

5. To re-elect the following Directors who retire in accordance with Clause 86.1 of the Company’s Constitution:-

i. Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Resolution 4 Abdul Aziz Shah ii. Ng Chin Hoo Resolution 5

6. To re-elect the following Directors who retire in accordance with Clause 85.3 of the Company’s Constitution:-

i. Su Kok Cheng Resolution 6 ii. Chong Yew Seng Resolution 7

7. To re-appoint Messrs Khoo Wong & Chan as Auditors of the Company for the Resolution 8 financial year ending 31 March 2021 and to authorise the Directors to fix their remuneration.

AS SPECIAL BUSINESS

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

8. Proposed Renewal of Existing Shareholders’ Mandate and New Shareholders’ Resolution 9 Mandate for Recurrent Related Party Transactions of a Revenue or Trading (Please refer to Nature Explanatory Note 3)

“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 28 August 2020, 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:

2 ANNUAL REPORT 2020

NOTICE OF ANNUAL GENERAL MEETING (cont’d)

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,

AND THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary to give effect to the Proposed Shareholders’ Mandate.”

9. Authority to Issue Shares Pursuant to Sections 75 and 76 of the Companies Act Resolution 10 2016 (Please refer to Explanatory Note 4) “THAT pursuant to Sections 75 and 76 of the Companies Act 2016, the Constitution 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 20% 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 listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad AND THAT such authority shall continue in force until the conclusion of the next AGM of the Company.”

10. 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 5 sen per share in respect of the financial year ended 31 March 2020, if approved, will be paid on 27 October 2020 to depositors registered in the Record of Depositors of the Company on 13 October 2020.

A Depositor shall qualify for entitlement to the dividend only in respect of:- i. Shares transferred into the Depositor’s Securities Account before 4.30 p.m. on 13 October 2020 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) (SSM PC No. 202008002837) TAN KEAN WAI (MAICSA 7056310) (SSM PC No. 202008000801) Company Secretaries

Kuala Lumpur 28 August 2020

3 SHL CONSOLIDATED BHD

NOTICE OF ANNUAL GENERAL MEETING (cont’d)

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. Items 3 and 4 of the Agenda: Directors’ fees and benefits payable

Section 230(1) of the Companies Act 2016 provides amongst other, that the fees of the directors, and any benefits payable to the directors of a listed company and its subsidiaries shall be approved at a General Meeting.

In this respect, the Board wishes to seek shareholders’ approval for payment of Directors’ fees of RM353,600 and benefits payable up to RM45,500 for the financial year ended 31 March 2020 and for the period from 1 April 2020 until the next AGM to be held in year 2021.

In determining the estimated total amount of Directors’ fees and benefits payable for the Directors of the Company, the Board has considered various factors including the number of scheduled meetings for the Board and Board Committees of the Company as well as the number of Directors involved in these meetings based on the current number of Directors.

In the event, the proposed amount is insufficient, e.g. due to enlarged Board size, approval will be sought at the next AGM for the shortfall.

3. Item 8 of the Agenda: Proposed Renewal of Existing Shareholders’ Mandate and New Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.

The Ordinary Resolution 9 is to seek a fresh shareholders’ mandate for the recurrent related party transactions comprising the shareholders’ mandate which has been obtained on 29 August 2019 as well as additional recurrent related party transactions. Further information on the Proposed Shareholders’ Mandate is set out in the Circular to Shareholders dated 28 August 2020, which is despatched together with this Annual Report 2020. The Circular to Shareholders dated 28 August 2020 is available for download on the Company’s website at http://www.shlcb.com.my.

4. Item 9 of the Agenda: Authority to issue shares pursuant to Sections 75 and 76 of the Companies Act 2016

i. The Ordinary Resolution 10 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 twenty percent (20%) 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 29 August 2019 and which will lapse at the conclusion of the 26th AGM to be held on 30 September 2020.

4 ANNUAL REPORT 2020

NOTICE OF ANNUAL GENERAL MEETING (cont’d)

NOTES:

1. Only depositors whose names appear in the Register of Depositors as at 23 September 2020 shall be eligible to participate in this 26th AGM via remote participation and voting facilities. 2. 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. 3. 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. 4. 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). 5. 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. 6. 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. 7. 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, Malaysia not less than forty- eight (48) hours before the time set for the Annual General Meeting or at any adjournment thereof at which the person named in the instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid. An instrument appointing a proxy to vote at this Meeting shall be deemed to include the power to demand, or join in demanding a poll on behalf of the appointor. 8. The 26th AGM will be conducted on fully virtual and the Company has appointed Bina Management (M) Sdn. Bhd. as the Poll Administrator for the 26th AGM to facilitate the remote participation and voting facilities. Please refer to the procedures set out in the Administrative Notes for the 26th AGM on the registration and voting process for the Meeting. 9. Due to the COVID-19 pandemic, the Broadcast Venue of the 26th AGM is strictly for the purpose of complying with Section 327(2) of the Act which requires the Chairman shall be present at the main venue of the 26th AGM. NO SHAREHOLDERS/PROXIES/CORPORATE REPRESENTATIVES from the public will be allowed to be physically present at the Broadcast Venue on the day of the 26th AGM.

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 Ir. Yap Chong Lee Au Lai Koong

Non-Independent Non-Executive Directors Wong Tiek Fong Chong Yew Seng

Independent Non-Executive Directors Su Kok Cheng Ng Chin Hoo

AUDIT COMMITTEE SHARE REGISTRAR

Su Kok Cheng (Chairman) Bina Management (M) Sdn. Bhd. Ng Chin Hoo Lot 10, The Highway Centre Chong Yew Seng Jalan 51/205, 46050 Petaling Jaya Selangor Darul Ehsan Tel : 603-7784 3922 Fax : 603-7784 1988

REMUNERATION COMMITTEE AUDITORS

Su Kok Cheng (Chairman) Khoo Wong & Chan (AF: 0736) Ng Chin Hoo Chartered Accountants Chong Yew Seng 8.06-8.08, 8th Floor Plaza First Nationwide 161, Jalan Tun H. S. Lee 50000 Kuala Lumpur

NOMINATION COMMITTEE COMPANY SECRETARIES

Su Kok Cheng (Chairman) Chok Kwee Wah (MACS 00550) Ng Chin Hoo Tan Kean Wai (MAICSA 7056310) Chong Yew Seng

REGISTERED OFFICE PRINCIPAL BANKERS

6th Floor, Wisma Sin Heap Lee Malayan Banking Berhad 346, Jalan Tun Razak Hong Leong Bank Berhad 50400 Kuala Lumpur CIMB Bank Berhad Tel: 603-2163 7788 Bangkok Bank Berhad Fax: 603-2163 1391 AmBank (M) Berhad 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 ANNUAL REPORT 2020

CORPORATE STRUCTURE

000 2

00 L INVESTMENT AND SERVICES 00 L R

0 L

00 L CONSTRUCTION 00 L

00 L

00 L SUPPLY AND LOGISTICS 00

00 E

00 T

00 L 00 L DEVELOPMENT L 00 00 R

L P 00

OPT 00 0

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

7 SHL CONSOLIDATED BHD

PROFILE OF DIRECTORS

Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah (Non-Independent Non-Executive Chairman) (Age 66, Malaysian, Male)

Tengku Abdul Samad Shah was appointed to the Board on 1 March 1995. He had his early education in Victoria Institution, Kuala Lumpur and attended the Wolaroi College NSW, Australia from 1970 to 1972.

He is currently the Chairman of the Company and a Director of several subsidiaries of the Company. His directorships in other public company within the SHL Group is as Director of Sungai Long Golf Resort Berhad.

Tengku Abdul Samad Shah attended all Board Meetings held during the financial year ended 31 March 2020.

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.

Dato’ Sri Ir. Yap Chong Lee (Executive Director) (Age 65, Malaysian, Male)

Dato’ Sri Ir. Yap was appointed to the Board on 1 March 1995. He obtained a Bachelor of Technology majoring in Civil and Structural Engineering from Bradford University, England in 1978, a Master of Science majoring in Construction Management from Birmingham University, England in 1979 and a Postgraduate Certified Diploma in Accounting and Finance, England in 1979. He is a Fellow of both the Institution of Engineers, Malaysia and the Association of Consulting Engineers, Malaysia.

His working career began in 1979, with a consulting engineering firm, Sepakat Setia Perunding (Sendirian) Berhad and was subsequently appointed as a Director of the firm in 1990. He has been involved in the management of Sin Heap Lee Group of Companies since May 1982. He is presently an Executive Director and a Director of all subsidiaries of the Company. His directorships in other public company within the SHL Group is as Director of Sungai Long Golf Resort Berhad.

Dato’ Sri Ir. Yap had attended all Board Meetings held during the financial year ended 31 March 2020.

He is the brother of Dato’ Sri Yap Teiong Choon, a major shareholder 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.

8 ANNUAL REPORT 2020

PROFILE OF DIRECTORS (cont’d)

Au Lai Koong (Executive Director) (Age 55, Malaysian, Male)

Mr. Au was appointed to the Board on 26 May 2016 and re-designated as Executive Director on 14 November 2019. 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 attended all Board Meetings held during the financial year ended 31 March 2020.

Wong Tiek Fong (Non-Independent Non-Executive Director) (Age 58, Malaysian, Male)

Mr. Wong was appointed to the Board on 1 April 2004. He obtained a Diploma in Commerce (Financial Accounting) from Tunku Abdul Rahman College, Kuala Lumpur in 1985. He is a Chartered Accountant by profession and a member of the Malaysian Institute of Accountants, the Chartered Tax Institute of Malaysia and a fellow of the Association of Chartered Certified Accountants, United Kingdom.

His career began in 1985 with a firm of Chartered Accountants, Messrs. Khoo Wong & Chan as an Audit Senior where he gained wide experience in corporate auditing and taxation of diverse industries. Prior to joining SHL Group in May 1989 as a Financial Accountant responsible for the financial accounting and management of SHL Group, he was attached to KPMG, a firm of Chartered Accountants, as an Audit Senior. Subsequently, he was promoted as the Financial Controller of SHL Group in May 1995. Presently, he is the Chief Financial Officer of SHL Group and a Director of several subsidiaries of the Company. His directorship in other public company within the SHL Group is Director of Sungai Long Golf Resort Berhad.

Mr. Wong had attended all Board Meetings held during the financial year ended 31 March 2020.

9 SHL CONSOLIDATED BHD

PROFILE OF DIRECTORS (cont’d)

Chong Yew Seng (Non-Independent Non-Executive Director) (Age 51, Malaysian, Male)

Mr. Chong was appointed to the Board on 22 November 2019. He obtained a Bachelor of Engineering degree in Civil Engineering from University of Malaya, Malaysia in 1994. He is a Professional Engineer with Practising Certificate and member of both The Institute of Engineers, Malaysia and Board of Engineers Malaysia.

His career began in 1994, with a consulting engineering firm, Sepakat Setia Perunding Sdn. Bhd. and was appointed as an Associate of the firm in 1998. He gained wide experience in design of infrastructure works, feasibility studies and project management. In March 2004, he joined Sin Heap Lee Construction Sdn. Bhd. as a project manager and has involved in Alam Budiman in Shah Alam and Sungai Long Residence in Bandar Sungai Long.

Mr. Chong is a member of the Audit Committee, Nomination Committee and Remuneration Committee of the Company. He attended all Board Meetings held during the financial year ended 31 March 2020.

Su Kok Cheng (Independent Non-Executive Director) (Age 52, Malaysian, Male)

Mr. Su was appointed to the Board on 14 November 2019. He obtained an honours degree in Bachelor of Laws (LLB) from University of London in 1991 and a Certificate of Legal Practice (CLP) from University of Malaya in 1992. He was called to the Malaysian Bar in 1993 and has been practicing as an advocate and solicitor for more than 26 years. His areas of specialty are banking and corporate litigation.

Mr. Su has extensive legal experience includes admiralty and maritime matters, ship arrest, foreclosure, winding-up, bankruptcy matters, moneylending law, employment law, probate, trust and estate matters. He has acted as counsel in a number of reported decisions. He is currently a partner of Messrs. Yap Su & Associates. He also a current member of the Disciplinary Committee Panel of the Advocates & Solicitors Disciplinary Board. He does not hold any directorship in any public companies and listed issuers.

Mr. Su is the Chairman of the Audit Committee, Nomination Committee, Remuneration Committee and Risk Management Committee of the Company. He attended all Board Meetings held during the financial year ended 31 March 2020.

10 ANNUAL REPORT 2020

PROFILE OF DIRECTORS (cont’d)

Ng Chin Hoo (Independent Non-Executive Director) (Age 61, Malaysian, Male)

Mr. Ng was appointed to the Board on 2 December 2013. He obtained his Bachelor of Commerce (Commercial Law & Accounting) from University of Melbourne, Australia in 1983. He is a Chartered Accountant by profession and is a member of the Malaysian Institute of Accountants, a member of the Institute of Certified Public Accountants of the Australian Society of Certified Practicing Accountants and a member of the Institute of Chartered Secretaries and Administrators.

Mr. Ng has wide experience in management consulting and financial management primarily gained working for KPMG Management Consulting in England and Malaysia. Mr. Ng was an Executive Director of KPMG Management Consulting as well as Limited Partner with KPMG. Since leaving KPMG, Mr. Ng has held various senior positions in listed companies. He does not hold any directorship in any public companies and listed issuers.

Mr. Ng is a member of the Audit Committee, Nomination Committee, Remuneration Committee and Risk Management Committee of the Company. He attended all Board Meetings held during the financial year ended 31 March 2020.

11 SHL CONSOLIDATED BHD

PROFILE OF KEY SENIOR MANAGEMENT

Wong Yew Mei (Project Budget Controller) (Age 62, Malaysian, Female)

Ms Wong was appointed as Project Budget Controller of SHL Group in December 1988. She obtained a Diploma in Technology (Building) from Tunku Abdul Rahman College, Kuala Lumpur in 1982 and a Master degree in Business Administration, University of East Asia, Macau in 1988.

In 1982, she joined Messrs Hashim & Lim, a quantity surveying consulting firm in Kuala Lumpur in which she was exposed to all aspects of quantity surveying works on residential, hotels and high-rise buildings. In October 1986, she joined SHL Group as an Estimator and was involved in feasibility studies and estimates for the SHL Group’s property development and construction projects.

She does not hold any directorship in any public companies and listed issuers. She does not have any family relationship with any Director and/or major shareholder, nor any conflict of interest with the Company. She 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.

Leong Chin Cheong (Senior Project Manager) (Age 60, Malaysian, Male)

Mr Leong was appointed as Senior Project Manager in 1995. He obtained a Bachelor of Science degree in Engineering majoring in Water Resource from University of Guelph, Guelph, Ontario, Canada in 1984.

He joined Sin Heap Lee Construction Sdn Bhd as an Engineer in October 1984 and has been involved in the project management of several housing development projects including Taman Sri Rawang, Rawang, Taman Hot Spring Jaya, Tawau, Wickham Residence, Ampang, Bandar Sungai Long, Cheras, Alam Budiman, Shah Alam and two smart schools at Putrajaya and Cyberjaya.

Mr. Leong is a member of Risk Management Committee of the Company.

He does not hold any directorship in any public companies and listed issuers. 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.

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GROUP FINANCIAL HIGHLIGHTS

FINANCIAL YEAR ENDED 2016 2017 2018 2019 2020

FINANCIAL RESULTS (RM Million) Revenue 231.9 203.2 180.5 171.2 138.1 Profit before Tax 96.2 102.7 82.4 81.7 65.0 Net Profit 80.0 82.8 69.7 69.4 45.5 Net Profit attributable to Shareholders 79.7 82.3 69.1 62.4 41.8

FINANCIAL POSITION (RM Million) Total Assets 871.6 897.1 941.3 993.5 1,027.3 Share Capital 242.1 242.1 247.7 247.7 247.7 Equity attributable to Shareholders 713.8 750.2 790.5 804.5 830.4

FINANCIAL RATIOS Basic Earnings per Share (sen) 32.90 33.99 28.55 25.78 17.28 Net Tangible Assets per Share (RM) 2.95 3.10 3.26 3.32 3.43 Return on Equity (%) 11.17 10.97 8.74 7.76 5.03 Return on Capital Employed (%) 22.58 21.47 17.10 14.19 12.02 Return on Invested Capital (%) 18.77 17.31 14.48 12.05 8.41 Gross Dividend per Share (sen) 20.00 18.00 16.00 16.00 12.00 Net Dividend per Share (sen) 20.00 18.00 16.00 16.00 12.00

Revenue Profit before Tax R R

02 2 202 2 0 2

138.1 65.0

20 20 20 20 2020 20 20 20 20 2020

Euity attributable to Shareholders Basic Earnings per Share R 830.4 0 0 02 20 2

17.28

20 20 20 20 2020 20 20 20 20 2020

13 SHL CONSOLIDATED BHD

MANAGEMENT DISCUSSION AND ANALYSIS Financial Year Ended 31 March 2020

Overview of Business Results and Operation

The global economy and global trade expanded by 2.9% and 1.0% respectively in 2019 (2018: 3.6% and 3.7% respectively), amid protracted and unresolved trade tensions which exacerbated the cyclical downturn in global manufacturing and investment activities. Heightened risk aversion in financial markets led to sustained demand for safe haven assets, exchange rate volatility as well as capital flow reversals from emerging market economies. Amid this challenging global economic environment and domestic supply disruptions, the Malaysian economy expanded by 4.3% in 2019, supported by resilient private sector spending. Headline Consumer Price Index inflation was lower at 0.7% (2018: 1.0%), while underlying inflation remained relatively stable (2019: 1.5%; 2018: 1.6%).

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 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.

For the financial year under review, revenue is reported at RM138.12 million, compared to RM171.24 million recorded in the previous financial year. The decrease in revenue was mainly attributable to substantial handover of sold property units to our purchasers at Goodview Heights, Sungai Long South, Selangor Darul Ehsan. The encouraging demand for homes at Sg Long Residence condominiums in Bandar Sungai Long, Selangor Darul Ehsan and the integrated mixed-development township namely Goodview Heights, located at Sungai Long South, Selangor Darul Ehsan have contributed significantly to the financial performance of the Company.

Profit before tax decreased by 20.4% from RM81.71 million reported in the previous year to RM65.02 million for the current year, mainly due to lower revenue generated by the property development segment and impairment loss on a brick manufacturing plant. The earnings per share for the financial year under review is 17.28 sen.

14 ANNUAL REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS (cont’d) Financial Year Ended 31 March 2020

GROUP FINANCIAL HIGHLIGHTS

FINANCIAL YEAR ENDED 2016 2017 2018 2019 2020

FINANCIAL POSITION (RM Million) Total Assets 871.6 897.1 941.3 993.5 1,027.3 Share Capital 242.1 242.1 247.7 247.7 247.7 Equity attributable to Shareholders 713.8 750.2 790.5 804.5 830.4

Contract assets, trade and other receivables decreased from RM123.28 million at the end of the previous financial year to RM22.34 million at the end of the current financial year. This was mainly due to collection from purchasers from the sale of Sg Long Residence condominiums in Bandar Sungai Long, Selangor Darul Ehsan upon the completion of the said property development project.

Cash, deposits and short-term investments have increased from RM308.70 million to RM368.71 million mainly due to substantial increase in net cash inflow primarily arising from the completion of property development projects under the built-then-sell concept and reduction of capital expenditure. A high level of liquidity is being maintained, mainly in the form of cash and deposits.

On a consolidated basis, the current ratio is about 9.0 times as at 31 March 2020.

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.

The property development segment continues to be the key contributor registering a revenue of RM124.46 million for the financial year ended 31 March 2020, representing about 90.1% 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.

15 SHL CONSOLIDATED BHD

MANAGEMENT DISCUSSION AND ANALYSIS (cont’d) Financial Year Ended 31 March 2020

(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.

Goodview Heights Phase 1 was first launched in year 2015 comprising of about 1,500 units of landed residential properties, apartments and shop office.

Goodview Heights Phase 2 of about 80 acres consist of approximately 1,000 units of mixed development which include terrace houses, condominiums and apartments with a gross development value of approximately RM426 million will be launched in the near future. These residential homes are designed to meet the affordability of the middle income group.

The demand for Goodview Heights will be boosted by the soon completed East Klang Valley Expressway (EKVE) Highway.

(b) Rasa in Batang Kali, Selangor Darul Ehsan

The project in Rasa, Batang Kali will be a mixed development of about 90 acres comprising of about 246 units of affordable residential terrace homes, 10 units of shop offices and 103 units of semi- detached industrial factory to meet the demand of a range of industries with a gross development value of approximately RM222 million.

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. Connectivity of Alam Budiman will be further improved by the near completed Damansara-Shah Alam Elevated Expressway (DASH) Highway.

The development of the final phase of 44 units of commercial shop office with a gross development value of approximately RM42 million will be completed in September 2020.

(d) Sg Long Residence in Bandar Sungai Long, Selangor Darul Ehsan

Sg Long Residence comprise of 572 units of condominium and commercial units with a gross development value of approximately RM307 million. The successful launch of Sg Long Residence condominiums Phase 1 in February 2018 has contributed significantly to the financial performance of the Group. Phase 2 of Sg Long Residence condominiums was launched in February 2019. The entire Sg Long Residence was completed end of May 2019.

(e) Bandar Sungai Long, Selangor Darul Ehsan

Bandar Sungai Long is a thriving RM2 billion township that hosts Universiti Tunku Abdul Rahman, Putra Specialist Hospital Kajang 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.

Villa Sungai Long comprise of 8 units of semi-detached houses and 21 units of bungalows with a gross development value of approximately RM57 million.

Kiara Sungai Long comprising of 39 units of bungalows is expected to be launched in 2020 with a gross development value of approximately RM82 million.

16 ANNUAL REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS (cont’d) Financial Year Ended 31 March 2020

Risk Management

SHL Consolidated Bhd has formulated and implemented a strategic business model to generate value creation for its shareholders and customers and manage the critical business risk factors. Having the competitive advantage of being a price and cost leader, financial and technical knowledge and skill set, the Company has the capability to conceptualize the right customer value proposition to meet its customers’ expectation of value and price and thus mitigate the pressure of sales risk.

Having an in-house and home grown construction company with the necessary core competencies is best suited for the Company’s delivery system. A close integration of its property development segment and the construction segment has an added advantage of exercising flexibility in the construction methods and timing of construction works to eliminate cost overrun, completion and delivery risks.

SHL Consolidated Bhd has long established a very strong cash balance and high level of liquidity to ease its exposure to the volatility of the Malaysian social and economic environment. The Company’s financial model is capable of managing the investment and operating cost of its property development projects and achieving sustainable economic growth and a reasonable return on its capital employed and invested capital.

Outlook

Against this highly challenging economic outlook, Malaysia’s GDP growth is projected to be between -2.0% to 0.5% in 2020 (2019: 4.3%). The Coronavirus Disease 2019 (“Covid-19”) has interrupted the movement of people and goods throughout the world and many levels of government are instituting restrictions on individuals and businesses. In relation to this, the Government of Malaysia issued a Federal Government Gazette on 18 March 2020 imposing a Movement Control Order (“MCO”) effective from 18 March 2020.

The domestic economy will be impacted by the necessary global and domestic actions taken to contain the outbreak of the Covid-19. Of significance, tourism-related sectors are expected to be affected by broad-based travel restrictions and travel risk aversion, while production disruptions in the global supply chain will weigh on the manufacturing sector and exports. The implementation and subsequent extension of the MCO, while critical, will dampen economic activity following the suspension of operations by non- essential service providers and lower operating capacity of manufacturing firms. Beyond the MCO period, reduced social and recreational activities until the pandemic is fully controlled globally and domestically will continue to dampen consumption and investment activity. Apart from the pandemic, the domestic economy will also be affected by the sharp decline and volatile shifts in crude oil prices and continued supply disruption in the commodities sector.

Given the significant headwinds to growth arising from the Covid-19, the Government and Bank Negara Malaysia have introduced large countercyclical policy measures to mitigate the economic impact of the pandemic.

As at the date of the authorisation of the financial statements, the Covid-19 pandemic and the MCO have significant financial impact to the Company, particularly on the property development segment of the Company. Some businesses of the Company have resumed operations with the approvals obtained from the relevant authorities during the MCO. Nevertheless, the Company is focusing on its efforts in the best possible way to mitigate its impact while protecting the business potential and branding from the medium to long term perspective. The Covid-19 pandemic and the MCO is not expected to impact our ability to meet our commitments over the next twelve months due to our high level of liquidity, mainly in the form of cash and deposits.

In view of the lack of visibility on the end date of the Covid-19 pandemic and the MCO, the Company is not able to estimate the full potential financial impact as at the date of the authorisation of the financial statements. As such, the Directors of the Company will continue to monitor the situations closely and respond proactively to mitigate the impact on the Company’s financial performance and financial position. The Company anticipates that the effects of the Covid-19 would potentially impact the judgements and assumptions used in the preparation of the financial statements for the financial year ending 31 March 2021. The Company will provide further updates on the financial impact and mitigating actions relating to the Covid-19 pandemic in its forthcoming quarterly financial reports.

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MANAGEMENT DISCUSSION AND ANALYSIS (cont’d) Financial Year Ended 31 March 2020

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 Villa Sungai Long, Kiara Sungai Long and Sg Long Residence at Bandar Sungai Long, Goodview Heights at Sungai Long South, Alam Budiman at Shah Alam and Rasa at Batang Kali, 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 7 sen per share, amounting to a net dividend payable of approximately RM16.95 million in April 2020 for the financial year ended 31 March 2020.

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 5 sen per share in respect of the financial year ended 31 March 2020.

18 ANNUAL REPORT 2020

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 2020. 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 2020 (CG Report) for the financial year ended 31 March 2020 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 Malaysian Code on Corporate Governance (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 Chairman of the respective Committees report to the Board on the outcome of their Committee meetings and such reports are included in the Board papers. 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.

19 SHL CONSOLIDATED BHD

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

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.

Whistleblower Policy and Procedures

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.

Code of Conduct & Ethics

The Board is committed to creating a corporate culture within the Group to operate the businesses of the Group in an ethical manner and to uphold the highest standards of professionalism and exemplary corporate conduct.

The Board reviewed the Board Charter, Whistleblower Policy and Procedures 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 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 2020, 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.

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CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont’d)

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.

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.

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 2020, the Board met on five (5) occasions, where a formal agenda are forwarded to all Directors at least one (1) week 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 2020 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 5/5 Dato’ Sri Ir. Yap Chong Lee 5/5 Au Lai Koong 5/5 Wong Tiek Fong 5/5 Ng Chin Hoo 5/5 Dato’ Sri Yap Teiong Choon (Retired on 29.08.2019) 3/3 Souren Norendra (Retired on 29.08.2019) 3/3 Su Kok Cheng (Appointed on 14.11.2019) 2/2 Chong Yew Seng (Appointed on 22.11.2019) 2/2

All the Directors complied with the minimum 50% attendance requirement in respect of Board meetings held during the financial year ended 31 March 2020 pursuant to Paragraph 15.05 of the Bursa Malaysia Listing Requirements.

21 SHL CONSOLIDATED BHD

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 2020 are as follows:

Name of Directors Course Title Date

Chong Yew Seng Technical Talk on ‘The Advent of 5G: Are We Ready For It? 10.04.2019

Pre-AGM Talk on “Decommissioning of Offshore Structures” 14.12.2019

Wong Tiek Fong MIA International Accountant Conference 2019 22.10.2019- 23.10.2019

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.

Chairman: Mr. Souren Norendra (Senior Independent Non-Executive Director) – Retired on 29.08.2019 Mr. Su Kok Cheng (Independent Non-Executive Director) – Appointed on 26.11.2019

Members: Mr. Ng Chin Hoo (Independent Non-Executive Director); Mr. Wong Tiek Fong (Non-Independent Non-Executive Director) – Resigned on 26.11.2019 Mr. Chong Yew Seng (Non-Independent Non-Executive Director) – Appointed on 26.11.2019

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-election 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.

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.

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CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont’d)

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 proposed the re-designation of Mr. Au Lai Koong from a Non-Independent Non-Executive Director to an Executive Director, the appointment of Mr. Su Kok Cheng as an Independent Non-Executive Director, appointment of Mr. Chong Yew Seng as a Non- Independent Non-Executive Director and recommended the same to the Board.

In accordance with the Listing Requirements of Bursa Securities and Clause 86.1 of the Company’s Constitution, 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 Annual General Meeting (“AGM”). The retiring directors shall be eligible for re-election at the AGM.

Upon the recommendation of Nomination Committee, the following Directors retire at the forthcoming 26th AGM of the Company pursuant to the Company’s Constitution and being eligible, have offered themselves for re-election:

(a) Y.A.M Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah (Clause 86.1) (b) Ng Chin Hoo (Clause 86.1) (c) Su Kok Cheng (Clause 85.3) (d) Chong Yew Seng (Clause 85.3)

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.

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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 one (1) Non- Independent Non-Executive Directors, as follows:

Chairman:

Mr. Souren Norendra (Senior Independent Non-Executive Director) – Retired on 29.08.2019 Mr. Su Kok Cheng (Independent Non-Executive Director) – Appointed on 26.11.2019

Members:

Mr. Ng Chin Hoo (Independent Non-Executive Director); Mr. Wong Tiek Fong (Non-Independent Non-Executive Director) – Resigned on 26.11.2019 Mr. Chong Yew Seng (Non-Independent Non-Executive Director) – Appointed on 26.11.2019

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 2020 for the financial year ended 31 March 2020 which is available on SHL’s corporate website at www.shlcb.com.my.

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CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont’d)

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

Audit Committee

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

Chairman: Mr. Souren Norendra (Senior Independent Non-Executive Director) – Retired on 29.08.2019 Mr. Su Kok Cheng (Independent Non-Executive Director) – Appointed on 26.11.2019

Annually, the composition of AC is reviewed by the NC and recommended to the Board for its approval. With the relevant skill sets, knowledge and experience, the AC 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 AC 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 scepticism, 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.

25 SHL CONSOLIDATED BHD

CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont’d)

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.

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

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.

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CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont’d)

In line with 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 an independent scrutineer to validate the votes cast at AGM.

Given the current pandemic of the Coronavirus Disease 2019 (Covid-19), SHL will implement remote shareholders’ participation and online remote voting (or voting in absentia) at the 26th AGM by leveraging on technology under Section 327(1) and (2) of the Companies Act 2016 and Section 60.1 of the Company’s Constitution. Shareholders who attend the 26th AGM via remote participation will be able to submit any questions during the AGM for the Company to respond. Shareholders are encouraged to take advantage of the said technology to attend the AGM remotely.

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 web site at www.shlcb.com.my, where shareholders can access for information.

This CG Overview Statement was approved by the Board of Directors on 24 June 2020.

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 (RMC), 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 RMC was established to oversee and perform reviews on the Group’s risk management processes. The RMC is chaired by Chief Risk Officer and includes Head of business units of the Group. The RMC reports to the Audit Committee where key risks and mitigating actions are deliberated and implemented. • The Remuneration 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 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.

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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 authorized 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 formalization 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, RMC 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 RMC, whose members comprise of senior management. The RMC 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 RMC 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 prioritize 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 RMC 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 RMC 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 RMC, 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 2020

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 subcontractors’ 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 2020 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 24 June 2020.

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 (AC) comprises the following Directors, all of whom are Non-Executive Directors.

Chairman: Mr. Souren Norendra (Senior Independent Non-Executive Director) – Retired on 29.08.2019 Mr. Su Kok Cheng (Independent Non-Executive Director) – Appointed on 26.11.2019

The Audit Committee met five (5) times during the financial year ended 31st March 2020. The attendances of the Audit Committee Members were as follows:

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

Su Kok Cheng 2/2 Chong Yew Seng 2/2 Souren Norendra 3/3 Wong Tiek Fong 3/3 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 6 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.

32 ANNUAL REPORT 2020

AUDIT COMMITTEE REPORT (cont’d)

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. 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. 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 the financial year ended 31 March 2020. 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 RM254,874/-.

33 SHL CONSOLIDATED BHD

SUSTAINABILITY STATEMENT

Our Commitment to Sustainability

As a company with over 30 years’ experience in the property and construction sectors as well as with a strong focus on providing affordable and mid-range homes which supports an inclusive society, sustainability makes up the core of our business. Beyond financial performance, we approach sustainability with a view on delivering value across the Economic, Environmental and Social (EES) areas. This ensures we generate a positive impact on our communities and the environment which produce better outcomes for all over the long-term.

Scope and Boundaries

This Sustainability Statement reports on our efforts for the period of our financial year ended 31 March 2020. In developing this report, we have been guided by Bursa Malaysia’s Sustainability Reporting Framework and the Global Reporting Initiative (GRI) Standards in sustainability reporting.

The topics covered in this statement, as categorised under the EES pillars, were derived from our materiality assessment as well as the regulations our business is bound to and internal policies and values.

Unless otherwise stated, reporting in this statement covers SHL Consolidated Bhd (SHLCB) and our subsidiaries in addition to the operations of our properties and facilities which are under our direct control and/or influence.

Basis of Preparation

In preparing this statement, we have collated and analysed group-wide information. If these were unavailable, we have provided performance data and case studies which represent our general approach. We have used our utility bills for the collection of environmental data such as energy and water usage, with meter readings used wherever possible.

Feedback

We are looking forward to receive feedback on this statement. Comments and enquiries can be directed to:

SHL Consolidated Bhd, 6th Floor, Wisma Sin Heap Lee, 346 Jalan Tun Razak, 50400 Kuala Lumpur. Tel: 03-2163 7788

34 ANNUAL REPORT 2020

SUSTAINABILITY STATEMENT (cont’d)

Sustainability Governance

Our sustainability activities are overseen by the Board of Directors, which takes into account environmental, social and governance (ESG) matters in developing our business strategy. The ESG matters which are material to our value creation are then integrated into our balanced scorecard, which guides us in developing our business objectives and culture as well as setting targets and measuring our performance.

The Board is also responsible for supervising the preparation and presentation of this sustainability statement in line with Bursa Malaysia requirements. In view of this, the Board has endorsed this statement as a balanced and fair representation of our performance.

To crystallise our sustainability and business strategy as determined by the Board, our sustainability activities are implemented by our sustainability champions, led by our Group Executive Directors who:

• Develop our sustainability framework; • Set key performance indicators (KPIs) and targets in consultation with relevant stakeholders; • Drive our Group-wide sustainability initiatives; and • Advise on the material ESG matters which contribute to our materiality assessment and strategic planning.

Our sustainability champions meet and update our Group Executive Directors and senior management team on a regular basis to ensure our sustainability activities remain according to plan.

Our Material Matters

Our material matters have been identified through a materiality assessment, which we review every year in accordance to Bursa Malaysia requirements. The materiality assessment covers our entire value chain, with any changes in our operations or external business environment taken into account to update our material matters when necessary.

The process of our materiality assessment is outlined as follows:

EVALUATING MAPPING CREATING A IDENTIFYING IMPORTANT IDENTIFIED MATRIX OF POTENTIAL IDENTIFY KEY MATERIAL MATERIAL MATERIAL INTERNAL AND INTERNAL AND ASPECTS MATTERS ASPECTS FOR EXTERNAL EXTERNAL THROUGH ACCORDING INTERNAL AND MATERIAL STAKEHOLDERS DESK-BASED TO THEIR EXTERNAL ASPECTS RESEARCH PRIORITY STAKEHOLDERS

From our materiality assessment, we have developed the following materiality matrix, with our top five material matters comprising economic performance, compliance with laws and regulations, sustainable development, safe and quality deliverables and career progression.

35 SHL CONSOLIDATED BHD

SUSTAINABILITY STATEMENT (cont’d)

Materiality Matrix

Economic performance High Compliance with laws and regulations

Sustainable development

Safe and quality deliverable

Local comunity Career progression development

Fair and ethical workplace Industry advancement through innovation Minimal environmental footprint Importance to Stakeholders

Biodiversity

Corporate philanthropy Low Low Relevance toSHLCB High

Engaging with Our Stakeholders

We have identified our key stakeholders and regularly engage with them to identify and address the matters which are of interest to them. We build on these engagements to inform our business strategy and sustainability activities.

36 ANNUAL REPORT 2020

SUSTAINABILITY STATEMENT (cont’d)

The following discloses our key stakeholders, the way in which we engage with them, their areas of interest and how we respond to them.

Key Stakeholders How They Are Engaged Key Interest, How the Company Concerns and Responds Expectations Shareholder and Annual General Meetings Economic Improving Annual Report Investors and financial content and delivery to Quarterly Financial performance ensure transparent and Announcements accurate reporting of the Sustainable revenue Group’s performance and Annual Reports and profit growth activities

Company Website Dividend prospects Detailed and transparent http://www.shlcb.com.my/ updates through Quarterly financial announcements, Project Specific Micro- media releases/ Websites statements https://shlproperty.com/ https://www.facebook. com/ shlproperty/

Project Launches

Media Releases or Statements Customers Show Unit Higher quality Provide higher quality of (Tenants, Buyers of product and product and services and Golf Club Site Visit services Members) Provide friendly and safe Brochures Friendly and safe environment environment Sungai Long Golf Country Club App

Launching Event

Advertisement in Newspaper and Social Media Regulators and Meetings Public Relations & Provide quality services Government Services Agencies Inspection of documents Compliance with laws and regulations Project site inspection Suppliers, Meetings Long-term business Evaluation form Contractors and relationship Sub-contractors Quotation

Telephone Communities Project Launches Latest project and Know your neighbor development Show Units SHL Property Fair

37 SHL CONSOLIDATED BHD

SUSTAINABILITY STATEMENT (cont’d)

Key Stakeholders How They Are Engaged Key Interest, How the Company Concerns and Responds Expectations Financial Email Transparency and Audited accounts Institutions disclosure of Telephone Communication financial Management accounts

Meetings Better Update on corporate understanding of information the Company’s strategies Media Digital or Online Marketing Property information Provide latest property information Facebook or NuProp.my Date and time slot of advertising Book in advance Press Advertising advertising date and time Sponsorships to Proposal feature in Private golf events

Our Sustainability Initiatives

In measuring our impact to all our stakeholders and the environment, we categorise our sustainability initiatives under EES as follows:

ECONOMIC ENVIRONMENTAL SOCIAL Our People Total headcount: 278 Number of trainings participated by our employees: 54 Average hours of Direct economic impacts Resource and waste training per year per Revenue: RM138,121,000 management employee: 8 Reduction in energy Economic value distributed: consumption to 2,046,389 Our Customers RM90,923,000 kWh from 2,067,531 kWh in Sungai Long Golf & Country Club 2019 was awarded Best Golf Course in Indirect economic impacts Malaysia (2019/2020) by the Asia Sustainable development: Pacific Tourism & Travel Federation 100% tenders awarded to local suppliers Our Community 100% local suppliers Build-Then-Sell (BTS) concept for our projects

38 ANNUAL REPORT 2020

SUSTAINABILITY STATEMENT (cont’d)

ECONOMIC

We measure our Economic impact through direct and indirect impacts. In terms of direct impacts, for FY2020 we recorded revenue of RM 138,121,000, of which RM 90,923,000 was distributed to the economy through our operating expenditure, employee remuneration, dividends and interest as well as taxes.

Audited Audited Audited Audited Audited 2016 2017 2018 2019 2020 RM’000 RM’000 RM’000 RM’000 RM’000

Direct economic value generated Revenue 231,936 203,159 180,542 171,242 138,121

Economic value distributed Operating costs 14,630 14,733 17,188 13,777 21,790 Employee remuneration 14,836 12,166 13,661 13,450 13,401 Payments to capital providers • Dividends paid 60,531 46,004 29,055 38,740 38,740 • Interest paid 54 52 49 21 5 Payments to the government Income taxes paid (net of refunds) 26,775 10,777 14,171 12,055 16,987 Economic value retained 115,110 119,427 106,418 93,199 47,198

Sustainable Development

As a property and construction company, we believe sustainable development is crucial for securing the longevity of our business as well as the well-being of society and the environment. We strive to contribute to this area by using local materials and sourcing from local suppliers as much as possible to unleash economic multipliers in the manufacturing and employment sectors.

To this end, during the year under review, 100% of our tenders were awarded to local suppliers, who also account for 100% of our supply chain.

Industry Advancement and Innovation

With our experience spanning six decades, we are proud of our contributions to the property and construction sectors, where we have built over 18,000 houses through various projects.

Among the innovations we have spearheaded to contribute to the growth of our industry includes our manufacture and supply of bricks, brickworks and brick structures through our subsidiary, Sin Heap Lee Brickworks Sdn Bhd. The company operates a fully automated plant in Sepang, Selangor, which has the capacity to produce 4 million bricks a month, equivalent to 120,000 tonnes a year.

CHARACTERISTICS OF OUR BRICKS

 Made from 100% purified clay  Dried and fired into various types for different application  Best insulation against heat and cold for homes  High compressive strength of up to 5000 psi  Approximately 8% to 10% water absorption  Produced by extrusion  Fire resistant as fired at 1,0000C  Technology adopted from an Italian clay plant manufacturer  Ideal for load bearing walls and heavy structures  Low soluble salts content for increased performance

39 SHL CONSOLIDATED BHD

SUSTAINABILITY STATEMENT (cont’d)

ENVIRONMENTAL

Our environmental sustainability initiatives are focused on balancing our carbon footprint against the needs of our business. We do so by managing our consumption of resources and striving to be climate positive. We also incorporate environmental sustainability in our lifecycle management to ensure environmental needs are embedded in all that we do.

ENIRONMENTAL SSTAINAILIT

O P

We also ensure we comply with the Department of Environment’s (DoE) requirements on air and water quality, noise levels and dust pollution. For the period under review, we did not record any major cases of non-compliance with the DoE’s requirements.

Energy Management

We record and monitor our energy consumption across our operations with an eye on conserving or reducing energy. During the year in review, we reduced our consumption to 2,046,389 kWh from 2,067,531 kWh in FY2019.

Electricity Consumption 1, 710, 211 1, 729, 604 2, 067, 531 2,046,389

FY2017 FY2018 FY2019 FY2020

40 ANNUAL REPORT 2020

SUSTAINABILITY STATEMENT (cont’d)

Greenhouse Gas Emissions

We record and monitor our greenhouse gas (GHG) emissions, which are mainly produced at our offices and sites, towards reducing emissions. We measure our emissions according to the World Business Council for Sustainable Development and World Research Institute’s GHG Protocol on direct (Scope 1) and indirect (Scope 2) emissions.

Scope Category Indicators Measured

Scope 1 Direct GHG emissions • Company-Owned Vehicles • Generators and Machinery

Scope 2 Indirect GHG emissions • Electricity

SCOPE 1

Our measurement of direct GHG emissions cover emissions from our company-owned vehicles and the diesel used by our generators and machinery at our sites and headquarters at Wisma Sin Heap Lee, with fuel purchases used as the basis to record consumption and volume.

Scope 1 Emissions (CO2e MT)

Source FY2017 FY2018 FY2019 FY2020

Generators and Machinery N/A 128,109 106,481 20,603

Company-Owned Vehicles N/A N/A 16,643 17,803

SCOPE 2

Our Scope 2 emissions are calculated based on electricity used at our HQ. CO2 emissions from the use of electricity were derived using the emission factor published by the Malaysian Green Technology Corporation for the Peninsular Grid.

Scope 2 Emissions (CO2e MT)

Source FY2017 FY2018 FY2019 FY2020

Electricity (MT) 1,187 1,200 1,435 1,683

Waste Management

Although we have not started measuring the waste we generated, we have implement waste management plans to ensure appropriate separation and disposal of waste.

Refuse and solid waste are collected, removed and regulated for disposal accordingly. Where possible, we also recycle our waste. Solid waste which cannot be recycled is stored and disposed of in accordance with regulations to maintain cleanliness and prevent disease. We also manage scheduled wastes in line with Environmental Quality (Scheduled Wastes) Regulations 2005, with such wastes appropriately stored and secured at a designated location on our sites. We have appointed a licensed third-party scheduled waste collector to collect and dispose of these wastes.

41 SHL CONSOLIDATED BHD

SUSTAINABILITY STATEMENT (cont’d)

Water Management

We strive to minimise our consumption of water at each of our projects by managing its usage, recycling and disposal. Where feasible, we reuse and recycle water at our construction sites.

Water Consumption 1, 153 2, 799 2, 630 3,446

FY2017 FY2018 FY2019 FY2020

SOCIAL

Sustainability activities under our Social pillar focus on delivering benefits to our employees and customers. We aim to achieve diversity in our workforce and provide our employees with a conducive working environment which enables talent development and career progression. We also emphasis on meeting the needs of our customers and fostering inclusiveness in the community through accessible home ownership.

Our People

Our workforce is an integral function of our operations. For FY2020, we recorded a headcount of 278 employees. In promoting a diverse workforce, we employ a balance of female and male workers as well as a mix of local ethnicities. We also promote women representation in our management team, in line with national targets. Since 2017, 22% of our top management team has been made up of women.

Workforce Diversity FY2020

A G E D D D

0 0 00 O

42 ANNUAL REPORT 2020

SUSTAINABILITY STATEMENT (cont’d)

The detailed breakdown of our workforce for the year is as follows:

FY2017 FY2018 FY2019 FY2020

Employees Total number of employees 261 257 258 278 Executives 2 2 2 2 Non-Executives 5 5 5 5 Malaysians 247 247 249 249 Non-Malaysians 14 10 9 29 Permanent Staff 220 213 212 211 Non-permanent staff (Contract Staff) 41 44 46 67 Female 106 104 104 101 Male 155 153 154 177 Union members 0 0 0 0 Non-Union members 0 0 0 0

Age group <30 47 47 47 51 30-39 62 52 50 54 40-50 80 78 72 77 >51 72 80 89 96 Disabled employees 0 0 0 0

Diversity Malay 92 96 92 95 Chinese 105 106 108 109 Indian 44 40 44 41 Others (Sarawakian) 6 5 5 4 Foreign Workers 14 10 9 29

Employee Turnover Rates Employee Turnover Rates 20% 17% 9% 13% Female 9 15 8 15 Male 43 29 15 20

Age Group <30 28 11 14 12 30-39 11 10 3 6 40-50 6 6 5 4 >51 7 17 1 13

Women Empowerment % Women in Management (staff) 22% 22% 22% 22% & Women in Top Management 22% 22% 22% 22%

43 SHL CONSOLIDATED BHD

SUSTAINABILITY STATEMENT (cont’d)

Empowering our Employees

We ensure our labour policies enable a conducive environment for talent development and career progression.

Benefits and Remuneration

We base our remuneration for employees based on the Malaysian Employment Federation’s salary survey report. We also provide comprehensive benefits and bonuses as follows:

 Annual Leave, Sick Leave, Maternity Leave  Paternity Leave, Marriage Leave, Compassionate Leave  Group Personal Accidents (PA)  Reimbursement of Medical Fee  Social Security (Socso), Employee Insurance Scheme  Allowances for Directors/Senior Management Staff  Uniforms (Security Personnel/ Company Drivers / Despatch Clerks/ Maintenance employee/ Hospitality Team)  Overtime Meal Allowance  Provision of Toll & Mobile Phone Reimbursement  Bonus/Pay Rise

We also ensure we provide our employees with adequate notice to accommodate manpower requirements due to operational changes. The minimum notice period is one month, although immediate notices are sometimes given to staff that we require to be transferred to different sites to meet our manpower needs, such as in the case of security needs.

Training and Development

As our employees progress in their career with us, we provide opportunities for growth through training and development. Training needs are identified at the begining of the year and provided according to our annual training plan. The following discloses our average training budget per employee and average number of training hours per year per employee. During the year in review, we invested RM35,200 on training our employees. This consisted of 54 trainings involving various levels of staff.

Training Unit FY2017 FY2018 FY2019 FY2020

Average training budget per employee RM RM1,000 RM1,000 RM1,000 RM1,000 Average number of hours of training per year per employee Hrs 8 8 8 8

44 ANNUAL REPORT 2020

SUSTAINABILITY STATEMENT (cont’d)

Employee Evaluation

Regular performance evaluation is conducted to ensure our employees fulfil their potential with us. For new employees, this starts from the day they begin working with us until they have completed their six- month probation period. Should they fail to achieve the desired results during this period, we will provide them with training.

Confirmed full-time employees are appraised once a year according to their categorisation as clerical or executive staff.

Employee Engagement

We strive to provide our employees with avenues for engagement. During the year, we conducted an induction programmes for new employees, a Deepavali lunch at the Double Tree by Hilton in Kuala Lumpur as well as our annual site dinner in conjunction with Chinese New Year held at our Sungai Long site office.

Our employees can also freely and fairly air grievance through our formal grievance procedures, the process for which is as follows:

GRIEVANCE PROCEDURES

Stage 1 Stage 2 Stage 3 Stage 4 (5 working days)

Executive Director (5 working days)

Human Resource and Admin (5 working days) Department

Head of Department (5 working days)

Immediate Superior

Employee (1 week) (3 working days) (3 working days) (3 working days)

45 SHL CONSOLIDATED BHD

SUSTAINABILITY STATEMENT (cont’d)

All grievances shall be resolved through the following procedures:-

A STAGE 01

STAGE

T 02

2 R A STAGE T R A 03

E STAGE T E 2 04

Health, Safety, Security and Environment

Our construction activities necessitate the implementation of Health, Safety, Security and Environment (HSSE) policies to ensure the well-being of our workers as well as the planet. In line with this, we have set up a HSSE Committee to ensure our compliances with requirements from relevant authorities, such as the Department of Occupational Safety and Health and the Ministry of Health. The HSSE Committee also liaises with material suppliers and relevant consultants such as architects and engineers to enable us to use more materials which are environmentally safe and free of health hazards.

Our Safety & Health Policy represents our framework towards achieving a zero-accident rate in all our project sites. We ensure strict compliance to the policy by all our employees and contractors.

The policy and its implementation are overseen by our Safety and Health Committee, which is comprised of employer and employee representatives. In accordance with the Occupational Health and Safety Act 1994 (Section 30), the committee also includes a chairman and a secretary.

46 ANNUAL REPORT 2020

SUSTAINABILITY STATEMENT (cont’d)

During the year, we recorded the following from our group safety indicators:

Indicator FY2017 FY2018 FY2019 FY2020

Fatality cases 0 1 0 0 Lost Workday Cases (LWC) 0 0 0 0 Restricted Workday Case (RWC) 0 0 0 0 Near Miss Cases 1 13 0 0 Dangerous Occurrence Cases 0 13 0 4 Fire Cases 0 0 0 0 Property Damage Cases 0 8 0 0 Vehicle Accident Cases 0 0 0 2 No. of Days Lost 0 61 0 0 Total Safe Man-Hours 151,840 11,200 391,040 28,800 Worked 5 7 9 0

Response to COVID-19

In response to the subsequent Movement Control Orders put in place since 18 March 2020 to combat the spread of COVID-19, we have ensured strict adherence to government requirements. In line with the announcement from the Ministry of International Trade and Industry, our company was allowed to operate with full workforce capacity without limitation on operating hours effective 4 May 2020.

We continue to observe standard operating procedures (SOPs) as well as guidelines from the Ministry of Health and our own internal guidelines to prevent further spread of the COVID-19 virus. These SOPs include practicing social distancing and personal hygiene as well as wearing of masks. Our full SOPs have been circulated to all staff, with the procedures also covering office sanitisation three times daily, processes for receiving external documents and sanitising vehicles.

We have also barred visitors until further notice. However, visitors or suppliers who must be present at our office for essential face-to-face meetings are required to complete required documentation, which must be approved by the respective Directors or Heads of Department. Visitors and suppliers are also required to sanitise their hands and wear face masks upon entering our building.

Our Customers

We work with customers including clients and consultants such as project delivery partners, architects and engineers to deliver our projects. To measure the quality of our deliverables, we conduct a customer satisfaction survey for each of our completed projects. The survey ensures our performance across eight criteria: meeting contractual requirements, meeting specifications/drawings, timely completion, site administration and management, construction methodology, professionalism, responsiveness and effectiveness of our quality management system.

For the year in review, we recorded the following in our customer satisfaction survey:

Customer Satisfaction Survey

4.0 4.0 3.6 3.0 3.4 3.4 3.0 3.0 3.0 2.8 2.0

1.0

0.0 Meeting Meeting Timely Site Construction Professionalism Responsiveness Effectiveness Contractual Specification / Completion Administration Methodology of Quality Requirement Drawings and Management Management System

47 SHL CONSOLIDATED BHD

SUSTAINABILITY STATEMENT (cont’d)

Quality Deliverables

As one of our material matters, we have adopted a Quality Management System (QMS) in accordance with ISO 9001:2015 to ensure we execute quality deliverables in Project Management for General Building Construction. The adoption is a strategic decision that can help to improve our overall performance and provide a sound basis for sustainable development initiatives.

The principles of QMS are:

 Customer  Leadership  Engagement of People  Process Approach  Improvement  Evidence-Based Decision Making  Relationship Management

This is further supported by working with subcontractors, consultants and other professionals who possess the required experience and track record. Our construction division, Sin Heap Lee Construction Sdn Bhd, is certified with ISO 9001:2015. It is also certified by the Construction Industry Development Board (CIDB) as a G7 Contractor.

We also conduct regular inspections at each stage of development until handover of our projects to ensure each specification is meet according to the prescribed procedures and methods.

As testament to our efforts, our Sungai Long Golf & Country Club was awarded Best Golf Course in Malaysia (2019/2020) by the Asia Pacific Tourism & Travel Federation. Located 15 minutes from the Kuala Lumpur metropolis, the golf course was designed by golfing legend Jack Nicklaus and is the first Jack Nicklaus Signature golf course in Malaysia. First opened in November 1992, the club was re-launched in January 2013 following major renovations, including upgrading of the golf course greens. It has consistently earned recognition as The Best Maintained Golf Course from Golf Malaysia Magazine and was included as an event site in the 2001 SEA Games.

48 ANNUAL REPORT 2020

SUSTAINABILITY STATEMENT (cont’d)

Our Community

We pride ourselves in building quality homes which are accessible to all. Among our efforts to do so includes our adoption of the Build-Then-Sell concept to enable buyers to purchase a home with just the 10% down payment. The balance is then paid when the units obtain the Certificate of Completion and Compliance (CCC). Hence, buyers are not charged bank interest payments during construction of the property. This allows buyers to choose units as they view it. It also protects them from non- completion of projects. This concept was implemented for Goodview Heights project as early as 2014.

We have continue to implement this Build-Then-Sell concept for our Villa Sungai Long project which we started selling in September 2019, Sungai Long Residence for which CCC was obtained in May 2019 and Magnolia Villas at Goodview Heights, which was relaunched with the Villa Sungai Long project.

Magnolia Villas at Goodview Heights An exclusive double-story Semi-Detached nestled between hills in a beautiful environment at the fringe of Kuala Lumpur City.

Sungai Long Residence A low-rise condominium development ideal for the growing family.

Here’s where your next generation can start their lives from a baby to working professional all in one place.

Villa Sungai Long Your oasis of peace.

The classic enclave neighbourhood, where the street is safer to play in again.

One street neighbourhood 3-storey Semi-Detached and 3-storey Bungalows.

49 FINANCIAL STATEMENTS 51 Directors’ Report

56 Statement by Directors

56 Statutory Declaration

57 Independent Auditors’ Report

63 Statements of Comprehensive Income

64 Statements of Financial Position

65 Statements of Changes in Equity

67 Statements of Cash Flows

70 Notes to the Financial Statements ANNUAL REPORT 2020

DIRECTORS’ REPORT for the year ended 31 March 2020

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 2020.

FINANCIAL 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 STATEMENTS 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 RM’000 RM’000

Profit before taxation 65,018 29,791 Malaysia taxation (19,520) (36)

Profit for the year 45,498 29,755 Other comprehensive income for the year, net of tax 22,854 -

Total comprehensive income for the year 68,352 29,755

Total comprehensive income for the year attributable to: • equity holders of the Company 64,703 29,755 • non- controlling interests 3,649 -

68,352 29,755

Dividends

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

RM’000

Dividends paid: • Interim dividend of 8 Sen per share in respect of financial year ended 31 March 2019 19,370 • Final dividend of 8 Sen per share in respect of financial year ended 31 March 2019 19,370

38,740

Dividend declared: • Interim dividend of 7 Sen per share in respect of financial year ended 31 March 2020 16,949

Dividend proposed: • Final dividend of 5 Sen per share in respect of financial year ended 31 March 2020 12,106

51 SHL CONSOLIDATED BHD

DIRECTORS’ REPORT (cont’d) for the year ended 31 March 2020

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 Ir. Yap Chong Lee Dato’ Sri Yap Teiong Choon (Retired on 29.8.2019) Souren Norendra (Retired on 29.8.2019) Wong Tiek Fong Ng Chin Hoo Au Lai Koong Su Kok Cheng (Appointed on 14.11.2019) Chong Yew Seng (Appointed on 22.11.2019)

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:-

Dato’ Sri Yap Teiong Choon Leong Chin Cheong Y.A.M. Tengku Muhaini Binti Sultan Haji Ahmad Shah Fumiaki Kiyose

52 ANNUAL REPORT 2020

DIRECTORS’ REPORT (cont’d) for the year ended 31 March 2020

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 2019 Addition Disposal 2020

Direct

Dato’ Sri Ir. Yap Chong Lee 1,835,519 - - 1,835,519 Wong Tiek Fong 80,000 - - 80,000 Au Lai Koong 5,000 - - 5,000

Indirect

Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah 21,222,437 - - 21,222,437 Dato’ Sri Ir. Yap Chong Lee 93,355,143 - - 93,355,143

None of the other Directors holding office at the end of the financial year had any interests in shares of the Company and its related corporations during the financial year.

By virtue of his interests in the Company, Dato’ Sri Ir. Yap Chong Lee is 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.

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.

53 SHL CONSOLIDATED BHD

DIRECTORS’ REPORT (cont’d) for the year ended 31 March 2020

Other statutory information (continued)

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.

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, other than those disclosed in the financial statements; 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 10 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.

54 ANNUAL REPORT 2020

DIRECTORS’ REPORT (cont’d) for the year ended 31 March 2020

Directors’ remuneration

Group Company RM’000 RM’000

Directors’ fee 266 266 Directors’ emoluments 2,834 36

3,100 302

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 Ir. Yap Chong Lee

______Au Lai Koong

Kuala Lumpur, 4 August 2020

55 SHL CONSOLIDATED BHD

STATEMENT BY DIRECTORS Pursuant to Section 251(2) of the Companies Act 2016

We, Dato’ Sri Ir. Yap Chong Lee and Au Lai Koong 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 63 to 143 give a true and fair view of the financial position of the Group and of the Company as at 31 March 2020 and of their financial performance, changes in equity and cash flows for the year ended on that date in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

On behalf of the Board,

Dato’ Sri Ir. Yap Chong Lee Au Lai Koong

Kuala Lumpur, 4 August 2020

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 63 to 143 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 August 2020 } Wong Tiek Fong MIA CA6380

Before me,

56 ANNUAL REPORT 2020

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 2020 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 63 to 143.

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 2020 and of their financial performance, changes in equity and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 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’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“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.

57 SHL CONSOLIDATED BHD

INDEPENDENT AUDITORS’ REPORT (cont’d) To The Members of SHL Consolidated Bhd.

Key Audit Matters (continued)

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 2020, Our audit procedures included, amongst others: property development revenue of RM124,461,000/- and cost of sales of RM63,087,000/- (Note 5) • Reviewed management-prepared budgets accounted for approximately 90% and 86% 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 activities over time using the stage of completion includes verifying the certified work done such method. The stage of completion is measured as examining progress claims from contractors based on the: and architect certification.

• Group’s efforts or inputs to the satisfaction of • Verified the budgeted costs against the letter the performance obligations (i.e. by reference of award issued to contractors. to the property development costs incurred up to the end of the reporting period as a • Performed analytical reviews including percentage of total estimated costs for the reasonableness test on the percentage of complete satisfaction of the development completion and profit recognition. project); and • Verified the gross development value against • physical proportion of contract work-to-date the signed sale and purchase agreements certified by professional consultants and estimated selling price of unsold property units to latest transacted selling price. Revenue and cost recognised on property development activities have an inherent risk of • Corroborated the certified stage of misstatements as these involve judgements and completion with the level of completion estimates. We focused on this area because there based on actual costs incurred to date over is key judgement involved in determining the the estimated total property development following: costs.

• Stage of completion; • Observed the progress of significant on-going • Extent of property development costs incurred projects by performing a site visit. to date; and • Estimated total property development costs. Based on the procedures performed, we are satisfied with the recognition of property Accordingly, we determined this to be a key audit development revenue and costs. matter.

[Refer to Note 3.4(ii) (a) for key sources of estimation uncertainty.]

58 ANNUAL REPORT 2020

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

Fair value of investment properties and valuation of land and buildings in property, plant and equipment

As at 31 March 2020, the Group’s: Our audit procedures included, amongst others:

• Investment properties that are measured at • Reviewed the basis of valuation adopted, fair value amounted to RM75,180,000/- (Note considered and challenged the assumptions 12), which represents 7% of the Group’s total used in the valuation model. assets. • Assessed management’s estimated fair values • Land and buildings in property, plant and by making reference to comparable property equipment that are measured at valuation transactions. amounted to RM209,022,000 (Note 9), which represents 20% of the Group’s total assets. • Performed site visits on major properties.

The Group determines the fair values of its Based on the procedures performed, we are investment properties and valuation of land and satisfied with the Group’s valuation of investment buildings in property, plant and equipment by properties and land and buildings in property, plant reference to selling prices of recent transactions and equipment. and asking prices of similar properties of a nearby location and valuation performed by an external independent professional valuer.

We focused on these areas in our audit due to complexities in determining fair values of the investment properties and valuation of land and buildings in property, plant and equipment, which involved significant judgements in estimating the underlying assumptions to be applied.

[Refer to Note 3.4(ii) (c) for key sources of estimation uncertainty.]

59 SHL CONSOLIDATED BHD

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

Impairment assessment of plant and machinery

A subsidiary in the Group incurred a gross loss Our audit procedures included, amongst others: during the financial year ended 31 March 2020. As a result, the plant and machinery belonging to this • Discussed the impairment model based on subsidiary are subject to impairment assessment discounted future cash flows with management under MFRS 136, Impairment of Assets, given the and compared the appropriateness of the key impairment indicators present. assumptions and estimates used, in particular, those relating to sales growth, gross profit The subsidiary determines the recoverable amount margin and discount rate with reference to of its plant and machinery based on value in use internally derived sources as well as external calculation by using a discounted cash flow model. benchmarks. • Considered the forecasting process and We focused on this area in our audit due evaluated the accuracy of the historical to complexities in determining recoverable forecast by comparing prior period financial amount of plant and machinery, which involved budget against actual results. significant judgements in estimating the underlying • Considered the sensitivity analysis performed assumptions to be applied in the cash flow by the subsidiary and assessed whether projections of the cash generating units. the related disclosures on the sensitivity of impairment assessment to changes in key [Refer to Note 3.4(ii) (b) for key sources of estimation assumptions have been adequately and uncertainty and Note 9 for details of impairment properly made to reflect the risks inherent in assessment.] the valuation of cash generating units.

Based on the procedures performed, we are satisfied with the subsidiary’s impairment assessment of plant and machinery.

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.

60 ANNUAL REPORT 2020

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

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group’s and 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. 61 SHL CONSOLIDATED BHD

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, actions taken to eliminate threats or safeguards applied.

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.

Khoo Wong & Chan Ong Lam Hock @ Tan Ah Lam Chartered Accountants Partner (AF: 0736) 03267/07/2022 J Chartered Accountant

Kuala Lumpur, 4 August 2020

62 ANNUAL REPORT 2020

STATEMENTS OF COMPREHENSIVE INCOME for the year ended 31 March 2020

Group Company Note 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Revenue 5 138,121 171,242 29,569 22,489 Cost of sales 5 (73,110) (89,097) - -

Gross profit 65,011 82,145 29,569 22,489 Other operating income 21,811 13,043 900 944 Distribution costs (3,931) (3,879) - - Administration expenses (17,859) (9,898) (678) (535) Finance costs (5) (21) - - Profit/ (loss) from associate (9) 322 - -

Profit before taxation 6 65,018 81,712 29,791 22,898 Taxation 7 (19,520) (12,308) (36) (21)

Profit for the year 45,498 69,404 29,755 22,877 Other comprehensive income/ (expense) for the year, net of tax: Items that will not be subsequently reclassified to profit or loss: • Revaluation surplus of land and buildings 25,400 - - - • Realisation of deferred tax liability upon disposal of revalued assets 63 70 - - • Income tax relating to revaluation surplus (2,609) (7,513) - -

22,854 (7,443) - -

Total comprehensive income for the year 68,352 61,961 29,755 22,877

Profit for the year attributable to: • equity holders of the Company 41,849 62,436 29,755 22,877 • non-controlling interests 10 3,649 6,968 - -

45,498 69,404 29,755 22,877

Total comprehensive income for the year attributable to: • equity holders of the Company 64,703 54,993 29,755 22,877 • non-controlling interests 10 3,649 6,968 - -

68,352 61,961 29,755 22,877

Sen Sen Earnings per share 8 Basic and fully diluted 17.28 25.78

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

63 SHL CONSOLIDATED BHD

STATEMENTS OF FINANCIAL POSITION as at 31 March 2020

Group Company Note 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

ASSETS Non-current assets Property, plant and equipment 9 219,505 201,155 - - Investment in subsidiaries 10 - - 348,888 424,307 Investment in associate 11 8,997 10,536 - - Investment properties 12 75,180 69,880 - - Investments 13 24 24 - - Inventories 14 2,753 2,749 - - Trust account 2,105 2,192 - - Deferred tax assets 15 7,879 5,311 - - Trade receivables 16 - 20 - -

316,443 291,867 348,888 424,307

Current assets Inventories 14 319,616 269,169 - - Trade receivables 16 13,469 20,605 - - Amount due from subsidiary 17 - - 49,795 49,795 Contract assets 18 - 95,010 - - Other receivables 19 8,872 7,643 65 10 Current tax assets 222 497 4 - Cash, deposits and short-term investments 20 368,707 308,698 1,820 4,187

710,886 701,622 51,684 53,992

1,027,329 993,489 400,572 478,299

EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital 21 247,726 247,726 247,726 247,726 Reserves 22 582,714 556,751 152,812 161,797

830,440 804,477 400,538 409,523 Non-controlling interests 10 79,297 80,268 - -

TOTAL EQUITY 909,737 884,745 400,538 409,523

Non-current liabilities Deferred tax liabilities 15 27,489 32,086 - - Lease/ finance lease liabilities 23 - 10 - - Club establishment fund 24 10,700 10,756 - -

38,189 42,852 - -

Current liabilities Amount due to subsidiary 17 - - - 68,744 Trade payables 25 58,536 21,992 - - Contract liabilities 18 372 36,298 - - Other payables 26 7,698 6,570 34 27 Current tax liabilities 12,791 822 - 5 Lease/ finance lease liabilities 23 6 210 - -

79,403 65,892 34 68,776

TOTAL LIABILITIES 117,592 108,744 34 68,776

TOTAL EQUITY AND LIABILITIES 1,027,329 993,489 400,572 478,299

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

64 ANNUAL REPORT 2020 STATEMENTS OF CHANGES IN EQUITY for the year ended 31 March 2020

Total attributable to equity holders of Non- Group Note Share *Other Retained the controlling Total 2020 capital reserves profits Company interests equity RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2019 247,726 (35,720) 592,471 804,477 80,268 884,745

Profit for the year - - 41,849 41,849 3,649 45,498 Other comprehensive income for the year - 22,854 - 22,854 - 22,854

Total comprehensive income for the year - 22,854 41,849 64,703 3,649 68,352

Additional investment in existing indirect subsidiary - - - - 1,650 1,650 Transfer within reserves: • realisation of revaluation surplus - (7,165) 7,165 - - - Dividends 27 - - (38,740) (38,740) (6,270) (45,010)

Transactions with owners - (7,165) (31,575) (38,740) (4,620) (43,360)

At 31 March 2020 247,726 (20,031) 602,745 830,440 79,297 909,737

2019

At 1 April 2018 247,726 (27,995) 568,493 788,224 61,572 849,796

Profit for the year - - 62,436 62,436 6,968 69,404 Other comprehensive expense for the year - (7,443) - (7,443) - (7,443)

Total comprehensive income/ (expense) for the year - (7,443) 62,436 54,993 6,968 61,961

Additional investment in existing indirect subsidiary - - - - 13,728 13,728 Transfer within reserves: • realisation of revaluation surplus - (282) 282 - - - Dividends 27 - - (38,740) (38,740) (2,000) (40,740)

Transactions with owners - (282) (38,458) (38,740) 11,728 (27,012)

At 31 March 2019 247,726 (35,720) 592,471 804,477 80,268 884,745

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

65 SHL CONSOLIDATED BHD

STATEMENTS OF CHANGES IN EQUITY for the year ended 31 March 2020 (cont’d)

*Analysis of other reserves:

Revaluation Capital Merger Group surplus reserves deficit Total 2020 RM’000 RM’000 RM’000 RM’000

At 1 April 2019 88,081 6,663 (130,464) (35,720) Total comprehensive income for the year: • other comprehensive income for the year 22,854 - - 22,854 Transfer within reserves: • realisation of revaluation surplus (7,165) - - (7,165)

At 31 March 2020 103,770 6,663 (130,464) (20,031)

2019

At 1 April 2018 95,806 6,663 (130,464) (27,995) Total comprehensive expense for the year: • other comprehensive expense for the year (7,443) - - (7,443) Transfer within reserves: • realisation of revaluation surplus (282) - - (282)

At 31 March 2019 88,081 6,663 (130,464) (35,720)

Share Capital Retained Total Company capital reserves profits equity 2020 Note RM’000 RM’000 RM’000 RM’000

At 1 April 2019 247,726 23,361 138,436 409,523 Total comprehensive income for the year: • profit for the year - - 29,755 29,755 Transaction with owners: • dividends 27 - - (38,740) (38,740)

At 31 March 2020 247,726 23,361 129,451 400,538

2019

At 1 April 2018 247,726 23,361 154,299 425,386 Total comprehensive income for the year: • profit for the year - - 22,877 22,877 Transaction with owners: • dividends 27 - - (38,740) (38,740)

At 31 March 2019 247,726 23,361 138,436 409,523

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

66 ANNUAL REPORT 2020

STATEMENTS OF CASH FLOWS for the year ended 31 March 2020

Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities Profit before taxation 65,018 81,712 29,791 22,898

Adjustments for: Property, plant and equipment: • depreciation 2,860 2,884 - - • derecognition 1 396 - - • impairment loss 5,933 - - - • (gain)/loss on disposal (6) 1 - - • revaluation deficit 369 - - - Reversal of impairment loss of subsidiaries - - (900) (900) Fair value gain on: • investment properties (5,300) - - - • short-term investments (1,075) (1,158) - - Gain from previously derecognised subsidiary - (44) - (44) Interest expenses 5 21 - - Interest income (11,138) (10,972) (169) (89) Dividend income - - (29,400) (22,400) (Profit)/ loss from associate 9 (322) - -

Operating profit/(loss) before working capital changes 56,676 72,518 (678) (535) (Increase)/decrease in inventories (52,112) (27,984) - - (Increase)/decrease in receivables 100,937 (89,567) (55) 21,395 Increase/(decrease) in payables 1,746 12,021 (5,418) (2,008) Cash generated from/(absorbed by) operations 107,247 (33,012) (6,151) 18,852 Tax paid (17,065) (12,982) (45) (18) Tax refunded 78 927 - 1

Net cash from/(used in) operating activities 90,260 (45,067) (6,196) 18,835

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

67 SHL CONSOLIDATED BHD

STATEMENTS OF CASH FLOWS for the year ended 31 March 2020 (cont’d)

Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000

Cash flows from investing activities Claim received from trust account 310 442 - - Payment to trust account (223) (237) - - Purchase of: • property, plant and equipment (448) (1,743) - - • land held for property development (4) (5) - - Proceeds from disposal of property, plant and equipment 6 8 - - Purchase of short-term investments - (150,000) - - Reinvestment of short-term investments (4,108) (4,481) - - Proceeds from disposal of short-term investments - 159,937 - - Proceeds from redemption of short-term investments 5,297 5,662 - - Interest received 11,138 10,972 169 89 Capital repayments from previously derecognised subsidiary - 44 - 44 Capital repayments from subsidiaries A - - 13,000 - Dividends received from: • associate 1,530 - - - • subsidiaries - - 29,400 22,400

Net cash from/(used in) investing activities 13,498 20,599 42,569 22,533

Cash flows from financing activities Repayment of club members’ deposits (56) (232) - - Payment of lease/ finance lease liabilities (214) (383) - - Interest paid (5) (21) - - Dividends paid to: • owners of the Company (38,740) (38,740) (38,740) (38,740) • non-controlling interests (6,270) (2,000) - - Proceeds from shares issued to indirect non-controlling interests 1,650 13,728 - -

Net cash from/(used in) financing activities (43,635) (27,648) (38,740) (38,740)

Net increase/(decrease) in cash and cash equivalents 60,123 (52,116) (2,367) 2,628 Cash and cash equivalents at 1 April 158,207 210,323 4,187 1,559

Cash and cash equivalents at 31 March 218,330 158,207 1,820 4,187

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

68 ANNUAL REPORT 2020

STATEMENTS OF CASH FLOWS for the year ended 31 March 2020 (cont’d)

Group Company Note 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Analysis of cash and cash equivalents Cash and deposits 20 218,330 158,207 1,820 4,187

Note A

Analysis of capital repayments from subsidiaries Cash - - 13,000 - Amounts due to subsidiaries - - 63,319 -

Total - - 76,319 -

69 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020

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 August 2020.

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.

70 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

2. FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

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:

2.1 Interest rate risk

The Group and the Company place surplus funds in the form of short-term deposits with reputable financial institutions and short-term investments in money market fund in Malaysia. Short-term deposits and short-term investments generate 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 Malaysian Financial Reporting Standards (MFRSs), International Financial Reporting Standards (IFRSs) 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 the 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.

71 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

3. BASIS OF PREPARATION (CONTINUED)

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.

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 MFRS 140 Investment Property in making judgement whether a property qualifies as an investment property. Investment property is a 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) Revenue recognition from property development activities

Revenue is recognised as and when the control of the asset is transferred to customers and it is probable that the Group will collect the consideration to which it will be entitled in exchange for the asset that will be transferred to the customers. Depending on the terms of the contract and the applicable laws governing the contract, control of the asset may transfer over time or at a point in time.

If control of the asset transfers over time, revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation based on the:-

• Group’s efforts or inputs to the satisfaction of the performance obligation (e.g. by reference to the property development costs incurred up to the end of the reporting period as a percentage of total estimated costs for the complete satisfaction of the development project).

• Physical proportion of contract work-to-date certified by professional consultants.

72 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

3. BASIS OF PREPARATION (CONTINUED)

3.4 Use of estimates and judgements (continued)

(ii) Key sources of estimation uncertainty (continued)

(a) Revenue recognition from property development activities (continued)

Significant judgment is required in determining the:-

• Percentage of completion, the extent of property development costs incurred, the total estimated property development revenue and costs, as well as the recoverability of the development costs.

• Progress towards complete satisfaction of that performance obligation based on the certified work-to-date corroborated by the level of completion ofthe development based on actual costs incurred to date over the estimated total property development costs.

The total estimated costs are based on approved budgets, which require assessments and judgments to be made on changes in, for example, work scope, changes in costs and costs to completion. In making these judgment, the Group evaluates them by relying on past experiences 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.

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, other relevant factors and valuation performed by an external independent professional valuer before arriving at the fair values of the properties. The determination of appropriate adjustments to the recent sale value and valuation performed by an external independent professional valuer 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 12 to the financial statements respectively.

73 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

3. BASIS OF PREPARATION (CONTINUED)

3.4 Use of estimates and judgements (continued)

(ii) Key sources of estimation uncertainty (continued)

(d) Impairment of investment in subsidiaries and associate

The Group and the Company determine whether the carrying amounts of their investments are impaired at the 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 associate.

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 10 and 11 to the financial statements respectively.

(e) Valuation of 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 amount of the Group’s inventories as at the end of the financial year is disclosed in Note 14 to the financial statements.

(f) Deferred tax assets

Deferred tax assets are recognised only to the extent that is probable that taxable profit will be available against which the temporary differences can be utilised. Significant judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

The carrying amount of the Group’s unrecognised deductible temporary differences is disclosed in Note 15 to the financial statements.

(g) Impairment loss for financial assets and contract assets

The impairment loss allowance for financial assets and contract assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

The carrying amounts and key assumptions used to determine the impairment loss of trade receivables, contract assets, and other receivables are disclosed in Notes 16, 18, 19 and 29.4 to the financial statements respectively.

74 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES

4.1 New MFRSs, Amendments to MFRSs and IC Interpretations (‘Standards’) that are effective for current financial year

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

Effective for financial periods beginning on or after 1 January 2019 • MFRS 16 Leases • Amendments to MFRS 3 Business Combinations (Annual Improvements to MFRS Standards 2015 – 2017 Cycle) • Amendments to MFRS 9 Financial Instruments • Amendments to MFRS 112 Income Taxes (Annual Improvements to MFRS Standards 2015 – 2017 Cycle) • Amendments to MFRS 119 Employee Benefits • Amendments to MFRS 123 Borrowing costs (Annual Improvements to MFRS Standards 2015-2017 Cycle) • Amendments to MFRS 128 Investments in Associates and Joint Ventures • IC Interpretation 23 Uncertainty over Income Tax Treatments

The initial application of these Standards has an immaterial impact on the Group and the Company’s financial statements, other than the change in accounting policies arising from the adoption of MFRS 16 as disclosed in Note 4.20 to the financial statements.

4.2 Amendments to MFRSs (‘Standards’) that are yet to be effective for current financial year

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

Effective for financial periods beginning on or after 1 January 2020 • Amendments to References to the Conceptual Framework in MFRS Standards • Amendments to MFRS 3 Business Combination • Amendments to MFRS 7 Financial Instruments: Disclosures • Amendments to MFRS 9 Financial Instruments • Amendments to MFRS 101 Presentation of Financial Statements • Amendments to MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors

Effective for financial periods beginning on or after 1 June 2020 • Amendments to MFRS 16 Leases

Effective for financial periods beginning on or after 1 January 2022 • Amendments to MFRS 3 Business Combinations • Amendments to MFRS 9 Financial Instruments (Annual Improvements to MFRS Standards 2018 – 2020) • Amendments to MFRS 101 Presentation of Financial Statements • Amendments to MFRS 116 Property, Plant and Equipment • Amendments to MFRS 137 Provision, Contingent Liabilities and Contingent Assets

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

The initial application of these Standards is expected to have an immaterial impact on the Group and the Company’s financial statements.

75 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (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.

76 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (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 a financial asset categorised at fair value through other comprehensive income 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. 77 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (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 a financial asset at fair value through other comprehensive income in accordance with MFRS 9.

4.4 Revenue and income recognition

Revenue from contracts with customers is recognised by reference to each distinct performance obligation in the contracts with customers. Revenue from contracts with customers is measured at its transaction price, being the amount of consideration which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, net of indirect taxes, returns, rebates and discounts. Transaction price is allocated to each performance obligation on the basis of the relative stand-alone selling prices of each distinct good or services promised in the contract. Depending on the substance of the contract, revenue is recognised when the performance obligation is satisfied, which may be at a point in time or over time.

78 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.4 Revenue and income recognition (continued)

(i) Revenue from property development

Contracts with customers may include multiple promises to customers and therefore accounted for as separate performance obligations. In this case, the transaction price will be allocated to each performance obligation based on the stand-alone selling prices. When these are not directly observable, they are estimated based on the expected cost plus margin.

Revenue from property development is measured at the fixed transaction price agreed under the sale and purchase agreement.

Revenue from property development is recognised as and when the control of the asset is transferred to the customer and it is probable that the Group will collect the consideration to which it will be entitled in exchange for the asset that will be transferred to the customer. Depending on the terms of the contract and the laws that apply to the contract, control of the asset may transfer over time or at a point in time. Control of the asset is transferred over time if:-

• the Group’s performance does not create an asset with an alternative use to the entity; and • the Group has an enforceable right to payment for performance completed to date.

The Group recognises revenue over time based on the:-

• Group’s efforts or inputs to the satisfaction of the performance obligations (i.e. by reference to the property development costs incurred up to the end of the reporting period as a percentage of total estimated costs for the complete satisfaction of the development project); and

• physical proportion of contract work-to-date certified by professional consultants.

The promised properties are specifically identified by their plot, lot and parcel number and their attributes (such as their size and location) in the sale and purchase agreements and the attached layout plan. The purchasers could enforce their rights to the promised properties if the Group seeks to sell the unit to another purchaser. The contractual restriction on the Group’s ability to direct the promised properties for another use is substantive and the promised properties sold to the purchasers do not have an alternative use to the Group. The Group has the right to payment for performance completed to date according to the Housing Development Act. The Group is entitled to continue to transfer to the customer the development units promised and has the rights to complete the construction of the properties and enforce its rights to full payment.

The Group recognises sales at a point in time for the sale of completed properties, when the control of the properties has been transferred to the purchasers, being when the properties have been completed and delivered to the customers and it is probable that the Group will collect the considerations to which it will be entitled to in exchange for the assets sold.

79 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.4 Revenue and income recognition (continued)

(ii) Revenue from construction contracts

The Group recognises revenue from construction contracts over time when control over the assets has been transferred to the customers. The assets have no alternative use to the Group due to contractual restriction and the Group has an enforceable right to payment for performance completed to date. Revenue from construction contracts is measured at the transaction price agreed under the construction contracts.

Revenue is recognised over the period of the contracts using the output method to measure the progress toward complete satisfaction of the performance obligations under the construction contracts, i.e. based on the level of completion of the physical proportion of contract work-to-date certified by professional consultants.

(iii) Income from sales of goods and services

Revenue from sale of goods is recognised net of discount and taxes at the point in time when control of the goods has transferred to the customer. Depending on the terms of the contract with the customer, control transfers upon delivery of the goods to a location specified by the customer and acceptance of the goods by the customer.

Sale of services is 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.

There is no element of financing present as the Group’s sale of goods and services are made with credit terms of up to 90 days.

(iv) Rental income

Rental income is recognised on an accrual basis in accordance with the substance of the relevant agreements. Other rent related income is recognised in the financial period in which the services being rendered.

(v) Interest income

Interest income is recognised on an accrual basis, using the effective interest method, unless collectability is in doubt, in which case it is recognised on a cash receipt basis.

(vi) Investment income

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

80 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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.

81 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.7 Income taxes (continued)

Deferred tax (continued)

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.

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.

82 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.9 Fair value measurement (continued)

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.

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.

83 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.10 Impairment of assets (continued)

(i) Non-financial assets (continued)

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.

(ii) Financial assets and contract assets

At each reporting period end, the Group and the Company assess whether there has been a significant increase in credit risk for financial assets and contract assets by comparing the risk of default occurring over the expected life with the risk of default since initial recognition.

In determining whether credit risk on a financial asset and contract asset have increased significantly since initial recognition, the Group and the Company use external credit rating and other supportive information to assess deterioration in credit quality of a financial asset and contract asset. The Group and the Company assess whether the credit risk on a financial asset and contract asset have increased significantly on an individual or collective basis. For collective basis evaluation, financial assets and contract assets are grouped on the basis of similar risk characteristics.

The Group and the Company consider past loss experience and observable data such as current changes and future forecasts in economic conditions to estimate the amount of expected impairment loss. The methodology and assumptions including any forecasts of future economic conditions are reviewed regularly.

The amount of impairment loss is measured at the probability-weighted present value of all cash shortfalls over the expected life of the financial asset and contract asset discounted at their original effective interest rate. The cash shortfall is the difference between all contractual cash flows that are due to the Group and to the Company and all the cash flows that the Group and the Company expect to receive.

The Group and the Company measure the allowance for impairment loss on financial asset and contract asset based on the two-step approach as follows:-

(a) 12-month expected credit loss

For a financial asset and contract asset for which there is no significant increase in credit risk since initial recognition, the Group and the Company measure the allowance for impairment loss for that financial asset and contract asset at an amount based on the probability of default occurring within the next 12 months considering the loss given default of that financial asset and contract asset.

84 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.10 Impairment of assets (continued)

(ii) Financial assets and contract assets

(b) Lifetime expected credit loss

For a financial asset and contract asset for which there is a significant increase in credit risk since initial recognition, a lifetime expected credit loss for that financial asset and contract asset is recognised as the allowance for impairment loss by the Group and the Company. If in a subsequent period, the significant increase in credit risk since initial recognition is no longer evident, the Group and the Company revert the allowance for impairment loss measurement from lifetime expected credit loss to 12-month expected credit loss.

For trade receivables and contract assets, the Group and the Company apply the simplified approach in accordance with MFRS 9 “Financial Instruments” and measure the allowance for impairment loss based on a lifetime expected credit loss from initial recognition. The Group and the Company estimate the expected credit losses on trade receivables and contract assets using a provision matrix with reference to historical loss experience.

The Group and the Company define a financial instrument as default, which is fully aligned with the definition of credit-impaired, when it meets one or more of the following criteria: -

• when the counterparty fails to make contractual payment as they fall due; • the debtor is in breach of financial covenants; • concessions have been made by the lender relating to the debtor’s financial difficulty; • it is becoming probable that the debtor will enter bankruptcy or other financial reorganisation; and • the debtor is insolvent.

The carrying amounts of the financial assets and contract assets are reduced through the use of an allowance for impairment loss account and the amount of impairment loss is recognised in profit or loss.

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 - 68.5 years Buildings - 1% to 2% Plant & machinery - 3% to 20% Motor vehicles - 20% Furniture, fittings & equipment - 10% to 20%

85 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.11 Property, plant and equipment (continued)

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.

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.

86 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

4.16 Inventories

Inventories are measured at the lower of cost and net realisable value.

Cost is determined on the following bases:-

Category Basis

(a) Land held for property development Specific identification or relative sale value (b) Property development costs Specific identification or relative sale value (c) Completed development units Specific identification or relative sale value (d) Work in progress and finished goods Weighted average (e) Building materials, raw materials and FIFO (first-in-first-out) goods for resale

87 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.16 Inventories (continued)

(a) Land held for property development

Land held for property development for which no significant development work has been undertaken or where development activities are not expected to be completed within the normal operating cycle, is classified as non-current asset.

Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other related fees.

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.

(b) Property development costs

Property development costs for which work has been undertaken and development activities are expected to be completed within the Group’s normal operating cycle, is classified as current asset.

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.

Property development costs comprise costs of land, land enhancement costs, direct materials, direct labour, other direct costs, attributable overheads and payments to subcontractors that meet the definition of inventories are recognised as an asset. The property development costs is subsequently recognised as an expense in profit or loss as and when the control of the asset is transferred to the customer.

Property development costs of unsold units are transferred to completed development units once the development activities are completed.

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

(d) Building materials, raw materials, goods for resale, work in progress and finished goods

Cost of these inventories comprises materials, direct labour costs and an appropriate proportion of production overheads.

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.

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

88 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.17 Contract assets / (liabilities)

Contract assets relate to the Group’s right to consideration for completed performance under the contract but yet to be billed at the reporting date. The contract assets are transferred to receivables when the right to consideration becomes unconditional. In the case of property development, contract assets are the excess of cumulative revenue earned over the billings to- date. In the case of construction contracts, contract assets are the excess of cumulative costs plus attributable profits less recognised losses over billings-to-date.

Contract liabilities are the Group’s obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when performance obligations are satisfied. In the case of property development, contract liabilities are the excess of the billings to- date over the cumulative revenue recognised. In the case of construction contracts, contract liabilities are the excess of the billings-to-date over cumulative costs plus attributable profits less recognised losses.

4.18 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 three categories, based on nature and purpose of the financial assets:-

• At fair value through profit or loss (“FVTPL”) • At fair value through other comprehensive income (“FVOCI”) • At amortised cost

At the reporting date, the Group and the Company have financial assets categorised as financial assets at amortised cost, FVOCI and FVTPL.

89 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.18 Financial instruments (continued)

(i) Financial assets (continued)

Classification

Category Nature and purpose Financial assets at FVTPL All financial assets not measured at amortised cost or FVOCI as described below are measured at FVTPL.

Derivatives are categorised as financial assets at FVTPL unless they are designated as hedges.

Financial assets at FVOCI Debt instruments

This category comprises debt instruments where they are held within a business model whose objectives are to collect contractual cash flows and selling the financial assets, and have contractual terms which give rise on specific dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Equity investments

This category comprises investments in equity that are not held for trading, and the Group and the Company irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-by-investment basis.

Financial assets at Financial assets are measured at amortised cost if both of amortised cost the following conditions are met:-

(a) the financial assets are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

(b) the contractual terms of the financial assets give rise on a specified date to cash flows that are solely payments of principal and interest on the principal amount outstanding.

90 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.18 Financial instruments (continued)

(i) Financial assets (continued)

Initial recognition and measurement

A financial asset is recognised when, and only when, the Group and the Company become a party to the contractual provisions of the instrument.

A financial asset is initially measured at fair value plus, for an item not at fairvalue through profit or loss, transaction costs. Trade receivables contain no significant financing component are initially measured at the transaction price.

Category Recognition and measurement principle Financial assets at Financial assets categorised as FVTPL are subsequently measured at FVTPL their fair value. Net gains or losses, including any impairment loss, exchange differences, interest or dividend income, are recognised in the profit or loss. Financial assets at Debt instruments FVOCI Subsequent to initial recognition, debt instruments are measured at fair value. Any gains or losses arising from the changes in fair value of these financial assets are recognised in other comprehensive income, except impairment losses, exchange differences and interest income which are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised.

Equity investments

Subsequent to initial recognition, equity investments are measured at fair value. Any gains or losses arising from the changes in fair value of these investments are recognised in other comprehensive income and are not subsequently reclassified to profit or loss. Financial assets at Financial assets at amortised cost are subsequently measured at amortised cost amortised costs using effective interest method, less impairment.

Gains and losses are recognised in profit or loss when the financial assets at amortised cost are derecognised or impaired, and through the amortisation process.

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, except equity investments at fair value through other comprehensive income.

91 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.18 Financial instruments (continued)

(ii) Financial liabilities

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

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

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

Classification

Category Nature and purpose (a) Financial liabilities at These are financial liabilities other than those classified amortised cost into financial liabilities at fair value through profit or loss.

Financial liabilities at amortised cost include trade payables, other payables, amount due to subsidiary, lease/ finance lease liabilities and club establishment fund. (b) Financial liabilities at fair These include: value through profit or loss • Financial liabilities held for trading; and • Financial liabilities designated upon initial recognition at fair value through profit or loss

Financial liabilities 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.

Initial recognition and measurement

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

When financial liabilities are recognised initially, they are measured at fair value plus transactions costs except for financial liabilities at fair value through profit or loss, which are recognised at fair value.

92 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.18 Financial instruments (continued)

(ii) Financial liabilities (continued)

Subsequent recognition and measurement

Category Recognition and measurement principle (a) Financial liabilities at These financial liabilities are subsequently measured at amortised cost 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. (b) Financial liabilities at fair These financial liabilities are subsequently measured at value through profit or fair value. loss Any gains or losses arising from changes in fair value of the financial liabilities are recognised in profit or loss.

For financial liabilities where it is designated as fair value through profit or loss upon initial recognition, the amount of change in fair value of the financial liability that is attributable to change in credit risk are recognised in the other comprehensive income and the remaining amount of the change in fair value in the profit or loss, unless the treatment of the effects of changes in the credit risk of the liability would create or enlarge an accounting mismatch.

Derecognition

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

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 the 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 equity instruments.

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

93 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.19 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.

4.20 Leases

(i) The Group and the Company as lessor

The Group and the Company classify their leases as either operating lease or finance lease. Leases, where the Group and the Company retain substantially all the risks and rewards of ownerships of the leased assets are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

If the Group and the Company transfer substantially all the risks and rewards incidental to ownership of the leased assets, leases are classified as finance leases and are capitalised at an amount equal to the net investment in the lease.

(ii) The Group and the Company as lessee

Recognition and measurement for the financial year ended 31 March 2020

The Group and the Company recognise and measure their leases in accordance with MFRS 16 Leases effective from 1 April 2019.

The Group and the Company recognise right-of-use assets and lease liabilities at the lease commencement date.

Right-of-use assets

The right-of-use assets are initially measured at cost and comprised of the following:-

• The amount of the initial measurement of the lease liability; • Any lease payments made at or before the commencement date of the lease, less any lease incentives received; • Any initial direct costs incurred; and • Any decommissioning or restoration cost.

Subsequent to initial recognition, the right-of-use assets are measured at cost less any accumulated amortisation, impairment losses and adjusted for any remeasurement of lease liabilities.

Amortisation is calculated on a straight-line basis over the estimated useful lives of the right- of-use assets.

94 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.20 Leases (continued)

(ii) The Group and the Company as lessee (continued)

Lease liabilities

Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date. The lease payments are discounted using the Group and the Company’s weighted average incremental borrowing rates.

Lease payments included in the measurement of the lease liability comprise:-

• fixed payments; • any variable lease payments; • the amount expected to be payable under a residual value guarantee; and • the exercise price under an extension option that the Group and the Company are reasonably certain to exercise.

Subsequent to the initial recognition, lease liabilities are measured at amortised cost using the effective interest method. Lease liabilities are re-measured when:-

• there is a change in future lease payments arising from a change in an index or rate; • there is a change in the Group and the Company’s estimate of the amount expected to be payable under a residual value guarantee; or • the Group and the Company change their assessment of whether they will exercise a purchase, extension or termination option.

Short-term leases and low-value assets

The Group and the Company have elected not to recognise right-of-use assets and lease liabilities for the following leases:-

• short-term leases that have a lease term of 12 months or less; and • leases of low-value assets.

Lease payments with short-term leases and low-value assets are recognised as rental expenses in the profit or loss on a straight-line basis over the lease terms.

Recognition and measurement for the financial year ended 31 March 2019

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

4.21 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.

4.22 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.

95 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

5. REVENUE AND COST OF SALES

Revenue of the Group represents revenue and income derived from the principal activities, net of discounts, allowances and taxes.

Revenue of the Company represents dividend and interest income.

Revenue and cost of sales consist of the following:

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Revenue: Revenue from contracts with customers: • Property development 124,461 158,913 - - • Sale of goods and services 8,522 9,273 - -

132,983 168,186 - - Revenue from other sources: • Investments 5,138 3,056 29,569 22,489

138,121 171,242 29,569 22,489

Disaggregated of revenue from contracts with customers: Major goods and services: • Property development revenue 119,983 158,483 - - • Sale of completed development units 4,478 - - - • Sale of land - 430 - - • Sale of goods 1,884 370 - - • Sale of services 6,638 8,903 - -

132,983 168,186 - -

Timing of revenue from contracts with customers: • Over time 126,621 167,386 - - • At a point in time 6,362 800 - -

132,983 168,186 - -

Cost of sales: Property development: • current year 59,976 82,058 - - • adjustment for previous year - 2 - -

59,976 82,060 - - Completed development units 3,111 - - - Land held for property development - 1 - - Sale of goods and services 8,790 5,831 - - Investments 1,233 1,205 - -

73,110 89,097 - -

96 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

6. PROFIT BEFORE TAXATION

This is arrived at:-

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

After charging all expenses including: Directors’ fee 266 266 266 266 Auditors’ remuneration:- Audit fees: • current year 182 170 25 25 • adjustment for previous year 9 (8) 4 1 Other professional fees 71 73 - - Employee benefits expense: Directors’ emoluments: Directors of the Company: • others 36 36 36 36 Directors of the subsidiaries: • salaries and bonus 280 284 - - • defined contribution plans 30 31 - - • others 13 18 - -

323 333 - - Other employees’ emoluments and benefits: • salaries and bonus 10,635 10,611 - - • defined contribution plans 1,158 1,143 - - • others 1,254 1,327 - -

13,047 13,081 - - Short-term leases: • rent of land and buildings 68 195 - - Lease/ finance lease interest 5 21 - - Property, plant and equipment: • depreciation 2,860 2,884 - - • derecognition 1 396 - - • impairment loss (included in administration expenses) 5,933 - - - • loss on disposal - 1 - - • revaluation deficit 369 - - - Allowance for impairment on: • receivables 9 18 - - • contract assets - 981 - - Direct operating expenses of investment properties which generated rental income 1,233 1,205 - -

97 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

6. PROFIT BEFORE TAXATION (CONTINUED)

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

And crediting all income including: Gross dividends from subsidiaries - - 29,400 22,400 Reversal of impairment of subsidiaries - - 900 900

Fair value gain on • investment properties 5,300 - - - • short-term investments 1,075 1,158 - - Rental income: • investment properties 4,507 2,580 - - • others 167 188 - - Interest income: • short-term investments 4,108 4,481 - - • short-term deposits 6,533 6,464 169 89 • others 497 27 - -

11,138 10,972 169 89 Gain on disposal of property, plant and equipment 6 - - - Reversal of allowance for impairment on: • receivables 2,755 3 - - • contract assets 981 - - - Derecognition of allowance for impairment on receivables 7 15 - - Gain from previously derecognised subsidiary - 44 - 44

7. TAXATION

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Malaysian: Current tax expense/(income): • current year 28,539 9,333 36 21 • adjustment for previous year 692 (46) - -

29,231 9,287 36 21 Deferred tax expense/(income): Origination and reversal of temporary differences: • current year (9,715) 4,684 - - • adjustment for previous year 4 (3,317) - - • effect of a change in imposition of tax rate - 1,654 - -

(9,711) 3,021 - -

19,520 12,308 36 21

98 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

7. TAXATION (CONTINUED)

The tax reconciliation is as follows:-

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Taxation based on Malaysian application statutory tax rate of 24% 15,604 19,611 7,150 5,496 Disallowable expenses for tax purposes • loss from associate 2 - - - • impairment loss on plant & machinery 1,424 - - - • others 5,902 1,294 158 128 Non-taxable income for tax purposes: • profit from associate - (77) - - • tax-exempt dividend - - (7,056) (5,376) • reversal of impairment losses of subsidiaries - - (216) (216) • fair value gain on investment properties (1,272) - - - • others (2,845) (6,686) - (11) Taxes for previous year 696 (3,363) - - Effect of differential deferred tax rate (714) - - - Effect of a change in imposition of tax rate - 1,654 - - Unrecognised deferred tax assets 1,416 9 - - Benefit from previously unrecognised deferred tax assets (781) (152) - - Others 88 18 - -

Taxation recognised in profit or loss 19,520 12,308 36 21

Benefit from previously unrecognised deferred tax assets on the following unrecognised deductible temporary differences is used to reduce tax expenses as follows:

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Current tax expense: Unutilised tax losses 149 152 - -

Deferred tax expense: Receivables 632 - - -

781 152 - -

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 RM41,849,000/- (2019: RM62,436,000/-) and the number of ordinary shares outstanding during the financial year of 242,124,000 (2019: 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.

99 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

9. PROPERTY, PLANT AND EQUIPMENT

Freehold Long Furniture, land & leasehold Plant & Motor fittings & Group buildings land machinery vehicles equipment Total 2020 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost/valuation: At 1 April 2019 185,340 1,318 45,105 7,479 6,978 246,220 Additions 138 - 13 - 297 448 Disposals - - - (69) (6) (75) Derecognition - - (44) - (24) (68) Transfer from property development costs 1,665 - - - - 1,665 Revaluation surplus/ (deficit) 25,184 (153) - - - 25,031 Elimination arising from revaluation (2,631) (174) - - - (2,805)

At 31 March 2020 209,696 991 45,074 7,410 7,245 270,416

Accumulated depreciation: At 1 April 2019 2,270 157 30,456 7,278 4,904 45,065 Charge for the year 376 17 1,792 144 531 2,860 Disposals - - - (69) (6) (75) Derecognition - - (44) - (23) (67) Elimination arising from revaluation (2,631) (174) - - - (2,805)

At 31 March 2020 15 - 32,204 7,353 5,406 44,978

Accumulated impairment losses: At 1 April 2019 ------Charge for the year - - 5,933 - - 5,933

At 31 March 2020 - - 5,933 - - 5,933

Carrying amount: At 31 March 2020 209,681 991 6,937 57 1,839 219,505

100 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Freehold Long Furniture, land & leasehold Plant & Motor fittings & Group buildings land machinery vehicles equipment Total 2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost/valuation: At 1 April 2018 185,338 4,478 76,470 7,600 6,313 280,199 Additions 2 357 557 - 827 1,743 Disposals - - - (121) (21) (142) Derecognition - - (31,922) - (141) (32,063) Transfer to property development costs - (3,517) - - - (3,517)

At 31 March 2019 185,340 1,318 45,105 7,479 6,978 246,220

Accumulated depreciation: At 1 April 2018 1,909 177 46,059 7,187 4,575 59,907 Charge for the year 361 48 1,797 211 467 2,884 Disposals - - - (120) (13) (133) Derecognition - - (17,400) - (125) (17,525) Transfer to property development costs - (68) - - - (68)

At 31 March 2019 2,270 157 30,456 7,278 4,904 45,065

Accumulated impairment losses: At 1 April 2018 - - 14,142 - - 14,142 Derecognition - - (14,142) - - (14,142)

At 31 March 2019 ------

Carrying amount: At 31 March 2019 183,070 1,161 14,649 201 2,074 201,155

101 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Analysis of valuation of land & buildings:

Group 2020 2019 RM’000 RM’000

At cost: • freehold land and buildings 1,665 9,768 • long leasehold land - 500

1,665 10,268 At 2020/ 2015 valuation: • freehold land and buildings 208,031 175,572 • long leasehold land 991 818

209,022 176,390

210,687 186,658

Fair value measurement of land and buildings

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

Group 2020 2019 RM’000 RM’000

Fair value hierarchy: Level 1 - - Level 2 - - Level 3 209,022 176,390

209,022 176,390

Level 3 fair value

The Group’s land and buildings are revalued by Directors on 31 March 2020 (2019: 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 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.

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

102 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Fair value measurement of land and buildings (continued)

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

Group 2020 2019 RM’000 RM’000

At 1 April 176,390 176,390 Addition 10,406 - Revaluation surplus 25,031 - Elimination arising from revaluation (2,805) -

At 31 March 209,022 176,390

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

Group 2020 2019 RM’000 RM’000

At cost: Freehold land and buildings 34,551 25,645 Long leasehold land 751 251

35,302 25,896 Accumulated depreciation: Freehold land and buildings 4,402 3,923 Long leasehold land 92 68

4,494 3,991 Carrying amount: Freehold land and buildings 30,149 21,722 Long leasehold land 659 183

30,808 21,905

The carrying amounts of assets leased under lease/ finance lease arrangements are as follows:-

Group 2020 2019 RM’000 RM’000

Plant and machinery - 799 Motor vehicles 9 124

9 923

103 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Impairment tests for plant and machinery

The Group has conducted a review on the recoverable amount of plant and machinery during the financial year. The recoverable amount is the higher of the plant and machinery’s fair value less costs of disposal and its value in use. The review has resulted in recognition of impairment loss totalling RM5,933,000/- (2019: inapplicable) in profit or loss.

The estimated recoverable amount of plant and machinery is based on value in use calculation. The Group estimates value in use using a discounted cash flow model. The key assumptions used are as follows:-

• the pre-tax discount rate applied to cash flow projection is 1.00% per annum;

• the projected cash flows extrapolated using growth rates at an interval of 2 years are as follows: - selling price increased by 4% - variable costs increased by 6% - fixed costs increased by 10%

• other commercial assumptions relating to plant and machinery have been made based on historic trends adjusted for management’ estimates on the economic condition.

Sensitivity to changes in assumptions

The level of impairment is prominently dependent upon judgement used in arriving at cash flows, future growth rates and the discount rates applied to cash flow projections. The impact on the impairment charge of applying different assumptions to the growth rates used to calculate cash flow projections and in the pre-tax discount rates would be as follows:-

Increase/(decrease) in impairment resulting from a 1% change to:-

1% 1% increase decrease RM’000 RM’000

• Discount rate (26) 30 • Growth rate 92 (123)

104 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

10. INVESTMENT IN SUBSIDIARIES

Unquoted shares

Company 2020 2019 RM’000 RM’000

At cost: At 1 April 446,631 446,631 Capital reduction (76,319) -

At 31 March 370,312 446,631

Accumulated impairment losses: At 1 April 22,324 23,224 Reversal (900) (900)

At 31 March 21,424 22,324

Carrying amount: At 31 March 348,888 424,307

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 2020 2019 % %

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

• Sin Heap Lee Construction 50,000,000 100 100 Building construction Sdn. Bhd. works, earthworks and infrastructure works, renting out of plant and machineries, construction management services and money lending business

• Integrated Management 500,000 100 100 Provision of professional Corporation Sdn. Bhd. management services in commercial and industrial studies and planning, construction management and financial services

• Sin Heap Lee Company 5,000,000 100 100 Rental of properties, Sdn. Berhad marketing agent of bricks and building materials

105 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

10. INVESTMENT IN SUBSIDIARIES (CONTINUED)

Issued Effective Name of company equity capital holding Principal activities RM 2020 2019 % %

• 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) 500,000 100 100 Property development Sdn. Bhd.

Wilayah Builders Sdn. Bhd. 500,000 100 100 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

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. 10,000,000 100 100 Property development

SHL-M Ventures Sdn. Bhd. 175,000,000 67 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.

106 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

10. INVESTMENT IN SUBSIDIARIES (CONTINUED)

10.1 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 RM900,000/- (2019: RM900,000/-) is recognised in light of the improved performance of the subsidiaries under review.

10.2 Additional investment in an existing subsidiary

The Group purchased an additional investment in an indirect subsidiary, SHL-M Ventures Sdn. Bhd., a company incorporated in Malaysia, for a cash consideration of RM3,350,000/- (2019:RM27,872,000/-).

The purchase has an immaterial impact on the Group’s financial position, financial results and cash flows.

10.3 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 2020 RM’000 RM’000 RM’000

NCI percentage of ownership interest and voting interest 40% 33% Carrying amount of NCI 17,886 61,411 79,297 Profit allocated to NCI 713 2,936 3,649 Dividend paid to NCI - (6,270) (6,270)

Non-current assets 46,036 83 46,119 Current assets 3,800 204,057 207,857 Non-current liabilities (4,949) (6) (4,955) Current liabilities (173) (18,040) (18,213)

Net assets 44,714 186,094 230,808

Revenue 3,084 56,979 60,063 Profit for the year 1,782 8,897 10,679 Other comprehensive income for the year - - - Total comprehensive income for the year 1,782 8,897 10,679

Cash flows from operating activities 1,431 97,045 98,476 Cash flows from investing activities 69 2,054 2,123 Cash flows from financing activities - (14,061) (14,061)

Net increase/(decrease) in cash and cash equivalents 1,500 85,038 86,538

107 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

10. INVESTMENT IN SUBSIDIARIES (CONTINUED)

10.3 Non-controlling interests in subsidiaries (continued)

Goodstock SHL-M Land Ventures Sdn. Bhd. Sdn. Bhd. Total 2019 RM’000 RM’000 RM’000

NCI percentage of ownership interest and voting interest 40% 33% Carrying amount of NCI 17,173 63,095 80,268 Profit allocated to NCI 27 6,941 6,968 Dividend paid to NCI (2,000) - (2,000)

Non-current assets 45,730 115 45,845 Current assets 2,280 233,521 235,801 Non-current liabilities (4,837) (5,765) (10,602) Current liabilities (241) (36,674) (36,915)

Net assets 42,932 191,197 234,129

Revenue 2,765 105,784 108,549 Profit for the year 68 21,032 21,100 Other comprehensive income for the year - - - Total comprehensive income for the year 68 21,032 21,100

Cash flows from operating activities 1,422 (66,717) (65,295) Cash flows from investing activities 174 914 1,088 Cash flows from financing activities (5,000) 42,769 37,769

Net increase/(decrease) in cash and cash equivalents (3,404) (23,034) (26,438)

11. INVESTMENT IN ASSOCIATE

Group 2020 2019 RM’000 RM’000

Unquoted shares, at cost 1,305 1,305 Share of post-acquisition profits 7,692 9,231

8,997 10,536

Share of net assets 8,997 10,536

There is no goodwill in the associate’s own financial statements and on the acquisition of the Group’s interest in the associate.

108 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

11. INVESTMENT IN ASSOCIATE (CONTINUED)

Details of associate are as follows:-

Name of company Effective holding Principal activities (Incorporated in Malaysia) 2020 2019 % %

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. 2020 2019 RM’000 RM’000

Revenue 2,313 2,438 Profit/ (loss) for the year (30) 1,075 Other comprehensive income, net of tax - - Total comprehensive income/ (expense) (30) 1,075 Dividend paid (5,100) -

(ii) Summarised statement of financial position

Opt Ventures Sdn. Bhd. 2020 2019 RM’000 RM’000

Current assets 12,124 17,082 Non-current assets 20,880 21,764

33,004 38,846

Current liabilities (1,718) (2,440) Non-current liabilities (1,293) (1,283)

(3,011) (3,723)

Net assets 29,993 35,123

109 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

11. 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. 2020 2019 RM’000 RM’000

Net assets at 1 April 35,123 34,048 Profit/ (loss) for the year (30) 1,075 Other comprehensive income - - Dividend paid (5,100) -

Net assets at 31 March 29,993 35,123

Interest in associate as at year end 30% 30%

Carrying amount of Group’s interest in associate 8,997 10,536

12. INVESTMENT PROPERTIES

Group 2020 2019 RM’000 RM’000

At fair value: At 1 April 69,880 69,880 Fair value gain 5,300 -

At 31 March 75,180 69,880

Fair value measurement

The fair values of investment properties are determined by the Directors (2019: 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.

110 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

13. INVESTMENTS

Unquoted club membership

Group 2020 2019 RM’000 RM’000

At fair value: At 1 April and 31 March 24 24

The Group designated the unquoted investments at fair value through other comprehensive income because the Group intends to hold these investments for long-term strategic purpose.

No strategic investments were disposed of during the financial year, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

14. INVENTORIES

Group 2020 2019 RM’000 RM’000

Non-current: At cost: • Land held for property development (Note a) 2,753 2,749

Current: At cost: • Completed development units 216,604 6,522 • Building materials 771 296 • Raw materials 360 116 • Goods for resale 173 175 • Work in progress 11 11 • Finished goods 7,135 7,966

225,054 15,086 Property development costs (Note b) 94,562 254,083

319,616 269,169

Total inventories 322,369 271,918

111 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

14. INVENTORIES (CONTINUED)

(a) Land held for property development

Land Development Group costs costs Total 2020 RM’000 RM’000 RM’000

At cost: At 1 April 2019 2,383 366 2,749 Additions 1 3 4

At 31 March 2020 2,384 369 2,753

2019

At cost: At 1 April 2018 2,382 363 2,745 Additions 2 3 5 Disposal (1) - (1)

At 31 March 2019 2,383 366 2,749

(b) Property development costs

Land Development Group costs costs Total 2020 RM’000 RM’000 RM’000

At cost: At 1 April 2019 78,479 525,918 604,397 Additions - 115,313 115,313 Transfer to property, plant and equipment (112) (1,553) (1,665) Transfer to completed development units (13,971) (199,222) (213,193) Derecognition on completion of projects (26,167) (378,597) (404,764)

At 31 March 2020 38,229 61,859 100,088

Cost recognised in profit or loss: At 1 April 2019 28,310 322,004 350,314 Recognised for the year 3,383 56,593 59,976 Derecognition on completion of projects (26,167) (378,597) (404,764)

At 31 March 2020 5,526 - 5,526

Carrying amount: At 31 March 2020 32,703 61,859 94,562

112 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

14. INVENTORIES (CONTINUED)

(b) Property development costs (continued)

Land Development Group costs costs Total 2019 RM’000 RM’000 RM’000

At cost: At 1 April 2018 75,277 420,820 496,097 Additions 117 104,734 104,851 Reclassification 759 (759) - Transfer from property, plant and equipment 2,326 1,123 3,449

At 31 March 2019 78,479 525,918 604,397

Cost recognised in profit or loss: At 1 April 2018 16,093 252,163 268,256 Charge for the year 12,217 69,841 82,058

At 31 March 2019 28,310 322,004 350,314

Carrying amount: At 31 March 2019 50,169 203,914 254,083

Included in the property development costs are:

Group 2020 2019 RM’000 RM’000

Employee benefits expense capitalised: Directors’ emoluments: Directors of the Company: • salary, allowance and bonus 1,803 2,233 • defined contribution plans 111 144 • others 19 12

1,933 2,389 Director of the subsidiaries: • salary, allowance and bonus 521 - • defined contribution plans 21 -

542 - Other employees’ emoluments and benefits: • salary, allowance and bonus 642 938 • defined contribution plans 31 60 • others 41 64

714 1,062

3,189 3,451

113 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

15. DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets and liabilities recognised in the statement of financial position after appropriate offsetting are as follows:-

Group 2020 2019 RM’000 RM’000

Deferred tax assets (7,879) (5,311) Deferred tax liabilities 27,489 32,086

19,610 26,775

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.

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 Investment development Group equipment buildings allowances properties costs Total 2020 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2019 3,107 17,581 (242) 5,426 903 26,775 Amount recognised in: • profit or loss (1,684) (199) (49) 530 (8,309) (9,711) • other comprehensive income - 2,546 - - - 2,546

At 31 March 2020 1,423 19,928 (291) 5,956 (7,406) 19,610

2019

At 1 April 2018 6,785 9,936 (124) 3,771 (4,057) 16,311 Amount recognised in: • profit or loss (3,678) 202 (118) 1,655 4,960 3,021 • other comprehensive income - 7,443 - - - 7,443

At 31 March 2019 3,107 17,581 (242) 5,426 903 26,775

114 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

15. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)

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 2020 2019 RM’000 RM’000

Unabsorbed capital allowances 4,068 3,117 Unutilised tax losses: • Expire in year 2025 492 1,745 Inventories 4,949 - Receivables - 2,632

9,509 7,494

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.

16. TRADE RECEIVABLES

Group 2020 2019 RM’000 RM’000

Non-current: Interest-bearing advances - 20

Current: Interest-bearing advances - 2,776 Others 13,569 20,682

13,569 23,458 Less: Allowance for impairment (100) (2,853)

13,469 20,605

13,469 20,625

Trade receivables are non-interest-bearing and generally on 14 to 90-day (2019: 14 to 90-day) terms. The contractual terms of interest-bearing advances are as follows:-

Unsecured interest-bearing advances 1

Group 2020 2019

Principal amount RM50,000/- RM50,000/-

Interest rate 4.00% per annum 4.00% per annum

Repayments terms Monthly instalments Monthly instalments of RM921/- each of RM921/- each for 60 months for 60 months

115 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

16. TRADE RECEIVABLES (CONTINUED)

Unsecured interest-bearing advances 2

Group 2020 2019

Principal amount RM75,000/- RM75,000/-

Interest rate 4.00% per annum 4.00% per annum

Repayments terms Monthly instalments Monthly instalments of RM1,381/- each of RM1,381/- each for 60 months for 60 months

Secured interest-bearing advances 3

Group 2020 2019

Principal amount RM3,000,000/- RM3,000,000/-

Interest rate 5.00% per annum 5.00% per annum

Repayments terms 8 quarterly 8 quarterly principal principal repayments** repayments**

Group 2020 2019 RM’000 RM’000

** Payable on

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.

116 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

17. AMOUNT DUE FROM/(TO) SUBSIDIARY

The unsecured outstanding amount is non-interest-bearing and repayable on demand.

18. CONTRACT ASSETS/(LIABILITIES)

Group 2020 2019 RM’000 RM’000

Contract assets: Current: Contract assets from property development - 95,010

Contract liabilities: Current: Contract liabilities from property development - (35,874) Contract liabilities from sale of services (372) (424)

(372) (36,298)

Contracts arising from property development

The Group issues progress billings to purchasers when the billing milestones are attained. The Group recognises revenue where the performance obligation is satisfied.

The Group’s contract assets/(liabilities) relating to the sale of properties as of each reporting period are summarised as follows:-

Group 2020 2019 RM’000 RM’000

Contract assets: At 1 April 95,991 - Revenue recognised during the year 56,793 103,718 Progress billings issued during the year (152,784) (7,727)

- 95,991 Allowance for expected credit losses - (981)

At 31 March - 95,010

Contract liabilities: At 1 April (35,874) (19,895) Revenue recognised during the year 63,190 54,765 Progress billings issued during the year (27,316) (70,744)

At 31 March - (35,874)

117 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

18. CONTRACT ASSETS/(LIABILITIES) (CONTINUED)

Contracts arising from sale of services

The Group’s contract liabilities relating to the sale of services as of each reporting period are summarised as follows:-

Group 2020 2019 RM’000 RM’000

Contract liabilities: At 1 April (424) (436) Revenue recognised during the year 384 474 Billings issued during the year (332) (462)

At 31 March (372) (424)

Unsatisfied performance obligations

Revenue expected to be recognised in the future relating to performance obligations that are unsatisfied (or partially satisfied) at the end of the reporting period, are as follows:-

2020 2019 Within Within Within Within 1 year 2 to 5 years Total 1 year 2 to 5 years Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property development - - - 9,174 - 9,174 Sale of services 260 112 372 109 315 424

260 112 372 9,283 315 9,598

19. OTHER RECEIVABLES

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Advances 1,657 1,059 - - Deposits 5,273 4,603 65 5 Other debtors 710 686 - 5

7,640 6,348 65 10 Prepayments 1,232 1,295 - -

8,872 7,643 65 10

The unsecured advances are non-interest-bearing and repayable on demand.

118 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

20. CASH, DEPOSITS AND SHORT-TERM INVESTMENTS

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Cash and bank balances: • housing development accounts 2,644 2,053 - - • others 11,440 7,057 148 64

14,084 9,110 148 64 Short-term deposits 204,246 149,097 1,672 4,123

218,330 158,207 1,820 4,187 Short-term investments 150,377 150,491 - -

368,707 308,698 1,820 4,187

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.

21. SHARE CAPITAL

Number of ordinary shares Amount 2020 2019 2020 2019 ‘000 ‘000 RM’000 RM’000

Issued and fully paid 242,124 242,124 247,726 247,726

119 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

22. RESERVES

Group Company 2019 2020 2019 2020 RM’000 RM’000 RM’000 RM’000

Non-distributable: Revaluation surplus 103,770 88,081 - - Capital reserves 6,663 6,663 23,361 23,361 Merger deficit (130,464) (130,464) - -

(20,031) (35,720) 23,361 23,361

Distributable: Retained profits 602,745 592,471 129,451 138,436

582,714 556,751 152,812 161,797

22.1 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.

22.2 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.

22.3 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:-

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

120 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

23. LEASE/ FINANCE LEASE LIABILITIES

Group 2020 2019 RM’000 RM’000

Minimum lease payments: • 1 year or less 6 215 • 5 years or less but over 1 year - 10

6 225 Future finance charge on lease/ finance leases - (5)

Present value of lease/ finance lease liabilities 6 220

Present value of lease/ finance lease liabilities: • 1 year or less 6 210 • 5 years or less but over 1 year - 10

6 220

The repayment periods of the lease/ finance lease liabilities are 5 years (2019: 3 to 5 years) at the inception of the leases. Interest is levied at a rate of 4.81% to 4.92% (2019: 4.18% to 5.59%) per annum. The lease/ finance lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default.

24. CLUB ESTABLISHMENT FUND

Club establishment fund represents refundable deposits due to the members of the golf resort.

25. TRADE PAYABLES

Group 2020 2019 RM’000 RM’000

Others 53,885 17,314 Retention sums 4,651 4,678

58,536 21,992

Trade payables are non-interest-bearing and are normally on 30 to 75-day (2019: 30 to 75-day) terms.

The retention sums are payable at the expiry of 24 months (2019: 24 months) after the completion of respective projects.

121 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

26. OTHER PAYABLES

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Accrued expenses 1,307 1,047 26 26 Refundable deposits 3,495 2,979 - - Others 2,896 2,544 8 1

7,698 6,570 34 27

27. DIVIDENDS

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Paid by the Company: In respect of financial year ended 31 March 2018: • Interim dividend of 8 Sen per share - 19,370 - 19,370 • Final dividend of 8 Sen per share - 19,370 - 19,370

In respect of financial year ended 31 March 2019: • Interim dividend of 8 Sen per share 19,370 - 19,370 - • Final dividend of 8 Sen per share 19,370 - 19,370 -

38,740 38,740 38,740 38,740

Paid by partly-owned subsidiary: In respect of financial year ended 31 March 2019: • Interim dividend of 333.33 Sen per share - 2,000 - - In respect of financial year ended 31 March 2020: • Interim dividend of 10.86 Sen per share 6,270 - - -

45,010 40,740 38,740 38,740

122 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

27. DIVIDENDS (CONTINUED)

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Declared: In respect of financial year ended 31 March 2019: • Interim dividend of 8 Sen per share - 19,370 - 19,370

In respect of financial year ended 31 March 2020: • Interim dividend of 7 Sen per share 16,949 - 16,949 -

Proposed: In respect of financial year ended 31 March 2019: • Final dividend of 8 Sen per share - 19,370 - 19,370

In respect of financial year ended 31 March 2020: • Final dividend of 5 Sen per share 12,106 - 12,106 -

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.

28. 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 2020 and 31 March 2019. 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.

123 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

28. CAPITAL MANAGEMENT (CONTINUED)

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Lease/ finance lease liabilities 6 220 - -

Total debts 6 220 - -

Share capital 247,726 247,726 247,726 247,726 Reserves 582,714 556,751 152,812 161,797

Total capital 830,440 804,477 400,538 409,523

Gearing ratio (times) 0.00001 0.0003 - -

29. FINANCIAL INSTRUMENTS

29.1 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 2020 RM’000 RM’000 RM’000 RM’000

Financial liabilities: Non-interest-bearing: • Trade payables 58,536 - - 58,536 • Other payables 7,698 - - 7,698 • Club establishment fund - - 10,700 10,700

66,234 - 10,700 76,934

Interest-bearing: • Lease liabilities: ○ principal 6 - - 6 ○ interest - - - -

6 - - 6

124 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.1 Liquidity risk (continued)

Within One to More than Group one year five years five years Total 2019 RM’000 RM’000 RM’000 RM’000

Financial liabilities: Non-interest-bearing: • Trade payables 21,992 - - 21,992 • Other payables 6,570 - - 6,570 • Club establishment fund - - 10,756 10,756

28,562 - 10,756 39,318

Interest-bearing: • Finance lease liabilities: ○ principal 210 10 - 220 ○ interest 5 - - 5

215 10 - 225

Within One to More than Company one year five years five years Total 2020 RM’000 RM’000 RM’000 RM’000

Financial liabilities: Non-interest-bearing: • Other payables 34 - - 34

2019

Financial liabilities: Non-interest-bearing: • Amount due to subsidiary 68,744 - - 68,744 • Other payables 27 - - 27

68,771 - - 68,771

125 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.2 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 2020 2019 2020 2019 % % % %

Trade receivables: • Interest-bearing advances 4.00 - 5.00 4.00 - 5.00 - - Short-term deposits 2.50 - 3.95 2.50 - 4.20 2.68 - 3.60 3.31 - 3.60 Short-term investments 3.49 2.56 - 3.90 - - Lease/ finance lease liabilities 4.81 - 4.92 4.18 - 5.59 - -

29.3 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 2020 2019 RM’000 RM’000

Increase/(decrease) in retained profits: Short-term investments: • Net assets value +/-1% 1,504 1,505

126 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.4 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 RM1,083,000/- (2019: RM522,000/-) relating to a corporate guarantee given by the Company to bankers for credit facilities granted to subsidiaries, as disclosed in Note 31 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.

(i) Trade receivables and contract assets

The Group applies the simplified approach in measuring expected credit losses which uses a lifetime expected loss allowance for trade receivables and contract assets.

To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.

127 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.4 Credit risk (continued)

(i) Trade receivables and contract assets (continued)

Ageing analysis of trade receivables and contract assets

The ageing analysis of the Group’s trade receivables and contract assets is as follows:-

Group 2020 2019 RM’000 RM’000

Gross trade receivables 13,569 23,478 Contract assets - 95,010

13,569 118,488

Trade receivables: • Neither past due nor impaired 13,081 20,210 • Past due unimpaired: ○ 1 to 30 days past due 97 78 ○ over 30 days past due 291 337 • Impaired 100 2,853

13,569 23,478

Contract assets: • Neither past due nor impaired - 94,029 • Impaired - 981

- 95,010

13,569 118,488

Trade receivables and contract assets that are neither past due nor impaired

The credit quality of trade receivables and contract assets that are neither past due nor impaired are substantially amounts due from property purchasers with end financing facilities from reputable end-financiers and customers with good collection track record with the Group.

Trade receivables also include amounts due from tenants that are secured with deposits paid by tenants prior to occupancy of premises and rentals paid in advance.

None of the Group’s trade receivables and contract assets that are neither past due nor impaired have been renegotiated during the financial year.

128 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.4 Credit risk (continued)

(i) Trade receivables and contract assets (continued)

Trade receivables that are past due unimpaired

Trade receivables of the Group that are past due but unimpaired are mainly related to the progress billings to be settled by end-buyers’ financiers. It is the Group’s policy to monitor the financial standing of these receivables on an ongoing basis to ensure that the Group is exposed to minimal credit risk.

Trade receivables and contract assets that are impaired

The movements of the allowance accounts used to record the impairment are as follows:-

Group 2020 2019 RM’000 RM’000

Movements in allowance accounts: Trade receivables: At 1 April 2,853 2,853 Charge for the year 9 18 Derecognition (7) (15) Reversal (2,755) (3)

At 31 March 100 2,853

Contract assets: At 1 April 981 - Charge for the year - 981 Reversal (981) -

At 31 March - 981

100 3,834

(a) Trade receivables that are impaired individually

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.

129 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.4 Credit risk (continued)

(i) Trade receivables and contract assets (continued)

Trade receivables and contract assets that are impaired (continued)

(b) Trade receivables and contract assets that are impaired based on lifetime expected credit losses

The Group considers credit loss experience and observable data such as current changes and future forecasts in economic conditions to estimate the amount of expected impairment loss. The methodology and assumptions including any forecasts of future economic conditions are reviewed regularly. The probability of non-recoverability of the trade receivables and contract assets is adjusted by forward looking information and multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss.

It requires management to exercise significant judgement in determining the probability of default by trade receivables and contract assets and appropriate forward looking information.

(ii) Trust account and other receivables

The ageing analysis of trust account and other receivables is as follows:

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Neither past due nor impaired Trust account 2,105 2,192 - - Other receivables 7,640 6,348 65 10

9,745 8,540 65 10

The unimpaired trust account and other receivables are monitored closely by the Group and the Company. The expected credit loss of trust account and other receivables is determined individually after considering the financial strength of the receivables. The Group and the Company concluded that the probability of the default of these receivables is low and thus, no loss allowance has been made.

(iii) Amount due from subsidiary

The ageing analysis of amount due from subsidiary is as follows:

Company 2020 2019 RM’000 RM’000

Neither past due nor impaired 49,795 49,795

Generally, the Company considers advances to subsidiary have low credit risk. The Company assumes that there is a significant increase in credit risk only when the subsidiary’s financial positions deteriorate significantly. The Company considers the advances to be:

130 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.4 Credit risk (continued)

(iii) Amount due from subsidiary (continued)

▪ in default when the subsidiary is unable to pay on demand ▪ credit impaired when the subsidiary is

○ unlikely to repay its advances to the Company in full or ○ continuously making losses and having a deficit shareholders’ equity

The Company determines the probability of default in the advances individually using internal information available. Accordingly, it is of the view that loss allowance is immaterial and no expected credit loss is recognised.

(iv) Cash and deposits (excluding cash in hand)

The Group and the Company consider the risk of material loss in the event of non- performance by financial counterparties to be unlikely as the financial institutions have low credit risk.

The counterparty risk ratings of the Group and of the Company’s cash and deposits with financial institutions rated by external credit rating agencies (RAM Rating Services Berhad, Moody’s Investors Service and Malaysian Rating Corporation Berhad) at the reporting period end are as follows:-

Counterparty risk ratings AAA AA2 AA- Baa1 Total RM’000 RM’000 RM’000 RM’000 RM’000

Group 2020 • Short-term deposits 24,282 106,899 51,867 21,198 204,246 • Cash at banks 13,944 9 - 11 13,964

38,226 106,908 51,867 21,209 218,210

2019 • Short-term deposits 15,541 82,716 35,278 15,562 149,097 • Cash at banks 8,996 18 - 7 9,021

24,537 82,734 35,278 15,569 158,118

Company 2020 • Short-term deposits - - 1,672 - 1,672 • Cash at banks 148 - - - 148

148 - 1,672 - 1,820

2019 • Short-term deposits - - 4,123 - 4,123 • Cash at banks 64 - - - 64

64 - 4,123 - 4,187

131 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.4 Credit risk (continued)

(v) Corporate guarantees given to bankers for credit facilities granted to subsidiaries

The Company provides unsecured financial guarantees to bankers in respect of credit facilities granted to its subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.

The maximum exposure to credit risk amounts to RM1,083,000/- (2019: RM522,000/-) representing the outstanding credit facilities of subsidiaries as at the end of the reporting period. As at the end of the reporting period, there was no indication that any subsidiary would default on repayment. The financial guarantees have not been recognised since the fair value on initial recognition was immaterial.

29.5 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 2020 2019 Carrying Fair Carrying Fair Note amount value amount value RM’000 RM’000 RM’000 RM’000

Trade receivables: • Non-current portion 16 - - 20 19

132 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.5 Fair values of financial instruments (continued)

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 • Investments The cost of unquoted investments has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range. • 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 (current) The carrying amounts of these financial instruments • Cash and deposits approximate fair values due to the relatively short- • Trade and other payables term maturity of these instruments. • Amount due from/(to) subsidiary • Trade receivables (non-current) The fair value of the non-current trade receivables are 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. • Lease/ finance lease liabilities The carrying amounts of short-term lease/ finance lease liabilities approximate fair values because of the short period to maturity of these instruments. The fair values of long-term lease/ finance lease liabilities are estimated based on the current rates available for lease/ finance lease liabilities with the same maturity profile. The carrying amount of the long-term lease/ 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.

133 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.6 Fair value hierarchy

The following table provides the fair value measurement hierarchy of the Group’s financial assets carried at fair value as at the reporting date:-

Level 1 Level 2 Level 3 Total 2020 RM’000 RM’000 RM’000 RM’000

Investments - - 24 24

Short-term investments - 150,377 - 150,377

2019

Investments - - 24 24

Short-term investments - 150,491 - 150,491

There was no transfer between levels of the fair value hierarchy during the financial year.

29.7 Financial instruments by category

The table below provides an analysis of financial instruments categorised under MFRS 9as follows:-

(a) Financial assets at fair value through profit or loss (FVTPL) (b) Financial assets at fair value through other comprehensive income (FVOCI) (c) Financial assets at amortised cost (d) Financial liabilities at amortised cost

134 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.7 Financial instruments by category (continued)

Financial Financial Financial Financial assets at liabilities at Total assets at assets at amortised amortised carrying Group Note FVTPL FVOCI cost cost amount 2020 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets: • Investments 13 - 24 - - 24 • Trust account - - 2,105 - 2,105 • Trade receivables 16 - - 13,469 - 13,469 • Other receivables (excluding prepayments) 19 - - 7,640 - 7,640 • Cash, deposits and short-term investments 20 150,377 - 218,330 - 368,707

150,377 24 241,544 - 391,945

Financial liabilities: • Lease liabilities 23 - - - 6 6 • Club establishment fund 24 - - - 10,700 10,700 • Trade payables 25 - - - 58,536 58,536 • Other payables 26 - - - 7,698 7,698

- - - 76,940 76,940

2019

Financial assets: • Investments 13 - 24 - - 24 • Trust account - - 2,192 - 2,192 • Trade receivables 16 - - 20,625 - 20,625 • Other receivables (excluding prepayments) 19 - - 6,348 - 6,348 • Cash, deposits and short-term investments 20 150,491 - 158,207 - 308,698

150,491 24 187,372 - 337,887

Financial liabilities: • Finance lease liabilities 23 - - - 220 220 • Club establishment fund 24 - - - 10,756 10,756 • Trade payables 25 - - - 21,992 21,992 • Other payables 26 - - - 6,570 6,570

- - - 39,538 39,538

135 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

29. FINANCIAL INSTRUMENTS (CONTINUED)

29.7 Financial instruments by category (continued)

Financial Financial Financial Financial assets at liabilities at Total assets at assets at amortised amortised carrying Company Note FVTPL FVOCI cost cost amount 2020 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets: • Amounts due from subsidiary 17 - - 49,795 - 49,795 • Other receivables 19 - - 65 - 65 • Cash, deposits and short-term investments 20 - - 1,820 - 1,820

- - 51,680 - 51,680

Financial liabilities: • Other payables 26 - - - 34 34

2019

Financial assets: • Amounts due from subsidiary 17 - - 49,795 - 49,795 • Other receivables 19 - - 10 - 10 • Cash, deposits and short-term investments 20 - - 4,187 - 4,187

- - 53,992 - 53,992

Financial liabilities: • Amounts due to subsidiary 17 - - - 68,744 68,744 • Other payables 26 - - - 27 27

- - - 68,771 68,771

136 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

30. COMMITMENTS

Non-cancellable operating lease commitment:

Group Group as lessor 2020 2019 RM’000 RM’000

Future minimum rental receivable: • 1 year or less 2,192 1,905 • 5 years or less but over 1 year 665 1,113

2,857 3,018

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 (2019: 3 years).

31. CONTINGENT LIABILITIES

Company 2020 2019 RM’000 RM’000

Unsecured: Corporate guarantees given to bankers for credit facilities granted to subsidiaries 1,083 522

32. 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.

137 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

32. SEGMENT REPORTING (CONTINUED)

Investment and Property Group services development Construction Trading Manufacturing Quarrying Elimination Consolidated 2020 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue External sales 13,472 124,461 - - 188 - - 138,121 Inter-segment revenue 2,798 186 73,805 10,984 2,012 - (89,785) -

16,270 124,647 73,805 10,984 2,200 - (89,785) 138,121

Results Operating profit 9,520 43,463 19,331 62 (7,952) 12,373 (22,903) 53,894 Interest income 1,033 6,215 1,706 263 1,376 545 - 11,138 Finance costs (2) (3) - - - - - (5) Loss from associate - (9) - - - - - (9)

Profit before taxation 10,551 49,666 21,037 325 (6,576) 12,918 (22,903) 65,018 Taxation (19,520) Non-controlling interests (3,649)

Profit for the year 41,849

Assets Segment assets 121,105 830,847 105,554 12,857 75,794 24,890 (160,816) 1,010,231 Investment in associate - 8,997 - - - - - 8,997 Current and deferred tax assets 3,983 3,909 - - 180 29 - 8,101

Total assets 125,088 843,753 105,554 12,857 75,974 24,919 (160,816) 1,027,329

Liabilities Segment liabilities 13,648 107,132 20,593 1,670 626 10 (66,367) 77,312 Current and deferred tax liabilities 7,240 28,684 1,203 188 2,960 5 - 40,280

Total liabilities 20,888 135,816 21,796 1,858 3,586 15 (66,367) 117,592

Others Capital expenditure 271 169 12 - - - - 452

Non-cash expenses: • depreciation 1,249 283 105 - 1,223 - - 2,860 • impairment loss - - - - 5,933 - - 5,933

138 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

32. SEGMENT REPORTING (CONTINUED)

Investment and Property Group services development Construction Trading Manufacturing Quarrying Elimination Consolidated 2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue External sales 11,959 158,913 - - 326 44 - 171,242 Inter-segment revenue 2,587 2,067 91,345 23,882 5,410 - (125,291) -

14,546 160,980 91,345 23,882 5,736 44 (125,291) 171,242

Results Operating profit 3,063 63,044 5,714 12 260 5,031 (6,685) 70,439 Interest income 1,068 5,794 1,185 367 1,486 1,072 - 10,972 Finance costs (15) (6) - - - - - (21) Profit from associate - 322 - - - - - 322

Profit before taxation 4,116 69,154 6,899 379 1,746 6,103 (6,685) 81,712 Taxation (12,308) Non-controlling interests (6,968)

Profit for the year 62,436

Assets Segment assets 242,453 675,375 111,363 16,903 82,589 36,915 (188,453) 977,145 Investment in associate - 10,536 - - - - - 10,536 Current and deferred tax assets 71 5,737 - - - - - 5,808

Total assets 242,524 691,648 111,363 16,903 82,589 36,915 (188,453) 993,489

Liabilities Segment liabilities 13,834 78,861 46,440 3,462 620 508 (67,889) 75,836 Current and deferred tax liabilities 6,738 21,017 196 186 4,749 22 - 32,908

Total liabilities 20,572 99,878 46,636 3,648 5,369 530 (67,889) 108,744

Others Capital expenditure 1,235 384 129 - - - - 1,748

Non-cash expenses: • depreciation 1,152 368 119 - 1,245 - - 2,884

139 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

33. RELATED PARTY DISCLOSURES

33.1 Related party transactions

Transactions with subsidiaries:

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Dividend income: Kajang Granite Quarry Sdn. Bhd. - - 29,400 19,400 Goodstock Land Sdn. Bhd. - - - 3,000

- - 29,400 22,400

Capital repayments: ▪ Sin Heap Lee Construction Sdn. Bhd. - - 63,319 - ▪ Sin Heap Lee Company Sdn. Berhad - - 2,500 - ▪ Integrated Management Corporation Sdn Bhd - - 500 - ▪ Goodstock (Tawau) Sdn Bhd - - 1,500 - ▪ Wilayah Builders Sdn Bhd - - 8,500 -

- - 76,319 -

Unsecured corporate guarantees: Maximum principal amount of corporate guarantees given to bankers for credit 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

140 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

33. RELATED PARTY DISCLOSURES (CONTINUED)

33.1 Related party transactions (continued)

Transactions with entities over which certain Directors have substantial financial interests:

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Income: Property development: ▪ Sin Heap Lee Capital Sdn. Bhd. 138 1,614 - -

Sale of land: ▪ Sin Heap Lee Land Sdn. Bhd. - 430 - -

Secondment fee: ▪ Project Delivery Partner Sdn. Bhd. 45 913 - -

Expenses: Engineering consultancy services: ▪ SSP Housing Sdn. Bhd. 1,790 2,017 - - ▪ Sepakat Setia Perunding (Sendirian) Bhd. 195 79 - - ▪ Project Delivery Partner Sdn. Bhd. 1,981 3,962 - -

Procurement of legal services: ▪ Yap Su & Associates 153 - - -

Engineering consultancy services capitalised in property development costs: ▪ SSP Housing Sdn. Bhd. 322 683 - - ▪ Sepakat Setia Perunding (Sendirian) Bhd. 25 - - -

33.2 Related party balances

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Amounts due from subsidiary: Sin Heap Lee Development Sdn. Bhd. - - 49,795 49,795

Contract assets: Sin Heap Lee Capital Sdn. Bhd. - 1,493 - -

Amount due to subsidiary: Sin Heap Lee Construction Sdn. Bhd. - - - 68,744

141 SHL CONSOLIDATED BHD

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

33. RELATED PARTY DISCLOSURES (CONTINUED)

33.2 Related party balances (continued)

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Trade payables: Entities over which certain Directors have substantial financial interests: ▪ Project Delivery Partner Sdn. Bhd. 1,260 3,155 - - ▪ Sepakat Setia Perunding (Sendirian) Bhd. 80 - - - ▪ SSP Housing Sdn. Bhd. 900 596 - -

2,240 3,751 - -

33.3 Directors’ remunerations

The aggregate amounts of remunerations received by the Directors of the Company during the financial year were as follows:-

Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000

Directors’ fees Directors of the Company: ▪ Non-executive Directors 190 190 190 190 ▪ Executive Directors 76 76 76 76

266 266 266 266

Directors’ other emoluments Directors of the Company: ▪ Non-executive Directors 610 747 36 36 ▪ Executive Directors 1,359 1,678 - -

1,969 2,425 36 36 Directors of the subsidiaries 865 333 - -

2,834 2,758 36 36

Total Directors’ remunerations 3,100 3,024 302 302

Analysed as amounts: ▪ capitalised in property development costs (Note 14) 2,475 2,389 - - ▪ recognised directly in profit or loss 625 635 302 302

3,100 3,024 302 302

142 ANNUAL REPORT 2020

NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 (cont’d)

34. SIGNIFICANT EVENT

The World Health Organisation declared the Coronavirus Disease 2019 (“Covid-19”) a pandemic on 11 March 2020. The Covid-19 outbreak has resulted in the occurrence of events such as movement restrictions and quarantine measures taken by the Government of Malaysia, causing disruption to business and economic activities.

Given the significant headwinds to growth arising from Covid-19, the Government and Bank Negara Malaysia have introduced large countercyclical policy measures to mitigate the economic impact of the pandemic.

As at the date of the authorisation of the financial statements, the Covid-19 pandemic and the Movement Control Order “MCO” have significant financial impact to the Group, particularly on the property development segment of the Group. Some businesses of the Group have resumed operations with the approvals obtained from the relevant authorities during the MCO. Nevertheless, the Group is focusing on its efforts in the best possible way to mitigate its impact while protecting the business potential and branding from the medium to long term perspective. The Covid-19 pandemic and the MCO are not expected to impact the Group’s ability to meet its commitments over the next twelve months due to its high level of liquidity, mainly in the form of cash and deposits.

In view of the lack of visibility on the end date of the Covid-19 pandemic and the MCO, the Group is not able to estimate the full potential financial impact as at the date of the authorisation of the financial statements. As such, the Directors of the Group will continue to monitor the situations closely and respond proactively to mitigate the impact on the Group’s financial performance and financial position. The Group anticipates that the effects of the Covid-19 would potentially impact the judgements and assumptions used in the preparation of the financial statements for the financial year ending 31 March 2021. The Group will provide further updates on the financial impact and mitigating actions relating to the Covid-19 pandemic as required.

Despite the current challenging and unpredictable Malaysian economic environment, the Group will remain resilient and focused on building landed properties and affordable value homes for property development projects located in Selangor Darul Ehsan, the primary social and economic centre of Malaysia.

143 SHL CONSOLIDATED BHD

LIST OF PROPERTIES As at 31 March 2020

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 and Freehold 149.54 170,435 31-3-2020 Mukim of Cheras Club Houses 27 District of Hulu Langat

P.T. 21147 Medical Centre Freehold 0.52 27,000 31-3-2020 Mukim of Cheras 10 District of Hulu Langat

P.T. 21062 Food Court Freehold 0.46 2,180 31-3-2020 Mukim of Cheras 10 District of Hulu Langat

2½ Miles, Sungai Pelek Land and factory Freehold 10.09 13,278 31-3-2020 43900 Sepang building 23 & 30

Lot 1731, 1737, P.T. 9519 Agriculture land Freehold 14.15 2,217 31-3-2020 & 63/2 Mukim and District of Sepang

P.T. 721 Agriculture land 99 years lease 1.27 153 31-3-2020 Mukim and District of expiring in Sepang 2083

Lot 1465, 1467, 1468 & Clay reserve land 99 years lease 6.07 512 31-3-2020 1471, P.T. 720 expiring in Mukim and District of 2084/ Sepang 2087

Lot 64, 207, 208, 730 Clay reserve land Freehold 16.75 2,941 31-3-2020 Mukim and District of Sepang

Lot 1117 Agriculture land Freehold 2.96 931 31-3-2020 Mukim of Semenyih District of Hulu Langat

Lot 173 Agriculture land Freehold 4.81 7,550 31-3-2020 Mukim Semenyih, Batu 17, Jalan Semenyih, District of Hulu Langat

Lot 2116 & 3489 Land held for Freehold 5.18 175 24-9-1992 Mukim of Cheras future housing 7-5-1990 District of Hulu Langat development

144 ANNUAL REPORT 2020

LIST OF PROPERTIES (cont’d) As at 31 March 2020

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)

P.T. 21023, 21226, 21911, Land held Freehold 7.48 8,138 19-12-1989 39753 & 39754 for future 31-3-2020 Mukim of Cheras development District of Hulu Langat

Lot 4137 Land held 99 years lease 0.37 1 15-1-1991 Mukim of Cheras for future expiring in District of Hulu Langat development 2067

Lot 30571 & 30572 Land held Freehold 3.00 2,699 31-3-2020 Mukim of Cheras for future District of Hulu Langat development

P.T. 816 - 1186 Ongoing 99 years lease 87.90 15,233 10-2-1999 Mukim of Batang Kali development of expiring in District of Hulu Selangor housing scheme 2089

Lot 3954 & 3955 Land held 99 years lease 0.37 326 31-3-2020 Mukim Batang Kali for future expiring in District of Hulu Selangor development 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 32715-32716, 33996- Land held for Freehold 1.99 90 31-3-1994 33997, P.T. 34019-34040 future housing Mukim and District of development Petaling

P.T. 6595, 6596 & 6933 Ongoing 99 years lease 4.87 15,673 19-2-2003 Mukim Bukit Rajah development of expiring in District of Petaling shop office 2102

Lot 7990, PT 10503, Ongoing Freehold 80.17 28,818 1-12-1997 Lot 1340 development of 31-3-2010 Mukim of Semenyih housing scheme District of Hulu Langat

P.T. 58715-58738 & Ongoing 99 years lease 9.62 46,145 7-5-1998 59170-59187 development of expiring in Mukim of Cheras housing scheme 2092 District of Hulu Langat

145 SHL CONSOLIDATED BHD

LIST OF PROPERTIES (cont’d) As at 31 March 2020

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 46,000 31-3-2020 Wilayah Persekutuan building 26 Kuala Lumpur

Negeri Sembilan

Lot 493, 497, 499, 502, Agriculture land Freehold 101.49 2,487 31-3-2000 503, 504, 505, 506, 507, held for future 510, 580, 697, 698 & 699 development Mukim of Parit Tinggi District of Kuala Pilah

146 ANNUAL REPORT 2020

ANALYSIS OF SHAREHOLDINGS As at 6 August 2020

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 - 3,295

DISTRIBUTION OF SHAREHOLDINGS

No. of No. of Size of Shareholdings Shareholders % Shares %

Less than 100 391 11.87 14,556 0.01 100 - 1,000 471 14.29 312,249 0.13 1,001 - 10,000 2,037 61.82 6,505,554 2.69 10,001 - 100,000 331 10.05 9,395,113 3.88 100,001 and below 5% 61 1.85 61,813,970 25.53 5% and above 4 0.12 164,082,283 67.77

TOTAL 3,295 100.00 242,123,725 100.00

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 - - 21,222,4371 8.77 Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah 2 Dato' Sri Yap Teiong Choon 530218-10-5955 4,283,869 1.77 60,659,8442 25.05 3 Dato' Sri Ir. Yap Chong Lee 540921-10-5761 1,835,519 0.76 93,355,1433 38.56 4 Yap Teiong Choon Holdings Sdn Bhd 67870-U 3,411,944 1.41 54,247,9004 22.41 5 Sin Heap Lee Holdings Sdn Bhd 67869-D 51,519,703 21.28 - - 6 Sin Heap Lee Capital Sdn Bhd 73421-H 91,340,143 37.72 - - 7 Taipan Equity Sdn Bhd 292562-W 21,222,437 8.77 - -

Notes:

1. Deemed interested by virtue of his shareholdings in Taipan Equity Sdn Bhd pursuant to Section 8 of the Companies Act 2016 ("Act") 2. Deemed interested by virtue of: (i) his shareholdings in Yap Teiong Choon Holdings Sdn Bhd, Sin Heap Lee Holdings Sdn Bhd and YTC Global Sdn Bhd pursuant to Section 8 of the Act, and (ii) his spouse and children pursuant to Section 59(11)(c) of the Act 3. Deemed interested by virtue of: (i) his shareholdings in Sin Heap Lee Capital Sdn Bhd pursuant to Section 8 of the Act, and (ii) his spouse and children pursuant to Section 59(11)(c) of the Act 4. Deemed interested by virtue of its interest in Sin Heap Lee Holdings Sdn Bhd and YTC Global Sdn Bhd pursuant to Section 8 of the Act

147 SHL CONSOLIDATED BHD

ANALYSIS OF SHAREHOLDINGS (cont’d) As at 6 August 2020

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 - - 21,222,4371 8.77 Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah 2 Dato' Sri Ir. Yap Chong Lee 540921-10-5761 1,835,519 0.76 93,355,1432 38.56 3 Au Lai Koong 650726-10-5149 5,000 0.002 - - 4 Wong Tiek Fong 620620-06-5161 80,000 0.03 - - 5 Chong Yew Seng 690120-10-6127 - - - - 6 Su Kok Cheng 671218-10-5137 - - - - 7 Ng Chin Hoo 590514-08-5391 - - - -

Notes:

148 ANNUAL REPORT 2020

ANALYSIS OF SHAREHOLDINGS (cont’d) As at 6 August 2020

LIST OF THE THIRTY (30) LARGEST SHAREHOLDERS AS AT 6 AUGUST 2020

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 TAIPAN EQUITY SDN BHD 102918-T 21,222,437 8.77 4 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 6193K 14,500,000 5.99 Pledged Securities Account for Sin Heap Lee Holdings Sdn Bhd 5 HSBC NOMINEES (ASING) SDN BHD 4381-U 11,947,000 4.93 Exempt AN for JPMorgan Chase Bank, National Association (SINGAPOREJPMPB) 6 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 199301012273 7,000,000 2.89 UBS AG Singapore for SSP Professional Services Sdn Bhd 7 KMB-WAJAR SERI SDN BHD 621146-W 6,696,500 2.77 8 YAP TEIONG CHOON HOLDINGS SDN BHD 67870-U 3,411,944 1.41 9 YTC GLOBAL SDN BHD 49941-A 2,728,197 1.13 10 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 284597-P 2,441,950 1.01 Pledged Securities Account for Ng Peck Chin 11 YAP TEONG SUAN 440427-10-5493 2,303,142 0.95 12 DATO’ SRI YAP TEIONG CHOON 530218-10-5955 2,223,650 0.92 13 DATO’ SRI YAP TEIONG CHOON 530218-10-5955 2,060,219 0.85 14 DATIN SRI PHAN FOO BEAM 530301-08-6986 2,000,000 0.83 15 GOH THONG BENG 401020-07-5219 1,640,000 0.68 16 LIM KHUAN ENG 420329-08-5697 1,370,000 0.57 17 DATO’ SRI IR. YAP CHONG LEE 540921-10-5761 1,063,019 0.44 18 ENVIMATIC SDN BHD 251931-X 876,899 0.36 19 DATIN SRI TAN MOH POH 560613-07-5298 795,000 0.33 20 DATO’ SRI IR. YAP CHONG LEE 540921-10-5761 772,500 0.32 21 YAP TEONG PENG 491012-71-5011 707,200 0.29 22 YAP BOON HUNG 600704-10-5863 664,500 0.27 23 KHER PEK CHOO 520301-10-5578 640,000 0.26 24 DB (MALAYSIA) NOMINEES (ASING) SDN BHD 317329-W 550,500 0.23 Deutsche Bank AG Singapore for Yeoman 3-Rights Value Asia Fund (PTSL) 25 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 284597-P 510,000 0.21 Pledged Securities Account for Lim Bee Ying 26 YAP WENG YAU 831028-14-6261 500,000 0.21 27 LIM KUAN GIN 540108-01-5595 499,600 0.21 28 YAP HONG ENG 351206-10-5014 375,000 0.15 29 YAP BOON WAN 580830-10-5957 344,750 0.14 30 YAP LAY KUAN 730306-10-5134 339,250 0.14

149 This page is intentionally left blank. PROXY FORM

CDS Account No. No. of shares held SHL CONSOLIDATED BHD. Registration No. 199401007886 (293565-W) (Incorporated in Malaysia)

I/ We, *NRIC/Passport/Registration No. of with email address Mobile phone no. being a *member/ members of SHL CONSOLIDATED BHD., hereby appoint

Full Name *NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address:

Email Address: Mobile Phone No.: *and/or

Full Name *NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address:

Email Address: Mobile Phone No.: or failing him/ her, the Chairman of the Meeting as *my/ our proxy to attend and vote for *me/ us on *my/ our behalf at the 26th Annual General Meeting (“26th AGM”) of the Company to be held fully virtual and entirely via remote participation and voting at the Broadcast Venue at the Conference Room, 18th Floor, Wisma Sin Heap Lee, 346 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia on Wednesday, 30 September 2020 at 11.00 a.m. and at any adjournment thereof:-

Ordinary Resolutions For Against Resolution 1 To approve the Final Dividend Resolution 2 To approve the payment of Directors’ fees Resolution 3 To approve the payment of Directors’ Benefits Resolution 4 To re-elect Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah as Director of the Company Resolution 5 To re-elect Ng Chin Hoo as Director of the Company Resolution 6 To re-elect Su Kok Cheng as Director of the Company Resolution 7 To re-elect Chong Yew Seng as Director of the Company Resolution 8 To re-appoint Messrs Khoo Wong & Chan as Auditors of the Company and authorise the Directors to fix their remuneration Resolution 9 To approve the proposed Renewal of Shareholders’ Mandate and New Shareholders’ Mandate for SHL Group to enter into Recurrent Related Party Transactions of a Revenue or Trading Nature Resolution 10 Authority to issue and allot shares pursuant to Sections 75 and 76 of the Companies Act 2016

(Please indicate your vote by marking (X) or (√) 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 , 2020

Signature of Member / Common Seal NOTES:

1. Only depositors whose names appear in the Register of Depositors as at 23 September 2020 shall be eligible to participate in this 26th AGM via remote participation and voting facilities. 2. 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. 3. 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. 4. 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). 5. 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. 6. 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. 7. 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, Malaysia not less than forty-eight (48) hours before the time set for the Annual General Meeting or at any adjournment thereof at which the person named in the instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid. An instrument appointing a proxy to vote at this Meeting shall be deemed to include the power to demand, or join in demanding a poll on behalf of the appointor. 8. The 26th AGM will be conducted on fully virtual and the Company has appointed Bina Management (M) Sdn. Bhd. as the Poll Administrator for the 26th AGM to facilitate the remote participation and voting facilities. Please refer to the procedures set out in the Administrative Notes for the 26th AGM on the registration and voting process for the Meeting. 9. Due to the COVID-19 pandemic, the Broadcast Venue of the 26th AGM is strictly for the purpose of complying with Section 327(2) of the Act which requires the Chairman shall be present at the main venue of the 26th AGM. No SHAREHOLDERS/PROXIES/CORPORATE REPRESENTATIVES from the public will be allowed to be physically present at the Broadcast Venue on the day of the 26th AGM. Fold here

Please affix Stamp

SHL Consolidated 199401007886 (293565-W) 6th Floor, Wisma Sin Heap Lee 346, Jalan Tun Razak 50400 Kuala Lumpur

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ANNUAL REPORT 2020 www.shlcb.com.my